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Zombie Banks

July 7, 2012

I dont know how else to say this other than to repeat the words of Max Keiser on RT News, banks are dead! Mr. Keiser mentioned many European banks that are insolvent and in this article I want to emphasize the U.S. banks that are insolvent and just running on a combination of TARP funds and the ignorant confidence of North Americans. But this has history. Lets look at a text from Professor Rothbard in his 1983 very appropriately titled book, The Mystery of Banking:

The U.S. government encouraged an enormous expansion in the number of banks and in bank notes and deposits to purchase the growing war debt. These new and recklessly inflationary banks in the Middle Atlantic, Southern, and Western states, printed enormous quantities of new notes to purchase government bonds. The federal government then used these notes to purchase arms and manufactured goods in New England…

By August 1814, it became clear that the banks of the nation apart from New England could not pay [in specie], that they were insolvent. Rather than allow the banks of the nation to fail, the governments, state and federal, decided in August 1814 to allow the banks to continue in business while refusing to redeem their obligations in specie. In other words, the banks were allowed to refuse to pay their solemn contractual obligations…

This general suspension was not only highly inflationary at the time; it set a precedent for all financial crises from then on. Whether the U.S. had a central bank or not, the banks were assured that if they inflated together and then got in trouble, government would bail them out.

And set a precedent it most certainly did. You can read this excerpt from The Mystery of Banking and think it was something that is going on in global finance right now and actually, it is, just a different time period.  So as you the reader can see bank bailouts have a history going back to 1814 that set a precedent for todays bank bailout practices. And just as in August of 1814 banks were allowed to continue doing business as usual while insolvent we are currently in the same situation today. If you watched the Max Keiser link you saw him mention many European banks that are insolvent but I will go ahead here and take the liberty of mentioning the U.S. banks that are insolvent: Bank of New York Mellon, State Street Financial, Morgan Stanley, Wells Fargo, HSBC, Goldman Sachs, Bank of America, Citibank, JP Morgan Chase. These nine “too-big-to-fail” banks have a total of $228.72 trillion in derivatives exposure. Yes that is trillion with a letter T. How in the world can these financial institutions, these zombie banks have more money invested than actually exists in the world?! The worlds economies only have a total of about $25 to $30 trillion dollars in total. The answer is they cant, except by fiat currency, that is the authority to print more paper money out of thin air. Thats right, banks are allowed to print money which is how our government was able to raise the debt ceiling in our nations economy just like state banks had created enough instant money for the federal government to raise the debt ceiling from $45 million to $127 million back in 1814. So what? So they can print more money, good, that means we have more wealth…wrong! Tripling the money supply, with no appreciable increase in goods, means the value of the dollar shrank to about one-third its former purchasing power and ladies and gentleman the same is happening today. Except with one big difference, in 1814, when the depositors began to awake to the scam and demanded their gold instead of paper, the banks closed their doors and had to hire extra guards to protect officials and employees from the angry crowds. Oh but wait a minute! Todays 21st century depositors are clueless on how banks are run and what is done with their money and there is no gold to demand, our currency is backed by nothing. In fact the depositor of the 21st century doesnt even have enough of a clue to even think about demanding gold for their deposits. In 1814, the monetary and political scientists had succeeded in fleecing the North American public of approximately 66% of all the money they held during that period, and that was on top of the 42% fleecing they got a few years earlier by the Bank of the United States. Ladies and gentleman, today we have had the third central bank in place and in play since 1913 and that is the Federal Reserve System, so you can imagine they have and continue to fleece the North American public of much more money than was done in 1814 by the second central bank our country had.

People its time to wake up. Its time for the rise of the Jeffersonian Republicans like Ron Paul and you and me to put a stop to this. We must educate ourselves to the history of banking in the United States and the world. History is not some boring subject about something that already happened. It is very relevant to what is happening today if you get the right teacher who knows the significance of studying our history. Take it upon yourself to educate yourself and if possible others through writings such as this article and the hyperlinks associated with this article. You are worth it, the future of your children are worth it and  I will continue to do my best to share information with you on this very important subject matter in the future.

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From → Economics

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