This site aims to offer a complete accounting of the fraud perpetrated by the US government over the last several decades years.
THE MEDIA IS FUNDAMENTALLY BROKEN
Before proceed any further, it is essencial to establish that the US media is broken in the most basic and fundamental way. I am NOT talking about the media’s "liberal" or "conservative" bias.
ALL mainstream news outlets have been castrated to the extent that instead of fulfilling their basic purpose of informing the public, THEY DO THE OPPOSITE.
There are entire subjects of the highest importance are being systematically ignored. These topics are so toxic that the media won’t touch them. The reason is that the facts surrounding these subjects are so damning and irrefutable that no amount of spin can fix them. In these case, rather than try to defend the indefensible, news outlets resort to a total media blackout.
Below is first of many examples of such media blackouts.
MEDIA BLACKOUT: The Federal Reserve’s extensive activities in derivative markets.
The Federal Reserve publishes, after a five year delay, the minutes of the Federal Open Market Committee Meetings. Normally, these transcripts are censored and the word “unintelligible” is inserted in the place of any sensitive material. However, during the middle of 2008 in the middle of the financial crisis, a mistake was made.
The transcript from Minutes of the Federal Open Market Committee Meeting on June 24-25, 2003 contains some of the most damning evidence of government fraud available anywhere. In this transcript, the Federal Reserve irrefutably admits extensive activities in derivative markets.
The Federal Reserve reports that Minutes of the Federal Open Market Committee Meeting on June 24-25, 2003.
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of the Federal Open Market Committee Meeting on June 24-25, 2003
CHAIRMAN GREENSPAN. Without objection they are approved. We turn now to Mr. Reinhart and Mr. Kos.
MR. REINHART. Thank you, Mr. Chairman. I’ll be referring to the material called “Conducting Monetary Policy at Very Low Short-term Interest Rates” which was on the table when you came in. It’s the same as the material I sent to you electronically last week. …
The Committee could sanction the use of various derivative instruments on conventional Desk operations as a way to influence longer-term yields, which is outlined in exhibit 8. Options of some form are a possibility, as are forward operations. For example, we could sell a sequence of options on term RPs, covering interlocking time segments that collectively extend as far into the future as desired. In this way, longer-term yields could be influenced and a visible signal of the Fed’s desired path of interest rates could be demonstrated. Forward operations in term RPs could be structured in a similar fashion. Alternatively, we could sell put options on longer-term Treasury securities at strike prices associated with desired longer-term yields. …
The sale of any options, or forwards for that matter, would not affect the domestic portfolio immediately and, in the case of options, may never do so. Auctioning derivatives is something we already have experience doing. In the event that options were ever exercised, the impact on the portfolio would be profound, …
Of course, a successful program would be one in which any options sold would never be exercised. … options … could be structured to correspond directly with a policy commitment on the path of future short-term rates… For these same reasons, options on Desk RPs could be structured to correspond directly with a policy commitment on the path of future short-term rates, and they could be effective through one of several channels. First, even a relatively small program would undoubtedly add symbolic weight. Second, they would represent a monetary cost to the Federal Reserve of deviating from the implied path of future short-term rates, which might be seen as further binding the Committee to that path. For this effect, the more options sold the better. Third, a large volume of options sold could reduce risk premiums embedded in longer-term rates, independent of the level of credibility about any policy commitment. Here too, the more sold the more effective. … ultimate success would hinge on the quantity of options sold—that is, how big a bet the Federal Reserve were willing to make. The more options sold, the greater the chance they would have the desired effect on longer-term rates even if not associated with any policy commitment, either by raising the costs to the Fed associated with options being exercised, or by lowering risk premiums on longer-term rates. But of course the risks to the portfolio, to reserve levels, and of capital losses would rise in equal measure. And an exit strategy for options may not be as straightforward as it seems, even apart from the possibility of their being exercised. Of course, the Desk could stop auctioning new options at any time. But a decision to stop selling more options or not to issue new contracts with later expiration dates as time passes likely would be interpreted in the market as a statement about future policy intentions. The resulting rush to unwind market positions would likely be very disruptive and send yields sharply higher.
