The Beginning Of The End
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What Have The Central Banks Of The World Done Now?

The central banks of the world are acting as if it is 2008 all over again.  Desperate times call for desperate measures, and right now the central bankers are pulling out all the stops.  The Federal Reserve, the European Central Bank, the Bank of England, the Bank of Canada, the Bank of Japan and the Swiss National Bank have announced a coordinated plan to provide liquidity support to the global financial system.  According to the plan, the Federal Reserve is going to substantially reduce the interest rate that it charges the European Central Bank to borrow dollars.  In turn, that will enable the ECB to lend dollars to European banks at a much cheaper rate.  The hope is that this will alleviate the credit crunch which has gripped the European financial system by the throat.  So where is the Federal Reserve going to get all of these dollars that it will be loaning out at very low interest rates?  You guessed it – the Fed is just going to create them out of thin air.  Our currency is being debased so that Europe can be helped out.  Unfortunately, the impact of this move will be mostly “psychological” because it really does nothing to address the fundamental problems that Europe is facing.  It is up to Europe to solve those problems, and so far Europe has shown no signs of being able to do that.

The major central banks of the world say that they want to “enhance their capacity to provide liquidity support to the global financial system.”  But essentially what is happening is that the Federal Reserve is going to be zapping large amounts of dollars into existence and loaning them out to the ECB very, very cheaply.  Think of it as a type of “quantitative easing” on a global scale.

The decision to do this was reportedly made by the Federal Reserve on Monday morning.  For the moment, this move seems to have stabilized the European financial system.  It is quite unlikely that any major European banks will fail this weekend now.

But as mentioned above, this move does nothing to solve the very serious financial problems that Europe is facing.  This intervention by the central banks is merely just a speed bump on the road to financial oblivion.

Most Americans are not going to understand what the central banks of the world just did, but it really is not that complicated.

The following is how CNN chief business correspondent Ali Velshi broke down what the central banks have done….

In an attempt to stave off the consequences of a global credit freeze, the Federal Reserve, in coordination with major central banks, has created a credit line available to those central banks, whereby they can borrow dollars at reduced interest rates for periods of three months. The central banks, in turn, can lend to commercial banks in their respective countries. This is meant to reduce the cost of short-term borrowing for troubled European banks and to give them immediate access to dollars.

This was done immediately after the collapse of Lehman Brothers as well, to alleviate the consequences of banks being largely unwilling to lend to other banks, even for short periods, for fear that the borrowing banks could fail.

Okay – so the Federal Reserve is loaning giant piles of cheap money to the European Central Bank.

So where in the world does all of that money come from?

As a CNBC article recently explained, all of this money is created right out of thin air by the Federal Reserve….

Neither the dollars nor the Euros come from anywhere. They aren’t moved or debited from anywhere. They are invented right on the spot with a few taps on the key pad. And that’s all. There’s no printing press fired up to make new dollars or euros.

This is sometimes called “fiat money.” But that makes it sound as if some command from a sovereign created the money. It’s really closer to “keyboard money,” since it is created by data entry in a computer.

Does that sound bizarre to you?

It should.

But that is how the global financial system really works.

We live in a crazy world.

So what did the financial markets of the world think of this move by the Federal Reserve?

It turns out that they absolutely loved it.

The Dow was up 490 points, and that was the biggest gain of the year so far.

Unfortunately, this stock market rally is not going to last indefinitely.  If you are still in the market, enjoy this while you can because eventually a whole lot of pain is going to be coming.

Again, nothing has been solved.  Europe is still in a massive amount of trouble.  But the announcement did make everyone feel all “warm and fuzzy” for at least a day.

Michelle Girard, a senior economist at RBS Securities, said the following about this move….

“The impact is more psychological than anything else”

Just think of it as “comfort food” for the financial markets.

It was also a very desperate move.

In fact, some even believe that this move happened because a major European bank was in danger of failing.

Just check out some of the things that Jim Cramer of CNBC has been saying on Twitter….

If the Fed didn’t act we would have had the largest bank failure ever this weekend, i believe.

The actions the governments took today shows that there was without a doubt a major bank about to fall this weekend.  That’s very dire….

I believe a major European bank would have gone under this weekend…. That’s why they did this….

An article in Forbes has also speculated that this move was made because a major European bank was in imminent danger of failing….

Did a big European bank come close to failing last night?  European banks, especially French banks, rely heavily on funding in the wholesale money markets.  Given the actions of the world’s largest central banks last night, it raises the question of whether a major bank was having difficulty funding its immediate liquidity needs.

Perhaps we will never know the truth, but the reality is that the Federal Reserve and the European Central Bank would have never taken coordinated action like this if they did not believe that there was some sort of imminent threat to the global financial system.

Sadly, this latest move is also going to have some side effects.

Pimco senior vice president Tony Crescenzi says that all of this “liquidity” is going to dramatically increase the size of the U.S. monetary base….

Keep in mind that any use of the Fed’s swap facility expands the Fed’s monetary base: all dollars, no matter where they are deposited, whether it be Kazakhstan, Japan, or Mexico, wind up back in an American bank. This means that any time a foreign central bank engages in a swap with the Federal Reserve, the Fed will create new money in order to make the swap. Use of the Fed’s liquidity swap line in late 2008 was the main cause of a surge in the Fed’s monetary base at that time. The peak for the swap line was about $600 billion in December 2008. Some observers will therefore say that the swap line is a backdoor way to engage in more quantitative easing.

When there is more money floating around out there but the same amount of goods and services, prices go up.

So will we eventually see more inflation in the United States because of all this?

