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 Dollars and oil

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PostSubject: Dollars and oil   Thu Apr 13, 2017 11:58 am

    Russia Abandons PetroDollar By Opening Reserve Fund

    By Colin Chilcoat - Jan 15, 2015, 4:55 PM CST



    2015 has not been good to Russia; the spread between Brent and WTI is gone in anticipation of US exports and both benchmarks have flirted with sub $45 prices. A hostage to such prices, the ruble has yet to begin its turnaround and the state’s finances are in extreme disarray. President Vladimir Putin’s approval ratings remain sky-high, but his country has not faced such difficult times since he took office more than 15 years ago.

    Since the turn of the new year the ruble has fallen over 13 percent and Russia’s central bank and finance department are running out of options – to date, policy makers have hiked interest rates to their highest level since the 1998 Russian financial crisis and embarked on a 1 trillion-ruble ($15 billion) bank recapitalization plan to little effect. Their latest, and most dramatic, plan is to abandon the dollar – at least somewhat.

    In late December, the Kremlin ordered five large state-owned exporters – including oil and gas giants Rosneft and Gazprom – to sell their foreign currency reserves. Specifically, the companies must bring their foreign reserves to October levels by the beginning of March. To comply, the exporters may have to sell a combined $1 billion per day until March. Private companies have not yet been hit by these soft capital controls, but have instead been advised to manage their foreign exchange maneuvers responsibly.

    More recently, the Kremlin announced it will open its $88 billion sovereign wealth fund and flip it for rubles. The plan will see Russia convert as much as $8 billion to rubles (~500 billion) over a two-month span and place them in deposits for banks. Overall, the move will provide the Russian economy with some much needed liquidity and could speed up the healing if oil were to rebound, but it sends the wrong signals to investors and Economy Minister Alexei Ulyukaev believes the country’s credit rating will soon be marked below investment grade.

    In any case, the move does little for the country’s ailing oil industry. The domestic market is projected to shrink amid the economic slowdown, and competition for market share abroad is increasingly competitive. Production forecasts are no rosier and the EIA predicts Russian crude production growth will be among the worst performers in both 2015 and 2016 – contrasted by continued growth in North America. Russia’s gas industry has fared no better. Gazprom’s 2014 output was historically awful and LNG is ever more a counter to the country’s pipeline politics.

    Related: Do Falling Oil Prices Raise The Threat Of Deflation?

    While Russia likely envisioned abandoning its dollars under far better circumstances, the news is just as worrying for the United States and its dollar hegemony. Along with Russia, energy exporters worldwide are pulling their petrodollars out of world financial markets and other USD-denominated assets in favor of greater, and certainly necessary, spending domestically. In the past, these dollars have given life to the loan market and helped fund debt among energy importers, contributing to overall growth.

    Petrodollar exports – otherwise known as petrodollar recycling – were negative in 2014 for the first time in nearly two decades. The result is falling global market liquidity, record low US Treasury rates, and higher borrowing costs for everyone – a tough pill to swallow for energy producers if oil prices remain low. The US dollar remains the global reserve currency for now, but the fact remains that nations are increasingly transacting on their own terms, and often times without the USD.

    By Colin Chilcoat of Oilprice.com


http://oilprice.com/Energy/Oil-Prices/Russia-Abandons-PetroDollar-By-Opening-Reserve-Fund.html

 

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PostSubject: Re: Dollars and oil   Thu Apr 13, 2017 12:11 pm


    China´s, Russia´s, Syria´s War on the Petrodollar: US Threatening WWIII in Response

    Posted on November 20, 2015 by Anders


    China is making the Yuan freely convertible with the Swiss Franc, thus threatening the Petrodollar – USA´s holy cow. That was a main reason for the wars against Iraq (oil euros) , Libya (oil gold dinars) and Syria which all abandoned the petrodollar (and had no Rothschild controlled central bank). Through the BRICS Development Bank and the AIIB Bank, Russia and China have challenged Rothschild´s US and IMF, trading among themselves without the dollar. Saudi-Arabia has partly abandoned the petrodollar in oil trading.

