Part 5 – The Real Significance of The Fed’s Zero-Interest-Rate Policy (ZIRP) – The Battle To Save The Fiat Money System Has Begun

Mathias Chang is Malaysian writer, and trained as a lawyer. His viewpoint seems radical or conspiratorial  and far from the established main stream view. It is an interesting view that might have an element of truth too. When US interest rates become very low, say near zero, countries holding the US dollar or the US treasury bills will get almost zero return too.  When US just keep on printing dollar notes to provide endless supply of credit, then it’s not too far fetched to use the colourful term ‘toilet paper currency’.

What would other creditor nations do in response to this situation?  Will the world at large start to shift from US dollar? I think the trend has started and is irreversible. US dollar will certaintly weaken in the medium to longer term against most currencies. 

His full article is found here: http://www.futurefastforward.com/component/content/article/903-feature-articles/777-by-matthias-chang?tmpl=component&print=1&page=

– By Matthias Chang

THE SHADOW MONEY-LENDERS’ LAST GAMBIT


The Fed’s decision to cut the Fed Fund Rates to 0.25 percent means that the Fed has embarked on a Zero-Interest-Rate Policy (ZIRP) and to proceed with the policy of Quantitative Easing (QE) – to turn on the spigot for “limitless supply of credit”.


In layman’s jargon, to encourage more debts – mortgage debts, credit-card debts, car loans, and more importantly to revive the derivative casino, presently on life support. This was the drug addiction that sustained the global financial system in the last twenty years and more intensely in the last seven years!


The announced policy (ZIRP / QE) is the last bullet in the Fed’s arsenal or as I have stated earlier, using another analogy, the final gamble, the last chip on the betting table. There will be no more ammunition left after this.


This huge gamble will take six months to play out but it will end in failure as surely as the sun will rise in the East tomorrow.


But a more sinister aspect of the zero-interest-rate policy which has not been highlighted by any economist or financial commentator is that the United States under the present Bush regime has declared to the entire world that the United States cannot and will not service anymore interest payments on the nation’s outstanding debts amounting to trillions.


Bush has declared that the United States for all intent and purposes is bankrupt and have no means to service the interest due, what more the principal sum.


Bush, Bernanke and Paulson have therefore collectively agreed to give the “two-finger sign” to the world’s creditors and in no uncertain terms are saying that:


You creditors, you a@#holes, you can jerk off. You know, I know and the whole bloody world knows that the US of A have no income to even service the interest which amounts to a few hundred billion a year.   


So let us stop the pretense. We owe trillions and interest on top of that runs to hundreds of billions, which when unpaid is capitalized. And every year we have to borrow from you guys just to pay the interest so as to avoid a call on default. There were so many occasions when we have defaulted, but you guys allowed us to roll over to maintain the façade that the US of A is still floating.


We ain’t floating like a bee, but we are sinking fast! Let’s cut the crap and be real.


So this is the offer. And you jerks better listen good because this will be said once and once only.


You guys should be more than happy with so much interests already accruing on the outstanding. All these years, you guys have been only too happy to see us print the toilet papers in payment of your goods and to service the interests. It was an incredible con and what a free ride we had all these years. You guys were part of the con as well. 


If you insist that I continue to pay you in toilet papers, why do you insist that we issue more toilet papers as interest payments? It is just more toilet papers. You guys are swarmed with toilet papers!


The toilet paper is worthless. So what is the point of paying “toilet paper interest” on outstanding toilet papers?


This is it! We are not paying anymore toilet paper interest. We are going to print more toilet papers to pay for whatever we want to purchase. If you want to sell to us, you will get toilet papers but with no interest. Period!


This is the greatest irony. The Fed, the world’s biggest money-lender and its partners-in-crime are telling their creditors to stuff it! When debtors cannot pay the exorbitant interests and the principal, these financial predators demand that the debtors give their pound of flesh in lieu of cash. But when they borrow, they repay in toilet paper money abd get away with it! 