That is what some are fearing.

Meanwhile, politicians in Europe have failed to come up with a plan to address the European financial crisis once again.

They are calling it a “delay”, but the truth is that it should be called a “failure”.  The following comes from an article in USA Today….

The ministers delayed action on major financial issues — such as the concept of a closer fiscal union that would guarantee more budgetary discipline — until the heads of state meet next week in Brussels.

So will European politicians come up with a real plan next week in Brussels?

That seems unlikely.

The reality is that this latest move by the major central banks of the world does not change the fact that Europe is in a huge amount of trouble and is most likely headed for a very painful financial collapse.

One more thing that this latest move by the central banks of the world highlights is the fact that we do not have any control over what they do.

All of these central banks are run by unelected bureaucrats that answer to nobody.  The decisions that these central bankers make affect all of our lives in a very significant way, and yet we have zero input into these decisions.

Most of the decisions that these central bankers make seem to benefit big banks and big financial institutions.  They always claim that the benefits will “filter down” to the rest of us.  But most of the time what ends up filtering down to us is the economic pain that comes from their bad decisions.

As I have written about so many times before, these central banks need to be abolished.  The American people need to tell Congress to shut down the Federal Reserve and to start issuing debt-free United States currency.

We do not want a bunch of unelected central bankers to “centrally plan” the U.S. economy or to “centrally plan” the global economy.

The more these central bankers monkey with things, the more they mess things up.

Yes, this latest move has stabilized things for the moment, but big trouble is on the horizon for the global financial system.

Count on it.

  • NWO Alert

    In plain English:

    (1) Global central banks (led by the Fed) are giving free money (US dollars) to European banks.

    (2) European banks will loan this free money (US dollars) to the US government and make substantial profits.

    (3) We the People (suckers) will bail out Europe by paying the interest on these loans to the US government.

    (4) We the People are getting screwed!

  • getreal

    Michael,
    Thanks for explaining what in the hell just happened. I caught the “Brian Williamsville News” tonight on NBC. Just a short blurb about the lending and how rosy the stock market is now-as a result. No in depth, as to what this all means. The average American is sooooo out of the loop! And the freight train keeps barreling towards us…

  • Greg

    My gold sales rep called me and said I should diversify. I said ALL my money is in gold and silver. She said “then you should diversify”. I said into what? Burning bags of dog poo?

    • TX4Life

      “Farmland”

    • Otown Right Guy

      You could use the burning bags of dog poo as fertilizer in your home garden!

  • Kim Asadourian

    Now I am entirely confused. Did you previously say: Of course this current sovereign debt crisis could be entirely averted if the countries of the western world would just shut down their central banks and start issuing debt-free money.

    Now you’re condemning such action? Don’t get me wrong. I am not advocating such. Please just explain the difference so I understand. Thank you very much.

    Kim ——> long time supporter.

    • Michael

      Kim:

      Central banks never issue “debt-free money”. For example, under this new plan the Fed is creating money that will be used to loan out to the ECB. But the interest will not also be created. So more debt will be created than money.

      This is how it always works under central banking.

      Under a debt-free money system, the government would issue money and no corresponding debt would ever be created.

      Michael

      • 007

        So Michael, what constraint would government have to keep them from just printing as much money as they want? I just don’t understand how this can’t end in terrible inflation. Even worse than we face now.

        • Michael

          007:

          Yes, inflation would be a danger. But right now, we have both a raging debt problem and a raging inflation problem. The U.S. dollar has lost well over 95 percent of its value since the Federal Reserve was created.

          So there would need to be fiscal discipline under a debt-free money system just as fiscal discipline is required now. But under the current system we have piled up 15 trillion dollars in federal debt with tens of trillions more on the way. Under a debt-free money system we would not pile up any more federal debt and could start slowly paying back our national debt.

          Michael

    • D

      Watch the documentary “Secret of the Oz.” It’s on youtube. It touches base and makes valid points regarding this topic.

    • Old Man

      “Now I am entirely confused. Did you previously say: Of course this current sovereign debt crisis could be entirely averted if the countries of the western world would just shut down their central banks and start issuing debt-free money.”

      Mike statement is too broad and general.

      It is true that ALL money issued by the US Fed is debt which carries interest. But in the past few years, that interest is almost zero. Unfortunately, it is zero interest only to the biggest banks (so that they can flip the money around with higher interest make instant profit), not to you and me. US also issues no-interest money. It is the everyday currency coins and notes, which is minted by the US government and not the Fed.

      Every central bank of the world is different. All, except the US, is owned and controlled (to varying degree) by the government. The US Fed is famously owned and controlled by its member private banks, whose CEOs sit on the Fed board. During an era in the early 20th century when America was run by oligarchs, Congress created the Fed but frees it from supervision. De facto dictatorship by the will of Congress.

      The Euro Central Bank is not owned by any member country. It has an independent treaty existence but its power is much limited. For example, while its job is to issue Euro, it cannot issue money out of thin air and cannot do QE. Every Euro it has is contributed by member country, and how it spend it is strictly limited. This is the reason why when a member country like Greece has problems repaying its debt, the ECB is hardly able to help. It is like the Fed refusing to bailout any of the Wall Street banks – in which case the both Wall Street and the federal government would have declared bankruptcy long ago.

      The Russian Central Bank is an arm of the executive branch, but under tight legislative control.

      The Chinese central bank is 100% owned & operated by the governing party. It issues all money, controls banking and all manner of finance. No legislation required.

