The Anniversary of 9/11

Don't want to hear this?

Tough. Grow up.

9/11 Commissioners:

• The 9/11 Commission's co-chairs said that the 9/11 Commissioners knew that military officials misrepresented the facts to the Commission, and the Commission considered recommending criminal charges for such false statements (free subscription required)

• 9/11 Commission co-chair Lee Hamilton says "I don't believe for a minute we got everything right", that the Commission was set up to fail, that people should keep asking questions about 9/11, and that the 9/11 debate should continue
  

• 9/11 Commissioner Timothy Roemer said "We were extremely frustrated with the false statements we were getting"
  

• 9/11 Commissioner Max Cleland resigned from the Commission, stating: "It is a national scandal"; "This investigation is now compromised"; and "One of these days we will have to get the full story because the 9-11 issue is so important to America. But this White House wants to cover it up"
  

• 9/11 Commissioner Bob Kerrey said that "There are ample reasons to suspect that there may be some alternative to what we outlined in our version . . . We didn't have access . . . ." He also said that the investigation depended too heavily on the accounts of Al Qaeda detainees who were physically coerced into talking

• And the Senior Counsel to the 9/11 Commission (John Farmer) - who led the 9/11 staff's inquiry - recently said "At some level of the government, at some point in time...there was an agreement not to tell the truth about what happened". He also said "I was shocked at how different the truth was from the way it was described .... The tapes told a radically different story from what had been told to us and the public for two years.... This is not spin. This is not true." And he said: "It's almost a culture of concealment, for lack of a better word. There were interviews made at the FAA's New York center the night of 9/11 and those tapes were destroyed. The CIA tapes of the interrogations were destroyed. The story of 9/11 itself, to put it mildly, was distorted and was completely different from the way things happened"

If even the 9/11 Commissioners don't buy the official story, why do you?

Senior intelligence officers:

• Former military analyst and famed whistleblower Daniel Ellsberg said that the case of a certain 9/11 whistleblower is "far more explosive than the Pentagon Papers". He also said that the government is ordering the media to cover up her allegations about 9/11. And he said that some of the claims concerning government involvement in 9/11 are credible, that "very serious questions have been raised about what they [U.S. government officials] knew beforehand and how much involvement there might have been", that engineering 9/11 would not be humanly or psychologically beyond the scope of the current administration, and that there's enough evidence to justify a new, "hard-hitting" investigation into 9/11 with subpoenas and testimony taken under oath (see this and this)

• A 27-year CIA veteran, who chaired National Intelligence Estimates and personally delivered intelligence briefings to Presidents Ronald Reagan and George H.W. Bush, their Vice Presidents, Secretaries of State, the Joint Chiefs of Staff, and many other senior government officials (Raymond McGovern) said “I think at simplest terms, there’s a cover-up. The 9/11 Report is a joke”

• A 29-year CIA veteran, former National Intelligence Officer (NIO) and former Director of the CIA's Office of Regional and Political Analysis (William Bill Christison) said “I now think there is persuasive evidence that the events of September did not unfold as the Bush administration and the 9/11 Commission would have us believe (and see this)

• A number of intelligence officials, including a CIA Operations Officer who co-chaired a CIA multi-agency task force coordinating intelligence efforts among many intelligence and law enforcement agencies (Lynne Larkin) sent a joint letter to Congress expressing their concerns about “serious shortcomings,” “omissions,” and “major flaws” in the 9/11 Commission Report and offering their services for a new investigation (they were ignored)

• A decorated 20-year CIA veteran, who Pulitzer-Prize winning investigative reporter Seymour Hersh called "perhaps the best on-the-ground field officer in the Middle East”, and whose astounding career formed the script for the Academy Award winning motion picture Syriana (Robert Baer) said that "the evidence points at" 9/11 having had aspects of being an inside job
  

• The Division Chief of the CIA’s Office of Soviet Affairs, who served as Senior Analyst from 1966 - 1990. He also served as Professor of International Security at the National War College from 1986 - 2004 (Melvin Goodman) said "The final [9/11 Commission] report is ultimately a coverup"

If even our country's top intelligence officers don't buy the official story, why do you?

Congressmen:

• According to the Co-Chair of the Congressional Inquiry into 9/11 and former Head of the Senate Intelligence Committee, Bob Graham, an FBI informant had hosted and rented a room to two hijackers in 2000 and that, when the Inquiry sought to interview the informant, the FBI refused outright, and then hid him in an unknown location, and that a high-level FBI official stated these blocking maneuvers were undertaken under orders from the White House (confirmed here)

• Current Democratic U.S. Senator Patrick Leahy said "The two questions that the congress will not ask . . . is why did 9/11 happen on George Bush's watch when he had clear warnings that it was going to happen? Why did they allow it to happen?"

• Current Republican Congressman Ron Paul calls for a new 9/11 investigation and states that "we see the [9/11] investigations that have been done so far as more or less cover-up and no real explanation of what went on"

• Current Democratic Congressman Dennis Kucinich hints that we aren't being told the truth about 9/11

• Current Republican Congressman Jason Chafetz says that we need to be vigilant and continue to investigate 9/11

• Former Democratic Senator Mike Gravel states that he supports a new 9/11 investigation and that we don't know the truth about 9/11

• Former Republican Senator Lincoln Chaffee endorses a new 9/11 investigation
  

• Former U.S. Democratic Congressman Dan Hamburg doesn't believe the official version of events

• Former U.S. Republican Congressman and senior member of the House Armed Services Committee, and who served six years as the Chairman of the Military Research and Development Subcommittee Curt Weldon has shown that the U.S. tracked hijackers before 9/11, is open to hearing information about explosives in the Twin Towers, and is open to the possibility that 9/11 was an inside job

If there is bipartisan questioning of the official story, why aren't you questioning it?

Other government officials:

• U.S. General, Commanding General of U.S. European Command and Supreme Allied Commander Europe, decorated with the Bronze Star, Silver Star, and Purple Heart (General Wesley Clark) said "We've never finished the investigation of 9/11 and whether the administration actually misused the intelligence information it had. The evidence seems pretty clear to me. I've seen that for a long time"

• Former Deputy Secretary for Intelligence and Warning under Nixon, Ford, and Carter (Morton Goulder), former Deputy Director to the White House Task Force on Terrorism (Edward L. Peck), and former US Department of State Foreign Service Officer (J. Michael Springmann), as well as a who's who of liberals and independents) jointly call for a new investigation into 9/11

• Former Federal Prosecutor, Office of Special Investigations, U.S. Department of Justice under Presidents Jimmy Carter and Ronald Reagan; former U.S. Army Intelligence officer, and currently a widely-sought media commentator on terrorism and intelligence services (John Loftus) says "The information provided by European intelligence services prior to 9/11 was so extensive that it is no longer possible for either the CIA or FBI to assert a defense of incompetence"

• The Group Director on matters of national security in the U.S. Government Accountability Office said that President Bush did not respond to unprecedented warnings of the 9/11 disaster and conducted a massive cover-up instead of accepting responsibility

• Deputy Assistant Secretary of Defense under President Ronald Reagan (Col. Ronald D. Ray) said that the official story of 9/11 is "the dog that doesn't hunt"

• The former director of the FBI (Louis Freeh) says there was a cover up by the 9/11 Commission

If top government officials are skeptical, why aren't you?

Numerous other politicians, judges, legal scholars, and attorneys also question at least some aspects of the government's version of 9/11.

