Central Banks, How the Rich Stay Rich Pt. 4
The The First US Bank of Fraud, (since 1913) Photo From blog.fora.tv
If you assume that when an institution of a country is allowed to create Money for Nothing, that that money rightfully belongs to its people or a least its government, then for private bankers to take over that authority so they can “loan” the money out at interest to themselves is a form of fraud.
And that is at its heart what the Federal Reserve System is. Under it money can only be created by someone somewhere borrowing it from a Federal Reserve institution, which virtually all banks in the US are, even if almost all are at a low level. Needless to say one borrows this money at interest.
If money is simply created and distributed, a disproportionate amount of it can go to the poor. But once this Money for Nothing is loaned out through banking, then Darwin rules. Only those who are strong enough financially to begin with, are deemed credit worthy. The poor need not apply.
And even among those who are deemed credit worthy, the rich who ostensibly are more credit worthy than others will be able to borrow this money into existence at lower interest rates than the middle class will have to pay.
So by turning this free money, (which should belong to the public anyway) into a banking function, not only does it not help the poor because they cannot get credit and if in the rare event that they can, they have to pay a fortune for it, it is great for the rich as they can get it easily and for next to nothing.
No matter what its name the Federal Reserve is a “Central Bank”. But it is a fake bank on its face.
A real bank gets money from its depositors, than loans it out at a higher interest rate then it pays. If the bank’s loan portfolio is good, and pays the bank back in full with interest, the bank makes money and is profitable. If the bank has a bad loan portfolio, does not get repaid, it loses money or goes bust. That is real banking.
One of many problems is that the Federal Reserve has no depositors. It gets its money by simply creating it out of thin air, printing it up or making an electronic credit somewhere.
Even if a citizen wants to borrow money from the Federal Reserve, (that should be his or hers to begin with) well she can’t. The Federal Reserve won’t even loan money to people who are ostensibly good credit risks like Bill Gates, Warren Buffet or the Koch Brothers.
The Federal Reserve won’t even loan money to the vast majority of banks who own tiny pieces of its stock. What we learned from Part 1 and Part 3 in this series is that, (while the Federal Reserve banks do not even want to discuss this fact) they are ALL privately owned banks. They have been forced to admit that “chartered commercial banks” in the US are shareholders.
But what we don’t know is which banks are shareholders and how many shares each bank actually owns? Small banks for example might own next to nothing, while the Wall Street Mega Banks may have a controlling interest.
What we do know is that the Federal Reserve will not tell the public. Given that they are loaning out money that should belong to the public in the first place, is this not just a little outrageous and suspicious?
Not only that, who the Federal Reserve loans its money too is also a secret. In the 2008- 2009 financial collapse the Fed bailed out all sorts of banks both in the US and abroad. It refused to say which.
Finally it was forced to through a Bloomberg lawsuit under the Freedom of Information Act. The six American banks it “loaned” over $500 Billion to were Goldman Sachs, JP Morgan Chase, Bank of America, Citigroup, Wells Fargo and Morgan Stanley.
Might these be the Wall Street Mega Banks who have a controlling interest in the Fed?
If this were to be true, wouldn’t this be Cronyism at the public’s expense? Doesn’t the public at least have a right to know? Not as far as the American Government is concerned.
Furthermore when the Fed “loans” this money out, it fixes a base interest rate through its falsely worded “Open Market Committee”, (which is held in secret and has nothing to do with markets).
By so doing it “loans” money to banks like the ugly six above, at the base or lowest interest rate that will then be available. I will put aside that these Mega Banks, (usually called the “Too Big to Fail Banks”) are only partly banks. Mostly they are financial casinos designed for high leverage speculations on derivatives of stocks, bonds and real assets.
Even when the Mega Banks are not using the monies they get for chump change from the Fed in their casinos, they are looking to loan it out in turn, and get a maximum profit with these monies that should be given for FREE to the public.
Even when the Mega Banks do make their monies available to smaller US banks, at every step of the way there will be a higher interest rate “charged” for the loan until it finally hits the ordinary citizen, as a home, or car loan, or especially on credit cards at an outrageous interest rate, because in the loan hierarchy coming from the Fed, as the money trickles down, everyone has gotten a piece of the action before it comes to the end user, whose money of course it was in the first place.
But the Mega Banks will only loan this money they get from the Fed within the country when it suits their interests. And when it doesn’t suit their needs the monies that should have belonged to the people to begin with won’t even be loaned to them by the Mega Bank controlled banking system. This is a key reason why after the banking collapse of 2008, when all sorts of money was being created by the Fed, very little of it ever hit Main Street and the real economy.
In the past the Mega Banks have chosen to “invest” such moneys in commodity speculation.
In 2007 this drove up the prices of food and oil, that showed up as terrible price inflation that hit poor people in the developing world hard, creating hunger, food riots and revolution (in the Middle East) and hurting the poor and middle class in the first world as well, especially with the oil price.
Today the Mega Banks have taken the monies from the Fed at interest rates approaching zero and along with other Mega Banks, (like the ones in London) have put $2 ½ TRILLION into East Asian debt markets, where they could make out-sized returns.
So for example if these Mega Banks have “borrowed” from the Fed at say ½% and invested at 4 ½ % in Asia, then they will make upwards of $80 Billion, (depending on how much of it came from the Fed) for free.
The Mega Banks are effectively using the money that should belong to the public to invest and make money.
But the public pays more than just not getting the use of money that should belong to them. There is the issue of risk. If you get a return of 4 ½% on your money in Asia, it is because there is a higher risk of default.
Well what would happen if there was a catastrophic default, where these Asian economies would not be able to pay back the monies that were loaned to them by the Mega Banks, who in turn could not repay their debts to the Fed?
No worries. The precedent of 2008 is that these banks are “Too Big to Fail”. So one way or another the public will have to bail them out. And don’t the CEOs of every one of these Mega Banks know it!
Not only that, if these Mega Banks own the Fed with its capacity to create and distribute money, their very own Fed can always bail them out by producing new money and handing it over to them.
Of course The Fed has to make it “look good” as it did in 2008, by taking “collateral” from the Mega Banks. The collateral the Fed took in 2008 were packages of debt obligations that were essentially garbage and were called “toxic” by the markets. In other words they were the worthless IOUs of people who could not be repay their debts.
So of course the same Fed could take the defaulted debt obligations from Asia as “collateral” in handing over fresh cash yet again to the Mega Banks who are likely to be its owners.
Here is the last part, (for those with a strong stomach) more Fed and Banker chicaneries and more of how the public, (poor and middle class) pays.