The following is a slide used by Reinhart during meeting.
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IMPLICATIONS: The US is selling insurance on its own debt to lower its interest rates! The Federal Reserve also admits that “Auctioning derivatives is something we already have experience doing.”
Try searching Google archive news for derivatives financial crisis, and you wouldn’t find a single article covering this story!
As the list of topics under media blackouts has increased over
the years, the US media has become a total joke, restricted from reporting on
any issue of real importance for the average American. Asking hard
question or investigating is all but dead. Now, the mainstream media
1) Human interest stories (ie: celebrity scandals
and American idol).
2) Non-threatening, long-run issues (global warming), while ignoring far more pressing, immediate dangers.
3) Political issues of no economic importance
While ignoring obvious fraud is bad enough, equally damaging are the cases where mainstreams deliberately misinforms the public by re-writing history.
Instead of correctly portraying the government as the cause of all our problems, blame is redirected towards innocent parties. The government is then free to use those same problems (which it created) as justification for more power, more regulations, and more control over the economy.
Below is an example of a false narrative at the center of the current financial crisis.
FALSE NARRATIVE: Credit rating agencies allowed competitive pressures to affect their ratings, creating and adopting inaccurate rating models.
Below are two example of this false narrative.
The New York Times reports about S.& P. and Moody’s use of inaccurate rating models.
Documents Show Internal Qualms at Rating Agencies
By SEWELL CHAN
Published: April 22, 2010
WASHINGTON — In 2004, well before the risks embedded in Wall Street’s bets on subprime mortgages became widely known, employees at Standard & Poor’s, the credit rating agency, were feeling pressure to expand the business.
… A Senate panel will release 550 pages of exhibits on Friday — including these and other internal messages — at a hearing scrutinizing the role S.& P. and the ratings agency Moody’s Investors Service played in the 2008 financial crisis. …
The investigation, which began in November 2008, found that S.& P. and Moody’s used inaccurate rating models in 2004-7 that failed to predict how high-risk residential mortgages would perform; allowed competitive pressures to affect their ratings; and failed to reassess past ratings after improving their models in 2006.
The companies failed to assign adequate staff to examine new and exotic investments, and neglected to take mortgage fraud, lax underwriting and “unsustainable home price appreciation” into account in their models, the inquiry found.
By 2007, when the companies, under pressure, admitted their failures and downgraded the ratings to reflect the true risks, it was too late.
NPR reports about blaming the credit ratings agencies.
Economy Got You Down? Many Blame Rating Firms
Alex Blumberg and David Kestenbaum
June 5, 2009
If you’re looking for someone to blame in the collapse of the global economy, one popular punching bag is the credit ratings agencies. Firms like Moody’s, Fitch and Standard and Poor’s are supposed to let investors know whether bonds are particularly risky or relatively safe.
Ratings agencies gave their triple-A rating, the highest ranking, to many bonds backed by home mortgages — the same bonds we now call toxic assets. Grouping those bonds among the safest investments allowed trillions of dollars to flow into the housing market, which in turn created the housing bubble.
It’s hard to overstate the ratings agencies’ role in the worldwide financial system. They’ve been around for a century, assigning a letter grade to everything from railroads to school districts, even entire countries. …
Those Marvelous Ratings
Jim Finkel also wondered about those computer models and the ratings they helped produce. He works for a company called Dynamic Credit and helped put together complex bonds called collateralized debt obligations, which were made up of mortgages. Finkel profited from the AAA ratings, but he says the ratings agencies’ blessings seemed too good to be true.
"They should have just said, ‘You know what? We just don’t have enough information about this stuff to ascribe a rating to it,’ " he says. "There were ratings that we saw that made no sense to us.. We marveled at the ratings that all of these CDO products got."
