Commentary - 05/08/2008

Feds Want Unlimited Credit Card

In yesterday's Wall Street Journal, buried on Page A4, was this article "Fed Seeks Approval to Pay Interest to Banks [Subscription Required], which stated:

The Federal Reserve is formally asking Congress for authority -- starting this year -- to pay interest on commercial-bank reserves, in an effort to gain better control over interest rates and more leverage to battle the credit crunch.
However, it then goes on to say:
In addition, the Fed could theoretically combat the credit crunch by buying securities or extending loans without limit without causing the federal-funds rate to fall to zero, something that could fuel inflation or distort markets.
Whoa, Nellie! Did I read that right? . . . buying securities or extending loans without limit . . .?

Remembering that the Feds have always said that they are owned by their member banks, this looks like they'd like Congress to legally give them an "unlimited credit card" to be used to buy anything and everything the member banks want, and extend those loans into never-never-land where loans never have to be paid back.

At the beginning of Chapter One of the 1889 Great Red Dragon book, it plainly stated that the goal was to "own the earth in fee simple." I've always wondered how that could be accomplished. So if the Feds can dish out unlimited loans to Barclays and others, along with help from the Bank of England, then well-connected private equity funds, hedge funds and other fronts could be funded with unlimited monopoly money. The mergers and acquisitions could continue unabated until nothing is left to purchase.

All those who settled for this monopoly money would eventually find that it buys hardly nothing. Just like Zimbabwe's 100 million dollar bill buys hardly nothing.

"The reserve bank of Zimbabwe s governor Gideon Gono has unveiled a new 100 million and 250 million dollar... Note and this will be in circulation starting today)," reported state television.
. . .
The official exchange rate in Zimbabwe has been kept at 30,000 Zimbabwe dollars for one US dollar since September 2007 -- but on the thriving black market, one US dollar can be exchanged for around 100 million Zimbabwe dollars.
There are pictures of 10 million and 50 million Zimbabwean notes here. Perhaps Zimbabwe is a live test study for America's future.

Sometimes The Dragon Wins is happening way too often now. We need to find a way to stop making it so highly profitable to lie, steal and murder.

2008 by Edward Ulysses Cate
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