CAUGHT On TAPE 1 Protester vs.12 Police. Weeks After the G20

Thanks to: “SupportLocalScene” for editing this video
and “pressfortruth” for covering this story

security camera footage taken on August 16th, 7 weeks after g20

The G-20 research and action continues for Derek as he gets the word out about the Toronto G20 security disaster. While being interviewed by Press for Truth on G20 related events Derek tells the story of being detained for investigation near the lobby of his downtown condo by Toronto Police, 7 weekends after the G20 summit, a 12-on-1 identification card check showing the Public Works Protection Act fraud continues after the global delegates have left town…

Toronto G20 Exposed new DVD documentary HD footage!!!
http://torontog20exposed.blogspot.com
or www.youtube.com/torontoG20exposed

LINKS: Toronto Truth Seekers http://www.torontotruthseekers.com/

G20 Class Action http://www.g20classaction.ca/

Toronto Media Co-Op http://toronto.mediacoop.ca/

Press For Truth http://pressfortruth.ca/

The Real News http://therealnews.com

Conspiracy Culture http://www.conspiracyculture.com/

Statism Watch http://statismwatch.ca/

The Secret Store http://www.thesecretstore.ca

TorontoG20Exposed Blog http://torontog20exposed.blogspot.com/

G20 Inquiry http://www.g20inquiry.org/

G20 Media feed http://2010.mediacoop.ca/

Hyperinflation in University Costs

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Summary: in Higher Education
By Jay P. Greene, Senior Fellow, Goldwater Institute and head of the Department of Education Reform at the
University of Arkansas; Brian Kisida, research associate, Department of Education Reform at the University of ...

1,270 Architects/Engineers Reveal Hard Evidence of Explosive Demolition at World Trade Center on 9/11

Former US Senator Mike Gravel (D-AK) and Richard Gage, AIA, Founder of Architects & Engineers for 9/11 Truth Discuss Scientific Findings

National Press Club, Washington DC, 2:00 pm, Thursday, September 9, 2010

WASHINGTON, Sept. 7 /PRNewswire-USNewswire/ -- On Thursday September 9, 2010, Gravel and Gage will host a central press conference at the National Press Club in Washington, DC, presenting hard evidence that all three WTC skyscrapers on September 11, 2001, in NYC were destroyed by explosive controlled demolition.

Senator Gravel notes, "Critically important evidence has come forward after the original government building reports were completed."

This press conference will be webcast at AE911Truth.org and hosted concurrently in cities throughout the world.* Following the conference, there will be a mock debate during which public statements made by government investigators and other defenders of the official account will be presented and responded to in multimedia format. "They refuse to debate us in person," says Gage, "so we will let their public statements represent them."

Gage will release a media-friendly summary of his organization's findings, which are based on forensic evidence as well as video and eyewitness testimony that were omitted from official reports. He will show evidence that the WTC Twin Towers were not destroyed by jet plane impacts or fires, but by pre-set explosives and incendiaries. The non-profit organization, Architects & Engineers for 9/11 Truth, will also call for a grand jury investigation of government report lead engineers Shyam Sunder and John Gross of the National Institute of Standards and Technology. "They were in a position to know the evidence we have been presenting," says Gage.

Also speaking will be Florida State Professor Lance deHaven-Smith, who coined the academic term State Crimes Against Democracy (SCAD). Prof. deHaven-Smith has appeared on Good Morning America, the Today Show, NBC Nightly News with Tom Brokaw, CBS Nightly News with Dan Rather, and other national TV/radio shows.

The DC press conference will be accessible via webcast AE911Truth.org, 2:00 pm September 9, 2010.

* For information on satellite press conferences in your area, contact CongressionalOutreachTeam [at] ae911truth.org.

To arrange print/broadcast interviews, with Richard Gage, AIA, contact Tania at 510-292-4710, or via email at 1000 [at] ae911truth.org.

CONTACT: David Slesinger 410-499-5403

SOURCE Architects and Engineers for 9/11 Truth

Saving Money on Groceries

• Avoid buying a non-grocery items if you can buy it for less elsewhere
• Avoid frozen/prepared entrees you get more for your money if you make it yourself
• Avoid wandering down aisles plan your trip through the store
• Be sure to lookout for “reduction” (e.g., 1.5 quarts vs. half gallon)
• Buy a chest freezer to stock up on good deals
• Buy foods in bulk but check the unit pricing first
• Check cupboards, pantry, and fridge before for what you need before leaving
• Check for a store’s website for printable coupons
• Check out the weekly store circular
• Clip coupons for the deals on name brand items
• Cook in larger batches and freeze the extras for later
• Cut back on meats by eating more fruits and vegetables
• Do not shop when you are hungry
• Drink more water, beverages are more costly
• Eat fruits and vegetables that are in season
• For the greatest deals be keen on diverting from your list
• Get a rain checks when sale items are out of stock
• Go to multiple stores to get the best deals on items
• Grow your own by planting a garden
• Hit your the local farmer’s market for deals on fruit and vegetables
• If you have a preferred store ask them if they will match prices form elsewhere
• Keep a list of items you need someplace easy to find when needed
• Keep a record or book of prices and deal when you see one
• Make sure fill out and send your rebates for items purchased
• Make sure instant coupons that are attached to some items are scanned
• Plan your meals in advance and only buy what you need
• Search the Sunday paper of coupons and deals
• Separate your list down by store and plan your shopping accordingly
• Set a grocery budget and stick to it
• Shop alone, you will spend less
• Shop less often but make shopping larger
• Stock up on items when things are on sale
• Try store brands items instead of name brand items
• Watch for correct pricing when items are being scanned you are at the check out

SOCIAL CONTROL… COMING TO YOUR NEIGHBORHOOD…

This is the first bill to enforce Federal control of our communities through federal legislation. The Federal Government will have control over us and our communities if this bill passes.

PRICE TAG: $4 BILLION, and that will grow.

Here’s a video that gives an example of what a government controlled community is and what becomes of it.

STATUS: Ready to go to Senate floor for a VOTE.

NSA: U.S. Must Secure the Internet

According to National Security Agency (NSA) Director Gen. Keith Alexander, the United States federal government has the overarching duty and responsibility in securing the Internet to safeguard against cyber-criminal activities. Top military officials concurred with Alexander, but the government still has yet to provide details of how it intends to tackle Internet security issues. According to site Threat Post, Alexander "expressed confidence that the country's information security apparatus was up to the task, but acknowledged the difficulty of securing the Internet, a network that many security experts see as hopelessly broken and flawed by design."

The government has been victim of a number of cyber attacks in recent years, the most notable one being an attack by way of an infected USB key. While Alexander's Gov. 2.0 Summit speech helps to highlight that Internet security, both internally and externally, will be a key government issue moving forward, it is unlikely that Alexander will be successful at mitigating criticism against the government for not being responsive enough to cyber-security vulnerabilities.

According to Alexander, the comprehensive actions of the NSA and other government entities involved on cyber-security will need to resepct the civil rights of citizens. "Our citizens take a lot of interest in the government's activities in this area, and I have an obligation to the law and the American people to ensure everything we do preserves and protects their rights while protecting our interests," says Alexander.

Rebels detonated bombs at Russian hydro plant-website

An Islamist website has reported that bombs planted by rebels exploded at a hydro electric power station in Russia's southern Dagestan region that was closed this week because of a fire.

The unofficial website www.kavkazcenter.com said two bombs had detonated at the Irganaisky plant while a third had failed to explode.