THE REALITY: Up until 1994, Rating agencies were extremely conservative in their estimates (ie: their estimates were accurate). However, RTC (created to take over failing thrifts) and FDIC, in an effort to sell billions in toxic mortgage-backed securities, devised their own overly optimistic method estimating defaults. Inaccurate rating models came straight from the federal government, and rating agencies adopted them because they didn’t have a choice.
The proof of this reality comes directly from the FDIC’s website.
After the savings and loan crisis, the FDIC conducted a
study on the challenges faced by the FDIC and the RTC in resolving troubled
banks and thrifts during the financial crisis of the 1980s and early
1990s. The result was a two book publication, Managing the Crisis.
Managing the Crisis: The FDIC and RTC Experience
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the importance of careful auction planning, coupled with the need to accurately
determine risk exposure, the RTC devised a method
to project each transaction termination date and to estimate realized losses. A model was developed to project cash flows for
each transaction using available information on prepayments, delinquencies,
defaults, and losses. It provides an estimate of credit
reserve losses, termination dates, year-by-year cash flows, reserve funds, and
residual values for each securitization. …
At the time of the closing, loss estimates for each securitization were provided by the RTC-FDIC financial adviser and by the rating agencies. In 1994, the RTC began to generate loss estimates using the model. In May 1996, the FDIC compared actual and expected loss estimates from the various sources. The comparison showed that the rating agencies were extremely conservative in their estimates, when compared to estimates by the model and the financial adviser. For example, rating agency-expected losses on the Multi-Family Securitization Program as a percentage of unpaid principal balances averaged approximately 29 percent, the FDIC model loss estimates averaged 12 percent; the financial adviser estimated losses to be 7 percent, and the actual realized losses were approximately 7 percent. Overall, the losses and recovery rates that were initially estimated by the rating agencies were severely overstated for the RTC-FDIC securitization program, …
The government is in the process of giving itself more power using its own the inaccurate
rating models as justification.
As a result of these media blackouts and false narratives, not only is the American public unaware about massive government fraud, but also completely misinformed in what it does know. Given the crucial role of free press in the democratic process, it can be said that democracy is dead in America.
We have reached the point where virtually nothing of significance is reported on national media outlets. Watching mainstream news has become a painful, mind-rotting experience. Take, for example, CBS Evening News on July 31.
Topics — CBS Evening News — July 31, 2010
Chelsea Clinton’s Wedding (first 5 minutes)
BP Scaling Back Clean-Up Ops (2 minutes 39 seconds)
Obama Talks Tough on Rangel (2 minutes 51 seconds)
Ground Zero Islamic Center Debate (2 minutes)
Great White Sharks Close Beaches (1 minutes 54 seconds)
American Hikers in Iran: One Year Later (1 minutes 39 seconds)
The Best Horseshoe Pitcher Ever (2 minutes 37 seconds)
What failed to make the news? The fact that Wheat prices surged up 42% in July, the biggest amount in more than a half century. Instead of warning people that food prices are about to go up (useful, relevant, important information), CBS Evening News reported on the The Best Horseshoe Pitcher Ever.
Again, the media in America is fundamentally broken.
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“Threat of deflation”
common sense tells us, and this has been pointed
out already, that at some point a determined
expansion of the monetary base has to be effective against deflation at
the zero bound. If that were not the
case, we could eliminate all taxes, and the government could permanently
finance its operations with money creation alone.
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Using Google archive news
There are things you can find on Google archive news that you can’t find on Google’s regular seach. This site will be making heavy use of Google archive news. The three main reasons for this are:
1) To provide instant credibility
Some of the things I right about may seem unbelievable, so being able to provide a links to thousands of articles on the subject is very useful.
As an example, take the CIA’s MK-ULTRA program.
