The Quantitative Easing initiatives have been declared as stimulus and successful in sustaining the US financial system. While having been able to continue the debt floats, the many market props, providing coverage for USGovt debt securities and mortgage backed securities which nobody wants, the initiative is hardly stimulus. The hyper monetary inflation does what we always learned it did, as in from school for 50 years, dole out its powerful corrosive effect. The inflation lifts the cost structure, leads to elimination of profit margins, and forces businesses to shut down, thus taking equipment out of service. The Jackass prefers to call the QE effect as killing capital, forcing retired capital, putting equipment on mothballs, often liquidated. Neither the USFed nor the Wall Street partners ever refer to the capital destruction effect, because it contradicts their stimulus argument and false message. Theirs is pure propaganda in keeping with the urgent directive to save the banks that are too big to fail. These are the financial crime centers of America.
Many are the interventions taken. Let us peruse the different types, while finishing with the Gold market. The paper mache solutions can continue in a seemingly endless manner, but not in the Gold market. The intervention and suppression in the Gold market is finite. It requires Gold bullion, the physical ingot bars, in order to execute the perpetuated interference and alteration to this financial niche market. The undermine is finite, and it is coming to an end. As the major conflict between East and West is played out between Russia and the United States, bear in mind an important contrast. The Russians have the vast network of natural gas pipelines, which are being fought over in Ukraine. The pipelines supply energy to the many economies, both industry and households. The United States has a vast network of toxic flow in contaminated money, evident in the USTreasury Bond market, the FOREX currency market, and the banking systems. The pipeline for tainted funds contains channels, windows, tubes, side entries, plumbing, and levers just like a giant chemical plant. The trouble is that the US network of liquidity is toxic and leads to destroyed capital and economic ruin. The US will not win this battle. It will earn isolation even from its allies. The US is to become a pariah nation.
BANK FAILURE SKEIN OF SPOT PATCHES
Many have been the bank failures in recent years during the so-called Global Financial Crisis, which the Jackass prefers to call the collapse of Western monetary system and banking system. Hidden was the biggest and most important to date, done in September 2008. The bailout was of Goldman Sachs, but made to look like a Lehman failure and AIG nationalization. Under the USGovt aegis, the venerable GSax was given 100 cents per dollar on derivative payouts, was redeemed in full on mortgage assets, and generally was placed first in line for all window functions. It was the most clever bank bailout in history. The source of the derivative payouts was the usual funny money, where all trails lead to the USFed in its money creation. The good people of the United States talk about the favored 1% Elite, but they really have no idea who the bankers are, what they do, devices they use, controls they exert, or influence they peddle. If only they knew how Goldman and Citibank write Congressional legislation and tap markets for illicit tolls and skims. Their huge penalties and fines for criminal behavior are incorporated into their business models. Crime has a relatively small but growing part in its cost of doing business.
Royal Bank of Scotland was another giant bailout following a failure, or near failure. The UKGovt took a 81% stake in the failed financial institution, not quite buying lock stock and barrel in its many wrecked business segments. The bailout was worth 46 billion British Pounds, completed in 2008 and 2009. It is all gone, all squandered, good (phony) money after bad. The good people of Britain have complained about horrendous treatment by the bank ever since. The RBS bank remains predatory, but protected by the government.
This post was published at GoldSeek on 23 October 2014.