    That makes the US desperate.

    1) Sputnik 12 November 2015: Russia is set to launch test trading of its new domestic-produced benchmark oil. It is expected to drive up the Price of Russian oil and end its dependence on Brent pricing. That may result in trading Russian oil in rubles.

    In the Pentagon and the temple of the US military-industrial complex, the Rand Corporation, it is being assumed that the petrodollar should be protected through a great war: US Minister of Defence, Ashton Carter, admitted last week that Russia and China are big threats to the US NWO.

    2) Al Jazeera 20 May 2014: In a symbolic blow to U.S. global financial hegemony, Russia and China took a small step toward undercutting the domination of the U.S. dollar as the international reserve currency on Tuesday when Russia’s second biggest Financial institution, VTB, signed a deal with the Bank of China to bypass the dollar and pay each other in domestic currencies.

    3) Zero Hedge 14 July 2015: China is at the epicenter and the country is making continued progress in cutting deals outside of the U.S. dollar framework. Deals shown in the graphic are currency flows between countries that have abandoned the dollar in bilateral trade, as well as countries that are considering such measures.

    The most recent culmination of these trends is the creation of the AIIB and the BRICS Development Bank, a China-led rival to the World Bank and IMF that includes 57 founding countries and $100 billion of capital. The United States is not a member and has actively lobbied its allies to avoid joining due to perceived governance issues.

    4) A report in 2010 by the United Nations called for the abandonment of the U.S. dollar as the single reserve currency. The Gulf Cooperation Council has also expressed desires for an independent reserve currency.
    With more bilateral trade transactions bypassing the dollar, and the increasing internationalization of the Chinese financial system, the yuan is eventually going to give the dollar a run for its Money.

    Consequences of the collapse of the Petrodollar system
    FTM Daily: 1. Foreign nations would begin sending a flood of U.S. dollars back to the United States in exchange for the new currency needed for oil.
    2. The Federal Reserve would lose their ability to print more dollars to solve America’s economic problems.
    3. The Treasury Secretary and the Federal Reserve Chairman would meet to determine the best course of action.
    4. That action would involve an immediate and dramatic increase in interest rates to reduce America’s money supply.
    5. Hyperinflation would ensue temporarily while the interest rates took time to take full effect.
    6. All oil-related prices, including gas prices, would reach outrageous levels.
    7. Washington would soon realize that the total amount of money in the system would have to be dramatically slashed even further, leading to an even higher increase in interest rates.
    8. The clueless American public would demand answers. Those on the left would blame the right. The right would blame the left. And both political parties would seek to blame the Federal Reserve.
    9. People with adjustable rate debts would be crushed and massive layoffs would occur as businesses suffered from the high interest rates.
    10. Asset prices across the board would plummet in value.
    11. Amid the financial carnage, an economic recovery eventually would begin to take place. But this new American economy would be tremendously smaller due to a drastically reduced money supply.

    Pravda 16 May 2006: This system of the US dollar acting as global reserve currency in oil trade keeps the demand for the dollar ‘artificially’ high. This enables the US to carry out printing dollars at the price of next to nothing to fund increased military spending and consumer spending on imports. There is no theoretical limit to the amount of dollars that can be printed. As long as the US has no serious challengers and the other states have confidence in the US dollar the system functions.

    In Money Morning June 16, Jim Rickards, the Asymmetric Threat consultant of the Pentagon and the CIA said: “The dollar is in the cold. These are straws in the wind, leading to the collapse of the dollar as world reserve currency”.

    Tglobal_anarchywo-thirds of the world’s oil trade is still taking place in dollars.
    The US debt is $ 17 trillion – the US can never repay its creditors this amount (including China).
    Now China is challenging the US by the fact that it makes its yuan a rival the dollar.

    Dollar value depreciation: 1971: $ 1 = 1 / 35th of 1 ounce of gold coin.
    2015: $ 1 = 1 / 1,203rd an ounce gold coin.
    If the petrodollar still falters, the US economy will collapse.

