The Federal Reserve Is Destroying America

Perhaps I should start with a disclaimer of sorts. Yes, I realize that the people working at the Federal Reserve, as well as the other central banks around the world, are just people.  Like the rest of us, they have egos, fears, worries, hopes, and dreams. I'm sure pretty much all of them go home each night believing they are basically good and caring individuals, doing important work.

But they're destroying America.  They might have good intentions, but they are working with bad models. Ones that lead to truly horrible outcomes.

One of the chief failings of central banks is that they are slaves to an impossible idea; the notion that humans are free to pursue perpetual exponential economic growth on a finite planet.  To be more specific: central banks are actually in the business of promoting perpetual exponential growth of debt. 

But since growth in credit drives growth in consumption, the two are concepts are so intimately linked as to be indistinguishable from each other.  They both rest upon an impossibility.  Central banks are in the business of sustaining the unsustainable which is, of course, an impossible job. 

I can only guess at the amount of emotional energy required to maintain the integrity of the edifice of self-delusion necessary to go home from a central banking job feeling OK about oneself and one’s role in the world.  It must be immense. 

I rather imagine it’s not unlike the key positions of leadership at Easter Island around the time the last trees were being felled and the last stone heads were being erected.  “This is what we do,” they probably said to each other and their followers.  “This is what we’ve always done.  Pay no attention to those few crackpot haters who warn that in pursuing our way of life we're instead destroying it.”

The most compassion I can drum up for central bankers right now is to observe that they really do have an impossible job; and their training has been simply too narrow and dogmatic for them to detect the gaping, obvious flaws in their world views.  They never studied energy resource issues. Nor did they have to take any behavioral psychology classes that would have explained to them how deeply unfair economic practices are socially corrosive. Nor any history classes that would expose how such actions proved ruinous when they were applied in previous societies.

But here we are. The fact that the central bankers are either accidentally ignorant or purposely too lazy to explore the wider world of ideas is not one you can ignore any longer.  Real consequences are coming and there’s no ducking them.  We’re all in this big canoe of life together and the Fed and our political officials are exhorting us to paddle faster towards the roaring falls ahead.

You need to understand this. If you want to have any chance of navigating the future successfully, you have to understand what they are doing, how they are doing it, and why it will fail.  If you don't take the time to sort out the mechanisms and implications...well, good luck.  You’re going to need it.

For those who prefer to rest their future prospects on Knowing instead of (misplaced) Hoping, read on.

How The Fed Gives Billions Of US Taxpayer Money To Foreign Banks

Out of many truly maddening sins committed by the Fed, perhaps the most glaring of late is its practice of handing billions and billions of dollars of US taxpayer money to big foreign banks.

I explain the process in this short video:

The summary of the video is this: the Fed is now paying interest on so-called ‘excess reserves’ held at the Fed. Those 'excess reserves' include a huge chunk of money held there by foreign banks who are only too happy to receive 1% on their holdings from the Fed given that their own central banks are paying 0%, or even negative rates.

The money that the Fed pays these foreign banks is deducted from the amount remitted to the US Treasury at the end of each fiscal year. 

It’s this simple: foreign banks are being paid billions of US taxpayer dollars and not one single person in the US got to vote for or approve of that action.

Let me repeat that: billions and billions of US taxpayer money is being sent to boost the profits of foreign banks. And there’s not a single thing a voting citizen can do about it. 

The decision to do this has been made unilaterally by unelected people for reasons they are under no obligation to either share or even have audited by the public.  I wonder if Detroit wouldn’t mind getting several billion dollars to use however it wishes, courtesy of the Federal Reserve?  Or the permaculture movement?  Or jobs training programs?

I’m 100% certain any of these -- or a thousand other candidates -- would be a better use than handing foreign big banks more US taxpayer money. 

What The Heck Else Is The Fed Up To?

I'm going to guess that very few of you were aware of the Fed's multi-billion annual giveaway to foreign banks before you watch the video above. If you're like me, once you learned what's going on, it's hard not to start wondering: What the heck else is the Fed doing that I don't know about?

We here at are particularly concerned about closely monitoring our central bank's next actions, as we believe their policies are creating the greatest wealth transfer of all time -- from the hard-earned savings of the public, and into the pockets of an elite few. (More on our conclusions can be read here).

As I said above, if you want to have any chance of navigating the future successfully, you have to understand what they are doing and how they are doing it.

Which is why is producing the upcoming webinar, The End of Money, which will bring together David Stockman, Axel Merk, G. Edward Griffin -- experts on the Federal Reserve, global currencies and financial markets. During this 3-hour event, you'll hear their latest intelligence and forecasts and be able to ask each speaker questions directly. It all takes place on June 7th, and those interested can learn more about the webinar here.

But, even before the webinar's revelations, there's plenty of worrisome recent activity by the Fed you need to be aware of, right now.

In Part 2: Understanding The Fed's Endgame Is Key To Protecting Your Wealth, we reveal the additional clandestine steps the Fed is performing in the shadows to separate the American people from their hard-earned wealth, and place it in the pockets of the bankers and their cronies. In most instances, it's a case of doing exactly the opposite of what it is publicly promising.

