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The Fed Can Run, But It Can’t Hide

28 Sep

Heavyweight Champ Joe Louis "You Can Run, But You Can't Hide" [courtesy Google Images]

Heavyweight Champ Joe Louis
“You Can Run, But You Can’t Hide”
[courtesy Google Images]

Before declaring bankruptcy in 2008, Lehman Brothers was the fourth-largest investment bank in the US.  It’s bankruptcy nearly toppled the US and global economies and helped precipitate the “Great Recession”. 

When Lehman Brothers filed bankruptcy, its assets were only 3% greater than its liabilities.

Today, the Federal Reserve is the single largest central bank in the world.  It’s assets reportedly exceed its liabilities by only 1.3%—less than half of what Lehman Brother had when if filed for bankruptcy in A.D. 2008.  The Fed has much greater significance than Lehman Brothers and is operating with a much smaller “margin for error”. 

The Fed’s potential for causing trouble for the US and global economies is enormous.

 

SovereignMan.com recently published an article with the peculiar title of “The global financial system is now resting on a margin of 1.3%.”

The article explained that,

 

“In 2008, the Federal Reserve’s entire balance sheet was just $924 billion.  And the total of its reserves and capital amounted to $40 billion, roughly 4.3% of its total assets.  Today the Fed’s balance sheet has ballooned to $4.5 trillion, nearly 5x as large.  Yet its total capital has collapsed to just 1.3% of total assets.

“The Fed’s total capital corresponds to the Federal Reserve’s ‘net worth’.  The value of the Fed’s assets needs to exceed their liabilities.”

That means that, on a percentage of assets basis, the Fed’s relative “net worth” has fallen by 70% in the past seven years.  More importantly, insofar as the Fed’s assets now exceed the Fed’s liabilities by only 1.3%, that “net worth” is razor thin and there’s not much margin for error.

 

“In the Fed’s case, its liabilities are all the trillions of dollars in currency units that they’ve created, known as ‘Federal Reserve Notes’.”

 

I don’t necessarily agree that Federal Reserve Notes (FRNs) are the Fed’s liabilities because the Fed doesn’t redeem its FRNs.  With real money, the government or bank that issued the paper currency is liable to “redeem” its paper dollars with something tangible like gold or silver.  However, today, there’s no proviso for the Fed to “redeem” its FRNs with anything other than newer FRNs.

Insofar as FRNs are “redeemable” and therefore “liabilities,” they can be redeemed by the government as payment for taxes, but are mostly redeemed by the American people and peoples of the world who will trade their tangible wealth (homes, land, labor, commodities, food, resources, products, services, etc.) for FRNs.  The government might redeem some FRNs as payment for taxes.  The People might redeem FRNs as payment for their labor and private property.  But the Federal Reserve does not redeem FRNs, so I don’t agree that FRNs are the Federal Reserve’s “liabilities”.

Even so, let’s proceed with argument presented by the Sovereign Man because it leads to a very interesting inference.

 

“The Fed’s assets are things like US government bonds.”

“Over the last several years during its multiple quantitative easing programs, the Fed has essentially created trillions of Federal Reserve Notes (i.e. ‘money’) and used those funds to buy US government bonds.

“In conjuring all that new money out of thin air, they created about $3.5 trillion worth of liabilities, which were offset by the $3.5 trillion worth of bonds they purchased.

“In total, the Fed’s “net worth” hardly budged.

“As a percentage of their total assets, their net worth really tanked [by 70%].”

 

As you’ll read, because:

 

1) the Fed’s “net worth” is only 1.3% of its total assets; and

2) most of the Fed’s assets are US bonds; then, it follows that,

3) the Federal Reserve is extremely vulnerable to changes in the values of its bonds.

 

If the market value of the US bonds held as assets by the Federal Reserve were to decline by, say, just 3%—that might be enough to overwhelm the Fed’s 1.3% positive “net worth” and thereby render the Federal Reserve technically insolvent.

 

 “When Lehman Brothers went under in 2008, its total capital was 3% of its balance sheet. Today, the Fed’s 1.3% is less than half of that.”