    Here, we have a main reason for the US wars in Iraq, Syria and Libya.
    But now comes the really big exit from the petrodollar system – led by Russia and China.
    This threatens the superpower status of the US, its military being paid by the petrodollar.

    No doubt, the dollar is doomed in the middle term – since the US debt is already nearly immeasurably high. Will the US accept to end up in the dustbin of history like all previous great powers or will it in its agony expose the World to the long expected confrontation with Russia and China – as wanted by the Pentagon and the strong US military industrial complex?


http://new.euro-med.dk/20151120-chinas-russias-syrias-war-on-the-petrodollar-us-threatening-wwiii-in-response.php

 

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PostSubject: Re: Dollars and oil   Thu Apr 13, 2017 12:33 pm

    Does the Federal Reserve Print Money?

    JULY 15, 2014 BY JOHN LAWRENCE

    The Federal Reserve is America’s Central Bank

    By John Lawrence

    The Fed doesn’t actually “print” money in the sense of ink on paper hundred dollar bills. But what it can do is create money with a few keystrokes on a computer.

    Money so created is called “fiat money” since it’s not backed by gold or anything else. The Fed currently prints the money to purchase $40 billion in mortgage backed securities and $45 billion in government bonds each month. The rationale for doing this is that it keeps interest rates low which is thought to be necessary to keep the economy humming.

    Before the financial crisis of 2008-09, the Fed managed to keep interest rates low by adjusting the interest rate at which banks borrow overnight. But after the financial crisis, the Fed needed a more robust policy which is called Quantitative Easing or QE. This policy is mainly a giveaway to the big Wall Street banks to augment their reserves. The lack of sufficient reserves is thought to have been the problem that caused the financial crisis.

    The Fed’s massive QE program was ostensibly designed to lower mortgage interest rates, stimulating the economy. And rates have indeed been lowered – for banks. But the form of QE the Fed has engaged in – creating money on a computer screen and trading it for assets on bank balance sheets – has not delivered money where it needs to go: into the pockets of consumers, who create the demand that drives the real economy.

    Low interest rates will certainly stimulate the economy in the sense that they will encourage the sale of cars and houses, both of which are usually done by borrowing money at interest. So the Fed’s policies are all about generating economic activity by creating more debt for average Americans and this results in bigger profits for Wall Street.

    The Fed’s QE policy means that the Fed buys government bonds and mortgage-backed securities from private investors – mainly the big Wall Street banks – and then credits the accounts of those banks with the cash. In return the Fed takes possession of the bond or security it has just bought which is just added to the Fed’s balance sheet.

    Now if the Fed sells that bond back into the market or redeems it from the government, it would get the cash that it had created back and could just extinguish it by a few more keystrokes on the computer. At that point the money that had previously been created will have been destroyed and would be subtracted from the Fed’s balance sheet. So in that long run scenario the Fed would not have “printed” or created any money at all except on a temporaray basis.

    The rub is that the Fed may never remove that money from its balance sheet. It certainly hasn’t done so thus far. The Fed has been buying bonds since early 2009. During that time its balance sheet has increased from $900 billion to over $4 trillion today.

    A secondary effect of keeping interest rates low is that it lowers the Federal government’s interest payments on its gargantuan Federal debt.

    That tends to neutralize the issue of government spending and deficits as a political issue. The Fed has also been buying the bonds being sold by the US government to finance its deficit. This is considered a Ponzi scheme by some writers as the Fed buys up government deficits and in effect disappears them making sure that bond redeemers always get paid. Bernie Madoff went to jail for doing the same thing except Bernie could not create money with a few keystrokes on a computer like the Fed can.

    The negative side of low interest rates is that it hurts savers. Saving accounts produce hardly any interest so there is not much incentive to save. There is, therefore, an incentive to invest in the stock market which has risen dramatically and basically has become a bubble similar to the rapid increase in home values prior to the Great Recession of 2008. When that bubble burst, home values fell precipitously.

    The same thing could happen to the stock market if the Fed eases off its policy of QE and interest rates rise. Then the stock market could deflate like a punctured balloon.