Russian news agencies, citing a local law enforcement source, reported on Thursday that one bomb with the equivalent of at least 3 kilograms of TNT had been discovered at the plant and defused.

There were no reports of any serious injuries related to the incident.

The owner of the plant, Rushydro, said in a statement on Wednesday that the power station had been closed due to a fire that broke out on Tuesday in the turbine room.

But company spokeswoman Yelena Vyshnekova said she could not say what caused the fire, referring Reuters to several Russian media reports that suggested the fire was an industrial accident.

"We cannot comment on the cause until the investigation ends. But state investigators and the police have said they believe it was not a terrorist act," she said.

Rushydro said the electricity supply to the region had not been affected by the closure of the 400 megawatt plant.

Russia is struggling to contain an upsurge of attacks in the mainly Muslim provinces along its southern flank, including Dagestan, Chechnya and Ingushetia. Rebels, who in March took their war to the Russian heartland with deadly bombings in the Moscow metro, have promised to focus on economic targets.

The website is the main media outlet used by the rebels, but it has published several implausible claims of responsibility in the past.

Observers widely dismissed the site's claim that rebels were responsible for the Sayano-Shushenskaya dam disaster in Siberia last year that killed 75 people.

Local leaders say a potent mix of clan feuds, poverty, Islamic extremism and heavy-handed tactics by law enforcement agencies has driven youths into the hands of rebels who want to create a Sharia-based pan-Caucasus state.

In July, militants stormed and bombed a hydro-electric power station in the Muslim republic of Kabardino-Balkaria, putting it out of action for two years.

After a Year of Setbacks, U.N. Looks to Take Charge of World’s Agenda

After a year of humiliating setbacks, United Nations Secretary General Ban ki-Moon and about 60 of his top lieutenants — the top brass of the entire U.N. system — spent their Labor Day weekend at a remote Austrian Alpine retreat, discussing ways to put their sprawling organization in charge of the world’s agenda.

Details concerning the two-day, closed-door sessions in the comfortable village of Alpbach were closely guarded. Nonetheless, position papers for the meeting obtained by Fox News indicate that the topics included:

– how to restore “climate change” as a top global priority after the fiasco of last year’s Copenhagen summit;

– how to continue to try to make global redistribution of wealth the real basis of that climate agenda, and widen the discussion further to encompass the idea of “global public goods”

– how to keep growing U.N. peacekeeping efforts into missions involved in the police, courts, legal systems and other aspects of strife-torn countries;

– how to capitalize on the global tide of migrants from poor nations to rich ones, to encompass a new “international migration governance framework”;

Read Entire Article

Homeless students receive backpacks full of supplies and food

ALBUQUERQUE, N.M. (AP) - Nearly 4,000 backpacks filled school supplies and food are being distributed to homeless public school students around New Mexico.

State Secretary of Education-designee Susanna Murphy says the supplies were distributed Wednesday to school officials from 41 New Mexico districts, which will give them to students in their communities.

Murphy says basic needs that aren't met become barriers to attending school and learning.

New Mexico public schools will serve an estimated 10,000 to 12,000 homeless students this school year.

The supplies, donated by Oklahoma-based Feed the Children, arrived at the state Public Education Department's Albuquerque office, where they were unloaded by volunteers who included New Mexico National Guard members.

(Copyright 2010 by The Associated Press. All Rights Reserved.)

U.S. court sets $1m bail for Israeli charged in human trafficking case

Mordechai Orian, head of Los Angeles-based Global Horizons Manpower Inc., accused of involvement in importing and exploiting 400 workers from Thailand.

A federal judge has set bail at $1 million for the chief executive of a labor recruiting company accused of importing and exploiting 400 workers from Thailand.

Forty-five-year-old Mordechai Orian, head of Los Angeles-based Global Horizons Manpower Inc., was ordered Wednesday to be held in federal custody until he can raise the money.

KITV reports federal prosecutors claim Orian, an Israeli national, is a flight risk. They had sought to keep him in custody until his trial, and they plan to appeal.

Orian is accused in what the FBI calls the largest human-trafficking case charged in U.S. history.

He was indicted last week on charges that he lured the workers with false promises of lucrative jobs, then confiscated their passports, failed to honor their employment contracts and threatened to deport them.

His public relations agency has said he complied with the FBI in negotiating his surrender in Honolulu.

So Broke We Can't Pay Attention

You spent the whole day yesterday worrying about today, and now that it's here, was it worth it?

Howard Beale

Activist Post

It's a scary feeling not being able to pay your bills. It can be so stressful that it consumes the entirety of our thoughts and emotions. We may fight with our spouses, or prematurely snap at our children over meaningless nonsense because we are constantly on edge over finances.

Day after day, week after week, month after month we live stressed to the max. If we're able to break our funk trance for a moment and look back, we just may realize that all of the agonizing was not worth it as, somehow, we made it to today in one piece.

An excellent article this week on the Economic Collapse Blog decisively proved that is impossible for a family of four to survive in America on a middle-class income of $50,000 per year. Since more than half of the U.S. population makes less than that amount, and another 35% of American families make less than $100,000 per year; we can only assume that the overwhelming majority of the population lives with chronic financial-stress syndrome -- which Big Pharma will happily treat for us.

This 85% of the population has little time or energy to think of much else. In other words, we're so broke we can't pay attention to the world around us -- which is what the system was designed to do. The system keeps us running on the rat wheel, terrified it will stop, or that our employers will kick us off.

We become so primal about defending our position, our sustenance, that we ignore our basic humanity. Who has time to think about such things like other people's problems? The system turns us against our neighbors in an ultra-competitive dog-eat-dog economy. And if that doesn't work they'll use religion, race, or politics to divide us. Scratch that; they use it all, all the time.

The public is kept in a constant state of dense negative energy, where we inevitably contaminate those around us with bad vibes, who then pass them on to their peers and so on.

Sooner or later we live in dense, negative, selfish society. This denseness has even affected the crowd that can afford to pay attention, because they are aware of the sinister methods being used to keep humanity within our shrinking prison walls. Thankfully for us, this prison of stress and manufactured division is an illusory distraction that we can ultimately free ourselves from.

Sure, we all have very real concerns about paying bills and putting food on the table. However, we must fully appreciate that we are alive and well today, just as we were three months ago when we were stressed out of our minds.

We lived the last three months in constant discomfort, distracted from reality and, despite all that, we survived. Would it not have been better to spend those three months with a positive attitude, or at least a level of comfort knowing that we'll be fine no matter what the system throws at us?

Perhaps with this slight adjustment in attitude, we might find that we do have time to pay attention and be more productive in ways that go beyond finances. In fact, we may even attract abundance to ourselves if we understand (not just believe) that positive thoughts and energy will attract the same to us.

Surely it must be better than the alternative, which is letting the system manufacture our emotions for us. Especially when the goal of such system engineering is to keep us in a perpetual state of non-thinking denseness that limits our potential to that of a rat in a seemingly inescapable maze.

Our individual potential is only limited to what we allow ourselves to imagine. In a world of decreasing personal freedoms, we each have the power to bust out of the cage of denseness into real liberty -- liberty of the mind.

So today, let's each take some time to concentrate on positive things like love, laughter, and joy -- if even for a few quiet minutes. Let a genuine smile overtake you. Beam those feelings of love and joy to the people around you. If you think it's hokey, just do it as a calculated experiment to see how it affects your day. Finally, we must believe, know, and fully accept that we will be okay no matter what perceived chaos surrounds us.