The Lehman Brothers bankruptcy nearly collapsed the US and global economies.  The Fed is far more important than Lehman was, but is running a much smaller “net worth”.  More, the Fed’s net worth is extremely vulnerable to even a small decline in the value of its US bonds.

What might cause the value of US bonds to fall significantly?

The Sovereign Man explains:

 

“The universal law of bond markets is quite simple: bond prices and interest rates move inversely to one another.  In other words, when interest rates go up, bond prices go down.”

Thus, if the current prime rate of 0.25% were raised even a little bit (say, to 0.50%), the market value of all US bonds would fall—including those held by the Federal Reserve.

 

“The Federal Reserve is sitting on $4.5 trillion worth of existing bonds, most of which they purchased when interest rates were basically zero.

“So what happens if the Fed raises interest rates?  The market value of their entire bond portfolio will fall.  Given the razor-thin capital the Fed has in reserve, they can only afford a tiny 1.3% loss on their bond portfolio before they become insolvent.

 

SovereignMan did not extend this argument further, but to me, the next inference is both obvious and crucial to understanding why the Fed has refused to raise interest rates for almost seven years.

We’ve seen the Fed do the dance of the seven veils for 80 months.  Will they raise rates?  Won’t they raise rates?  Will they; won’t they?  Is the economy strong enough to sustain a minuscule 0.25% interest rate increase—or is the economy still too weak?

Given that we’re only talking about raising interest rates by a quarter of a percentage point, the whole dilemma about whether the Fed will or won’t raise interest rates has seemed silly.  On the face of it, we could suppose that a 0.25% increase in interest rates would be almost unnoticeable.  If the economy is so weak that we can’t even raise interest rates by a negligible 0.25%, then the economy must truly be on life support and in need of last rights performed by an economic guru.

But, if we accept the SovereignMan’s argument that:

 

1) the Fed’s “net worth” is only 1.3% of its total assets;

2) most of the Fed’s assets are US bonds; and therefore,

3) the Fed is extremely vulnerable to changes in the values of its bonds—

Then, the Fed’s persistent refusal to raise interest rates makes perfect sense.

I.e., the Fed hasn’t raised the interest rate in nearly seven years because by doing so, they would reduce the market value of the $4.5 trillion in US bonds in the Fed’s portfolio.

Remember?  The universal law of bonds?  If interest rates rise, bond prices must fall?

That means that if the Fed raises interest rates from 0.25% to 0.50%, the market value of US bonds held by the Fed will fall.  If that fall in bond market prices exceeded the Fed’s 1.3% “net worth,” the Fed would be technically insolvent and arguably bankrupt.

 

•  God only knows what might happen if the Fed were perceived to be bankrupt. But whatever the results of a technical insolvency might be, they couldn’t be good for the US or global economies.

How much confidence could the world retain in FRNs as “world reserve currency” if the Federal Reserve were seen to be bankrupt?

If the Fed became insolvent because it raised interest rates, the value of the Fed’s fiat dollars would also have to fall significantly.

If a rise in interest rates caused the Fed to become technically insolvent, that wouldn’t necessarily collapse or kill the dollar.  But it might not be surprising if the dollar’s purchasing power suddenly fell by 10%—20%—maybe more.

Further, once the Fed was shown to be insolvent, I think it would precipitate a spiraling crisis in confidence that would slowly feed on itself until—within a year or two—both the Federal Reserve and its FRNs were relegated to the ash heap of history.

In this context we can imagine why the Fed has persistently failed and refused to raise the Near Zero Interest Rate:  doing so might destroy both the Federal Reserve and the fiat dollar.  Since the Fed’s current 1.3% “net worth” is so small, any raise in interest rates—even by just another 0.25%—might be suicidal.

Therefore, not wishing to commit suicide, the Fed has logically and persistently refused to raise the interest rate for the last 55 Fed meetings over an 80 month period.

 

•  For almost seven years, the Fed has justified its persistent maintenance of the Near Zero Interest Rate as being necessary to preserve and protect the US economy.

But, if the Sovereign Man’s argument is valid, the Fed’s justification is pure smoke.  The Fed’s decision to hold the interest rated at 0.25% for nearly seven years is not about preserving the fragile US economy, per se.  It’s about preserving the fragile Federal Reserve and the fragile FRN.  If the Fed were to double the interest rate from 0.25% to 0.50%, and if the result was a loss of over 1.3% of the current perceived value of US bonds, the Fed might be destroyed.