      Two English-speaking smaller countries has a central banking system in the middle ground – away from the extremes of America and China. They are Australia & Canada. The government owns these central banks but has an arm-length relationship which is under strict legislative control. Also, their central bank mandate is to manage inflation to within a legislated tight range of 2%-4%. This prevents currency debasement at will, also greatly limit the amount of QE they can do. The governments of both countries nevertheless reserve the right to issue money outside of the central banking system. For example, the government of Canada directly issued stimulus money to cushion the impact of the 2008 Lehman bankruptcy; it issued same to finance certain exports. They apparently don’t like money monopoly or dictatorship in managing it. This diversity and flexibility has worked amazingly well – both Australia and Canada has not only fully recovered from the US-created 2008 crisis, but has restored to healthy economic growth.

    • JJ Cambell

      Kim,
      I think a simple explanation is When the Fed prints dollars The tax payers have to pay it back. I know that sounds crazy. Even worse Some people think that the Federal Reserve Banks are United States Government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders.”
      JFK actually started to print our own us dollars to the disbelief of the Federal Reserve.
      two weeks later he was dead. LBJ returned the power to the Fed.

  • D

    You can really see how these oligarchs (banking elite), who own the mainstream media news, have tampered with internet news sites like Yahoo and MSN. It’s the worst I’ve seen in a while. You can tell things are getting close.

    First, MSN has a story “BREAKING NEWS” saying how the stocks jumped 490 points and thing are golden, yet it dropped 400 points not even a month ago, and the only reason they jumped is because of more debt from Black Friday and paper pumping at it’s finest. These oligarchs are now kicking the can through the field goals posts.

    Yahoo, who reported these stats, first allowed comments and ratings. They never seem to allow ratings on these types of stories because they don’t want maniacs like us to spread the truth. Well, this time they must of forgot. All of the top comments on the article were from people who “woke up” so to say and knew the dirty details behind what is going on. You know, the elite, corruption on every level, chaos, economic collapse. I was honestly quite surprised how intelligent the Yahoo comments section was in regards to people understanding the dire consequences of what just happened.

    However, two hours later, Yahoo edits the news article, deletes all the original comments, and doesn’t allow ratings to bump the accurate comments to the top (BS sensor posts). Everyone called BS on the first article, which tried to convey the notion that central banks are godsends. Those bankers didn’t like that, and they ordered Yahoo to nip it at the bud in a raging haste.

  • 007

    This was a desperate measure. It will for sure vastly increase the money supply. The resulting inflation will be felt back here in the U.S. very shortly. However, this is only the first step, and will only be deemed peanuts, compared to what these desperate central banks are about to do.. Eventually, they will have to create a back door to allow someone to buy all of the toxic European debt which grows every day. When they start buying this debt, it will mark the end of the bond markets, horrible bubbles and rampant inflation. I agree, if you are in the market still, this is a great opportunity to get out. It can go down faster than it went up. Goldman Sachs can create shorts as fast as the FED can print money.

  • 007

    When you go to the grocery store and can’t afford your food, when you can not afford to put gas in your car, when you can’t afford the high prices for your utilities, clothes, health care and education, thank Obama and the corrupt Federal Reserve.

    Oil just rocketed over $100.00 a barrel and gold has risen over $100.00 an ounce in three days. The coming wave of inflation is going to crush this country like a beer can.

  • mark

    I will continue to say that you can’t fix a debt problem with more debt. The super wealthy will keep on collecting intrest on the backs of all of us debt serfs. The super wealthy’s buddies at the Fed just keep creating dollars to keep the market up and reduce the value of my dollars that I hold. I think the best investment around is a long term food storage. You had better get prepared.

  • http://economicsurvivor.net Russell Cavanagh

    These guys are merely postponing the inevitable collapse. Interesting that the US Dollar – a currency in crisis globally – is being offered at discount to the commercial banks as a large part of the “solution” – http://t.co/DveUcPxa

  • http://lnx-bsp.net/ Tel

    Let’s not forget that they were rewarded in 2008 with free taxpayer money as bailouts. Of course they expect more of the same.

    Reward failure — expect more failure.

  • Bone Idle

    How about some central bank data keying a million or so into my bank account. It will come from thin air so my repayments will come from the same place.
    Then again if the sovereigns don’t have to repay why should I?

  • Maria

    “As I have written about so many times before, these central banks need to be abolished. The American people need to tell Congress to shut down the Federal Reserve and to start issuing debt-free United States currency.”

    Amen to that!

    Bill Still explains the history of the Fed in this video. More importantly he explains how the U.S can issue and distribute its own debt-free money now. The solution starts at 3:06:00.

    http://www.youtube.com/watch?v=JXt1cayx0hs

    • Maria

      Bill Still is running for President. Talk about an underdog! He posts some great video comments on his website! Check it out.

      http://still2012.com/

  • jd

    For the quickest indicator of what this means for all of us, look at the price of gold – it’s a sign of inflation and our purchasing power going down as the Fed essentially reduces the value of US dollars:

    http://goldprice.org/

  • A.S.

    To Quote:

    “The hope is that this will alleviate the credit crunch which has gripped the European financial system by the throat.”

    What about alleviating OUR credit crunch? What about the Banks loaning money at 0% to people that still have home and are suffering through pending foreclosure. That is one short term fix that the Federal Reserve could do for fellow Americans. But will they? No!–Because they hate America.

    I was right. The Federal Reserve, with our without permission from Congress (most likely once again without (and maybe it would not have made much difference if Congress really did approve it they way they have been behaving with insider trading and voting on S-1867) )…
    WILL PRINT OUT OF THIN AIR POSSIBLY $1 TRILLION!