    So what is the other negative aspect of the Fed’s QE policy? All that money the Fed is creating or printing, if you will, is pooling in the financial system mainly among rich investors. It is not going into the real economy or into the average person’s pocket. If that money were injected into the real economy, it could be used for rebuilding, repairing and building new infrastructure, for example, which would create jobs.

    Instead the Fed’s idea of creating jobs is to keep interest rates low so that more cars and houses will be built and sold. The jobs created will be mainly for car salesmen and real estate salespersons as well as construction crews and assembly line workers.

    Money pooling in the financial system and not entering the real economy has only an indirect effect on economic growth, and has the primary purpose of making rich people, especially bankers, richer. This is thought to be a good thing in that it shores up bank reserves which were drastically depleted due to the casino operations leading up to the Great Recession when the banks collapsed not essentially because they had little in the way of reserves but primarily because they had run up their gambling debts to excessive levels with nothing to back them up.

    So what will the Fed do now? It may never be able to reduce its balance sheet by either redeeming government bonds or selling them into the market because that would raise interest rates and drive up the amount the Federal government would have to pay in interest on its debt. At that point paying interest on the debt might take up the entire or almost the entire Federal budget.

    In addition raising interest rates would put a damper on economic activity in the form of discouraging people from purchasing cars, houses and other consumer items. Since consumption is 70% of GDP, this could lead to a recession. This would again place the big banks in jeopardy because, as economic activity diminishes, interest payments to the banks – a big part of their income – will go down, and this will add to the downward spiral which could produce Great Recession, Part 2.

    Therefore, the government bonds and mortgage-backed securities that the Fed is taking on its balance sheet via their money printing operations may never be redeemed or sold and may have effectively disappeared into a black hole as the Fed’s balance sheet continues to increase. The Fed may be stuck printing money ad infinitum and subsidizing the banks at the expense of the average American in perpetuity.

    The Wall Street banks, it should be pointed out, make money every time the Fed purchases a government bond or mortgage backed security from them. Since the Fed is prohibited by law from buying government bonds from the government directly, Wall Street banks effectively act as middle men and they do so for a price, a price the Fed gladly pays, and for no risk on the part of the banks.

    As the Fed continues to subsidize the big banks with money pooling at the upper end of the income spectrum, inequality increases in American society. The Fed policy of QE is a policy designed to increase inequality as the price to be paid to keep the economy rolling. The price of increased economic activity and rising GDP is the further indebtedness of the American people as they buy cars, houses and other consumer items with borrowed money.

    The Fed, which is not publicly owned, functions to improve the financial prospects of the Wall Street banks which are its real owners. (They actually own most of the stock in the Federal Reserve.) Is it any wonder then that the Fed’s policies primarily serve the interests of its owners – the big Wall Street banks? A truly public central bank, one owned by the people of the US, could have the same function of increasing the money supply as needed, but it might do so by using the fiat money so created to more directly benefit the American people.

    Germany tried “abnormal” money printing in the early 1920s after WW 1 and the result was hyperinflation, collapse of the German economy, and the rise of Hitler. The same might happen in the US if hyperinflation were to start taking place while the Fed is stuck in handing out money to the big banks in order to keep them afloat.

    To fight hyperinflation the Fed would have to raise interest rates and this might bring the US economy to a grinding halt. The policy of reducing the amount of QE on a monthly basis is called “tapering.” This doesn’t mean that the Fed is selling off the government bonds or mortgage backed securities on its balance sheet, just buying less of them than they had previously. The Fed will still be adding billions to its balance sheet every month. Inflation is the only thing that will force the Fed to reduce its balance sheet. Otherwise, it could disappear government deficits and bank owned mortgage backed securities into its black hole indefinitely.

    If the Fed starts to taper, the big boys at the Big Banks might take this as a signal to short the stock market, and this might cause the stock market bubble to burst as stock values are driven down. The average non sophisticated 401k investor would probably panic and sell on the dip losing the value of his or her retirement savings as the Wall Street guys make a killing.