The Fed is not “here to help you”.  They Fed is here to help itself.

 

•  If this conjecture is correct, one way the Fed could theoretically raise interest rates would be for the Fed to first acquire additional assets (other than bonds) that would increase the “margin” between its debts and assets from 1.3% to something sufficiently higher (4.0%?) to ensure that the Fed wouldn’t be plunged into (or near to) insolvency by raising the interest rates.

But how can the Fed increase its assets, without also increasing its debts?  So long as increased assets result in corresponding increased debt, the 1.3% “net worth” will remain small, marginal and dangerous.

 

•  Another theoretical solution might be based on the common belief that the Fed could simply “spin” enough currency “out of thin air” to purchase more assets or simply add that currency to its portfolio to create more positive “net worth”. But the idea of the Fed “spinning currency out of thin air” is not quite true.

Contrary to popular belief, the Fed can’t merely print more currency and spend it into the economy.  So far as I know, all of the Fed’s paper dollars are all loaned into circulation. When the Fed prints more currency, that currency must just lay there, dormant and unused until some third party borrows it.   Unless the Fed changes its policy, the Fed can’t inject more freshly-printed dollars into the economy or into its portfolio, unless some third party is willing to borrow those new Federal Reserve Notes.

Q:  Who would be able and willing to borrow FRNs from the Fed

A:  The US government.

Q:  What would the US government use to “pay” for the some freshly-spun FRNs?

A:  Freshly-printed US bonds.

Q:  But, wouldn’t the value of those new US bonds would fall as soon as the Fed raised interest rates?

A:  You betcha.

Q:  Doesn’t that mean that lending more FRNs to the US government in exchange for for more US bonds can’t help increase the Fed’s “net worth” and is therefore a pointless strategy?

A:  Seems so.

 

•  If the Fed can’t escape the 1.3% “margin for error” by purchasing more assets or lending more FRNs, another way that the Fed might theoretically be able to raise interest rates is to first sell off some of the Fed’s “toxic assets” to increase the 1.3% margin to avoid the insolvency that might follow a rise in interest rates.

But, like the US bonds in the Fed’s ledger, its “toxic assets” have a current perceived value that must be maintained for the 1.3% margin to be retained.  Given that much of the Fed’s “toxic assets” were purchased during Quantitative Easing, could the Fed sell any of its “toxic assets” without admitting that they are no longer worth their purchase price and presumed “face value”?  If the market value of the Fed’s toxic assets fell, that could also cause Fed liabilities to exceed Fed assets, destroy the 1.3% “net worth” and push the Fed into insolvency and even bankruptcy.

 

•  There’s another hypothetical possibility for increasing the Fed’s 1.3% “net worth”.  Let’s suppose that the Fed owned four thousand metric tons of gold which were counted as part of its assets. At current prices, that gold would be worth about $40 million per ton or $160 billion total.

Let’s suppose that the Fed caused the price of gold double to, say, $2,300/ounce.  The value of those 4,000 hypothetical tons of Fed gold would rise from $160 billion to $320 billion.  Would the “extra” $160 billion in assets be enough to increase the 1.3% “net worth” enough to allow an increase in interest rates without killing the Fed and the FRN?

I don’t know.

What if the Fed caused today price of gold to rise by a factor of 4 to, say, $5,000/ounce?  The value of the 4,000 hypothetical tons of gold would rise from $160 billion to about $700 billion.  The Fed’s assets would be increased by over $500 billion.  Now we’re talkin’.  That should be more than enough to increase the 1.3% “net worth” to a level that could withstand a rise in interest rates from 0.25% to 0.50% or higher.

But, does the Fed own 4,000 metric tons of gold?  Not according to the Federal Reserve.  It gave all of its gold to the federal government back in A.D. 1934.  Thus, this hypothesis is mildly interesting but impossible.

 

•  One last crazy hypothetical:  maybe some billionaire “angels” (maybe the American people??) would simply donate $500 billion to the Fed’s balance sheet.  A gift of that magnitude would solve the Fed’s 1.3% problem.  But, on reflection, I’d have to say . . . . hmm . . . prob’ly not.