Recent Articles by Howard Beale:
Are We Witnessing the Death of Our Planet?
The Great Gay Distraction Perfectly Timed For November Elections

Hitler’s freedom from International Debt Slavery

It is always difficult to have a discussion on the topic of WW II Germany, and Hitler, without having emotions run high. And understandably so. We do not believe that there is a world plot in place by those of the Jewish faith to dominate the world. We do however suspect that there is a plot in place by the major financiers and financial institutions, to control. We don’t necessarily agree with all the points made in the article you are about to read, but it certainly does raise some interesting points. We offer this article to our readers as an alternative viewpoint, intended to stimulate discussion. PTE

An article excerpted from:
http://www.webofdebt.com/

Article Author Unknown

History is written by the victors” – W. Churchill

An interesting perspective on World War II, and the players involved.

Many people take joy in saying Wall Street and Jewish bankers “financed Hitler.” There is plenty of documented evidence that Wall Street and Jewish bankers did indeed help finance Hitler at first, partly because it allowed the bankers to get rich (as I will describe below) and partly in order to control Stalin. However, when Germany broke free from the bankers, the bankers declared a world war against Germany.

When we look at all the facts, the charge that “Jews financed Hitler” becomes irrelevant. Los Angeles Attorney Ellen Brown discusses this topic in her book Web of Debt…

When Hitler came to power, Germany was hopelessly broke. The Treaty of Versailles had imposed crushing reparations on the German people, demanding that Germans repay every nation’s costs of the war. These costs totaled three times the value of all the property in Germany. Private currency speculators caused the German mark to plummet, precipitating one of the worst runaway inflations in modern times. A wheelbarrow full of 100 billion-mark banknotes could not buy a loaf of bread. The national treasury was empty. Countless homes and farms were lost to speculators and to private banks. Germans lived in hovels. They were starving.

Nothing like this had ever happened before – the total destruction of the national currency, plus the wiping out of people’s savings and businesses. On top of this came a global depression. Germany had no choice but to succumb to debt slavery under international bankers until 1933, when the National Socialists came to power.

At that point the German government thwarted the international banking cartels by issuing its own money. World Jewry responded by declaring a global boycott against Germany. Hitler began a national credit program by devising a plan of public works that included flood control, repair of public buildings and private residences, and construction of new roads, bridges, canals, and port facilities. All these were paid for with money that no longer came from the private international bankers.

The projected cost of these various programs was fixed at one billion units of the national currency. To pay for this, the German government (not the international bankers) issued bills of exchange, called Labor Treasury Certificates. In this way the National Socialists put millions of people to work, and paid them with Treasury Certificates. Under the National Socialists, Germany’s money wasn’t backed by gold (which was owned by the international bankers). It was essentially a receipt for labor and materials delivered to the government. Hitler said, “For every mark issued, we required the equivalent of a mark’s worth of work done, or goods produced.” The government paid workers in Certificates. Workers spent those Certificates on other goods and services, thus creating more jobs for more people. In this way the German people climbed out of the crushing debt imposed on them by the international bankers.

Within two years, the unemployment problem had been solved, and Germany was back on its feet. It had a solid, stable currency, with no debt, and no inflation, at a time when millions of people in the United States and other Western countries (controlled by international bankers) were still out of work. Within five years, Germany went from the poorest nation in Europe to the richest. Germany even managed to restore foreign trade, despite the international bankers’ denial of foreign credit to Germany, and despite the global boycott by Jewish-owned industries. Germany succeeded in this by exchanging equipment and commodities directly with other countries, using a barter system that cut the bankers out of the picture. Germany flourished, since barter eliminates national debt and trade deficits. (Venezuela does the same thing today when it trades oil for commodities, plus medical help, and so on. Hence the bankers are trying to squeeze Venezuela.)

Germany’s economic freedom was short-lived; but it left several monuments, including the famous Autobahn, the world’s first extensive superhighway. Hjalmar Schacht, a Rothschild agent who was temporarily head of the German central bank, summed it up thus… An American banker had commented, “Dr. Schacht, you should come to America. We’ve lots of money and that’s real banking.” Schacht replied, “You should come to Berlin. We don’t have money. That’s real banking.” (Schacht, the Rothschild agent, actually supported the private international bankers against Germany, and was rewarded by having all charges against him dropped at the Nuremberg trials.)

This economic freedom made Hitler extremely popular with the German people. Germany was rescued from English economic theory, which says that all currency must be borrowed against the gold owned by a private and secretive banking cartel — such as the Federal Reserve, or the Central Bank of Europe — rather than issued by the government for the benefit of the people. Canadian researcher Dr. Henry Makow (who is Jewish himself) says the main reason why the bankers arranged for a world war against Germany was that Hitler sidestepped the bankers by creating his own money, thereby freeing the German people. Worse, this freedom and prosperity threatened to spread to other nations. Hitler had to be stopped!

Makow quotes from the 1938 interrogation of C. G. Rakovsky, one of the founders of Soviet Bolshevism and a Trotsky intimate. Rakovsky was tried in show trials in the USSR under Stalin. According to Rakovsky, Hitler was at first funded by the international bankers, through the bankers’ agent Hjalmar Schacht. The bankers financed Hitler in order to control Stalin, who had usurped power from their agent Trotsky. Then Hitler became an even bigger threat than Stalin when Hitler started printing his own money. (Stalin came to power in 1922, which was eleven years before Hitler came to power.)

Rakovsky said:

“Hitler took over the privilege of manufacturing money, and not only physical moneys, but also financial ones. He took over the machinery of falsification and put it to work for the benefit of the people. Can you possibly imagine what would have come if this had infected a number of other states?” (Henry Makow, “Hitler Did Not Want War,” March 21, 2004).

Economist Henry C K Liu writes of Germany’s remarkable transformation:

“The Nazis came to power in 1933 when the German economy was in total collapse, with ruinous war-reparation obligations and zero prospects for foreign investment or credit. Through an independent monetary policy of sovereign credit and a full-employment public-works program, the Third Reich was able to turn a bankrupt Germany, stripped of overseas colonies, into the strongest economy in Europe within four years, even before armament spending began.” (Henry C. K. Liu, “Nazism and the German Economic Miracle,” Asia Times (May 24, 2005).

In Billions for the Bankers, Debts for the People (1984), Sheldon Emry commented:

“Germany issued debt-free and interest-free money from 1935 on, which accounts for Germany’s startling rise from the depression to a world power in five years. The German government financed its entire operations from 1935 to 1945 without gold, and without debt. It took the entire Capitalist and Communist world to destroy the German revolution, and bring Europe back under the heel of the Bankers.”

These facts do not appear in any textbooks today. What does appear is the disastrous runaway inflation suffered in 1923 by the Weimar Republic, which governed Germany from 1919 to 1933. Today’s textbooks use this inflation to twist truth into its opposite. They cite the radical devaluation of the German mark as an example of what goes wrong when governments print their own money, rather than borrow it from private cartels.

In reality, the Weimar financial crisis began with the impossible reparations payments imposed at the Treaty of Versailles. Hjalmar Schacht [who was never a Nazi Party member either and now it appears clear why that was the case] – the Rothschild agent who was currency commissioner for the Republic — opposed letting the German government print its own money…
“The Treaty of Versailles is a model of ingenious measures for the economic destruction of Germany. Germany could not find any way of holding its head above the water, other than by the inflationary expedient of printing bank notes.”

