Sunday, January 06, 2008

Credit Crunch

It's coming, and as before it is going to be "Heads you loose, tails we win" for the banks who use us as pawns in their game. In the US it started with "sub prime" mortgages, in the UK it continued with "Northern Rock". In both places the governments, heavily indebted to the banking sector, and the media, whose loyalty the banks ensure with full page advertisements, want to make us believe that this is just an isolated phenomenon for imprudent lenders. The truth is, the system has been shaken more than it can recover from, and every country and their populations are soon going to be between a (northern) rock and a hard place.

There are two basic myths by which the banks have concealed their fraudulent nature from us over the centuries. Firstly, they made us believe that "boom and bust" are natural events within an "economic cycle". Secondly, they keep claiming that they lend out depositors' money. Both these claims are blatant lies.

Boom and bust are cycles created by the banking system through credit expansion and credit squeezes in order to make people pledge their real wealth as a security for obtaining loans and then taking it off them when they are forced to default. After all, the banks know that their credits are worthless promises. They are not after our money, they are after our wealth.

Bank credits are created "out of thin air" using a system called "fractional reserve banking". In other words, banks invent the money they lend us, yet still charge us for it. They don't have enough collateral to back up the promises they make. Their actual collateral only covers a tiny "fraction" of the money they lend. If any of us tried this game, we would be locked up for fraud. Not so the banks. They have been so good at conning people that even governments borrow from them their fictitious money instead of issuing their own. The money the governments borrow is, of course, backed by the totality of their nations' wealth.

The financial system just described results in an exponential growth curve similar to cancer and must eventually take its host down. The visible signs of this malaise are inflation, caused by interest, and increasing global indebtedness. Politicians keep talking of growth they want to achieve, but natural resources are finite, hence unlimited growth is an impossibility. A balanced system would be at equilibrium, but this is impossible in an economy where interest payments demand that more is given back than was entered into the equation in the first place. The only safety valves which kept this explosive powder keg from blowing up have been destructive mechanisms like drugs and wars, and space programs, which remove some of the surplus out of circulation. Global poverty, totally unavoidable in today's world, has been purposefully engineered by a greedy financial system.

However, it seems the time has finally run out. There are no more colonies to conquer and no more markets to capture. Every world citizen by now has a sizable noose of personal debt around his or her neck, compounded by the debt contracted by their respective governments. The governments know that time is running out. A few weeks ago the Treasury, the Bank of England and the Financial Services Authority announced in a tripartite statement - which underlines the seriousness of the problem - that a "liquidity support facility" would be extended to Northern Rock to prevent the company from going insolvent as this would cause serious economic damage. So after we were told that paying interest for loans is a fair price for the risks bank take, we are now, through our taxes, also paying them for miscalculating their risks. In the USA, likewise, the Federal Reserve has just increased the amount made available to banks in trouble from $40bn to $60bn, once again underlining the seriousness of the problem.

What governments are worried about is that people loose trust in the banking system and that this will generate a "run" on the banks. If people all started to ask for their deposits back they would soon realise that the money wasn't actually there. Whatever desperate measures they invent, however, governments will only be able to extend the time scale and stave off the collapse for a little longer. They know this, too. This is the real rationale for all the counter-terrorism measures and attacks on personal freedom we have seen over recent years.

Under the guise of a terrorist threat they are preparing for martial law in order to control an outraged populace when the money has finally run out. Acquiescent as we have been to hand over total control to them in return for a false sense of security sold to us on the basis of the irrational fear of an ever-present terrorist threat, it is now just a matter of time when those powers will be used against us. Thus the banks, or rather their actual owners, who gained control over our governments through financial manipulations a long time ago, will consolidate their take over and begin to rule us with an iron fist. Unlike us, they were never fooled into believing that money equals wealth, and power is more important a goal for them than affluence.


At 11 January 2008 at 22:17, Anonymous Anonymous said...


Glad to see you're posting regularly again, I was a bit worried u had stopped! Once again spot on, the banks will always be the winners when either interest rates or the economy rise or fall.

I recall at the time of the beginning of the Northern Rock problem the story of benefit cheats was also out with figures of £12bn a year lost to people who, lets be honest, wouldn't really cheat the system unless they needed to. How does that compare to exploitative greeedy bankers that have already cost the taxpayer at lest 4 times that and who knows how much more will go.

Keep up the good work




Post a Comment

<< Home