 

•  Conclusion: The Fed is screwed.  It can’t purchase more assets to increase the 1.3% margin of error.  It can’t sell off its toxic assets without also crossing the 1.3% margin of error.  It can’t lend more FRNs out, except in exchange for government bonds.  And it can’t raise interest rates without causing the value of its US bonds to fall—perhaps enough to overwhelm the 1.3% margin of error.

If the Fed’s balance sheet was populated with a diverse variety of assets (stocks, US bonds, foreign bonds, cash, gold, etc.), if it raised interest rates, the value of its US bonds would fall, but the remainder of its investments would presumably remain largely unaffected.  The Fed’s 1.3% “net worth” might be hurt a little, but not too much.  The Fed would still have room to maneuver, if it cared to do so.

However, it appears that by lending $4 trillion to federal government, the Fed’s balance sheet became unbalanced with too many ($4 trillion) US bonds.  Because the Fed’s assets are almost entirely US bonds, and has such a small “net worth” (1.3%), the Fed can’t raise interest rates without reducing the value of their $4 trillion in bonds and plunging the Fed, itself, into insolvency and bankruptcy.

The Fed is caught in a conundrum that not even Solomon could resolve.  They are truly “darned if they do and darned if they don’t”.

Implication:  For now, the Fed is unlikely to raise interest rates and will avoid doing so as long as possible.

Nevertheless, sooner or later, the Fed—seeing no escape from its predicament—will probably say “screw it,” raise interest rates and risk the resulting insolvency and/or bankruptcy.

If the premises and arguments presented by Sovereign Man–and the inferences that I draw from those arguments—are valid, the Fed is ensnared in a web of its own creation where it can’t create more liabilities, can’t buy more assets, can’t lend more currency to the US government, and can’t increase the interest rate without destroying itself and the FRN.

If all that’s true, who thinks that the Federal Reserve will raise interest rates this next December?

 

•  On the other hand, if the Fed can’t raise interest rates, who’s now willing to consider the possibility that the Fed might soon impose negative interest rate that would raise the price of bonds, increase the perceived value of the US bonds held by the Fed as assets and thereby at least increase the Fed’s 1.3% “net worth”?

Remember the universal law of bonds?  When interest rates go up, bond prices go down.  When interest rates go down, bond prices go up.

Most people have presumed that zero is the lowest limit for interest rates.  Therefore, the Fed’s 0.25% interest rate is so “near” to zero that they can’t go any lower.  Therefore, the market price for bonds can’t go any higher and the Fed’s assets can’t be increased enough to add another few percent to its 1.3% “net worth”/“margin for error”.

But—not to worry.  In our brave new world order of debt-based currency, it’s mathematically possible to impose a negative interest rate that’s even lower than the current, positive 0.25%.  It could even be lower than zero percent.  It could be a minus, say, 2%.  Or minus 4%.  Or even minus 10%!

Several banks in the EU have toyed with negative interest rates on bank deposits.  The Federal Reserve has considered negative interest rates as a potential tactic.

Given the universal law of bonds (interest rates and bond prices move inversely), a negative interest rate should increase the market value for US bonds. If the Fed could increase the market value for its $4 trillion in US bonds, it could also increase that “net worth”/ “margin of error” of 1.3% to, say, 2.0% or even 4.0%.

Thus, by using negative interest rates, the Fed could still pull another trick or two out of its sleeve.  It could still “do something” and thereby avoid being dismissed as impotent and irrelevant.

Even so, the Fed’s objective is to not merely find a way to “do something” but find a way to raise interest rates without causing the price of US bonds to fall.  In other words, the Fed is looking for a way to break the “universal law of bonds”.  The Fed needs to raise interest rates without causing the market price of bonds to fall.

Probably, that can’t be done—not even in the irrational, crazy world of a debt-based monetary system.

Which brings me back to my previous conclusion:  The Fed is screwed.  By purchasing several trillion dollars’ worth of US bonds, they’ve overloaded their balance sheet with US bonds, and apparently painted themselves into a 1.3% “net worth” that leaves them no room to maneuver; no room to raise interest rates by even 0.25%.

So, now what?