Schacht echoes the textbook lie that Weimar inflation was caused when the German government printed its own money. However, in his 1967 book The Magic of Money, Schacht let the cat out of the bag by revealing that it was the PRIVATELY-OWNED Reich bank, not the German government, that was pumping new currency into the economy. Thus, the PRIVATE BANK caused the Weimar hyper-inflation.

Like the U.S. Federal Reserve, the Reich bank was overseen by appointed government officials, but was operated for private gain. What drove the wartime inflation into hyperinflation was speculation by foreign investors, who sold the mark short, betting on its decreasing value. In the manipulative device known as the short sale, speculators borrow something they don’t own, sell it, and then “cover” by buying it back at the lower price.

Speculation in the German mark was made possible because the PRIVATELY OWNED Reich bank (not yet under Nazi control) made massive amounts of currency available for borrowing. This currency, like U.S. currency today, was created with accounting entries on the bank’s books. Then the funny-money was lent at compound interest. When the Reich bank could not keep up with the voracious demand for marks, other private banks were allowed to create marks out of nothing, and to lend them at interest. The result was runaway debt and inflation.

Thus, according to Schacht himself, the German government did not cause the Weimar hyperinflation. On the contrary, the government (under the National Socialists) got hyperinflation under control. The National Socialists put the Reich bank under strict government regulation, and took prompt corrective measures to eliminate foreign speculation. One of those measures was to eliminate easy access to funny-money loans from private banks. Then Hitler got Germany back on its feet by having the public government issue Treasury Certificates.

Schacht , the Rothschild agent, disapproved of this government fiat money, and wound up getting fired as head of the Reich bank when he refused to issue it. Nonetheless, he acknowledged in his later memoirs that allowing the government to issue the money it needed did not produce the price inflation predicted by classical economic theory, which says that currency must be borrowed from private cartels.

What causes hyper-inflation is uncontrolled speculation. When speculation is coupled with debt (owed to private banking cartels) the result is disaster. On the other hand, when a government issues currency in carefully measured ways, it causes supply and demand to increase together, leaving prices unaffected. Hence there is no inflation, no debt, no unemployment, and no need for income taxes.

Naturally this terrifies the bankers, since it eliminates their powers. It also terrifies the internationalists, since their control of banking allows them to buy the media, the government, and everything else.

Britain's ghost towns: Up to a third of shops in high street are shut

Close to a third of shops are empty and derelict in some towns, research reveals.
Though the recession is officially over, its fallout is still spreading through the high street.

The proportion of stores that are empty rose from 12 to 13 per cent in the first half of the year.

In some towns, particularly those in the North, the figure is approaching 30 per cent and expected to rise.

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Boarded up: Blackpool is still suffering the side-effects of the recession with 30 per cent of shops on Central Drive vacant

Blackpool has the worst shop vacancy rate for a large shopping area - 29 per cent - according to research by analysts at The Local Data Company.

Bradford has a vacancy rate of 25 per cent, while Wolverhampton, Doncaster and Hull have figures that are little better.

Among smaller shopping areas, Altrincham, Greater Manchester, has a vacancy rate of 30.04 per cent and Margate, Kent, has a rate of 27.55 per cent.

Dewsbury, West Yorkshire, and Stockton-on-Tees, Co Durham, face similar levels of blight.

The report warns that high streets are being squeezed on all sides by a ‘perfect storm’ of factors.

As well as growing competition from out-of-town supermarkets and online shopping, they face falling demand from cash-strapped customers and plans to increase VAT to 20 per cent in the new year.

Boarded up: High Streets such as Rotherham's have been devastated

Evidence suggests that once the proportion of boarded up shops in an area reaches a critical level, vandals move in and shoppers stop visiting the remaining businesses.

The report, titled The Gathering Storm?, said: ‘Overall at the half-year, there are many more centres getting worse than getting better.’

The analysts found that 21 of the 25 worst performing large shopping streets have seen a rise in shop vacancy since January. The same pattern was seen for 21 of the 25 struggling smaller retail areas.

The figures also exposed the severity of the North-South divide. Of the worst-hit large shopping areas, just three were south of Watford.

These were Watford itself, Bristol and Reading.Mind the gap: Towns in the north of England are suffering from high street shop closures with up to 30 per cent of stores sitting empty in towns like Doncaster, Blackpool and Hull.

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The report warned that northern shopping streets will be particularly
vulnerable to Government public spending cuts and associated job losses.

‘The philosophy underpinning this administration is to shrink the State for good,’ it said. ‘For some big northern and peripheral centres, this could be the perfect storm.

‘Many large and medium-sized centres in the Midlands and North are yet to see a material improvement in vacancy.

‘Given the importance of public sector employment in these areas, it is hard to avoid the conclusion that, in the face of a shrinking State, they are going to struggle to fill their high streets for some time.’

Many town centres across Britain now contain a boarded-up Woolworths

By contrast some shopping centres and high streets in the South are seeing new businesses move into derelict properties.

Bath, Guildford and Henley-on-Thames are doing better, Central London continues to be strong and Wales has seen reductions in vacancy in Cardiff and Swansea.

A spokesman for the Local Data Company, Matthew Hopkinson, said: ‘The impact of the VAT increase, public sector cuts and fierce competition within the "multi-channel" retail environment make it increasingly hard for shops on our high streets.’

He suggested that a switch to online shopping will kill off many bricks and mortar stores, asking: ‘Will we ever need these vacant shops again?’

Colombia: 'Giant fireball' was a meteorite

Colombian authorities confirmed that a "giant fireball" that fell from the sky in the Santander department, central Colombia, was a meteorite.

The Colombian media has been buzzing with eye witness accounts of the fireball, which caused a massive explosion at 3:15PM local time Sunday.

Andina.com reported that Bucaramanga Mayor Fernando Vargas confirmed that the phenomenon was a meteorite that left a crater 100 meters in diameter when it crashed into the earth in the San Joaquin municipality in Santander.

Colombian air force helicopters were commissioned to fly over the area to try to locate the source of the explosion.

The director of the University of Nariño's Astronomic Observatory, Alberto Quijano, told RCN Radio Sunday that he believed the object was a meteorite.

In rural areas of Santander, police received reports that the explosion had shattered windows in the area.

Should You Buy a House Now?

Recently, we have had a number of queries about real estate. And no wonder. For starters, real estate prices have come down. Plus, in an environment with next to zero interest rates, the idea of possibly picking up some income-producing property on the cheap holds a certain appeal to some. Then there’s the fact that real estate is very much a “tangible” – and so should hold up reasonably well, should the fiat currency system come undone, as we expect it will before this crisis is over.

The following, from reader and correspondent Ross, considers the issue of home buying from an interesting angle.

My wife and I have been considering buying/building a house for a while now. After long months of searching, we have had to ask ourselves about the "value" of a home. I say this because my parents in 1972 purchased a 2, 000 sq/ft home for $20,000. That was almost exactly what my father made per year at his job at the time of purchase. Is this ratio one to consider as a prudent homebuyer not trying to live beyond his means? I make about $150,000 a year and can't imagine purchasing a house here in Pittsburgh for that price and being happy with that purchase.

My parents sold their home in 2001 for $180,000, which is obviously 9 times what they paid for it. We are looking at homes in the low 300s to purchase, and I can't imagine the sales price in 30 years being 9 times that price, which would be $2.7 million! So do you see my line of thinking?

Could hyperinflation cause the price to "appreciate" that same way over time? Is inflation what caused my parents home to return 9 times what they paid for it? The reason I wrote to you regarding this topic is that I thought maybe there was a future missive buried in this line of thinking. Maybe not, but if you have time I would love to hear your thoughts on home purchasing at this time.

