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Peter Schiff: How the Fed indirectly monetizes the debt

Submitted by SteveMT on Mon, 03/28/2011 - 03:27

Economy

A short, interesting read.

The Treasury Auction Shell Game
Peter Schiff
Mar 25, 2011

Very few people have either the time or patience to sift through the data released by the Treasury Department in the wake of its bond auctions. But the numbers do provide direct evidence of the country's current financial condition that in many ways mirror a financial shell game that typifies our entire economy.

Despite continued deterioration of America's fiscal health, the Treasury is still attracting adequate numbers of buyers of its debt, even with the ultra low coupon rates. Market watchers take these successful auctions as proof that our current monetary and fiscal stimulus efforts are prudent. But who's doing the buying, and what do they do with the bonds after they have been purchased?

Continued at:

http://www.rightsidenews.com/2011032413112/us/politics-and-e...

In a simplied form (I'm no

Submitted by greatscott on Mon, 03/28/2011 - 10:22. Permalink

In a simplied form (I'm no expert either) since few to no one are buying T Bills and bonds (loaning us money) the Fed has to buy the bonds to give an appearance that everything is ok. They then turn around and print the money to pay for those T Bills and bonds. It becomes the dog chasing it's tail, and when the dog stops chasing it's tail is when the dollar collapses.

Sometimes the Big 5 Banks (owned by and working undercover for the Fed) buys the T Bills and Bonds, and then a couple of months later when no one is looking, the Fed buys them back from the Big 5 (Printing money to pay for them). That is called Monetizing the debt, or simply printing money to pay for the Government's spending. It's all an optical illusion designed to keep everyone happy long enough for the Fed and their Wall Street buddies to make off with the loot. Then they pull the rug out from under the dollar and let it implode while the Banksters are running away as fast as they can.

—

There is no Left or Right -- there is only freedom or tyranny. Everything else is an illusion, an obfuscation to keep you confused and silent as the world burns around you." - Philip Brennan

"Invest only in things that you can stand in front of and pr

I don't understand this Fed stuff

Submitted by Road Runner on Mon, 03/28/2011 - 10:12. Permalink

I have an above average IQ, MBA, some wealth, gobs of corporate America experience, etc. and I still don't quite understand what the Fed hubbub is all about.

If you understand it, great. But I'm willing to bet that lots of people really don't understand what the Fed is doing and why it is wrong.

If you want firmer exceptance of these arguments, please explain them as if you are talking to a five-year old. Otherwise, they can easily be destroyed.

That is just what I liked about this Schiff article.

Submitted by SteveMT on Mon, 03/28/2011 - 12:08. Permalink

A clear and concisely written story, so that I could understand it.

The central banks have "a deal" worked-out. They first buy the bonds, then they sell them back to the Fed. That is a no-lose situation for them, they prop-up the system in the meantime, and the Fed can go on monetizing the debt, albeit indirectly and below the radar.

Propping-up the system is the name of the game by any means necessary.

Here is my latest educating presentation for beginners

Submitted by tony m on Mon, 03/28/2011 - 10:17. Permalink

We are going to home school ourselves and become smart individuals on our monetary system.

Tip 1– Connect your laptop to your tv and watch the youtube videos from the comfort of your living room.

• You can purchase the necessary cables from radio shack, online could be cheaper. Depending on the age of your tv, check to see which type of input connections it has.
• HDMI is the best because the video and audio are in one cable. Very hassle free. A 25’ cable can be purchased on line for $25. (The laptop has to have HDMI also.)
• It could have VGA, the same connection as your computer monitor. A 25’ cable can be purchased on line for $25. (Laptops should have this.)
• Then there is Component-video inputs that use green, blue and red RCA connectors, and are typically labeled Y Pb Pr. Purchase cable.
• If using VGA or Composite, you will then need to also purchase a separate stereo audio cable that goes from your laptop headphone output jack to the audio input of the tv.
• The investment is $30 to $50 to really enjoy the capabilities of the Internet in comfort.
•

Tip 2 – How to download the videos to your computer’s hard drive and then watch them for educational purposes.