(I can imagine why Janet Yellen lost her ability to speak during a recent one-hour presentation.  She had to leave the stage without completing her speech and sought emergency medical attention.  Apparently, she was alright.  But, I’d bet her “spell” was caused by the stress of knowing there’s no way out.  The Fed has no more “tricks” and no place to hide.  Facing that reality must be sobering, even staggering for someone in Yellen’s position.)

 

•  World heavyweight boxing champion Joe Louis once told an opponent, “You can run, but you can’t hide.” In other words, once you step into the ring, there’s space to run for a while, but there’s no place to hide.  Sooner or later, the champ will catch up with you, and then it’s lights out.

The Federal Reserve made a huge, potentially lethal mistake when it “stepped into the ring” in A.D. 2008 when “Helicopter” Ben Bernanke decided to save the US from an economic depression.  By committing itself to prevent a Greater Depression, the Fed meddled in problems that were too great for it to solve.  In doing so, the Fed may have jeopardized its own survival.

The Fed’s been “running around the ring” ever since with a Near Zero Interest Rate.  But it can’t hide from the heavyweight champ (reality).  Sooner or later, reality will catch up with the Fed—and then it’s lights out.

Sooner or later, we’re going to have the economic depression that we should’ve had seven years ago.  There’s no real surprise in that prediction.  Everyone’s understood for several years that all the Fed was doing was “kicking the can down the road,” buying more time, and postponing the moment when we finally surrendered to an overt depression. Well, perhaps that moment is finally getting pretty close .

But, there is one surprise in all this:  It appears increasingly likely that before the US economy slide into the next overt depression, we just might see the Federal Reserve expire in insolvency and bankruptcy.

If that were to happen, could the fiat dollar survive?

If not, what then?

Do we live in “interesting times”?

Ask Janet Yellen.

 

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18 responses to “The Fed Can Run, But It Can’t Hide

  1. Jim on Oregon

    September 29, 2015 at 12:00 AM

    Very interesting insight, Al! Fascinating, actually. Thanks.

     
  2. wholy1

    September 29, 2015 at 3:30 AM

    All of this is very well. BUT, as a PRIVATELY held corp with TOTAL independence of ANY “governmental” control and no disclosure requirement of Its “financial operations/transactions”, what’s to prevent it from issuing however many more “FRN’s” or “digital dollars” it chooses? What happens to those who attempt to impose an alternative to ITS FRN hegemony? Does anybody believe that It will not do whatever is necessary to maintain Its control until . . . whatever hellish situation occurs to end It? At this point, all of this “prime rate measley bases pts BS” and balance sheet margin doesn’t mean jack in an environment of selectively enforced lawlessness – especially with an Eric the race-baiting place-Holder now-in-drag-with-a-big-bustle-under-the-dress running interference. Anybody care to forecast the circumstance of Its demise?

     
    • Adask

      September 29, 2015 at 11:23 AM

      I don’t know what’s to absolutely prevent the Fed from issuing FRNs to itself. But, I’m going to assume that even the Fed may be bound by some rules and I’m going to guess that those rules prevent the Fed from issuing currency directly to itself. I don’t doubt that such rules could be broken, but I don’t think the rules could be broken in secrecy.

      If I had to guess, I’d say the Fed needs to add, say, $500 billion to its assets in order to increase its 1.3% “net worth” enough to withstand a interest rate increase. If the Fed simply added $500 billion to its balance sheet, everyone would know. The whole idea behind adding the $500 billion is to increase the 1.3% “net worth,” so that increase would have to take place in the public eye. A secret increase would have no purpose or effect.

      Everyone would know that the Fed had done the equivalent of me writing a check for $1 billion on my own account and then depositing back into my account and claiming to be a billionaire. Everyone would know that my $1 billion check was fraudulent.

      If the Fed tried to deposit $500 billion into its own account, everyone would want to know where the currency came from. The Fed would have to admit the fraud. The value of FRNs would probably fall to some degree. But, most importantly, the Fed would be shown to be a fraud and/or a bunch of crooks.

