By Peter B. Meyer - 29th of February 2012

Forget it, why not, is explained here. The path of least resistance for politicians is to create more currency units, currencies will devalue your purchasing power, and cause inflation maybe even hyperinflation is the result. We all know Greece is broke. If a nation requires a few hundred billion dollars in government assistance and a deal where private creditors take a 70% haircut to survive, it's in default. This last Greek bailout is not for Greece, it’s a bailout of the European Banks, while the Greek constitution is to be changed to reflect that. So the Greek people suffer austerity and become raped by their unelected rulers.

While Greek politicians scrambled to review the new bailout deal, the European Central Bank decided it was time to rig the system. The ECB structured the deal to exchange its 50 billion euro’s worth of Greek bonds for brand-new ones that will not be affected by the mandatory cuts which were jammed down the throats of private investors.

The European Union (EU), European Central Bank (ECB), and the International Monetary Fund (IMF) agreed to grant Greece a €140 billion bailout, on top of the €110 billion it has already received. This is yet another unconvincing announcement, as Greece has yet to implement austerity measures. And German, Finnish, and Dutch parliaments still must approve the deal.

In addition to the bailout cash, Greece is asking its private creditors to forgive €120 billion in debt. They'll take an effective 70% write-down on their holdings. The ECB and other European central banks will forgo profits on their Greek debt.

Even some of the Eurocrats themselves are starting to get it: The Financial Times got its hands on a memo that’s been making the rounds in the last weeks.

“It warned that two of the new bailout’s main principles might be self-defeating. Forcing austerity on Greece could cause debt levels to rise by severely weakening the economy, while its €200 billion debt restructuring could prevent Greece from ever returning to the financial markets by scaring off future private investors.” If European banks don't start lending, growth will certainly falter.

But since these bailout solutions never seem to solve anything, Europe’s central bankers, politicians, and technocrats get to huddle together every few weeks and solve the crisis over and over again. It is a kind of Circus for euro-meddlers. They get to keep going on their favorite ride over and over again. So, after days of “tense negotiations,” the ECB and the Greek leadership finally hammered out a deal to save the troubled nation from default.

The newest austerity deal is not a rescue plan; it is a captivity plan. This newest austerity plan is an imprisonment plan: It straps handcuffs onto a nation that is already shackled to a monstrous debt load and a deeply depressed economy. The country’s GDP is tumbling faster than ever before.

“Anyone who thinks austerity is a way to fix a debt crisis should consider how this ‘medicine’ has worked on the Greek patient. Athens adopted strict budget targets in May 2010 in return for a €110 billion rescue. Last year the Greek economy shrank by 6% and the country’s budget deficit is still close to 10% of GDP.” Meanwhile, unemployment has risen to a depression-level 18%. And over half of young Greeks are out of work. And these are real rioters — not like those touchy-feely, iPhone or iPad hauling Occupy Wall Street folks — with real grievances.

Their main gripe: Why should I pay someone else’s debts? Why should I suffer because a prior generation spent much more than it earned, while also awarding itself retirement benefits the country cannot afford? In lieu of extreme austerity measures, bond-restructuring deals and tranches of billion-dollar bailouts, the answer is simply one word: Default.

It’s so simple the Greeks could do it all by themselves, without any help at all from the ECB circus, the Federal Reserve, the IMF or any of their friends in Germany.

Even so, most financial authorities use words like “unthinkable” or “disastrous” to describe the prospect of a Greek default. But history testifies to the contrary. Default is actually quite “thinkable” and rarely as disastrous as the “solution” the Greeks are now receiving.

More recently, Iceland’s default and devaluation provides a textbook example of “default therapy” or what Nobel laureate, Paul Krugman, termed “bankrupting yourself to recovery.” In late 2008, Iceland’s economy hit an iceberg. Although the country never reneged on any sovereign debt, its banks defaulted on $85 billion of foreign debt — more than double the $40 billion Russia defaulted on in 1998.