And now they even have the audacity to give an ultimatum:


We are the biggest buyers in town. If you don’t want toilet papers from us, that is fine by us. You can get tissue papers from the Europeans, bamboo papers from the Japanese and whatever that is on offer. Who is going to argue whether tissue paper would do a better job than plain toilet paper? Hey, this is a free market. Pick your choice!


This is the ultimate poker game. Bush, Bernanke and Paulson is betting that no one will call their bluff, turn away and stop selling anymore goods to the US of A. Bush is counting that the fear of recession and or social unrest in the creditors’ countries will force the creditors to capitulate.


Unfortunately, this gambit will fail. The reason is simple. The US cannot supply the goods that the American consumers want, even the most basic stuff. The manufacturing industries are all anemic, while others are on life support. Without imports, the United States will have to shut down within six months.


There will be massive riots all over the US, with people killing for food and other basic necessities. Basic raw materials, commodities for manufacturing etc. will be unavailable. There will be no more cars on the freeways! Millions of Americans licensed to carry arms will stalk the streets for whatever scrap they can get their hands on.


You can bet your bottom dollar, the Shadow Money-Lenders and its military partner will impose martial law.


Preparation is already on the way.


PRESIDENT BUSH’S STARK WARNING


On Tuesday, December 9th 2008, President Bush in fascist speak stated that, “I have abandoned free market principles to save the free market system.”


If you guys out there still don’t get it, this is what Bush is saying:


I am imposing dictatorial rule!


This is because the opposite of “free market” according to conventional wisdom is “state-control economy”. In a word, Socialism – Big Government.


The Fed and the Treasury, in connivance with Congress, have already approved and financed big time, the acquisition of the major banks in Wall Street through the Troubled Asset Relief Program (TARP), the Term Asset-Backed Securities Loan Facility (TALF), and the $700 Billion bailout plan. Several US financial commentators have already conceded that this is outright nationalization of the financial institutions.


Soon it will be the nationalization of the big corporations like GE, GM, Ford and Chrysler, all too big to be allowed to fail.


Too far fetched? Just look back to the events leading to World War I and World War II and to the dictatorships in Latin America in the 1970s.


How did Franklin Roosevelt get out of the 1930s mess if not for big government policies and engaging in the wars in Europe, against Germany and Japan in Asia? He even decreed Americans could no longer own gold in any form. They were all confiscated. President Roosevelt ruled with an iron fist, and don’t you believe otherwise.


Now that the entire world knows that the Federal Reserve Note (the dollar bill) is toilet paper and even though in law is “legal tender” (i.e. by law the toilet paper must be accepted as full payment of any debt, failing which the debt is deemed paid), the Shadow Money-Lenders cannot afford the risk of an armed open rebellion and the fiat money system to be overthrown. It is therefore necessary in these circumstances to enforce the use of the US dollar toilet paper by military rule and brutality.


To those who are not attuned to “dictatorship speak”, there is no clearer message to prepare the elites for the coming catastrophe that the announcement that free market principles will no longer apply. The emphasis is on the word “free” and not the word “market”.


We can argue till the cows come home whether my reading of events is correct. Time will be the final judge.


WORLD GOVERNMENT BY CONQUEST OR CONSENT


James P. Warburg, the son of Paul M. Warburg (first Chairman of the Board of the Federal Reserve System), had proclaimed that world government is their ultimate objective. But that objective cannot be achieved unless and until the United States is completely subdued. A world government can only come about if there is created a crisis that will engulf the entire world, starting from America. Such a crisis will not and cannot be resolved by any one country. It will have to be a global solution. And since countries can only work through a common mechanism, there is therefore a need for an international institution or mechanism.


The United Nations is the precedent from which a new world government will emerge.


Henry Kissinger, since the onset of the crisis, has been calling and cajoling world leaders to submit to such an endeavour if the world is to avoid a global calamity.


And it will be a socialist world government. Before anyone protest and declare that I have gone insane, let me state here once and for all, I am in full command of my faculties. I have done my research.