In response, I have to point out the obvious, that all real estate markets are local. Simply, unless it’s a mobile home, you can’t pick your home up and move. So, for example, you could offer me a house in downtown Detroit for free, and I wouldn’t take it. But a house up the road from me just traded hands at over a million dollars (for the record, a 25% discount off the offering price). So where, and when, to buy will largely depend on local market conditions… and the value proposition of the real estate on offer.

That said, given the dismal outlook for the U.S. economy and housing in particular, if you’re going to buy today – you should only do it on your terms. Don’t let a real estate agent push you into a quick decision or into raising your bid. Someone might beat your offer, but with the large housing inventory, the odds are good another dream house is available just down the block.

Now, as to the inflation question. If you do the inflation calculation, then based strictly on the government’s debasement of the currency over the last 30 years, the $20,000 that Ross’s parents spent in 1972 is the equivalent of $107,000 today. That they sold the property in 2001 for $180,000 confirms that there was more than inflation going on.

As you can see in the chart just below, while they sold it early on in the housing bubble, by 2001 housing prices – encouraged by the Fed’s loose money policies and a collapse in lending standards – were already on their way to the stratosphere.

While much of the appreciation in Ross’s parents’ home can be attributed to currency debasement, it is reasonable to attribute the additional appreciation to the general housing bubble and, finally, positive local market conditions.

But that was then, and this is now. Is now a good time to buy? Again, with the caveat that all markets are local, my general sense is that it’s too early, but maybe not by much.

Weighing in on the “wait a bit longer” side of the argument is the large inventory of homes. And while that inventory is high, it is likely understated due to the shadow inventory of houses owned by fed-up sellers who have pulled their homes off the market in order to rent them and offset some of their carrying costs while waiting for better days. In addition, there are millions of houses that are either in foreclosure or will be before too long, adding to the inventory.

On the demand side, because of high unemployment, a sluggish economy, and the end of government home purchase incentives, home sales are falling again – indicating no significant decrease in house inventories anytime soon.

On the flip side of the argument, today’s mortgage rates are unnaturally low – and so, unlikely to last. When they begin to rise again, they are likely to rise a lot, and in relatively short order. First and foremost, there is no way the government’s benchmark rates can continue to bump along next to zero, especially not with the amount of debt and deficits we’re running. And even a return to a rate close to the long-term norm will have a devastating effect… starting with mortgage rates (and, as a knock-on consequence, house sales and prices).

Secondly, something like 95% of all new mortgages are currently being purchased, or otherwise guaranteed, by Fannie Mae and Freddie Mac. As you don’t need me to tell you, those two organizations have essentially been nationalized and are broke and doomed to fail. Simply, outside of a full-on communistic system where all property is the property of the state, the government can’t be the mortgage lender of first, second, and last resort.

In time, as Fannie and Freddie are revealed for the scams they are – followed by another trillion-dollar bailout – the government is going to have to extricate itself from the mortgage business, which will result in rates being set by the market and not by government dictate.

Thus, buying a piece of property today with a fixed-rate mortgage of just over 4% would be about as cheap a mortgage as you’ll ever get… now and for the balance of your lifetime.

What about inflation? Though one is tempted to add the likelihood of a big inflation to the “buy now” side of the balance sheet – because property is tangible – my sense is that it’s mostly a moot point. While Ross can’t foresee a house that sells for $300,000 today being worth $2.7 million in 30 years, not only can we foresee that happening – we’d be surprised if that were all it sold for. Of course, my reference point is today’s currency units; in 30 years, much fewer “new dollars” will likely be necessary.

That’s because the past 30 years represent the salad days of the current fiat monetary experiment. The fun part, if you will, with everyone feeling wealthier because they had so many more dollars in their bank and brokerage accounts, and because the things they owned that were priced in dollars – Ross’s parents’ house, for example – had appreciated in nominal terms. The next 30 years, however, will include the dark years where the fiat monetary system comes unglued.

When that happens, some analysts expect that the dollar price of sound money – gold – will rise to $5,000 an ounce. Other analysts think it could go much, much higher than that. I don’t know, and to some extent, as long as I have a sufficient position in gold, I don’t care. That’s because the dollar is just a piece of paper with some numbers on it. As long as my gold, and other tangible assets I own, continue to hold their purchasing power, even as the number of zeros on the dollar expands – I’m good to go.

As a tangible, the price of your real estate is likely to rise in dollars’ terms, but only because the dollar is falling. However, the premium that Ross’s parents received as a result of the housing bubble will not rematerialize in our lifetimes. The overbuilding of the recent bubble years, coupled with fairly straightforward demographics related to the baby boom and bust – along with the inevitable return to sane, versus insane, lending standards – will conspire to keep the value of homes, regardless of their price in dollars, at or well below current levels for years and even decades to come.

So, no easy answer to the question of whether now is the time to buy. As with most things, it comes down to a personal calculation, based on how much you can comfortably afford to pay. By extension, that requires further contemplation as to how confident you are that your income and net worth will continue to allow you to afford the payments well into the future. Of course, in addition to your mortgage payments, that calculation has to take into account property taxes, which are going up, as well as maintenance, association dues, and more.

And because all real estate markets are local, you also need to do some serious due diligence on the outlook for local markets. In Ross’s general neighborhood, Harrisburg, Pennsylvania, just defaulted on a $3.3 million municipal bond payment, and Philadelphia’s finances are also in poor shape – so, before buying, he should do enough research to be confident that the neighborhood isn’t going to deteriorate.

Finally, one more reason why we may not have to wait overly long before real estate becomes at least a rational investment. And that reason is that there is a lot of money on the sidelines just now, both in the U.S. and abroad. Much of that money is in cash, and much is in bonds – a disaster in the making.

As interest rates start moving up, and the fiat currencies start to come down, investors will become fairly desperate to get out of bonds and into pretty much anything with a discernable heartbeat. Once housing prices have fallen by another 20%, 30%, real estate will be again considered a safe asset to own, and some percentage of money will certainly begin to flow back into it.

So, personally, I would hold off buying real estate for the time being. At least in the post-bubble markets where the debt still really hasn’t been addressed (much of it now sits on the books of the Fed, and Fannie and Freddie), and where desperate governments will take advantage of the fact that you can’t pick up and move your house to raise your property taxes.

The Casey Report focuses on big-picture investing – analyzing emerging mega-trends and their effects on the economy and markets… and recommending the best ways to profit from those trends, whether they’re positive or negative. To learn more about one of the editors’ favorite investments of 2010, click here.

Ultra-Rich in Finance Are Meaner Than Rest of Us

September 08, 2010 "Bloomberg" -- There is something surprising about a private banker warning his colleagues about the rich. It would be like a director of Volkswagen AG casting doubt on motorists, or the boss of McDonald’s Corp. distancing himself from people who eat fast food. Rather like valets, the main aim of the private banker is to court the wealthy.

At a conference in Zurich last week, the head of Barclays Wealth Management’s private-banking unit, Gerard Aquilina, appeared to issue a red alert about the richest of clients.

“Beware of the complexities of dealing with ultra high net worths,” Aquilina told his audience. “Demanding and often unreasonable” requests from them may create “impossible demands on the organization.”

Such as? Help with getting children into the right school, securing credit to buy property, or obtaining last-minute concert tickets, for example. Even worse, the richest of the rich turn out to be pretty stingy as well. They don’t even want to pay the full fee for all the services they demand.