Not surprisingly, the Icelandic Krona collapsed and the economy plunged into a deep recession. Icelanders suffered an 18 percent slump in their disposable incomes and unemployment approached 10 percent, compared with one percent before the crisis. But the country’s pain and suffering did not last very long.

The Krona’s 80 percent fall against the Euro and the US dollar sent the trade deficit into surplus within months. Today, the Icelandic economy is growing once again and the country is already able to borrow money again from the international capital markets.

“Iceland didn’t have the ability to save the banks,” told Finance Minister, Steingrimur Sigfusson, recently, when discussing Iceland’s decision to let its banks default. “This wasn’t our free choice.”

Just maybe, a country with “no choice” is better off than a country with access to hundred-billion-euro “rescue plans.” Just maybe, defaulting is less disastrous than borrowing money to defer a default.

Certainly, the divergent paths of the Icelandic and Greek economies testify to the generative powers of “default therapy.” Iceland’s GDP is on the upswing already, while Greece’s GDP is sliding ever lower.

So definitely, default is a better course of action for Greece than a treaty of servitude to the ECB.

Greece will never agree to remain inside its “Golden prison.” It will break out eventually, but probably not before the wardens at the ECB and IMF waste another hundred billion dollars reinforcing the prison’s locks and walls.

This latest Greek bailout will fail too, just as decisively as all the bailouts that will follow.

By Peter B. Meyer – 25th of February 2012

Tunisia, Egypt, Libya, Yemen and half a dozen others on the brink, who is next, Syria, Iran?

While insurgent masses, in the Middle East and North Africa, having difficulty to achieve democracy in their own country, many have not yet realized what the consequences are. The expressions of dissatisfaction are in each country more or less the same. What the results are must be awaited.

Initially democracy seems a virtuous and decent enough system to replace the tyranny of an autocrat. And that's right, for as long as competent and honourable men exercise the administration. In a popular uprising, dictators are quickly overthrown and the people usually acquire the right of a "voice" through the ballot box.

Everyone feels involved in the progress and part of the revolution. But unfortunately democracy has the regrettable tendency to remain only a short time in the hands of virtuous and decent leaders. As Winston Churchill once said, democracy is "the worst form of government except for all other forms that have been tried." Consequently democracy wins by default.

Over time, when the fanfare of the revolution is over, begins fate. The democratic political system grows in the direction of tyranny and this time it is imposed by the majority. By the time the parasites among the people through the ballot box obtain the majority to get hold of other people’s property into their own hands, the game is practically over. While oppressive regimes like those of Ben Ali, Hosni Mubarak and Muammar Gaddafi, were an easy target for freedom-seeking individuals, it appears easier to overthrow a dictator than to overthrow a government that has made a mess of their own democracy.

Possibly democracy is a kind of sweetie of the month, an evolutionary development, like all forms of governance that went before? Was it probably successful in the 20th century because it was more appropriate and adapted to take possessions of the rich? That the average citizen was complicit in the interest of the system through bribery to extradite their neighbours to the tax authorities. It was made possible to give the people a vote by the Elite who control the government, to better enable them to take money from the rich and, if required, even the political life of obstructive popular politicians, as maybe was the case with the favoured politician Pim Fortuyn in The Netherlands?

"Soldiers do their duty for a dictator, as the price is right", "Voters do their duty for the government for less money. They are also more willing to submit to government-imposed taxes, particularly if they feel that they are the masters, in lieu of their slaves. The difference is merely an illusion, but it works perfectly adequate. In practice, the electorate has hardly any influence on the group around the government, which is easier on a dictator. But finally, we all have become Democrats. For good or bad.

And herewith we arrived at the present situation. The initial and successive governments have chosen themselves priceless to impose obligations on a far too expensive social systems, nonessential subsidies, bailouts for banks and costly public services, because of that they are now technically bankrupt. As an example, look at nations as Greece, Ireland, Portugal, Spain, America, Japan, etc.