  • mel

    All these money printing are going to fail miserably

    Let recap all the 8 trillion $ that been printed to pop up the economy since 9-11-2001 All have gone down the drain
    We had 1% interest rates from Greenspan fueling housing.
    We had wars from Bush and Obama fueling defense industry employment.
    We had two rounds of Quantitative easing from the Fed.
    We had cash-for-clunkers.
    We had two housing tax credit packages.
    We had an $800 billion stimulus package from Congress for “shovel-ready” projects.
    We had stimulus kickbacks to states.
    We had HAMP (Home Affordable Mortgage Program).
    We had bank bailouts out the wazoo to stimulate lending.
    We had Small Business lending programs.
    We had central bank liquidity swaps.
    We had Maiden Lane, Maiden Lane II, and Maiden Lane III
    We had Single Tranche Repurchase agreements
    We had the Citi Asset Guarantee
    We had TALF, TARP, TAF, CPFF, TSLF, MMIFF, TLGP, AMLF, PPIP, and PDCF
    The recent operation Twist.
    We had so many programs the Fed must have run out of letters because they were not given an acronym.

    That is a partial list. Other than bailing out bondholders what exactly do we have to show for any of it? The one-word answer is “debt”.

    • Michael

      Wow what a list. :)

      Michael

  • A.S.

    To Quote:

    “As I have written about so many times before, these central banks need to be abolished. The American people need to tell Congress to shut down the Federal Reserve and to start issuing debt-free United States currency.”

    That is not going to happen! JFK tried to do that and looked what happened to him! As bad as members of Congress are, whoever even introduces such a bill will be instantly killed to shut him up. So, Congress will not nationalize the Federal Reserve. We need another Andrew Jackson who will fight to his death and not be afraid of threats of extermination.

    • D

      Don’t forget the others who challenged the Federal Reserve.

      -Andrew Jackson: attempted assassination – both pistols misfired at point blank range.

      -Abe Lincoln: Issues debt-free gov’t money to fund the civil war. The bankers didn’t like that. He was assassinated.

      -James Garfield: Challenged the banks – was assassinated. Everyone forgets about this guy.

      The oligarchs learned their lesson and just hand-pick some puppet politicians to avoid those assassination fiascos. It’s much easier. If someone like Ron Paul comes along, they will make sure he doesn’t get far (by using their controlled mainstream media). In another parallel paradoxical world, where Paul actually did get elected president and tried to end the Fed, he would just get assassinated.

    • Mike McConeghey

      The Andrew Jackson you are looking for is RON PAUL.

  • http://None Hans

    Get ready for a bartering system. The final collapse of fiat currency systems is unavoidable.
    To create nonexisting “currency” at a keystroke,to call it dollars and to lend it to bankrupt institutions or countries whilst you are youself indebted to the tune of trillions of these fictitious dollars is utter madness.
    When it all hits the fan, would you rather hold tangible assets, or pieces of paper called dollars or even worse, electronic entries in bank accounts, stocks, CDS’s or any other financial instruments that the bankers and brokers dreamt up? I know what I will bet my (real) money on. I will also keep my credit card accounts active but unused. As soon as I see the collapse occurring, I will max out all my credit cards on food, fuel and so on. After the collapse, if it has to be repaid, these “loans” can be repaid with worthless currency. I am sitting in South Africa, so this might still work. It might take a day or two to shut down our credit access. In the first world this will likely not be an option. Expect the bankers to close all access to currency just before the actual collapse. I do not rely on this to work. I myself have alternative plans, but it would be nice to screw the bankers if it does!

  • http://militantjeffersonian.com Republicae

    “As I have written about so many times before, these central banks need to be abolished. The American people need to tell Congress to shut down the Federal Reserve and to start issuing debt-free United States currency.”

    Strangely, you rail against Quantitative Easing and yet you call for issuing Debt-Free U.S. Currency. It is the same thing, do you think that simply by changing the image or the title of the fiat currency that it becomes any different than the fiat currency created out of thin air by the FED?

    So-called “debt-free” currency, or as some call it U.S. Notes, is no different than what the FED currently does under Quantitative Easing when it simply prints or digitizes money into existence without having to buy U.S. Treasuries to monetize the debt obligations of issuing fiat currency.

    Becoming a Greenbacker is not a solution to our problems, it would only continue the problem of a devalued IOU currency system that would still have the inability to pay the promises of those IOUs, since they would be essentially the very same monetary falsehood as the current Federal Reserve Note.

    Do you actually think that it is possible to pay our debt simply by printing a new type of “debt-free” single-tier fiat currency? If you think that politicians and other bureaucrats can be trusted with the “printing presses” anymore than government appointed Mercantilist Bankers at the FED then think again.

    There is no such thing as a “debt-free” fiat currency, it is always a liability, in fact it is always a double liability to the issuer and the holder.

    There is only one debt free currency and that is sound gold and silver commodity money. Gold and silver being double assets on both sides of the ledger.

  • yhung

    how true..these elites don’t care now, will print till all the countries go into oblivion…..this is their ultimate goal anyway.

  • Silver Bean

    So now Cramer has credibility in what he says????????????

    “keyboard money” I like it!!!!

  • REED RICHARDS

    Being one of the very few intelligent people wanting the asylum state empire to collapse so the Republic can be reborn, I don’t own stocks. It is a totally rigged game and only fools without big money and political connnections dabble in it. But suffice it to say, another collapse is coming. Hence the need for Congress to enshrine into law the power for military to detain people, citizens and non citizens alike, forever and a day without charge, trial, counsel or due process of any kind.