    When the market reaches its lowest ebb, the Big Guys will start buying again driving the market back up. After the market rallies sufficiently, the average guy will work up the courage to get back in with his 401k, having lost a ton of money selling on the dip and buying on the rally, just the opposite of what sophisticated investors do.

    Concomitantly, the Fed will probably reintroduce its policy of QE in order to stabilize the economy, and it might have to admit that this policy will continue indefinitely or even ad infinitum. The denouement is that the rich will have gotten richer while the middle class will have been reduced to penury, just the same tendency as happened after the recession of 2008.

    This debt-based, Wall Street centric, unstable economy known as US capitalism could be changed by replacing the privately owned Federal Reserve with a publicly owned central bank that created and extinguished fiat money. This would more directly benefit the American people, and serve the needs of the real economy rather than being an effort to stabilize and profit Wall Street banks. Rather than providing jobs indirectly only if more debt for the American people is created, a public central bank could inject money as needed directly into the real economy creating jobs in the process and building wealth for the average American while reducing inequality.


http://sandiegofreepress.org/2014/07/does-the-federal-reserve-print-money/

 

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PostSubject: Re: Dollars and oil   Sun Jul 02, 2017 3:22 am

Alright, this will be an attempt to completely understand how the federal reserve system works.

It's confusing and complex but also fascinating, so let's see what we can come up with. Please offer additions or corrections as you see them.

---

The federal reserve is a private/public hybrid corporation composed of 12 departments or companies that are each somewhat independent. Each of these companies issues stock that can only be bought by banks within its operating region; banks are required to use money (I think it is 3% of their revenues) to purchase stock in the federal reserve company in their region, and in exchange these banks get paid dividends on this stock that they own, and also get to vote on federal reserve company board members. Federal reserve stock isn't publically traded and banks are forbidden from trading or selling the stocks they own.

The US Treasury does not print US currency, it prints federal reserve notes. There is no US currency in existence anywhere in the world anymore, there is only federal reserve corporation's Monopoly money. I say Monopoly money because the federa reserve is a corporation and not a government entity. The federal reserve corporation is not funded by the government or by taxes, rather the federal reserve corporation makes money in several ways: 1) private banks are required to buy stock in the federal reserve corporation, which provided the initial startup capital and probably still provides some revenue as new banks join, 2) the federal reserve company charges interest and fees for managing transactions between private banks, 3) the federal reserve corporation is paid interest on assets it owns, such as mortgage backed securities and US government bonds, and 4) the federal reserve corporation creates money virtually by simply adding money to the reserves of private banks that own stock in one of the 12 federal reserve companies.

This last one is especially interesting, because the federal reserve corporation isn't legally allowed to buy US government bonds "from the government", therefore it skirts this by buying them from the banks. In fact, I'm sure this "restriction" on the federal reserve corporation is actually designed to force the federal reserve corporation to buy bonds though the intermediary of the banks, thus ensuring profits for the banks. So it works like this: large private banks like Citibank or Bank of America buy US government bonds and then turn around and sell these to the federal reserve corporation; the federal reserve corporation "pays for" these bonds by simply adding to the digital account reserves for that private bank from which it received ownership of the bonds. Note that the federal reserve corporation didn't actually spend any existing money or capital acquiring those bonds, it simply credited the accounts of the banks who originally bought the bonds from the government.

Now the private banks made money by selling their bonds to the federal reserve corporation, because these banks charge a fee for the transaction, and the federal reserve corporation now owns a huge amount of treasury bonds some of which at any given time are maturing. When the bonds mature the US treasury must pay the owner of the bond its value plus interest, which means the US treasury transfers some of its federal reserve notes from the US government coffers over to the federal reserve corporation.

What's so funny about this is that the federal reserve corporation is legally required to send any of its excess profits to the US treasury (excluding certain operating costs, and excluding dividend payments to the private banks that own stock in the federal reserve corporation). So while the federal reserve corporation owns a huge amount of US government treasury bonds, as these mature and the government pays he federal reserve corporation the bond value plus interest some, or even most, of this money just gets sent back over to the treasury again.