      Ordinary people would wonder why had the Fed stooped to engaging in fraud to shore up its balance sheet. Ordinary people would begin to see that, OMG!, the Fed has resorted to fraud to conceal the fact that it’s (nearly?) BANKRUPT! The world would SEE that the Fed is, or is nearly, bankrupt. The world would lose confidence in the fiat dollar. Hyperinflation would probably kick in, and the dollar would so much of its value that it might die.

      I don’t believe the Fed can write a $500 billion check to itself without attracting serious attention to its accounting procedures. Once the people started looking, the Fed’s fraud would be apparent, the Fed’s insolvency would be apparent, the Fed’s bankruptcy would be apparent. The Fed might die in the resulting furor.

      Can the Fed write a $500 billion check to itself? Maybe. But it can’t do so in absolute secrecy. Once the word gets out that the Fed is in such a desperate financial condition that it was forced to resort to major financial fraud to maintain the illusion of solvency, everyone would lose confidence in the FRNs and the Fed would die. If the Fed writes that check, it will constitute a confession that the Fed is bankrupt.

      So, can the Fed write a $500 billion check to itself? Maybe. But it can’t get away with doing so.

      As I said in the article:

      1) IF the Fed’s 1.3% “net worth” figure provided by SoverignMan.com is accurate, and

      2) IF the Fed’s assets are primarily (perhaps 90%?) composed of US bonds,

      Then, the Fed appears to be trapped, ensnared in its own web, and perhaps facing its own demise. It can’t leave interest rates near zero much longer. And it can’t raise interest rates without plunging itself into a publicly-admitted bankruptcy.

      IF my premises are valid, I don’t see any way for the Fed to escape.

      On the other hand, if the Fed does manage to escape, then I will learn something important (like my premises are false or the Fed still has another trick that I have not yet discovered on my own). Either we are on the verge of watching the Fed’s demise, or I am about to get another semester of my “continuing education”. Either way, it’ll be annoying, disturbing but still fairly good (for me, at least) since I like to learn.

       
      • wholy1

        September 29, 2015 at 2:57 PM

        The “Fraud Preserve” won’t “issue it to itself”. It will simply issue “credit extensions” to its “account holders” such as Goldman Hacks through a myriad of “special facility windows”, RRP’s – and now ON RRP’s, off-shored indirect stock purchases thru said acct holders etc, ALL of which WILL NOT be disclosed. There’s the – for-your-distraction “account[ed]/reported and the [much larger] unaccounted/unreported. And what is the ACTUAL value of whatever it reports in so long as “It” can continue to “mark-to-model”. Remember the 12+Tn “issued” that Bloomberg forced the “Fed” to disclose about 2 years after the PUBLIC distraction 700Bn gov’t bailout that required TWO legisTRAITOR iterations? Why is Yellen so freaked about the Pauls’ pushing the auditing issue? When all else fails, there’s always the [S]ick Cheney torture-compromised int’l wet-workers /military option ready to “resolve” any really “awkward situations”. Hope your prepared cuz learning – great as it is, I fully agree – may not be quite as fulfilling on an empty stomach and disconnected internet access acct.

         
    • Adask

      September 29, 2015 at 11:51 AM

      If I had to guess at the “circumstances” of the Fed’s “demise,” I’d guess that it might go something like this:

      The Fed will continue to suppress the “official” interest rate to something Near Zero.

      But the private markets will raise “real” interest rates to 3%, 5%, whatever.

      Eventually, the difference between the Fed’s “official” Near Zero Interest Rates and the “real” interest rate of, say, 4% will become too great to ignore. The Fed will seem increasingly impotent and irrelevant. People will begin to doubt the Fed’s excuse that it can’t raise interest rates without damaging the the weak economy.

      Then, the world will begin to realize that real reason that the Fed isn’t raising the “official” interest rate is that, by doing so, the Fed might sign its own death warrant.

      Then, the world will begin to realize that the Fed is already a “dead man walking”.

      And, then, they’ll lose confidence in the Fed and the dollar will hyperinflate and/or die.

      But, on the bright side, if the Fed were to die, it might take several hundred billion dollars worth of in “toxic assets” with it. Perhaps the economy would receive a boost from the loss of the Fed’s “toxic assets”.