MK-ULTRA: In the 1950s to the 1970s, the CIA ran a mind-control project aimed at finding a "truth serum" to use on communist spies. Test subjects were given LSD and other drugs, often without consent, and some were tortured. At least one man, civilian biochemist Frank Olson, who was working for the government, died as a result of the experiments. The project was finally exposed after investigations by the Rockefeller Commission.
2) To Remind people what common sense sounds like.
Why Shouldn’t We Spend?
Ocala Star-Banner – Google News Archive – Jan 19, 1965
R HENRY J. TAYLOR
If President Johnson is right (and we are safe) in all the spending he’s proposing, what’re we waiting for? Why don’t we just double the national debt and everybody get rich?
Anyone can promise to speed up the printing presses and build up our debt. This brings happiness and security?
Governments that overspend face global and epidemical forces from the outside that no amount of mystic theory can avoid or kick downstairs into the Deepfreeze. …
The 1939 dollar’s purchasing power has already declined to less than 45 cents. Declining currencies follow the law of physical bodies, they accelerate as the fall. But even at the present rate our dollar will be worth less than 25 cents in 10 years.
When Mr. Johnson or anybody proposes cradle-to-the-grave disbursements by the U. S. Treasury that somehow sounds free, our misinformation becomes complete.
A government is a spender not an earner. Anything the government says it will give to the people it must first take from the people. The government is spending more than the entire income of everybody west of the Mississippi River. …
What is folly in the family debt, debt and more debt cannot be wisdom in the kingdom. The applauded rulers merely come and go and leave us to clean up the mess. So will President Johnson on his present course. His good intentions are not pertinent. Next to wars, nothing has finally caused mankind more misery than Inflation with its destruction of working people’s savings and its artificial pay.
3) To show when the fraud began
Searching Google archive news is a great way to get a general timeline of important events.
For example, it is easy to see that the disconnect from economic reality is Disconnect began in 1980, as shown in the screenshot below of Google archive news results for "Deficits don’t matter"
Before 1980, governments that overspend faced "global and epidemical forces from the outside that no amount of mystic theory can avoid or kick downstairs into the Deepfreeze." Anyone claiming that deficits don’t matter would be laughed at. After 1980, according to the US treasury, deficits stopped mattering.
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THE BASIC ABSURDITY OF IT ALL
Thanks to the broken media, we are living in an unreal world. Common sense in America appears to be dead.
1) Something for nothing
The government has managed to convince that government spending is free. Deficits are presented as costless. “Anything the government says it will give to the people it must first take from the people” has become “anything the government says it will give to the people it will produce out of thin air.” Absurdly, Americans believe it.
So total is this misinformation that despite , Americans are afraid deflation. Some people convince that we won’t have meaningful inflation for the next 15 years.
If deficits are truly so costless, then “what’re we waiting for?” “Why don’t we just double the national debt and everybody get rich?” The government has promised us “cradle-to-the-grave disbursements by the U. S. Treasury that somehow sounds free,” and Americans believe this promise. Our misinformation is complete.
Common sense tells us that government deficits must have a cost. If that were not the case, we could eliminate all taxes, and the government could permanently finance its operations with money creation alone.
2) “IT GOT BETTER”
In America, long term, intractable problems simply “get better,” without explanation or costs. Below are two examples:
A) For over twenty, the US government recklessly sold US gold reserves to finance deficit spending until less than half was left. Then in 1980, “it got better”. The treasury showed responsibility by stopping official gold sales and running the largest deficits the world has ever seen. As soon as the US ceased selling thousands of tons of gold, the price of gold collapses, beginning a multi decade rout. Makes perfect sense.