The federal reserve corporation also determines a "federal funds rate" which is an interest rate for banks lending money to each other overnight; all private banks within the federal reserve corporation's system have a balance of reserves ("money") held in their account at the federal reserve corporation, and if there are more reserves in those accounts than are required then the excess can be loaned to other banks with less or no excess reserves. The federal funds rate is also used as a primary indicator benchmark for how private banks set interest rates on things like mortgages, car loans, and credit card loans. As the federal funds rate increases it becomes more expensive for banks to immediately lend money to each other, which they do all the time in order to help each other out covering costs and deposits to make sure no bank ever runs out of money (banks with more excess reserves at any given moment can loan them to banks in need of immediate funds to cover their deposits and payments, so that when the federal funds rate goes up this is good for the lending bank but bad for the borrowing bank, and vice versa; the federal funds rate is supposed to be the mid-point between profit and loss for lending and borrowing banks respectively), therefore this extra cost is passed on to the consumer in the form of higher interest rates on consumer debts.

The federal reserve corporation also buys assets like mortgage backed securities (a Wall Street invention that is basically like a casino game, where they bundle thousands of individual mortgages together as one financial asset and buy and sell those assets in a market), and it does this in the same way that it buys government bonds, namely by crediting the reserve account of the private bank which owns the mortgage backed security and then taking possession of the mortgage backed security onto the federal reserve corporation's balance sheets. In this situation the federal reserve corporation just owns a made-up financial asset with no real value, as we saw in the 2008 financial collapse when the market for these assets collapsed due to too many bad mortgages being bundled into them (of course someone still made money on that crash, because Wall Street also makes up financial assets that are simply bets on whether or not another financial asset will rise or fall, and then bets on these in a market too). So if a mortgage backed security fails and the owner loses their money they paid for the security, that doesn't affect the federal reserve corporation if it happens to be that owner because it didn't pay real money for the security anyway.

Let's sum up here:

1) the federal reserve corporation constantly creates "money" and credits it into the accounts of private banks, in exchange for those banks giving the federal reserve corporation various government bonds or financial assets that the bank formerly owned. Also, the federal reserve corporation can simply add money to a bank's account for no reason, like in the TARP bailout.

2) most of the extra capital reserves (fake/created money) the federal reserve corporation creates pool in the largest private banks rather than being circulated in the overall real economy. This is somewhat good, because if that invented money were to enter the real economy it would cause massive inflation.

3) banks use that new money to buy primarily two things, mortgage backed securities and government treasury bonds. Buying the former props up Wall Street and the stock market, while buying the latter props up the federal government's revenues.

4) after banks use that made-up money to buy mortgage backed securities and bonds, these banks sell the securities and bonds to the federal reserve corporation, getting paid by the federal reserve corporation in more invented money and keeping the cycle going.

5) when the bonds mature, the treasury pays the federal reserve corporation, and then the federal reserve corporation transfers most of that amount back to the treasury anyway.

6) the federal reserve corporation now has trillions of dollars of mortgage backed securities and bonds on its balance sheets. It could sell these back into the market, thus generating more revenue for the federal reserve corporation and thus for the treasury also, but doing so would potentially flood the market with these securities and cause their devaluation leading to the collapse of this (artificial to begin with) market for these (made-up casino assets) mortgage backed securities. Or the federal reserve corporation can keep them on the balance sheets and either delete them off or wait for the market to collapse their value eventually, because the federal reserve corporation didn't spend any real money acquiring them so it had no loss if it loses them.

7) if the federal reserve corporation wanted to crash the US economy it would be very easy to do. All it would need to do is start selling its mortgage backed securities and treasury bonds on the open markets. This would not only flood and then collapse the prices in these markets but it would also skyrocket inflation leading to the severe devaluation of the dollar, triggering a runaway cycle of inflation, market panic, and unplayable debt.


