A Perfect Storm Cometh: Money, Debt, the Fed and Usury

Tuesday, January 22, 2008

Money, Debt, the Fed and Usury

If you don't understand the Federal Reserve, you don't understand the world you live in. Draw your own conclusions...

This is the best presentation I've ever seen on the Federal Reserve. It is made to be understood by anyone, regardless of knowledge of The Fed.

Money as Debt 1
Money as Debt 2
Money as Debt 3
Money as Debt 4
Money as Debt 5

Another take:
Federal Reserve Part 1
Federal Reserve Part 2
Federal Reserve Part 3
Federal Reserve Part 4
Federal Reserve Part 5

A Cliff's Notes-type version:

A History of Money and Banking Secrets That Banks Dont Want Published A History of Money and Trade
To start with a history of money and debt, we must go back many years ago when people used to trade their wares for the things they wanted and needed.In place of money or Federal Reserve Notes, you could trade a well made pistol for a cow, which you could eat or trade a remainder of for other items like clothing.It didn't take long for people to realize there needed to be a more efficient means of trade. If you were a farmer, it was too difficult to carry baskets of fresh corn around to trade for a new horse. And, the person selling the horse might not want any corn at all.

A History of Money and Gold
So, people used gold for cash money, which always had a stable value, to trade for the items they wanted and needed... Gold was very heavy to carry and hard to conceal. In the beginning of our banking history what people would do is leave their gold with a goldsmith.The goldsmith would then give them a note, or paper money, that stated how much gold they had on deposit with the goldsmith (bank).The farmer could then take this paper money note... ...the note would continue to trade hands and very few people would ever go redeem it for the gold it was backed by.It didn't take long for the goldsmith to understand this reality. So, here he is storing all of this gold for other people. Let's give it a value to make this next principle clear.Let's say the gold he is storing is valued at $1,000 and there are $1,000 in real cash money notes backed by this real gold being circulated.

A History of Money and Loans
When many people wanted a loan for say a total of $1,000, he decided no one would notice and it would be real easy to lend them someone else's gold... And, he'd only charge 10% interest... ...why not lend out to anyone who looks like they can repay? And, that year he lent out a total of $10,000 worth of newly created or you could say counterfeit, funny money notes.

A History of Money and Inflation
...There is now ten times as much currency/notes floating around then there is real gold to back it. This causes the value of the original $1,000 to loose 90% of its value...Everyone now has way more money then they did the year before, they feel rich...This means there is still $1,000 of real cash money notes backed by REAL gold. $9,000 in funny money loans outstanding, $9,000 in total notes circulating and the goldsmith has pocketed $2,000.So, the goldsmith is now up $2,000 out of thin air...

A History of Money and Recession
People tighten up their spending for no apparent reason, but it is soley because there are less notes in circulation. So, prices start to fall... RECESSION...Year five, the borrowers paid back $1,400 worth of principal and $600 in interest. There is still only $1,000 in gold. $4,000 in loans outstanding, $1,000 in total notes circulating and the goldsmith has pocketed another $2,000, totaling $10,000 thus far, but $4,000 is still owed.With only $1,000 in total notes circulating, people obviously cannot continue to pay, so there is one thing left and that is the confiscation of their assets, and the remaining $1,000 in total notes circulating. Can you say BANKRUPTCY...

A History of Money and the FED
Oh, I know says the goldsmith, I'll just have to keep lending this counterfeit money backed by nothing so they can work hard for me for free, and I will own every asset on this planet for free. So the goldsmith starts to lend out money again and lends out $10,000 the first year which again causes the BOOM. And, on and on it goes....the goldsmith's are now called the Federal Reserve System and the funny money counterfeit notes are called Federal Reserve Notes. In the 1930's there was roughly $30 Billion in gold at Fort Knox, and now we owe $7,937,046,735,823.So, then I ask you fellow American, is this a history of money and debt that you thought was going on when you borrowed from Capital One or Providian?...

1 comment:

Anonymous7:29 AM, February 21, 2008
If you want people to actually read your blog, please change the color scheme to one which does not induce a headache and annoy the eyes.

The black background is a bad idea to begin with. The text in a rainbow of colors is even worse.