    I will be very interested to see how indefinite military detention without rights or due process is going to mesh with the republican wing of the war party plan of unlimited gun ownership. One the one hand you want a mass populace to be armed but on the other hand you want to indefinitely detain that same populace. Can’t wait to see that clash happen.

  • mondobeyondo

    Oh, goody! The Fed is going to create more dollars out of thin air, to help the European financial system. If you notice the glee on the faces of the local news anchors and financial analysts on TV, they all seem to say, “Europe avoids financial catastrophe! Stock market has HUGE rally! We’re saved! We’re SAVED! Thank you, Superman! I mean Ben Bernanke!”

    What they forgot to mention is, the dollar in your pocket just lost value. Maybe a lot of value, depending on how many dollars the Fed decides to print. Europe may be off the hook for now, but the prices of everything you buy are about to go up, up and away. Your wheat and sugar are going up. So is meat. Toilet paper. Soap. Coke. Sunny D. Cars. SUV’s. iPads. It’s a simple case of too many dollars, and the same amount of goods. And the Fed is about to unleash a dollar tsunami.

    Hello, inflation. Brace yourselves.

    • Joel

      Mondo,

      the Fed don’t do it to help the European Financial System at all. They do it to sustain the whole financial system they put in place since World War II all over the world. It’s just to support the money making machine. Europe is just one of those big Supra-National ATM made for the rich by the rich.

      There is no such thing as a “European Financial System”. There is a European ideal which has been already put in the ground for long now. As I said in one of my former comments, the E.U., in itself, is a good idea, made up out of the suffering of WWII, and to avoid a repetition of such a thing on our Old Continent. Which is why I don’t like the idea of people thinking it must be done with per se. Yet, I maintain some objectivity and try to avoid mixing an ideal E.U. and the reality we live in. The fact is, once they decided to create the EEC (Economic European Community – the ancestor of the E.U.) long time ago, things were clear, and everything is in the name itself : Economy (behind read : Finance above all). So much for the ideal.

      IMHO it’s not a good idea to focalise so much on Europe. When everyone is looking at Europe, the “To-big-to-fall” have the ability to do whatever they want elsewhere without people looking for it. It’s nice “magician” trick : attract as much attention, with big drama, on the left, so that you can make things happend on the right. and Voilà, I got you… Before you know it, you are stuck.

  • Lennie Pike

    It isn’t a European crises, it is a crisis for all Western banks. The only financial system that exists, exists only for banksters – it is NOT that there is a credit freeze – it IS that there is no financial system for anyone other than banksters – they have zero incentive (or ability anymore – they’re bankrupt) to lend money to anyone other than the ones gambling at their table – themselves. But they do have the ability to manufacture new money out of thin air and give it to themselves and let the rest of us suckers pay for it through inflation. And inflation, along with the suffering that accompanies it can go on for a good while until hyper-inflation forces people to stay home and stop working.

    Money is work.

    When derivatives were introduced, and the Glass Steagal Act made law, banks no longer had a reason to continue with the financial system that existed before.

    This is not about the sovereign debt of European countries and out of control government spending, or the loss of economic activity in European countries, or a high level of socialism, even though all of those things do exist and are very destructive. THIS IS ALL ABOUT BANKS GAMBLING WITH DERIVATIVES – these gamblers are frothing insanely at the mouth with their gambling addictions and greed – they have nothing else that stimulates them.

    And we allow them to run our lives.

    Good luck with that phone call to your Congressman asking to end the fed.

    Unfortunately or fortunately, depending on which side you are or will be on, as the Bible says, some “leader” is going to appear that will have the “solution” to this mess.

    Maybe that time is not now – maybe it is hundreds or thousands of years into the future – only God knows. Most of the signs of that time drawing near that were spoken of in the Bible either have already happened or are happening now.

    Do we welcome what’s coming or try to prevent it? All I know is that whoever this new “leader” is, and he could easily be very well known to the World already, he will not be leading those of us who recognize the sound of the voice of our Shepherd – Jesus Christ – The Son Of God And God Himself.

    • Tim

      “My sheep hear my voice, and I know them, and they follow me: And I give unto them eternal life; and they shall never perish, neither shall any man pluck them out of my hand. My Father, which gave them me, is greater than all; and no man is able to pluck them out of my Father’s hand.” (John 10:27-29)

      • Joel

        We just need to be sure we are HIS sheep :-)

      • Lennie Pike

        Absolutely.

  • DeathSpiral

    Here is a video off Gerald Celente’s Blog showing the highest powers in the U.S. discussing a bank holiday during an election campaign including none other than John Corzine. Scary stuff!

    http://geraldcelentechannel.blogspot.com/2011/11/gerald-celente-prepare-for-bank-holiday.html

  • Pingback: A Voice of Reason « L.A. Marzulli's Blog()

  • http://www,Back2theLand.com Old Timer

    I rely on historical precedent to the patterns of expectations. In this current article Michael is right on track about shutting down the central banking system, albeit retaining home town community banks.

    If you think the central banking system is bad, consider the proposals to create a “world” central bank and the printing of new curancy based upon equal shares of international poverty. There are lots of proposals out there and the mentally ill are in control.

    However the pattern, as I understand it, in the next step of desperation may be nationalizing the banks. This will be more of a mess, but will delay what we all known is going to happen.

    As the end approaches and the OWS type movements grow more violent there is, in accordance with the recent proposed “battlefield” military intrusion into our lives, along with the suspension of Constitutional guarentees by the congress far right paranoids, the military will just take over ” to protect the innocent”.

    The current system of political moves and promises are just delaying tactics. No one political enity wants to restart at ground zero but seeks to continue with the model of dispair at the cost to the people.