• The Internet is the only true freedom of information we still have. Get it while you can.
• Use Mozilla Firefox as your browser.
o Download here - http://www.mozilla.com/en-US/firefox?
• Download the plug-in “Downloader Helper” for Firefox that enables you to download the videos.
o https://addons.mozilla.org/en-US/firefox/addon/video-downloa...
• Download VLC player to play the video’s because they have the .flv and .mp4 file extensions. This is a great small player.
o http://www.videolan.org/vlc/

What you will learn:
• How wealth is transferred from the people to the government.
• How the poorer get poorer and the middle class gets wiped out.
• What is money, fiat currency, how money is created, how the Federal Reserve creates money, fractional reserve banking, inflation, bubbles, and much more.

The Chris Martenson’s Crash Course videos are very good.
• Average running times are 7 minutes, give or take, and a couple longer.
• Chapter’s index - http://www.chrismartenson.com/crashcourse.
• Watch chapters 6 through 10, 15 and 16. Here is the link for chapter 6 to get you started - http://www.chrismartenson.com/crashcourse/chapter-6-what-money

Short article
An excellent and very short exemplar article on understanding the loss of your purchasing power. The first 5 paragraphs.- http://evoorhees.blogspot.com/2009/07/record-of-federal-rese...

More short videos
• Fractional reserve banking 10 minutes
o http://video.google.com/videoplay?docid=4578903985916741358#

• Federal Reserve Primer [1] [2] (I am not a fan of this production as a whole, but it does simplify some topic matter.) 5 minutes.
o http://video.google.com/videoplay?docid=-153739825016985147#

• The Federal Reserve System
o (Excellent simplified analogies that explain what the Federal Reserve has done to the population. From the Revolution March, July 12, 2008, West Lawn of the Capital, Washington, D.C.) 10 minutes.
o http://www.youtube.com/watch?v=TOtAyo9Qz9I

Mike Maloney’s presentation at the 2010 Russian bankers conference. “How Wealth Gets Transferred from the People to the Government”
• This is very, very good. This also covers a shorty on our nation’s different monetary systems since the late 1800’s. 12 minutes.
• http://www.youtube.com/watch?v=lk7QgHgA6rY

Website page of educating graphs.
• http://www.libertypursuit.com/federal.html

****

It is absolutely normal to not understand everything at the first go. It is about grasping more each time you reference the same video again and/or from a different video.

*****

Control of the money supply is key. Feel free to find whatever knowledge you can and conclude from your own judgment.

Tony M

_________________

[1] -- The Ben Franklin quote:
o Wikiquotes –
 Widely quoted statement on the reasons for the American War of Independence sometimes cited as being from Franklin's autobiography, but this statement was never in any edition.
 Some of the statement might be derived from those made during his examination by the British Parliament in February 1766, published in "The Examination of Benjamin Franklin" in The Parliamentary History of England from the Earliest Period to the Year 1803‎ (1813); when questioned why Parliament had lost respect among the people of the Colonies, he answered: "To a concurrence of causes: the restraints lately laid on their trade, by which the bringing of foreign gold and silver into the Colonies was prevented; the prohibition of making paper money among themselves, and then demanding a new and heavy tax by stamps; taking away, at the same time, trials by juries, and refusing to receive and hear their humble petitions." http://en.wikiquote.org/wiki/Benjamin_Franklin#Quotes_about_... (Emphasis is wikiquotes – Tony M)

o Memoirs of Benjamin Franklin, Volume 2 -
 http://books.google.com/books?id=SrIEAAAAYAAJ&pg=PA441&lpg=P...

[2] -- The Wilson quotes are his but from different referenced documents. There is some debate on whom exactly Wilson was referring to. Yet in reading the complete text of where the quotes exist, it would seem that Wilson was referring to the Federal Reserve. Research and draw your own conclusion.

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