B) In the 1950s to ’70s, the CIA paid a number of well-known domestic and foreign journalists to publish CIA propaganda ( See Google archive news results for 400 American journalists ). Then, the Church Committee finally exposed the activities in 1975, and “it got better.” In January 28th, 1976, George Bush became CIA director and announced a new policy: "Effective immediately, the CIA will not enter into any paid or contract relationship with any full-time or part-time news correspondent accredited by any U.S. news service, newspaper, periodical, radio or television network or station." (Of course, the names of the 400+ journalist were never published. This means that every administration since that time has had a list of 400+ journalists willing to put out their side of the story in exchange for a little cash. What could go wrong?)
Common sense tells us problems don’t simply “get better” without any explanation.
3) Magically fixing problems
Somehow Americans have accepted the idea that, by throwing guarantees at the problem, the government can magically make problems go away.
Common sense tells us that The problems don’t disappear! Hiding the damage simply allows it to grow exponentially. Government Guarantees are like giving a sick person morphine. Just because he can no longer feel the pain doesn’t mean all is well.
4) Lack of rational explanations
There is a mountain strange news developments for which no rational explanation exists. For example, during the last thirty years, long-term interest rates have steadily fallen in US, as demonstrated by the chart below.
Logically speaking, the chart above makes no sense. The US fundamental underlying the US economy have grown steadily worse over the last thirty years. For example, in 2006, the US’s current account deficit nearly hit 9 percent of gdp, and economists usually consider 4% to be unsustainable. There are also the US’s chronic budget deficits and the massive projected social security shortfalls. Even more incomprehensible, over the last six months the yield on long-term treasuries has fallen in the face of a disintegrating economy and a massive expansion of the supply of treasuries. This is NOT how the world works: as the financial health of borrowers decrease, their interest rates are supposed to go up.
Common sense tells us that the refusal or inability to explain the suspicious activities suggest fraud.
5) Dozens of Smoking Guns
Fraud isn’t hidden. One example is the Federal Reserve’s dealing in derivatives provided above. However, there are dozens of other “smoking guns” of government fraud which are being ignored. The problem isn’t lack of evidence, but rather the lack of media coverage and legal action.
TOO GOOD TO BE TRUE
A simple truth is that if something seems too good to be true, it probably is.
If it looks like a scam, it will be a scam.
IT ONLY MAKES SENSE TAKEN ALL TOGETHER
The world makes sense
The reason the world doesn’t make sense is the same as the reason why Madoff’s increadible profits didn’t make sense: it was fraud. The US economy became a ponzi scheme in 1980.
The US ponzi scheme is not a single fraud, but rather a series of overlapping frauds, one flowing into the other.
As an example of how the frauds flow together, consider the example of Central bank gold leasing and naked short selling, two of the most famous US frauds. The chart below shows the gold lease rate (higher the rate, the more central bank gold is being sold on the market) and total treasury, MBS, and corporate “failures to deliver” (basically the amount of naked short selling of US debt, in trillions).
The overlap between these two frauds is crystal clear (more on this in section 9).
Driven by Desperation
The bigger the fraud, the more incentive there is to commit even greater fraud to cover it up. It is this same desperation to cover up past mistakes which is driving the US ponzi scheme.
This anonymous comment from the web sums up the situation nicely.
The system is corrupted and corrupting. It is not reasonable, let alone realistic, to expect saints or martyrs, so to speak, to materialize in sufficient numbers to turn the tide. The system itself is so degenerate, so perverted, top to bottom, that it will never reform itself willingly or voluntarily, especially if the money holds up tolerably well. There is far too much in the way of vested interests, both material and psychological, for the system to face the truth (assuming it even could) and act accordingly. Lies beget more lies, and fraud begets more fraud. The system, I’m afraid, has gone past the point of no return. It must keep the game going at all costs, as it fully intends to do.
The United States has, after digging itself into a hole, has continued to dig deeper for years and is finally hitting bedrock.
Below are the 21 sections of the major article I am working on.
Section 01: =====INTRO=====
Section 02: =====1980 Disconnect: What really happened=====
Section 03: =====BREAKING THE PSYCHOLOGY OF INFLATION=====
Section 04: =====THE US TREASURY’S WAR ON GOLD=====
Section 05: =====IDEOLOGICAL FRAUD=====
Promises politicians have made which the government can’t deliver.
