The Global Fiat Currency Shell Game Grows

http://jrparrott.wordpress.com/2010/05/10/the-global-fiat-currency-...

The World's Fiat Currency System Risks Collapse

On February 12th, NIA released an article entitled, "Greece Distracting from Real Debt Crisis in U.S." in which we said, "We hope that Greece doesn't get bailed out, because a bailout would cause foreign investors to become more irresponsible than ever and create even greater moral hazards. Unfortunately, not only is it likely that Greece will get bailed out, it's possible our own Federal Reserve will get involved. The U.S. Federal Reserve has the ability to make loans to foreign central banks without disclosure to the U.S. public. European banks have already benefited $50 billion from the U.S.'s bailouts of AIG, so it's not out of the realm of possibility that the Federal Reserve will intervene due to euro-zone countries being key U.S. trading partners."

NIA was right, late Sunday evening the Federal Reserve announced the re-establishment of U.S. dollar liquidity swap facilities with foreign central banks, as a part of the European Union (EU)'s nearly $1 trillion bailout plan. The Federal Open Market Committee has authorized swap lines through January 2011 with the Bank of Canada, the Bank of England, the European Central Bank (ECB), the Swiss National Bank, and the Bank of Japan.

While the Federal Reserve may say these swap lines are necessary "to help improve liquidity conditions in U.S. dollar funding markets and to prevent the spread of strains to other markets and financial centers", NIA recognizes that this is nothing more than another transfer of wealth from the American middle class to bankers around the world through inflation. This program was originally enacted in 2008 when the Federal Reserve loaned $582.8 billion to foreign central banks without any disclosure of which central banks got the money.

NIA believes it is unconstitutional for the Federal Reserve to make loans to foreign central banks. Most likely, the Federal Reserve was pressured by Wall Street to re-establish the swap facilities because Bank of America, Citigroup, JP Morgan, Goldman Sachs and Morgan Stanley have about $2.5 trillion in exposure to Europe, and Wall Street doesn't want to see their bets go bad.

Not only will Americans now be exposed to the European debt crisis through the Federal Reserve's swap lines, but the U.S. will be giving money away to Europe through the IMF. The IMF is contributing up to 220 billion Euros as a part of the bailout, which equals $283.1 billion at the latest exchange rate. The U.S. represents approximately 20% of IMF funding, which means the bailout is costing U.S. taxpayers $56.7 billion, not including the potential losses from loans made by the Federal Reserve and the inflation it will create.

The moral hazards of the EU bailout are immeasurable. It sets a dangerous precedent that the ECB won't allow any eurozone nations to fail, just like the Federal Reserve won't allow any major financial institutions on Wall Street to fail. Eventually, if you don't allow the free market to punish countries and financial institutions that recklessly speculated and made poor financial decisions, the financial crisis we are preventing will turn into a currency crisis that the western world will never be able to recover from. Although NIA still believes the U.S. dollar will win its race to the bottom with the Euro, we are now at risk of a total collapse of the world's fiat currency system.

Imagine if baseball teams weren't allowed to fail. You probably remember playing t-ball as a kid and at the end of every game, both teams were declared the winner. Think about what would happen if Major League Baseball declared there will no longer be losers at professional baseball games, both teams will be declared the winners of every game. Would you still pay $300 for a ticket to see a Major League Baseball game? Of course not, the value of the tickets would collapse to nothing, similar to how fiat currencies will soon lose their purchasing power if we don't allow countries and financial institutions to fail.

NIA is almost done producing its nearly hour-long documentary 'Meltup'. We spent quadruple the time and money producing Meltup than we did producing our previous critically acclaimed documentary 'The Dollar Bubble', which has already surpassed 710,000 views since November 23rd. We believe Meltup will be the best economic documentary ever produced in world history and a must see for yourself, your friends, and your family.

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In authorizing swap lines, the nearly transparent-as-mudd Federal Reserve has created "liquidity" from the emptiness eminating from their blackhole that is their balance sheets! Now the "quarter" can be under any number of shells at any number of given times, even simultaneously if necessary! (See Repo 105s for an example) Now it is official, all countries and their central banks are complicit in the unraveling and destruction of the global fiat currency system. Instead of garnering support at home by telling the governed the truth about our situation "the powers that be" continue to make historic and future-altering decisions for us as though we are infants still sucking from our mothers' teets, incapable of comprehending our options! The options are not pleasant, I will agree, but what is being done seems like a band-aid solution and a large step closer to empowering the World Trade Organization or one of its counterparts to "regulate" the world in order to save IT from total destruction. (If you read the last sentence and sensed a bit of fearmongering, it was intentionally exaggerated as a critique of the ruling methods currently being used worldwide).

All we need to do is look at how well other band-aid solutions have worked here in the United States. Ripped from today's headlines: "Fannie Mae seeks $8.4B in aid after posting $13,100,000,000.00 loss in 1Q 2010 (http://finance.yahoo.com/news/Fannie-Mae-seeks-84B-in-aid-apf-68771...) AIG is no different, neither is GM regardless of what their new CEO has said on the television commercial....haven't seen the commercial check it out:

Extend and pretend can only work for so long. Eventually the law of gravity will come a knockin and everything will come down a crashin! And the market soars over 400 points today on NEWS that a trillion dollar life preserver will be thrown to the EU! Just NEWS, nothing more and the markets rally. This kind of volatility is desirable for those in the "know" but in the meantime everyone else on the planet is left holding all the empty shells, alas even the quarter is missing!

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