What We Must Not Overlook About the Default Crisis
One thing that I find most revealing about the great default crisis is the fact that very early in crisis which began in 2007, the Federal Reserve, ever the private money market of the rich, introduced the policy of paying interest to banks for their excess reserves – that is the central bank paid money to the member banks for holding cash balances idle – not making loans on it – in the midst of the deflationary depression. How obvious does the engineering of the default crisis and subsequent depression have to be?
On March 9, 2006, the Federal Reserve governors released this notice: “On March 23, 2006, the Board of Governors of the Federal Reserve System will cease publication of the M3 monetary aggregate. The Board will also cease publishing the following components: large-denomination time deposits, repurchase agreements (RPs), and Eurodollars.”
And so they did. In the words of Fed Chairman Bernanke, “The Federal Reserve will not withhold the M3 data from the public; rather, it will no longer collect and assemble that information.”
Hiding data? We’re not hiding data, we simply stopped creating the data. And everyone said, “Duh, OK, as long as you are not hiding it.”
Now it is understandable that when adopting new theories and new policies the Fed may choose to ignore certain data collected, but is there ever any reason for discontinuing a measure that economists and bankers and those working in government finance or private finance are using?
Why eliminate the measure of a thing if the thing still remains and is very important in all that is going on??? Why? To conceal the transfer of money power from the people to the Money Power elite.
The money supply in circulation is all-important and it has different components. M1 is paper money people hold plus the immediately checkable or “debit-card-able” deposits that are always acceptable in purchases. M2 is M1 plus time savings accounts and money market accounts and money market mutual shares owned by the public, that require a few steps to convert to spendable money. M1 and M2 are the little people’s money. So what was M3 and why did they want to hide it? M3 adds the cash holdings of the rich to M2. It is M2 plus large denomination time deposits and institutional money market shares and term repurchase agreements and term Eurodollars, which covert to M1 after a term, the term being usually overnight – but the term qualification allows the money holdings of the rich to be separated from the money holdings of the poor.
THE MONEY HOLDINGS OF THE RICH WERE CONCEALED – NO LONGER REPORTED BY THE FED – IN MARCH OF 2006, JUST MONTHS BEFORE THE INTENTIONAL DEFLATION THAT SHRUNK M1 WAS REPORTED. AT THIS TIME, THE RICH SHORTED THE ECONOMY – AND BET ON DEFLATION FOR A WINDFALL – BY PUTTING THEIR FUNDS INTO EURODOLLARS (OFFSHORE BANK ACCOUNTS) AND OTHER STORAGE – AS THE BANKS STOPPED LENDING ON THEIR RESERVES, KEEPING EXCESS RESERVES AND ALL OF A SUDDEN BEING PAID INTEREST FOR KEEPING THEIR MONEY IDLE WHILE THE ECONOMY OF ORDINARY PEOPLE – WHAT I CALL THE LOWER LOOP OF THE DOMESTIC HOUSEHOLD AND BUSINESS SECTORS – EXPERIENCED A SHORTAGE OF MONEY CIRCULATION THAT FORCED THE DEFAULT CRISIS, AND THE DEFLATIONARY DEPRESSION THAT MADE THE EURODOLLAR HOLDINGS AND IDLE BANK HOLDINGS OF THE RICH MUCH MORE VALUABLE BY THE WINDFALL THAT DEFLATION PROVIDES TO SAVERS. That’s what happened. This is the truth.
It’s a sad thing that nearly all of the victims – over a billion worldwide – know nothing about about how it was done. Let’s change that.