American Bankster

Welcome to American Bankster, the blogsite that examines current events in finance and banking as they devolve into losses of personal liberties and individual freedoms.

"Give me the right to issue and control a nation’s money and I care not who governs the country.” Meyer Amschal Rothschild, International Banker

"Those that create and issue the money and credit, direct the policies of government and hold in their hands the destiny of the people." Richard McKenna, former president of the Midlands Bank of England

"We have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve Banks. Some people think the Federal Reserve Banks are U.S. government institutions. They are private credit monopolies; domestic swindlers, rich and predatory money lenders which prey upon the people of the United States for the benefit of themselves and their foreign customers. The Federal Reserve banks are the agents of the foreign central banks. The truth is the Federal Reserve Board has usurped the Government of the United States by the arrogant credit monopoly which operates the Federal Reserve Board. Congressman Louis T. McFadden, Chairman of the House Banking and Currency Committee, addressed the House on June 10, 1932. 75 Congressional Record 12595-12603

Sunday, May 31, 2009

On Thursday 21 May, federal regulators in the U.S. closed Florida’s BankUnited. That closure represented the largest bank failure this year and the second-largest failure in U.S. history. It will cost the FDIC nearly $5.0 billion. On Friday, regulators closed two Illinois banks located in farm country. Total U.S. bank closures, thus far in 2009, number thirty-six; eleven more than in 2008 and nearly four times more than in 2007. Last week’s bank closures encompassed both extremes of the spectrum – from the largest of the year to two small farm-community banks – suggesting the worst is not over for the industry. On Thursday of last week, S&P lowered its outlook for the UK economy, saying that government debt may increase to 100% of GDP in the next few years and the UK could, therefore, lose its AAA credit rating. The comment was barely printed on the wires before U.S. Treasuries – which had been showing signs of sickness well ahead of the S&P comments – confirmed the unwell state of American affairs by losing more than two full points on the day. Prior to Thursday’s news, FOMC meeting notes indicated the Fed was/is considering the purchase of more U.S. bonds; code for efforts to inflate/reflate the economy through quantitative easing. The U.S. has maintained a triple-A credit rating since 1917 but that is sure to end with reckless fiscal policies which, adding insult to injury, result in no meaningful economic improvement. GM may become “Government Motors” as early as this week as the company drives toward bankruptcy court. And, as if alienating international partners holds some sort of advantage, the Obama administration is so desperate to encumber American taxpayers, it has ‘requested’ British banks to act as “qualified intermediaries” for the purpose of collecting taxes on U.S. depositors in that country. The request puts British banks – already reeling from their own liquidity crisis – under a cloud of higher costs – in the untenable position of being accountable to the IRS. Banks have responded by suggesting they may refuse to accept American clients. A meeting between banking representatives, British brokerage houses and the Obama administration is slated for mid-June when banks say they will tell the IRS they’re not interested and both the administration and its taxing body should back off. Of course, neither the administration nor the IRS can make quid-pro-quo promises because no overseas depositor in their right mind would invest in the U.S. Last Friday, the dollar index hit its lowest level in more than two months in what appears to be an acceleration of U.S. economic devolution. The media has referred to loosening up in the money markets as ‘signs of recovery’. We call it the start of unbearable inflation. It is interesting that the Obama administration is attempting to enlist the aid of UK banks to corral U.S. taxpayers and, equally interesting, that U.S. federal growth has become so onerous the government feels comfortable taking over corporations, firing executives, developing plans to dictate executives’ compensation in private industry, and individual states teeter on the verge of bankruptcy even as Washington’s spending threatens to engulf the whole of national GDP. It is no coincidence America is witnessing a growing movement to restore the country to norms set forth in its Constitution. The political and economic blob that has become the federal government is in direct opposition to the precepts set forth in the document which, for the most part until about 1963, served as the law of the land. The final draft of the U.S. Constitution was delivered in 1782 – one year after the conclusion of the Revolutionary War – and, ironically, America has never been closer to disintegration than in the twelve months following its victory over the British. When the war ended, the economy was in a shambles. The country’s ‘army’ was in effect a relatively well-organized militia made up of farmers rather than the professional soldiers against which it fought. After the war, patriot-farmers returned to their land only to find, in many cases, government expropriation for back taxes. Inflation was rampant. Supplies of the most basic necessities had dried up. Civil unrest against the system they’d fought to establish became so pervasive it was, in many places, as if the war had never ended. The federal government, bound only by the Articles of Confederation, had no authority to levy taxes, establish policy or regulate trade. It operated completely at the ‘mercy’ of the states. And because the states were in such devastated condition, allocating resources and power to a centralized system was impossible in the absence of a formal agreement that served to clearly define the role of federal governance while preserving states’ sovereign rights. Over the course of the past 223 years, the Constitution has been interpreted, re-interpreted and misinterpreted more times than could ever be justified by Constitutional purists and, in the process, the federal government has grown into an unsustainable monster growing fat off the wealth and resources of the states. Representatives who were intended to be part-time employees of a system that would cause them to remain contributory individuals beyond the scope of their political duties have, over the life of the republic, come to establish dynasties of ‘public service’ which, in many cases, involve multiple generations of redundant family names. Representatives vote-in their own pay raises. Because they no longer work beyond the political realm, and because they are not responsible for insuring their own financial well-being within the confines of the general economy, they were long ago stripped of any identification with the common man they are purported to represent. The Articles of Confederation which hamstrung federal government gave way to the Constitution which was designed to preserve individual liberties and states’ rights. But through legal maneuvering and slow but steady efforts to garner more power, the federal government has become virtually everything it was never intended to be. After decades of unfunded mandates, federal intrusion into states’ affairs and the erosion of civil liberties on the corporate and individual levels, states have mounted a movement to reinstate their sovereignty. The movement which now involves 34 of the 50 states seeks to reassert tenth amendment rights , thereby reducing Washington’s ability to interfere; effectively seeking to curtail Washington’s power. It is, therefore, interesting, if not ironic, that 223 years after the first formal efforts to secure freedom from England, the current U.S. administration is attempting to harness its assistance – at the expense of English banks – in pursuing American taxpayers. It is interesting, if not ironic, that such efforts are undertaken at a time when, not unlike the late-1780s, the U.S. faces an unprecedented economic crisis which promises a repeat of (albeit far more dilatory) war-time debts, worsening raw material shortages due to reduced capital expenditures, raging inflation and tax revolts. The financial crisis which came to the fore in late-2006 is routinely compared to the Great Depression but we think that’s a mischaracterization. It is our view that, perhaps most ironically of all, the crisis underway will ultimately prove to be a more accurate reflection of conditions in post-Revolutionary War America. Government has become everything it was never intended to be and states and individuals are embarking on yet another quest for their freedom. The tyrant is not a monarch across the ocean, but a domestic federal government so ignorant of its boundaries, so possessed of hubris and so uneducated in its own purpose and responsibilities that it poses a threat to the very nation it was created to serve. In our view, the U.S. is entering a period wherein efforts to dismantle or retract federal power will result in its socio-political and economic demise. Practices and policies to date by the Obama administration, including the president’s comment Saturday in a public interview that the U.S. is “out of money” represent acts of self-sabotage (in the collective sense) so perverse they border on treason. Government securities of nations in turmoil are not good investments. Currencies of nations in conflict with themselves represent poor stores of value. There is only one hedge against the sort of instability we see escalating in the months and years to come: BUY GOLD.

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