    Old Timer.

  • Barn Cat

    We’re on the road to the end of the dollar as the world’s reserve currency. We’re also on the road to hyperinflation like Germany had in the 1920s. Hyperinflation is a 100% certainty.

    • mondobeyondo

      When – not if- the U.S. dollar loses its reserve currency status, it will be terrifying for America and its people.

      One of the reasons why the Fed can recklessly print money out of thin air, is BECAUSE the dollar is the world’s reserve currency. Oil and other commodities are priced in a nation’s reserve currency. Lose that status, and the Fed will not be able to print money out of thin air anymore, and the U.S. will be screwed.

  • Colin

    I feel that many of the decisions made by the central banks are based on emotional reactions to events, and that these decisions are limited to short term thinking. These banks are repeating history, and I think we will see the Greatest Depression soon.

  • uncurable wound

    I was watching this unfold.After the S&P downgrade I knew things would get interesting.
    Listen to this statement,also from cnbc.
    http://www.cnbc.com/id/45492184

    Finally, the Fed isn’t lending out “taxpayer dollars” at all. Rather, it is lending out newly created dollars at very low interest rates.
    Ok I feel a lot safer dont you?LOL,LOL!
    When this thing goes down it will happen overnight.
    We are all FOOLS to let such FOOLS lead us!!!

  • Paul

    Yes, the credit crunch is more psychological than anything else.

    The only way out is to save on expenses and not to spend more than you earn.

    The first step has to be to cut down on consumption. And everything related to the army is consumption most of that money goes up in smoke. Payment for politicians is consumption. Street lighting is consumption. etc. etc.

    Installing solar and LED and motion-sensor streetlights is investment to reduce consumption.
    Insulating your house is investment to reduce consumption of energy for heating and/or cooling.
    Humans give off 50-100W heat. 30 school children provide 1.5 – 3kW heating power. Install heat conserving air circulation systems in schools and save a lot of energy costs. The same goes for offices.

    Covering parking lots with Photovoltaic cells is investment to reduce fossil fuel import. Reduced import => increased GDP.

    And that investment goes into local businesses that do the installation and from there to their hairdressers, and butchers and farmers.

    Open your blinds during the day and shut off artificial illumination!

    Plant deciduous trees in front of the house. They provide shade in Summer and let the sun through in Winter.

    • Lennie Pike

      Re-load your own brass shell casings after marathon practice sessions at the firing range.

  • Antonio Gonzalez

    Now european can pay american banks. And you can”t do nothing
    my friend.

  • Piglet

    “When there is more money floating around out there but the same amount of goods and services, prices go up.

    So will we eventually see more inflation in the United States because of all this?”

    Inflation isn’t an increase in the cost of goods and services. By definition, it means “to inflate the supply of money.” Rising costs are the symptom of inflation, not the definition of it. But will we see rising costs as a result of inflation? Of course!

    • mondobeyondo

      You are correct.
      Most people think of inflation as rising prices. But that is simply an effect. The cause is increased money supply.

  • Joe

    It’s the equivilent of giving a drunk another few drinks so he can postpone a hangover, nothing more.

    • 007

      No, it’s giving a condemned man a few drinks to forget he is about to die.

  • http://thecurrencycollapse.blogspot.com/ Vince

    Another great article Michael. As I have mentioned before, the central banks will eventually implode the whole financial system. When will the mainstream media start telling us the truth? Do they think they are immune to the eventual collapse? Until then we will have to rely on blogs like Michael’s and others.

    http://thedollarcollapse.blogspot.com/

    • DeathSpiral

      The problem is the banks continue to create just enough money to temporarily bail themselves out. However, the masses are left to wither on a vine.

      The concern is the banks could do this for many more years and at the end 70% to 80% of the population would have collapsed into some form of poverty.

  • gary2

    How about the fed lending me money at .0005%? If socialism is so wonderful for the big banks why not for the rest of us?

    We have socialism for the rich and banks and large corporations and cruel brutal capitalism for the rest of us.

    At least I am honest and say I want socialism. People know where I am coming from and I do not try to hide it. (tax the rich spread the wealth)

    I love how these supposedly free market goofs promote the free market for the little people but demand and get socialism for themselves.

  • DownWithLibs

    Michael,

    Just want to take a moment to join the chorus of voices who appreciate the time and effort you put into these articles. I have been reading for over a year now and feel like I am getting a good heads-up, not just the “fluff” of MSM. Despite the efforts of our “Nanny State”, I hope you will continue long into the future…at least as long as the many threats out there continue to surround us.

    • Michael

      DownWithLibs:

      I always enjoy your comments and I am so grateful that there are people like you that keep coming back day after day. I really enjoy writing these articles, and it means a lot that there are so many people that enjoy reading them. :)

      Michael

  • Tim

    I don’t understand how so many (seemingly intelligent) people could get this so wrong. The Fed ISN’T printing money and giving it away to the ECB. It has said that it is cutting the rate at which is LENDS dollars to European banks (through the ECB) OVERNIGHT. Quote from Bloomberg: “The premium banks pay to borrow dollars overnight from central banks will fall by half a percentage point to 50 basis points, the Fed said yesterday in a statement in Washington. The so-called dollar swap lines will be extended by six months to Feb. 1, 2013.”
    These are LOANS, folks. They have to be paid back. They are no more inflationary than the loan you get from your bank to buy a house. And, moreover, the Fed is only changing the RATE it charges for these overnight loans. Otherwise it is doing nothing it wasn’t doing before. This is a little oil for the wheels of commerce, not runaway inflation. Get a grip!