The voters have only themselves to blame. Probably it is better to celebrate the collapse of the government at all levels led by the incompetent Elite, both in this country and as in many other nations. While each day that goes by, meddlesome, intrusive and costly bills are adopted that lead to the denouement that comes by ever closer.

By Peter B. Meyer – 18th of February 2012

The FED lends the bankers money. Then, the bankers turn around and lend it back to the feds. The banks are happy; they're making money on a risk-free trade. The regulators are happy; what could be safer in a bank's vault than US Treasury bonds? Investors are happy; it looks like the financial sector is making money again. And the feds are happy; they're able to finance their deficits. What good does it do for the economy? NONE. Doesn’t that look like a scam?

Nevertheless, global central banks have printed trillions of dollars and euro’s to boost their economies, as they say, which is a straight lie! These bailouts usually solve the immediate crisis, keeping banks from collapsing. Apart from tackling the main problem; the huge amount of debt owed remain untouched to increase at an ever faster and accelerating pace, which is exceptionally dangerous because debt growth is compounded, which results in ever faster growing debt expansion. And that's happening right now, because additionally money is borrowed to pay the interest over earlier debt. And that went on for the last 40 years. Moreover they also have failed to resolve other important issues, like high unemployment and falling home values. And worse, this printing of global currencies is reducing the purchasing power, thus punishing savers and pensions.

Nevertheless, global central banks have printed trillions of dollars and euro’s to boost their economies, as they say, which is a straight lie! These bailouts usually solve the immediate crisis, keeping banks from collapsing. Apart from tackling the main problem; the huge amount of debt owed remain untouched to increase at an ever faster and accelerating pace, which is exceptionally dangerous because debt growth is compounded, which results in ever faster growing debt expansion. And that's happening right now, because additionally money is borrowed to pay the interest over earlier debt. And that went on for the last 40 years. Moreover they also have failed to resolve other important issues, like high unemployment and falling home values. And worse, this printing of global currencies is reducing the purchasing power, thus punishing savers and pensions.

The ECB says it will give away as much as $1 trillion on February 29th. The European crisis is far from over, the endgame will be a bailout of the entire European banking system organized and financed by the FED.

“There will be no exit strategy for the ECB and the FED from their easy money policies. A reversal of its easy policies would destroy the entire EU banking system overnight.” “Just like the Fed, the ECB can talk tough about how it will withdraw liquidity ‘in a few years.’ But once that future arrives, there will be no withdrawal. The money printing tsunami won’t be reversed. The implicit merger between the banking system, the state and central banks will gradually be viewed as explicit.” “Investors, and savers slowly, are going to see this scenario as inevitable, so you should prepare for the inflationary consequences, ahead of the crowd.”

Let’s see, how does this work? You are deeply in debt. So, the bankers lend you money so you can continue making payments. You go even deeper in debt, and the bankers lend you more money so you can keep making payments, and so it keeps going on.

As an example, Portugal’s economy is shrinking at a 5% annual rate. Italy, Spain, Greece and Ireland are not in much better shape. There will be less income for the resp. governments. So what do the Eurocrats do? The same as the US does. They give the banks money, hoping the bankers will distribute it around.

The truth is that Central Banks and the Feds are privately owned. The banks that are members of the Central Bank Systems own them. Another truth is that the current debt-based monetary system was designed by greedy bankers that wanted to make enormous profits by using the FED and Central Banks as a tool to create money out of thin air and lend it to their respective governments at interest. And that plan is working quite well. Most people don’t understand how any of this works, but the Elite they do know.

Here is how it works.  The Federal Reserve lends gigantic piles of nearly interest-free cash to the big Wall Street banks, and in turn those banks use the money to buy up huge amounts of government debt.  Since the return on government debt is higher, the banks are able to make large profits very easily and with very little risk. This scam was also explained in a recent article in The Guardian….