Section 06: =====FIGHTING THE FREE MARKET (AND LOSING)=====
Section 07: =====FOREBEARANCE: The Lingering Disease=====
Section 08: =====FINANCIAL INNOVATION=====
Virtually every one of the financial "innovations" which have wrecked the US financial system have been spearheaded by the US treasury (OTC derivatives, securitization, credit enhancements, etc…). These "innovations" were driven by the need to "prevent the collapse of the financial system through any means possible (including fraud)"
Section 09: =====The US Ponzi Scheme=====
Section 10: =====Dismantling the free market=====
Section 11: =====AMERICA BECOMES INTO A GIANT BUCKET SHOP=====
Section 12: =====THE EXCHANGE STABILIZATION FUND AND MARKET MANIPULATION =====
Section 13: =====MANIPULATION=====
Section 14: =====SUICIDAL CHEAP FOOD POLICIES=====
Section 15: ===== BREAKING THE MEDIA=====
Section 16: =====DOLLARIZING THE WORLD===== (the major fraud I haven’t written about yet)
Section 17: =====A MOCKERY OF DEMOCRACY=====
Section 18: =====SPREADING ECONOMIC AND MORAL DECAY=====
Section 19: =====Looting the Europe===== (the last fraud)
Section 20: =====Reaching the breaking point=====
Section 21: =====US on verge of another disconnect=====
The US economy disconnected from reality back in 1980 when the US economy became a giant ponzi scheme. The ponzi scheme
Consequences of the multi-decade US ponzi scheme
James B. Thomson offers a good explanation about Markets and Banking System Stability which helps explain what must happen.
the simplest terms, one can think of the financial
system as a ball rolling down a path. The first condition for stability
is directed momentum: if there are no outside forces operating on the ball, it
follows its equilibrium path. When an exogenous force, for example, new
information arriving in the market, acts on the ball, it deviates from its
path. How far the ball deviates and how quickly it
returns to the equilibrium path are also factors that affect the stability of
the system. Volatility is related to only one of these conditions: that
is, it is a measurement of how far and how often the ball deviates from some
path. Measures of volatility give us no information on how quickly the ball
returns to the equilibrium path and, indeed, cannot tell us whether the ball
returns to its path at all.
Market systems naturally exhibit more short-run volatility than regulated ones because market forces continually make corrective adjustments in order to return their ball to its equilibrium path. In regulated systems, corrective actions tend to be deferred (supervisors pretend that the ball has not really deviated from its path), creating an environment in which there are substantial periods of nonadjustment, with substantial adjustments made occasionally. Large-scale adjustments often delayed at the expense of having the ball deviate farther and farther from its equilibrium path in the interim.
… Hence, regulated systems exhibit less short-run volatility than market systems, but conclusions about the relative stability of the two systems, based solely on "measured" short-run volatility, may be as misleading as comparisons of apples and oranges and, in any case, are subject to the same "flows of funds versus capital stock" criticism mentioned above.
To the extent that regulated systems achieve less short-run volatility by suppressing the corrective forces inherent in markets, the greater is the probability that, over time, a major adjustment would be needed. This is analogous to the absence of small earthquakes along a fault line, which allows stress to build up and thereby increases the probability that a major quake eventually will occur. Small quakes, like self-correcting market forces, relieve the pressures that accumulate over time. Suppression of these forces through regulatory interference allows the pressure to rise and increases the magnitude and violence of the resulting adjustment. …
In the US, the "ball" has been deviating from equilibrium since the US economy disconnected from reality back in 1980. Thanks to serial frauds by the federal government, pressure and damage has been accumulating. Right now, we have . The magnitude and violence of the adjustment back to equilibrium will be some.
What should have been a depression back in 1980 will instead be economic disintegration three decades later.