Capitalism and Socialism are two sides of the same money-lender’s coin. Both ideologies serve a common master – the global shadow money-lenders.


For doubting Thomases, please consider the following facts:


1)  The Russian October Revolution, led by Lenin was financed by bankers, to be precise, the bankers in New York and Berlin. In New York, the money was organized by the banking firm of Kuhn, Loeb & Co whose directors included Mr. J. Schiff and Mr. Warburg, founder of the Federal Reserve System. In Berlin, the German banker was the brother of the New York Warburg.                  


2)  On January 16, 1962, the Look and Life magazine published the following statement by David Ben Gurion, the first Prime Minister of Israel who was then still in office:


“The image of the world in 1987 as traced in my imagination: The Cold War will be a thing of the past. Internal pressure of the constantly growing intelligentia in Russia for more freedom and the pressure of the masses for raising their living standards may lead to a gradual democratization of the Soviet Union. On the other hand, the increasing influence of the workers and farmers and the rising political importance of men of science, may transform the United States into a welfare state with a planned economy. Western and Eastern Europe will become as federation of autonomous states having a socialist and democratic regime … countries will become united in a world alliance, at whose disposal will be an international police force. All armies will be abolished and there will be no more wars. In Jerusalem, the United Nations (a truly united nation) will build a shrine of the prophets to serve the federated union of all continents; this will be the seat of the Supreme Court of Mankind, to settle all controversies among the federated continents, as prophesied by Isaiah.”


3) On the success of the Russian October Revolution and the abdication of the Czar Nicholas II, the British Premier David Lloyd George said in Parliament, that Britain had achieved one of its major war aims.


4)  The principal aim of Capitalism and Socialism is the centralized rule of an elite political group which owns and or controls all the means of production and the issuance of money and credits – in the case of the former, through various forms of monopoly and in the case of the latter, public monopoly.


WHY WAR IS INEVITABLE               


To prove the point, let me use a simple analogy.


It is often reported in the headlines of newspapers that a certain gentleman or woman had been brutally beaten up for failing to pay the debts due to a money-lender. In Malaysia, money-lenders are often referred to as “Ah-Longs”. This is even the case when the debt is paltry. If the money-lender adopts the “soft method” in recovering a loan, it may encourage defaults and non-payments. Brutality ensures full compliance!


So is the case with nations. When the very survival of a nation is at stake because of economic and or currency warfare, do you really think that the nation at risk would not go to war?


The US invaded Iraq not because of the threat of Saddam’s WMD but for the crude oil and because Saddam was selling crude oil in Euros instead of the dollar toilet paper.


The shadow money-lenders are in a desperate situation and they will start a world war to avoid the collapse of the fiat money system. The war will be financed by the major central banks and their proxies – the 8 to 10 global commercial and investment banks. As in World War I and II, the elites of the City of London and Wall Street will be the primary movers of this insidious plot.


Anyone who doubts this scenario need only to ask one simple question – Do you think the financial powers centred in the West would accept and tolerate their loss of financial power?


I am using such graphic terms because the average Joe Six-Packs have yet to appreciate the full import of the latest announcements by President Bush that the US will abandon “Free market principles”, and by Bernanke of the Fed’s Zero-Interest-Rate Policy. Worst still, the majority of the political leaders of the third world are equally ignorant. This was evident in the APEC Summit in Peru. Like the average Joe Six-Packs, these leaders have no idea how the fiat money system works. When Washington and London say “print”, “open the spigots”, “lower interest rates”, and vice-versa they just follow blindly. There was just one rare exception, when Malaysia opted out during the 1997 financial crisis. Even then, this was temporary as the new Badawi regime has succumbed to the old ways.


Can this war be stopped?


There is a slim chance. If American patriots, who are lawfully armed, rebel and resist the imposition of martial law, world war may be averted.


The IMF has already warned that if the US fails to resolve the crisis, there will be massive social unrest. There will be blood flowing on the streets! Military power would be pitted against brave militias with a proud tradition of having once defeated the mighty British colonial power.

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About kchew

an occasional culturalist
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