I recommend a white background and black text.
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Where We Stand

Economic Crisis

Peak Oil
* Peak production appears to have occurred in 2005 or 2008. Certainly, production has been on a plateau since 2004-5. The recession and the high prices from last year caused falling demand. This is brought on lower prices. That caused new production projects to be slowed, delayed or stopped. Because starting up projects takes much longer than shutting them down, this will likely lead to oil shortages if the economy and demand rebound, certainly by 2012 or so.

UPDATE Nov. '09: The new IEA World Energy Outlook revised **downward** to 105 million barrels a day it's projections for future oil production. What they are saying is, over the next 20 years, we won't be finding much oil. Whistle blowers, one still employed, one not, say even this is wishful thinking. We agree. We have thought so for two or three years. They also say the decline rate is higher than admitted - and it was already 4.2%!!! This means we are looking at, what? Six percent? Eight? At six percent we lose the equivalent of Saudi Arabia every two years. Of course, we aren't finding that much new, recoverable oil each year and haven't for decades. Where's the extra coming from?

** Peak occurred from 2005 to 2008. It is slightly possible we could exceed past production in the next two years *if* there is economic growth as there is some spare capacity and some new spare capacity came on this year. There appears to be just enough new oil coming online - or there would have been if projects hadn't been shut in due to the economic crash - the next two years to barely stay even. After that, decline will have eaten away two Saudi Arabias and it will be impossible to reach a new high.

* Production surpasses new oil discoveries by a margin of 3 :1 or 4:1. This is unsustainable.

*The global economic downturn may decrease these numbers, which would help slow the fall down the back slope of the decline curve.

* The "Export Land" Model (.pdf) shows increased consumption in oil exporting nations leads to decreasing exports. Exports dropped by 3% in 2006. For oil importing nations, this means oil availability falls 2x to 3x the global decline rate.

* Current prices make some alternative energy projects economically infeasible. While oil is depleting and declining, the low prices and economic crash are impacting our ability to ramp up renewables to replace fossil fuel-based energy.

* OPEC has announced (1/2/08) future production is in peril. Many believe OPEC cannot raise their current production by more than 3 million barrels a day. Ever. Or can do so only at the cost of future production. I.e., they must choose between their own citizens and the rest of the world.

* A nice, but older, overview (.pdf). Its age, 2005, makes the time lines a little longer than seems probable. Still, excellent forecasting.

People & Power - Peaked - 06 Jan 08 - Part 1.
(Part 2 can be found on youtube.)
An excellent overview of Peak Oil right now.

Climate Change
* James Hansen, et al., published some very important papers (article) this year. Conclusions are thus:

1. The world is at @ 392 ppm CO2, but irreversible climate change happens at just 350, which we passed decades ago. This is why time is shorter than it seems.

2. The goal now is to stop warming at only 2 degrees C. This will still mean seas rising a meter or more and climate change globally, but we may be able to stabilize there. It also means reducing carbon emissions by 90% by 2100. That's creating an entirely new energy system in less than a century. We did that already, but that was when there was virtually no infrastructure in place.

3. Action must be taken in a very short time period. Waiting ten years is almost certainly too long. The silver lining that comes with Peak Oil? It may give us no choice but to act sooner rather than later. The solutions for Peak Oil and Climate Change are the same (except for bio-fuels.) This situation is unprecedented in human history.

* The Arctic melted to an extraordinary degree in 2007 and nearly as much in 2008 - despite perfect conditions for 2008. This is THE canary in the coal mine. Back in February, when the first of three IPCC (Those rock-n-rollers of recent Nobel fame.) reports came out and didn't include ice melt in their projections, I was stunned. Various scientists, also. I knew viscerally that change was coming faster than they stated. Much faster. The summer melt validated that view. Hold on to your hats. f you know anything of Chaos, bifurcations, tipping points and non-linear systems, you're probably as scared as I am.

* New findings of methane being released from the Arctic permafrost and sea floor, along with increased atmospheric methane are ominous signs we may be well past key tipping points. There have been massive, abrupt climate changes in the past due to the release of methan clathrates from the sea floor.

The Big Melt - Arctic ice melt accelerates by 20+%.

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