By Graham Summers
Indeed, it just posted the single biggest money pump since Lehman Brothers... on the week of June 27 2011. If you're looking for a reason that stocks have been ramped so much higher in the last two weeks. This is it.
Indeed, for the week ended June 27, the Fed flooded the financial system with $76 BILLION in liquidity. Bill King of the King Report puts that number into perspective noting that it's BIGGEST increase since September 22, 2008 right after Lehman Brothers collapsed.
That's right, the Fed just juiced the system as much as it did when Lehman Brothers went under. While a shockingly large single money pump, the Fed's generally been flooding the system with liquidity at a pace equal to that of 2008 since the beginning of the year.
In 2008, the Fed put roughly $1 trillion in liquidity into the system to try and hold things up. So far in 2011, it's put in nearly $700 billion. You think that the recession ended and systemic risk has gone away? Explain this one.
In simple terms, it's clear that beneath his attempted calm, Ben Bernanke is in fact scared stiff. Why else would he be printing money night and day? If the financial system was indeed stable and secure, why is he pumping money at the same pace as 2008?
This all ties in with what I've been saying for months now... that 2008 was in fact the warm up and that the REAL Crisis is fast approaching. And when it hits, the Fed will be POWERLESS to stop it.
Because this time it will be entire countries, NOT just Wall Street banks that collapse. So what's coming will be the equivalent of 2008 all over again, along with food shortages, civil unrest, outbreaks in crime, bank holidays, and the like. It will, in short, be like what's going on in the Middle East today (though NATO won't be bombing us).
I believe we could see another 2008 situation unfold in the near future, which is why I just unveiled six specific trades to subscribers... all of which will pay off HUGE returns as the current stock market collapse accelerates.
The 2008 Crisis occurred when private US banks became so distrustful of one another's balance sheet risk that interbank liquidity dried up triggering a systemic implosion in the unregulated derivatives market, particularly in Credit Default Swaps (which was a $50-60 trillion market at the time).
The Federal Reserve dealt with this situation by suspending accounting policies (permitting banks to lie about their true balance sheet risk), offering to backstop those banks with the greatest derivative exposure (JP Morgan, Bank of America, Goldman Sachs, and Citigroup), shifting trillions of dollars' worth of toxic debt to the US balance sheet and then funneling trillions of new dollars into the banks most at risk of a derivative collapse (the banks I listed before).
From a philosophical perspective, the Fed removed the notion of "risk of failure" from Wall Street's collective mind. As anyone who's studied human behavior can tell you, without consequence for one's actions most people will take their bad behaviors to the limit.
As a result of this, Wall Street went back to doing what caused the Financial Crisis in the first place: increasing leverage, fleecing clients, and paying its employees' excessive salaries. Today the financial system is once again overleveraged. In fact, leverage levels today exceed those that occurred during the 2008 Tech Bubble, the large banks continue to be insolvent due to their gargantuan derivative exposure.
Put another way, the financial system is primed for another 2008 episode. The very same issues that caused 2008 remain in place. Leverage is far too high. And the unregulated derivatives market remains a multi-hundred trillion dollar problem.
However, the next Crisis will not simply be another 2008. The reason for this is that by transferring trillions in toxic debt to the public balance sheet, the Federal Reserve has put the US's credit rating and debt situation in jeopardy.
To be clear, the US was already bankrupt due to unfunded liabilities (including Social Security and Medicare, the US has over $50 trillion in debt). But the Fed's actions truly brought things to a tipping point.
Consider that before the Financial Crisis the Fed's balance sheet consisted of $800 billion worth of Treasuries. Today, thanks to QE 1, QE lite, and QE 2, it's $2.8 trillion. To put that number into perspective, it's larger than the economies of France, the UK, and Brazil.
Remember, most if not ALL of this increase was the result of the Fed taking on DEBT (and toxic debt at that). With only $51 billion in capital, the Fed now has a leverage ratio of 54 to 1. To put this into perspective, Lehman Brothers was only leveraged at 30 to 1 when it went bust.
Comrades, I know Mr. Summers uses a lot of financial lingo, but I think you all get the drift. Things are looking bad for the stock market.
Some of you may say, "So what? I don't invest in the stock market."
Well neither do I, but if the market completely collapses, it will make the Great Depression of 1929 look like a financial boom by comparison. Our entire financial system could, and probably will fall completely apart. It's almost there already.
Considering the fact that the very people who are supposed to run our finances properly are causing this situation, the future looks very bleak indeed. Europe is falling apart, and we're next. Even China is in deep sh*t.
I have just one question: When everything does fall apart, what will take its place?
I have a sneaking suspicion I already know. I realise many people consider the "Protocols Of The Learned Elders Of Zion" to be a fraud. I myself don't accept them as factual. There's no evidence that they are legitimate. But things seem to be going as they outlined. It could be a coincidence, but then again, maybe not.
IF they are real, the only thing that can stop the "Elders" is National Socialism. I call upon every White Worker, both blue AND White collar to stand together and fight for our Folk. Even if the Protocols are total BS, something sinister is going on. We are systematically being destroyed. If we don't stand up for ourselves, we are doomed.
Support the ANP, if you don't already do so. The ANP is the last best hope for a White America. Hail Victory!