    • Michael

      When the Federal Reserve makes “loans”, it creates the money for those loans out of thin air.

      Michael

      • Tim

        And the bank that gives you a mortgage also creates the money out of thin air. When the loan is paid back, the money is removed from circulation. The net result is zero.

        • Michael

          Tim:

          But the ECB does not just hold on to the cash from the Fed. It loans it to European banks which uses that money as reserves to make even larger loans. Then the cash from those loans gets into circulation and can be multiplied even further.

          Michael

    • DB200

      “They are no more inflationary than the loan you get from your bank to buy a house. ”

      Guess what happened to housing prices from 2001 to 2006 when loans where aplenty and increasing?

  • JMorcan

    Screw this, the U.S. government can no longer be trusted. Much as it pains me, I’m converting to RMB. It’s safe, it’s climbing, and the Chinese aren’t stupid enough to bail out failing enterprise.

  • Pitchfork Ready

    They can only delay the inevitable, not stop it.

    And the band played on……

  • Jake

    http://www.zerohedge.com/contributed/%3F-older-posts-why-radical-left-and-mainstream-republican-leaders-are-both-wrong-about-in

    GARY2, I found a very good article on the Zerohedge site I think you’ll be interested in. Read it and let me know what you think.

  • mondobeyondo

    Bank holiday? Ugh.

    Didn’t FDR do that back in 1933? Shut down the banking system for a whole week, so that it could “recover”?

    Can you make it without having to access your bank account for an entire week?

    Boing, boing… just listen to all those checks bouncing. (Assuming people even write checks anymore.)

  • Unelected

    Michael the author writes;

    All of these central banks are run by unelected bureaucrats that answer to nobody. The decisions that these central bankers make affect all of our lives in a very significant way, and yet we have zero input into these decisions.

    But what he really means is;

    For our wrestling is not against flesh and blood, but against the principalities, against the powers, against the world-rulers of this darkness, against the spiritual hosts of wickedness in the heavenly places.

    for we live in a world that is beyond our control, only through prayer can we battle these forces, so tonight everyone pray, pray against these wicked rulers of the world that create misery for every human on earth.

  • Cinderella Man JD

    See, I called this the other day when I said the banksters will not let their investments in Europe fail. Europe really is “too big to fail.” These banks going under would cause finacial disaster of epic proportions and we would not be having a very merry Christmas. Im so numb to the bailouts and printing of money I only get a sick feeling in my stomach when I here the dumbasses on CNBC talking about the rape of our treasury and plundering of our dollar’s wealth like its the greatest thing since sliced bread. Dont worry, something will happen next week and the DOW will drop again. Its the old heroin addict swinging up and down again. Believe me the Black Friday boost was like a big shot in the arm and the QE by the world’s banks will be short lived. This economy’s engines are sputtering if not dead already.

  • Pechez

    Thank you Michael for all your great articles. I wish I could get the people I love to pay attention to what is going on right under their noses but… No one wants to know, they want to live in denial. I’m preparing every day and god help us for what is to come. Shame on our leaders for taking us down this path, shame on those with power for the giant ponzi scheme they have purpertrated on us all.

    • Michael

      Pechez:

      You are welcome. I am so thankful that so many people consider this site to be a valuable resource.

      Michael

  • http://www.SurvivalSchool.US Robert Allen

    All I got to say is you had better start preparing your household to become more self reliant. One thing you can do is add some cheap trapping items and different things that can make you completely self reliant for food. Here is an article on that shows some cheap simple preps that will make you able to provide food for your family forever. Check it out Bug Out Philosophy

  • http://www.greenloop360.blogspot.com Steve

    Merry Christmas… It may be the last one as we have known it in the Western world

  • duh

    All you need to know is that key strokes in the computer, clicking away at fake dollars, “REALY IS A LABOR TRANSFER AGREEMENT” meaning we guarantee our peoples labor. Forced labor, you have been used as collateral for the dirty scheme. That’s it in a nut shell. Class over.

    • Highspeed

      Duh, you nailed it.

  • Otown Right Guy

    So there were 6 central banks as in 666. Satan strikes again!

  • Nickelthrower

    Greetings,

    I wouldn’t worry about this at all. Look, they’ve kicked the can down the road again and that gives me additional time to get additional survival tools.

    The world economy is now a punch drunk fighter staggering around whilst taking blow after blow. As long as it remains standing the people will continue to have faith that things will turn around for them.

    Use this time wisely.

  • Old Man

    EU and US economic problems are fundamentally different.

    In the US, the 99% has borrowed to their eyeballs, the final creditor being the Fed who issued all the credits. In addition, the big banks played derivatives on borrowed money, thus adding trillions to their considerable liabilities. In sum, untold trillions were issued and a large portion of it simply un-collectible. The banks and the rich refused to write off or take a loss. The central bank has already max out its ‘infinite’ credit card. The politicians don’t have the brains or courage to facilitate solutions. Therefore everything is stuck in zombieland, waiting for the Armageddon to arrive. It WILL arrive.

