The Federal Reserve Approves the “Bail In” Theft
|July 31, 2014||Posted by Staff under Financial|
This 2014 excerpt of Occupy, Jly 28, is by Ellen Brown.
Shadow banking refers to hedge funds, derivatives, and credit default swaps.
Conventional banks also engage in “shadow banking.” The cash cushion from excess deposits does not make the banks less vulnerable to shock. The proprietary trading desks at these “banks” use that cash as collateral to take out loans to gamble with.
Despite the 828-page Dodd-Frank Act, the derivatives pyramid has continued to explode to a notional value now estimated to be as high as $2 quadrillion.
Taxpayers pay about $400 billion a year in interest on the federal debt, just as they did in 2006 — although the debt has nearly doubled, from $9 trillion to over $16 trillion. The total interest is kept low by extremely low interest rates.
Raising interest rates could implode taxpayers and the derivatives scheme. The biggest banks have written over $400 trillion in interest rate derivatives contracts, betting that interest rates will not shoot up.
If they do, the banks would become insolvent. It will be our deposits that get confiscated to recapitalize them, under the new “bail in” scheme approved by Janet Yellen as one of the Fed’s more promising tools (called “resolution planning” in Fed-speak).
Depressions, credit crises, and financial collapse are not acts of God but are induced by mechanical flaws or corruption in the financial system. Credit may stop flowing, but the workers, materials and markets are still there. The rules of money and banking have changed every 20 or 30 years for the past three centuries. We can change them again.
Ed. Notes: Forget changing regulations — lose them, their bureaucracies, and the Federal Reserve, and address fundamentals.
For safety, let people put their savings in any public treasury, earning no interest. Prohibit politicians and bureaucrats from touching it. If people want to receive an interest, they’d have to invest elsewhere.
Yet getting an interest payment won’t matter so much if there is no inflation, and there won’t be any if government quits overspending on wasteful programs like war and quits taxing people’s useful efforts like trade.
Getting an interest payment will matter even less when government pays citizens a dividend from surplus public revenue. Whence the surplus? It’s the worth of Earth, its economic parts, none of which needed human effort to exist. It’s all our payments for the nature we use, the land, resources, EM spectrum, ecosystem services.
Presently mortgages direct most of that spending into banks, the source of the trouble. However, government could use taxes or fees or dues to redirect that flow into the public treasury then back out again as a Citizen’s Dividend. Already, Singapore does something like that.