Philosophical summary: currently the federal reserve corporation seems to be an ingenious scheme for coordinating banking, markets, and government to the mutual benefit of each of those entities. It is a private institution with some publicly appointed officials and which isn't legally allowed to make a profit, yet still pays stock dividends to the banks which own it. It sets powerful interest rates that trickle into the entire economy, it indirectly (and directly) prints money, and it allows banks to lend and borrow amongst each other to make sure no bank ever becomes insolvent.

Side effects: government spending and debt increases dramatically, but the portion of debt owed to the federal reserve corporation is effectively nullified because the federal reserve corporation has to legally transfer back any profits it makes back to the treasury anyway. Amount of dollars in circulation increases dramatically, but many of the new dollars made remain in the upper echelons of the private banks, which they use to 1) enrich themselves personally in salaries and bonuses, 2) lend and borrow to other banks, 3) keep the cycle of buying and selling between the government/Wall Street and the federal reserve corporation going, and 4) pumping out excess dollars into foreign markets in order to sustain and grow the international market for US dollars. Also it is possible this money pooling in the top of the banking sector is being used for other purposes that I'm not aware of.

On the issue of federal debt: most of the federal debt is actually owed to the government from itself, in the form of different government agencies (notably social security) using excess funds to buy treasury bonds, and as noted above in the form of the federal reserve corporation buying these bonds. The federal reserve corporation alone owns more US debt than Japan and China put together. And remember that it's good for as much of the debt as possible to be owned by the federal reserve corporation because when that debt comes due the money paid from the treasury to the federal reserve corporation is just self back anyway, minus the "house take" of course.

 

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PostSubject: Re: Dollars and oil   Sun Jul 02, 2017 3:44 pm

I've read that the federal reserve corporation is just a scheme for siphoning off hundreds of billions of dollars a year out of the US economy and into the hands of the financial elite, because the income tax is really just used to make debt payments on the federal debt to the US's creditors. This makes a little bit of sense, but I do not think it is quite that simple either. Those foreign or domestic "elites" (super-rich) who buy US treasuries will certainly get paid out from that, but these treasury bonds have a quite low return on investment (2% or so). That is lower than inflation, so it doesn't really make sense to say that China or Japan or foreign bankers purchasing US debt are "siphoning hundreds of billions out of the US economy every year" by doing that. Plus as I already noted above, most of the US federal debt is owned by the US itself, either as US government agencies owning it or the federal reserve corporation owning it.

The other way the federal reserve corporation can enrich the elites at our expense is by playing around with the interest rates and stock markets. They can create or inspire booms and busts, and whether there is a boom or bust someone is always making huge sums of money from that. The stock market is a sort of casino game of betting, but when you have access to the mechanism within the system that can determine how the game turns out, the betting becomes an inside game. I wonder if anyone within the federal reserve corporation or connected to it has ever been charged with insider trading as a result of the federal reserve corporation's policies causing either booms or busts in the stock markets... probably not.

The federal reserve corporation also creates money out of thin air, and gives this money to private banks (it also gives it to European private banks as well as American ones). That is obviously a way for the federal reserve system to screw the rest of us over by making the super-rich even super-richer. I think the TARP bailout was a tipping point: the federal reserve system wanted to start a massive new scale of fraud, but in order to get the cycle going (the cycle being what I outlined in the last post, of where private banks buy US treasury bonds and then sell these to the federal reserve corporation, which pays for them with created/invented money, and then the bank uses that same money to buy more bonds, etc.) they needed a large influx of new money at the start. They achieved this by forcing Congress to pass the TARP bill, which allowed the federal reserve to "legally" (it could have done it anyway, but with such large amounts it would have been political suicide) create trillions of dollars out of thin air on their computers and simply transfer this money into private banks. That got the whole "QE" thing rolling.

 

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PostSubject: Re: Dollars and oil   Sun Jul 02, 2017 6:12 pm

That's already happening. Many of the wealthy are currently paying 7% income tax and in the new health care bill it would b decreased to 3.5%

Here in Florida I am considered a low income person but yet I have to pay 15% federal income tax.

Don't even ask if that pisses me off.
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