Consider this: we pretend that banks are private businesses that should be allowed to run their own affairs. But they are the biggest scroungers of public money of our time. Banks are lent vast sums of money by central banks at near-zero interest. They lend that money to us or back to the government at higher rates and rake in the difference by the billion. They don’t even have to make clever investments to make huge profits.

All this is causing inflation, which is a “hidden tax” that continually robs all people of their wealth. The Central Bankers always says that they are “committed” to controlling inflation, but that never seems to work out so well. And current FED Chairman Ben Bernanke says that it is actually a good thing to have a little bit of inflation. He plans to try to keep the inflation rate at about 2 percent in the coming years. So what is so bad about 2 percent?  That doesn’t sound so bad, does it? Well, just consider the following excerpt from a recent Forbes article….

The Federal Reserve Open Market Committee (FOMC) has made it official:  After its latest two day meeting, it announced its goal to devalue the dollar by 33% over the next 20 years.  The debauch of the dollar will be even greater if the Fed exceeds its goal of a 2 percent per year increase in the price level.

But, an increase of 2% a year over a period of 20 years will lead to a 50% increase in the price level. It will take 150 (2032) dollars to purchase the same basket of goods that 100 (2012) dollars can buy today. The “dollar” in 2032 will be worth one- third less (100/150) than what it is worth today

Now you understand why the banks are doing so fine. They earn money without taking the risk of lending to the real economy. Creating higher bonuses for the bankers themselves, to make money on taxpayers account. “How would the economy then function without the FED? Something has to take its place, right?”

No, the truth is that we don’t need anyone to “manage” our economy. The respective Treasuries could be in charge of issuing currency, while the free markets determine the interest rates. The world does not need to have a centrally planned economy.

The way today’s system works, whenever more money is created, more debt is created too. For example, whenever the government wants to spend more money than it takes in, which happens continually, it has to ask its Central Bank for it.  The government gives Treasury bonds to the Central Bank, and the Central Bankers give the government “Federal Reserve Notes” in return.  Usually this is just done electronically.

So where does the Federal Reserve get the Reserve Notes? It just creates them out of thin air. Wouldn’t you like to be able to create money out of thin air? Instead of issuing money directly, the government lets the Federal Reserve create it out of thin air and then the government borrows it. Sounds stupid? But that’s exactly the way it works.

When this new debt is created, the amount of interest that the government eventually pays on that debt is not created. So where will that money come from? Well, eventually the government will have to go back to the FED or its Central Bank to get even more money to finance the ever expanding debt bubble that it has gotten itself trapped into. It is a debt spiral that is designed to go on perpetually.

You see the reality is that the money supply is designed to constantly expand by the Central Bankers. That is why we have all become accustomed to thinking of inflation as “normal”.

Now everyone is doing the right thing. Households are reducing spending. Business is reducing its costs. GDP growth is falling and investors are taking shelter in Treasury debt. So what's the problem? Well, the FED and Central Bankers can't bear to see people doing the right thing. They want them to do the wrong thing - that is, they want them to spend money they don't have on things they don't need. Why? Because it makes the economy look good, and makes them look like they know what they are doing.

As long as the dollar rules, Washington’s power will rule. As Rome debased its silver denarius into lead, Rome’s power to purchase compliance faded away. If “Helicopter Ben” Bernanke inflates away the purchasing power of the dollar, Washington’s power will melt away too.

Where does this end? It isn’t known yet, but very much likely in Hyperinflation.

Recommended:

Since the majority of the official media either is owned or controlled by the Elite, you only read the lies and not the truth. To better understand today’s reality it is suggested to printout this essay with the previous four about: Inflation, Deflation, Stagflation and Hyperinflation, and keep those on hand. Even better forward those 5 issues to all your friends and family members. Spread these messages and wisdom for a better understanding about the state of affairs of today’s crisis. It certainly will help to speed up the recovery process!