It was strong stuff. But it was also an insight into the way the rich have changed over the past decade. They are, it turns out, a nasty bunch of people who are only getting nastier. And the banking industry only has itself to blame.

Customer Demands

To some degree, Aquilina’s warning can be seen as the kind of observation you find in every industry. Executives in any business tend to feel the real trouble always comes from the customer, who is often stupid, unreasonable and annoying, and sometimes all of the above.

No doubt, the software engineers at Microsoft Corp. fume about all those blockheads who don’t know how to partition their hard drive, or re-configure the registry file. There must be countless airline executives who occasionally dream about how smoothly their planes would circle the globe if only they didn’t have to fill them up with stupid tourists, their snotty children, and their overstuffed bags.

It’s always the case that people are going to be irritated by those they have to serve. There’s no reason that even super- smooth private bankers should be exempt from that. But Aquilina makes an interesting point.

There is an increasing amount of evidence that the rich are a vicious tribe of people. One study last year from the University of California, Berkeley, found that the rich are ruder than others. Another piece of research, conducted at the same institution, concluded they were less likely to give to charity than poorer people were. A third study, carried out at the Humboldt University in Berlin, concluded they were “nastier,” in the sense of being keener to punish others.

Top of Tree

Nothing is shocking about that. You don’t get to be rich without being difficult and demanding. You need some sharp elbows to get to the top of the tree, and there is no point in being squeamish about treading on a few toes along the way. And the rich have a lot more to protect than other people: They have to be fierce to hang on to all that wealth.

They have probably been vicious ever since one caveman used a bigger club to take control of the grandest cave on the hill.

In the past, most fortunes were built in association with ordinary people. Factory owners were aware of the shop-floor workers on whom their wealth depended, and that shaped the view of themselves. Carmaker Henry Ford doubled his workers’ average pay to $5 a day in 1913 and shortened their working hours. The Cadbury family of chocolate makers in the U.K. built a small town for many of the company’s workers in Bournville, near Birmingham, in the 19th century. That made them more human.

The growth of the financial-services industry and the bonus culture has changed that. The investment bankers and hedge-fund managers who make up most of the new rich elite don’t have much contact with ordinary people. They assume their wealth is entirely the result of their own brilliance. And they cut themselves off from normal life.

It is an industry that mints billionaires and also breeds arrogance, selfishness and snobbishness.

Aquilina has put a spotlight on an industry that only has itself to blame. Maybe that’s why he’s warning others.

http://www.informationclearinghouse.info/article26321.htm

Time for Helicopter Ben to Drop Some Money on Main Street

The Federal Reserve is proposing another round of "quantitative easing," although the first round failed to reverse deflation. It failed because the money went to banks, which failed to lend it on. To reverse deflation, the money needs to be funneled directly to state and local economies. The Fed may not be authorized to "monetize" state bonds, but it COULD buy bonds issued by state-owned banks.

In 2002, in a speech that earned him the nickname "Helicopter Ben," then- Federal Reserve Chairman Ben S. Bernanke famously said that the government could easily reverse a deflation, just by printing money and dropping it from helicopters. "The U.S. government has a technology, called a printing press (or, today, its electronic equivalent)," he said, "that allows it to produce as many U.S. dollars as it wishes at essentially no cost." Later in the speech he discussed "a money-financed tax cut," which he said was "essentially equivalent to Milton Friedman's famous 'helicopter drop' of money." You could cure a deflation, said Professor Friedman, simply by dropping money from helicopters.

It seems logical enough. If there is insufficient money in the money supply (deflation), the solution is to put more money into it. But if deflation is so easy to fix, then why has the Fed's massive attempts to date failed to do the job? At the Federal Reserve's Jackson Hole summit on August 27, Chairman Bernanke said he would fight deflation with his whole arsenal, including "quantitative easing" (QE) - purchasing long-term securities with money created on a computer. Yet, since 2008, the Fed has added more than $1.2 trillion to "base money" doing just that, and the economy is still in a serious deflationary spiral. In the first quarter of this year, the money supply actually shrank at a record annual rate of 9.6 percent.

Cullen Roche at The Pragmatic Capitalist has an answer to that puzzle. He says that as currently practiced, QE is not really a money drop. It is just an asset swap:

"[T]he Fed doesn't actually 'print' anything when it initiates its QE policy. The Fed simply electronically swaps an asset with the private sector. In most cases it swaps deposits with an interest bearing asset."

The Fed just swaps Federal Reserve notes (dollar bills) for other assets (promissory notes or debt) that can quickly be turned into money. The Fed is merely trading one form of liquidity for another, without raising the overall water level in the pool.

The mechanics of how QE works were revealed in a remarkable segment on National Public Radio on August 26, describing how a team of Fed employees bought $1.25 trillion in mortgage bonds beginning in late 2008. According to NPR:

"The Fed was able to spend so much money so quickly because it has a unique power: It can create money out of thin air, whenever it decides to do so. So ... the mortgage team would decide to buy a bond, they'd push a button on the computer - 'and voila, money is created.'

"The thing about bonds, of course, is that people pay them back. So that $1.25 trillion in mortgage bonds will shrink over time, as they get repaid. Earlier this month, the Fed announced that it will use the proceeds from the mortgage bonds to buy Treasury bonds - essentially keeping all that newly created money in circulation. The decision was a sign that the Fed thinks the economy still needs to be propped up with extraordinary measures."

"Extraordinary measures" was a reference to Section 13(3) of the Federal Reserve Act, which allows the Fed in "unusual and exigent circumstances" to buy "notes, drafts and bills of exchange" (debt instruments) from "any individual, partnership or corporation" satisfying its requirements. The Fed was supposedly engaging in these extraordinary measures to "reflate" the money supply and get credit flowing again. Yet, the money supply continued to shrink. The problem, as Roche explains, is that the dollars were merely being swapped for other highly liquid assets on bank balance sheets. That this sort of asset swap will not pump up a collapsed money supply has been shown not only by the Fed's failed experiments over the last two years, but by two decades of failed QE policy in Japan, an economy which remains in the deflationary doldrums. To reverse deflation, it seems, QE needs to be directed somewhere else besides the balance sheets of private banks. What we need is the sort of helicopter drop described by Bernanke in 2002 - one over the towns and cities of the real economy.

There is another interesting lesson suggested by two decades of failed QE: it might actually be possible for the government to "print" its way out of debt, without triggering the dreaded hyperinflation long warned of by pundits. Swapping dollars for debt hasn't inflated the circulating money supply to date because federal debt securities already serve as forms of "money" in the economy.

The Textbook Money Multiplier Model … and Why It Is Obsolete

Beginning with some definitions, QE is explained in Wikipedia like this:

"A central bank ... first credit[s] its own account with money it has created ex nihilo ('out of nothing'). It then purchases financial assets, including government bonds, mortgage-backed securities and corporate bonds, from banks and other financial institutions in a process referred to as open market operations. The purchases, by way of account deposits, give banks the excess reserves required for them to create new money, and thus a hopeful stimulation of the economy, by the process of deposit multiplication from increased lending in the fractional reserve banking system."

"Deposit multiplication" is the textbook explanation for how credit expands as it circulates through the economy. In the textbook model, banks must retain "reserves" equal to 10 percent of outstanding deposits (including deposits created as loans). With a 10 percent reserve requirement, a $100 deposit can support a $90 loan, which gets deposited in another bank, where it becomes an $81 loan, and so forth, until a $100 deposit becomes $1,000 in credit money.