As with the above video, very, very few people are aware of what the Fed is truly up to. But it's critical we learn, as the knowledge we gain explains a lot about both the failure of today's bubblicious asset prices to sell off, and about just how worried the Fed actually is about draining cash from the financial markets lest it create a cascading meltdown. It's only by developing an understanding of the endgame currently in play that the concerned investor can make informed choices for protecting their wealth.

Click here to read the report (free executive summary, enrollment required for full access)

This is a companion discussion topic for the original entry at

here in Southern California. I’m pretty sure I just had a nightmare.
You see, I thought I just read that foreign banks are getting 1% on about a trillion dollars of free money from the Fed.
My wife and I have worked many years and managed to save a few grand along the way. We are getting less than zero on our savings when inflation is factored into the equation.
Therefore, I’m going to re-read the article so that this time the shock will somehow wake me from this nightmare, and I will again live in a sane world that rewards positive endeavors, not financial quackery…
Should I not wake up and it turns out that I’m not dreaming at all, then at least I have your company to share the nightmare with.
Always looking for the bright side.

The Fed is a private corporation, owned by banks. It’s loyalty is to its shareholders, regardless of the fig leaf of accountability created by having the Fed chair named by the President. Regulatory capture is a problem among government employees who spend their careers among the people they regulate. Imagine how much stronger the effect would be among private sector employees to the people who actually own their employer.
There is no guarantee the stock in the Fed is entirely owned by US banks. Though the original ownership may have been domestic in 1913, many stock-holder banks have been sold, merged or failed over the years. How those shares changed hands is a closely guarded secret. It’s even possible some shares were sold.
The actions of the Fed may be driven by a belief that instability in the foreign central banks will somehow sink the US banks, or perhaps by the practical need to have a lever with which to control foreign central bank behavior. We can’t know, they aren’t required to explain, and no congressman since Ron Paul has the guts to question them anyway.

It’s straight out ridiculous to blame the Federal Reserve for doing what the vast majotity want -perpetual growth. Many of us know the limits to growth, but the multitude doesn’t or doesn’t want to understand.
The Federal Reserve is a necessary arm of government. It requires a banker. What it doesn’t need is the bank’s board to be stuffed with bankers, whose main knowledge is how to profit. They set the political agenda and pollies are only too willing to ride along. After all, they are in Congress because they got the money they needed to get there from wealthy donors, like bankers.
The idea expressed in this post that the Central bank can print money without limit is straight out false. The Central bank can indeed buy any and all debts, but it cannot just print money. It can only buy what is for sale. This is a finite boundary, but it is far removed from taxation “revenue”. The taxation paid to the central bank is effectively destroyed on being credited to Treasury. Why? Because the central banks only use new money as a net credit operation. It’s also impossible to support spending via taxes, as spending has to come first, before being taxed so consumers can get the money they need and send in the tax due. “Old” money is not reused by the federal government. The State Governments are like you and me. We have to earn our money. The CB can create it, interest free. Taxpayers do not pay a penny towards expenditure.
It is also NOT the Fed that is fuelling the imbalance between the super rich and the rest of us. Politicians do that when they manipulate the laws and give rise to the asset inflation racket. The Fed helps but mostly its what the banksters want. But they are shooting themselves in the foot as the real economy [not the financial] has to shrink to suit unemployment etc. As the economy shrinks the wealth also shrinks.
So the Fed is complicit in harming the USA. but not by any means a sole contributor The nation needs a Central Bank.

So - to use Chris' example about the spread between CD returns and the Fed rate on excess reserves - depositors in Germany have put money into Deutsche Bank. They are earning a terrible return. Chris throws out .05% on a certificate of deposit. Deutsche Bank parks its excess reserves at the US Fed and earns 1%, giving a .95% risk free return.
So What?
1% is cheap money. Lets imagine the Fed uses some of that to buy, I don't know, student loan securitizations that have allowed 1M kids to go to school. 1% is a really cheap way to finance that. Maybe college is too expensive, yes. Maybe it sucks that kids have to take on debt to get an education. But if you put a million kids through college, that's not a bad thing, and I'd argue taking German money at 1% is a good enough way to do it. Just an example.

Could be interesting to check exactly which foreign banks are receiving these stealth subsidies. Are they primarily european? Are for example these european banks amply represented:
BNP Paribas
Credit Agricole
Credit Suisse
Deutsche Bank
Societe Generale
It is my contention, that, if not before, since the bailout of Long-Term Capital Management in september 1998, the american and european banks have been partners in crime. As the principal negotiator for LTCM James Rickards himself has put it, it was only due to the swift and resolute action of The Federal Reserve along with this group of megabanks, that this collapse of LTCM didn’t turn into a financial crisis on its own part, which would have had major political ramifications.
How big would the political ramifications have been, if the collapse of LTCM had run its course? Potentially huge, because the dealings of LTCM ties in with the windowdressing of the budgets of both Italy and Greece prior to their acceptance into the euro on the one hand, and on the other, the potential end of cheap capital through the necessary implementation of constraints on the whole derivatives complex.
What I am implying is, that some european banks are still receiving payback for the favors they extended to The Federal Reserve back in 1998.
Karsten Kolliker

Only question is who’s bucket the cash lands in each time.
It’ ain’t gonna be yours.

This notion I keep hearing about a “QE for the people” is charming. When have they helped the regular guy, ever? Why would they start now? This will be just another Creature-engineered collapse, and this time they will own just about everything after the dust settles.

Well said Chris