       
      • wholy1

        September 29, 2015 at 4:03 PM

        So, what “consuming segment” of the “Fed’s FRN prime-rate-circumstanced ‘personage’ is still addicted to said “prime-rate” debt? In your estimation, what is the future dynamic of said “segment” – decreasing/increasing? What happens at the point that the remaining “liquidity” in the financial system is no longer adequate enough to “service” the compounding interest coupon on said FRN denominated debt: when the REAL “growth rate” goes negative for how long?

         
  3. Peg-Powers

    September 29, 2015 at 10:27 AM

    Are we not witnesses to the following scene?

    “….the merchants of the earth weep and mourn for no man buyeth their merchandise any more….every shipmaster and as many as trade by sea stood afar off and cried when they saw the smoke of her burning….and they wept and wailed for in one hour is Babylon made desolate…..for by their sorceries were all nations deceived…..and she is instigator of all murders of prophets, of saints and all those slain in wars.”
    Rev 18

     
    • wholy1

      September 29, 2015 at 4:53 PM

      The “Quickening” is on, ya think? Exciting time for the repented, “RE-covenanted” thru the Redeemer, and “reconstituted” on an unencumbered, arable, elevated portion of RURAL “allodium” far from coasts, metros and nuke plants, grouped (very neighborly), gunned (keeping the pearls from the swine), gardened, grained, and gold/silver coined. Great opportunity for the prepared to GATHER in/with those “ready-repentants” in greater need to share the joy of His presence in pursuit of that ultimate Grace of ” . . . forgive them for they no not”. . . ” .

       
      • wholy1

        September 29, 2015 at 5:09 PM

        Oops! An error edited portion: ” . . . forgive them for they KNOW/KNEW not”. . . ” .

         
  4. Dennis Naanes

    September 29, 2015 at 10:30 AM

    This post reminds me of the Late Bob Chapman – (The Fed is In A Box That They Cannot Print There way Out Of)

    Dennis

    ________________________________

     
    • wholy1

      September 29, 2015 at 5:05 PM

      Really miss that Man’s contribution to Truth through His many weekly blurps/interviews.

       
  5. thecompanyofcreators

    September 29, 2015 at 11:15 AM

    And as people are adaptable we see other currencies emerging to take over. The Fed has been dead for a long time. It was unlawful from the start and the whole system and stock market scam is done. There never was any debt of the people no money was loaned at any mortgage and the insurances have paid off the criminals who got paid in FRN’s. So there ya have it suicide by stupidity, greed, selfishness and inequality.
    Just as Government over time has proven to be a bad idea and will be corrupted one way or the other even the founders knew this but did not know of any other way (necessary evil) still knew “all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.”
    Thus they hoped that at some point the people would wake up and discover another way to coexist and “to secure these Rights…” without “Governments are instituted among men..” because they knew they become corrupted “Whenever any Form of Government becomes destructive of these ends, it is the Right of the people to alter or abolish it…” It does not say “if” but “whenever” knowing it happens just a matter of time.
    So with all this in mind lets look at this as an opportunity for mankind as a whole to recognize our inherent evils (to be superior, better than others, instead of celebrating our uniqueness’s as creations of the Creator) and grow up a bit, move into self governance and abolish Government once and for all. Really we only need one law which was so well expressed in Hale v Henkel “he owes no duty to the public so long as he does not trespass upon their rights.”
    What everyone is also missing in my opinion is the obvious. That by this criminal activities it has been revealed that there is a virtually unlimited amount of resources available to mankind and that he need not limit himself in any way except to what he needs and desires for himself and equally for others. It is simple really, allow others what ever you desire and provide for others what you need. After all “Happiness” is the only true currency! “and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.”
    By establishing “only one law” it is easy for all people to know it and to grock it. There would be little need for litigation or courts and all that corruption. It would be as simple as saying “what you choose to impose shall be imposed upon you for the same duration. Upon which time you can renegotiate the agreement.” So if you so do something to me that I think is unconscionable and you think it is perfectly alright then we simply switch rolls and see if each party really does find it to be “mutually beneficial” as all contracts must be. (what I call “a mutual blessing upon each other”) Thus we shift the para-dime from “me me me, mine mine mine (fuke you fuke you fuke you as long as I get what I want) to “how can i make your life better and by doing so encourage you to make my life better” perspective where there is no longer a delineation between peoples but recognizing that we are all fingers (and thumbs) on the same hand. One cannot injure the other fingers or thumbs without injuring the hand/body/whole. Same with the earth.. we are of this earth and bound to it and rely on it for our very survival, thus we must consider the earth as a part of us and treat it the same way as we desire to be treated.
    This concept can be instituted and is actually quite natural. All we need do is institute it in our lives and raise the next generation with this “programming” and the obligation to institute it for the next generation. It is simply time to “throw off” these obsolete concepts of the haves and have not’s and the desire to be “better” superior, have more etc. and institute new Guards for their future security (of rights to Life, Liberty and Pursuits of Happiness). It is time!
    As an inventor I can tell you that there is more than enough for everyone and a hundred times more. Population explosions happen when people are not happy,destitute and down trodden instead of actively pursuing their Happiness and feeling Safe. Thus it is another self regulating circumstance to allow others their dreams and to pursue them and slow down population growth as a result. There is an amazing amount of “free energy” all around us and tapping into it is not that hard nor costly. In fact one design I know of would provide completely clean electricity, clean fuel, and fresh water as a by product which could be transported for the cost and maintenance of the pipes or other means of transport which themselves are propelled by clean free energy.
    No need for “money” because money presumes to keep “equal” the “value” of an exchange. Once we recognize that everything is already ours and yours too then we no longer need to “evaluate” somethings “worth”.. and the one law will always reveal the “truth” of the situation. By simply reversing the deal each party can experience the reality of their assertion of the “mutually beneficial arrangement”. And once people begin to have the attitude of “how can I bless you” all competition and one-upsmanship goes away. It does work, I have seen it and people are much happier, content and fulfilled. They still have trials and tribulations to deal with and learn from but it does work well.
    After all not even Banksters and Crooks, Government agents or kings can “take it with them when they go” “never seen a hearse with a trailer hitch”
    So let the Dead bury the Dead and let the living get on with living. “for what doth it profit a man to gain the world and loose his soul”
    Blessings everyone!