The theory is that increasing the banks' reserves will stimulate this process, but both the Federal Reserve and the Bank for International Settlements (BIS) now concede that the process has not been working in the textbook way. (The BIS is "the central bankers' central bank" in Basel, Switzerland.) The futile effort to push more money into bloated bank reserve accounts has been compared to adding more apples to shelves that are already overstocked with apples. Adding more reserves to a banking system that already has more reserves than it can use has no net effect on the money supply.

The failure of QE either to increase bank lending or to inflate the money supply was confirmed in a March 24 paper by Federal Reserve Vice Chairman Donald L. Kohn, who wrote:

"The huge quantity of bank reserves that were created [by QE] has been seen largely as a byproduct of the purchases [of debt instruments] that would be unlikely to have a significant independent effect on financial markets and the economy. This view is not consistent with the simple models in many textbooks or the monetarist tradition in monetary policy, which emphasizes a line of causation from reserves to the money supply to economic activity and inflation."

The textbook model is obsolete because banks don't make lending decisions based on how many reserves they have. They can always get the reserves they need. If customers don't walk in the door with new deposits, the bank can borrow deposits from other banks, something they can now do at the very low Fed funds rate of .2 percent (one-fifth of 1 percent). And if those deposits are not available, the Federal Reserve itself will supply the reserves. This was confirmed in a BIS working paper called "Unconventional Monetary Policies: An Appraisal," which observed:

"[T]he level of reserves hardly figures in banks' lending decisions. The amount of credit outstanding is determined by banks' willingness to supply loans, based on perceived risk-return trade-offs, and by the demand for those loans. . . .

"The aggregate availability of bank reserves does not constrain the expansion [of credit] directly. The reason is simple: ... in order to avoid extreme volatility in the interest rate, central banks supply reserves as demanded by the system. From this perspective, a reserve requirement, depending on its remuneration, affects the cost ... of loans, but does not constrain credit expansion quantitatively. ... [A]n expansion of reserves in excess of any requirement does not give banks more resources to expand lending. It only changes the composition of liquid assets of the banking system. Given the very high substitutability between bank reserves and other government assets held for liquidity purposes, the impact can be marginal at best."

Again, one form of liquidity is just substituted for another, without changing the overall level in the pool.

If bank reserves do not constrain bank lending, what does? According to the BIS paper, "the main ... constraint on the expansion of credit is minimum capital requirements." These capital requirements, known as "Basel I" and "Basel II," were imposed by the BIS itself. It is interesting that the BIS knows that the main constraints on bank lending are its own capital requirements, yet it is talking about raising them, in an economic climate in which lending is already seriously impaired. Either the BIS is talking out of both sides of its mouth, or its writers don't read each other.

A Solution to the Federal Debt Crisis?

Another interesting aside arising from all this is the suggestion that the government could actually print its way out of debt - it could print dollars and buy back its bonds - without creating inflation. As Roche observes:

"[QE] in time of a balance sheet recession is not actually inflationary at all. With the government merely swapping assets they are not actually 'printing' any new money. In fact, the government is now essentially stealing interest bearing assets from the private sector and replacing them with deposits. ... [T]his policy response would in fact be deflationary not inflationary."

Roche concludes, "the inflationistas have been wrong and the USA defaultistas have been horribly wrong." The inflationistas are the pundits screaming that QE will end in hyperinflation, and the defaultistas are those insisting that the US must eventually default on its debt. Representing both camps, for example, is Richard Russell, who writes:

"In my opinion, the US MUST default on its debt. There are two ways to default. One is simply to renege on the debt.... The other way to default on the debt is to inflate it away. I'm absolutely convinced that this is the path that the US will take. If the US inflates enough, then over time (many years) the devalued dollar will tend to reduce the power of the debts."

The failed QE experiments in Japan and the US suggest, however, that there is a third alternative. Printing dollars to pay the debt (referred to by Russell as "inflating the debt away") might actually eliminate the debt without creating inflation. This is because federal bonds and Federal Reserve Notes are interchangeable forms of liquidity. Government securities trade around the world just as if they were money. A $100 bond represents a claim on $100 worth of goods and services, just as a $100 bill does. The difference, as Thomas Edison said nearly a century ago, is merely that "the bond lets money brokers collect twice the amount of the bond and an additional 20 percent, whereas the currency pays nobody but those who contribute directly in some useful way.... Both are promises to pay, but one promise fattens the usurers and the other helps the people."

The Fed's earlier attempts at QE involved swapping $1.25 trillion in mortgaged-backed securities (MBS) for dollars created on a computer screen. As noted in the NPR segment, many of those securities have come due and have gotten paid off, putting cash in the Fed's till. The Fed now proposes to use this money to buy long-term Treasury debt rather than MBS. That means the Fed will, in effect, be buying the government's debt with dollars created on a computer screen. The privately-owned Federal Reserve is not actually an arm of the federal government, but if it were, the government would thus be printing its way out of debt - just as Helicopter Ben proposed in 2002. Recall that he said, "the U.S. government has a technology, called a printing press" - the US government, not the central bank that has done all the QE to date.

Running the government's printing presses to pay its bills has not seriously been tried since the Civil War, when President Lincoln saved the North from a crippling war debt at usurious interest rates by printing greenbacks (US notes). Other countries, however, have tested and proven this model more recently. They include Germany, which pulled itself out of a massive financial collapse in the early 1930s by printing a form of currency called "MEFO bills"; and Australia, New Zealand and Canada, all of which successfully funded public works in the first half of the 20th century simply by advancing the credit of the nation. China, Malaysia, Guernsey, Jersey, India, Argentina, and other countries have also revived their economies at critical times by this means. The US government could do this, too. It could print dollars (or type them into electronic bank accounts) and spend the money on the sorts of local public projects that would put people back to work and get the economy rolling again.

How to Reverse a Deflation: Do a Helicopter Drop on the States

The government could pay its bills by issuing greenbacks as Lincoln did, but it probably won't, given the current deadlock in Congress. Today, only the Federal Reserve chairman seems to be in a position to act unilaterally, without asking anyone's permission. Chairman Bernanke could execute his own plan and generate the credit needed to get the economy churning again, by aiming his QE tool at the states. After all, if Wall Street (which got us into this mess) can borrow at 0.2 percent, underwritten by the Fed as "lender of last resort," then state and local governments should be able to as well. Chairman Bernanke could credit the Fed's account with money created ex nihilo (out of nothing) and swap it for state and municipal bonds at the Fed funds' rate.

A "state" might not qualify as an "individual, partnership or corporation" under Section 13(3) of the Federal Reserve Act, but a state-owned bank would. Bruce Cahan, an attorney and social entrepreneur in Silicon Valley, California, proposes that the Fed could diversify its role by buying long-term bonds in existing or newly-chartered, state-owned banks. These banks, which would have a mandate to serve state and local communities, would more quickly and accountably lend for in-state purposes than private banks do now. They could be required to use accepted transparency accounting standards to trace how the proceeds of their loans flowed into the economy. Local needs would thus determine how best to jumpstart and keep alive businesses and households that the "too big to fail" megabanks no longer want to fund on fair credit terms. Adding a state-owned bank would also bring competition to regional banking markets such as that of the San Francisco Bay area, which are now dominated by out-of-state megabanks. By funding state-owned banks, the Fed could inject "liquidity" where it is most needed, in local markets where workers are hired and real goods and services are sold.