    In the EU, the banks (but not the government) of rich countries have issued large loans to the so-called PIIGS, who spent all and now cannot repay. But the ECB (Euro Central Bank) HAS NOT issued new money beyond what it already has – QE is not permitted. And the debt-credit is within the Eurozone. There are two ways out: a) PIIGS countries tighten belts and slowly repay their loans. This is being done but of course it is most difficult to their societies. b) The ECB issue large amount of liquidity temporarily ease the burden, buy time. But unlike the Fed this is not permitted without a revised treaty. Such a revised treaty will be proposed in a week. If it passed, and the correct actions thus taken, then the EU financial crisis will be resolved with only a small amount of QE by the ECB. Such a new treaty will also vastly increase the regulatory and supervisory power of the ECB. Therefore a solution is certainly possible, the price affordable, plus the added bonus of an improved Eurozone setup. Note also the Eurozone financial problem is much smaller in magnitude then the US, the banks are in better shape, and people savings is vast. Indeed, their problem is mostly due to the inadequate setup of the Eurozone treaty, which will be addressed by politicians hell-bent on finding solutions.

    Compare this to the US, where no solution is possible.

  • http://EconomicCollapse Already Gone

    A major grocery chain here in mn has had a cap on alot of there groceries until the end of
    December. January could be a wallet breaker.

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  • Toomanyfakeconservatives

    Regarding central banking and the end result for America… the most powerful explanation you can get begins at 2:31:07 of Zeitgeist: Moving Forward http://www.youtube.com/watch?v=4Z9WVZddH9w

  • Tony N

    The Globalists are staging Consumption controls by controlling the distribution of capital with this managed worldwide crisis control effort all in the name of their belief that Earth has reached its Human Carrying Capacity and that their need to Save the Earth from Humanism is now the top economic goal , see these technocrats conversations and Methods they are Installing here , http://my.brainshark.com/Agenda-21-for-Public-Officials-472185383

    Is all this crazy senate actions and lack of leadership because the result of ideological critical thinking here driving Government policy that ignores Citizens rights ?
    http://www.earth-policy.org/books/out/out_table_of_contents
    The Elite Plan for a New World Social Order
    http://globalresearch.ca/index.php?context=va&aid=27188
    The Department of Health and Human Services’ Death Panel
    http://www.forbes.com/sites/steveforbes/2011/11/03/the-department-of-health-and-human-services-death-panel/

    “Seven big problems for 7 billion people . Experts weigh in on predicaments caused by a burgeoning world population ,
    http://www.msnbc.msn.com/id/44990504/ns/us_news-life/

    http://blogcritics.org/politics/article/the-two-for-one-solution/
    These elitists are going to effect the way the supply-side free markets grow and convert debt Investments into Equity assets , and if you look at these 2 charts so far over the past 15 years or so that convertibility has not been sustained , and i think thats because there has not been a defined accomplishment in how food production is expanding to keep up with the population growth predictions out there .The world markets are telling us this by there unsustainable growth patterns over the last 12-14 years , compare these charts, http://stockcharts.com/freecharts/historical/djia1900.html , http://en.wikipedia.org/wiki/File:Wheat_yields_in_developing_countries_1951-2004.png
    CORN RESERVES: The U.S. Department of Agriculture says the nation’s corn reserve is at its lowest level in more than 15 years
    http://www.whotv.com/news/who-story-corn-reserve-problems-020911,0,577364.story
    The top tier private Investors and Government Technocratic societies have lost their willingness to extend private sector credit for consumer consumption growth in the FREE markets because of this World View of Overpopulation ,and Peak Earth usage of Resources in a 20 -30 year window of view so they are slowly altering our lifes functions to fit with the UN Agenda 21 Plan for what they see as a Sustainable Humanity .

    I would like to see this professors ideas sustained in the USA , http://www.youtube.com/user/LearnLiberty?v=WZgVUCGva8w&feature=pyv&ad=8301426729&kw=free%20markets

  • oleguy

    All this did was bail out several European banks that would have been bankrupt that day. My thoughts are they should have let them fail. Europe will not bail them out why should we the USA taxpayers. We are now on the hook for that money. Time to do away with the Fed.

    It boggles my mind our country is in trouble with high unemployment and no jobs on the horizon record food stamps, but it is ok to bail out European banks. We are indeed in troubled times.

    • NWO Alert

      US banks hold (own) about half of the European debt.

      So the Fed decided to bail out European banks sooner rather than bailing out US banks later.

  • http://www.newfinancialanswer.com Anglo22

    These times ahead are going to be crazy!!!! It is hard to say what exactly one can do in order to prepare but I’ve found a pretty cool site w/ some awesome info and suggestions. It has definately given me a better idea of what I can do to try and secure our financial future. Take a look and see what you think. newfinacialanswer.com Wishing everyone all the best during these hard times to come

  • http://economiccollapse Bill

    i hope the malority has prepared to some degree,i hope you have strong family ties theres a good chance you maybe living together again just to survive,on the upside all those who dont work will be weeded out im sure there isnt one person going to do a healty persons job for them,there will be jobs,manuel plowing digging ditchs farming ..back to the work or starve the way it suppose to be

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  • Auntiegrav

    The banks aren’t creating ‘money': they are creating debts. Money isn’t created out of thin air when banks loan it. The money they loan out with a keyboard stroke comes from the future. OUR future. It is a decision we all have to make when we continue to work for and buy ‘stuff’ from the oligarchs: do we want to be comfortable now and dead in the future, or uncomfortable now and uncomfortable in the future? (“Life IS pain, princess. Anyone who tells you different is selling something.” )
    Every debt is a promise to use resources in the future to pay back that debt. Banks are making the promise FOR you to burn up a certain amount of oil (we don’t have) sometime in the future to pay that money. When the resources aren’t being created through renewable labors, then they are fixed or diminishing. The increasing debts are simply diluting the value of the promises (inflation). When the government makes those promises, you have to multiply the required resources by whatever the inverse of the tax rate is. A 25% tax rate means that we have to burn up 4 times as many resources to pay that debt as we would if a bank created the debt.

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