     
    • Merle Heinz

      October 1, 2015 at 7:30 PM

      thecompanyofcreators
      Are you aka Legion?

       
  6. palani

    September 29, 2015 at 8:10 PM

    The solvency of a legal fiction is of less interest than its lack of existence. The mind has an ability to imagine things that aren’t there and the concept of creation always begins with a single thought. You get a lot of people thinking about the Federal Reserve and first thing you know it is miraculously conjured into some form of existence where previously it had none.

    I would suggest if you find some entity calling itself the Federal Reserve you get it in front of a mirror and check for an image there. If you can find no image then you are dealing with a spirit rather than something real.

     
    • wholy1

      October 2, 2015 at 7:37 AM

      This essence of the “matter”! David Clarence Schroll stuff.

       
  7. Peg-Powers

    September 30, 2015 at 9:46 AM

    Other than Petrobras and Deutsche Bank, Glencore (Anglo-Swiss commodity trading/mining, linked to trillions in derivatives) is spiraling to an inescapable and speedy death. And notice who has been at the helm.

     
  8. dog-move

    October 2, 2015 at 5:14 AM

    At this point it matters not what the FED does. The SPDR Barclays High Yield Bond ETF (JNK) at this time is completing a massive topping pattern. When this starts down in earnest this will cause the cost to service lower grade debt (Junk) to rise substantially and will spread to the bond and Treasury markets. This will cause major disruptions and rates will rise across the entire debt spectrum. Rising rates will further weaken stock markets around the world which are already in bear market territory.
    Being observant and understanding of the implications of higher rates against the structure of this highly leveraged economy, when the scheme that is clearly evident, unseen by the Masses progresses further, the drops in the markets will be lightning fast, and truly horrific to the unsuspecting Masses.
    ***********************The words of Palani above are pure gold.****************************

     
  9. wholy1

    October 2, 2015 at 7:18 AM

    Evidence of my contention that there IS NOT AND NEVER WILL BE ENOUGH FRN’s issued to cover the coupon (interest) amt: http://www.zerohedge.com/news/2015-10-01/there-are-five-times-more-claims-dollars-dollars-existence-why-matters .

     

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