Tuesday, June 7, 2011
SO WHAT"S REALLY THE PROBLEM?
If I lend you a dollar does that mean I now have an extra dollar I can lend to someone else?
Yes, you read the question right. It makes no sense. Yet this nonsense is the basis of all bank accounting.
The idea is that the more you lend the more you have so you can lend even more.
If everyone behaved that way the economy would fall apart in ten minutes.
But only banks are allowed to behave that way. Is it any mystery that banks fall apart? And when they do the government takes tax payer money and gives it to them. Because they are "too big to fail."
This is the problem of the advanced economies. It is so simple that nobody can get their mind around it. It is so stupid that nobody can even believe it exists.
But the problem becomes compounded a million times over by the entire layer of Financial Engineers (Yes: GOLDMAN SACHS) who then come in to hide the problem of insolvent banks by disguising debt as currency swaps and other complex 0ff-balance sheet derivatives - for which they receive massive compensation from the banks insolvent coffers.
The entire charade becomes uncovered when the Debt Derivative complex becomes so enormous and unwieldy (Currently estimated at around a QUADRILLION DOLLARS) that it can no longer hide the problems of entire countries like Greece, Ireland, Portugal, Spain.
Just as it could no longer hide the insolvent banking sector that crashed in the US 2 years ago.
This is where the Central Banks step in. They have only one job. Their job is this: TO TAKE TAXPAYER MONEY AND FUNNEL IT TO THE INSOLVENT BANKS.
That's the job. It's so simple, so stupid (from a working financial perspective) that nobody can believe it's true.
The problem is that THERE IS NO MORE TAX PAYER MONEY. It's all been spent a thousand times over by the profligate governments. Now the central banks are spending FUTURE TAX PAYER MONEY.
Crazy, right? It can't be that stupid, could it? It must be more complicated than that. BUT IT"S NOT.
That's the sad sad truth. It's just that simple. And nobody can believe it's true. But there's one way to find out: Audit the Fed.
Oh, that's right you can't. They won't let congress do that. I wonder why not.