Where’s the money???
The stock market is going up.  Gold, silver, and other commodity prices are on the rise.  “Investors” a.k.a. gamblers are placing large bets that the Fed will step in and increase the nation’s money supply by wide margins.  They’re wrong.  Instead, what we are witnessing is the largest transfer of wealth ever perpetrated upon our nation. I encourage everyone to tackle this whole article and spend some time digesting it.  How can I so blatantly state such an accusation?  Allow me to divide it into pieces.

Point 1) The Federal Reserve (“Fed”) is simply a “conduit” between the international banks and the United States government, and it is controlled and run by the international banks.  The Fed does not answer to anybody and their books are off limits to third party audits and our government.

Point 2) The Fed does not have any desire to make a profit.  Any annual profits, after “operating expenses”, are returned back to the US Treasury.  Remember this point, as it is very important later on.

Point 3) Banks were holding a TON of toxic Mortgage-backed securities (MBS’s) that were literally worth around 35 cents out of every dollar.  They were sitting on a 65% loss.  This is a key point! Remember it.

Point 4) The Fed (run by the international banks) undertook a program to buy Mortgage-backed securities from the international banks in amounts exceeding one TRILLION dollars.  The Fed gave the banks 100 cents on the dollar for securities that were only worth 35 cents on the dollar (from Point 3).  How did the Fed pay for this?  They simply created new money.

Wait!  Doesn’t that mean that our money supply shot up and we really are in inflationary (or hyperinflationary) times?  No.  That’s the point most people are missing.  The international banks have the trillion dollars sitting in their “excess reserve” accounts at the Fed.  The money is NOT circulating in the economy!  Instead, the Fed (controlled by the international banks) is paying the international banks interest on it.  You don’t need to believe me.  Here is a link to the Fed’s weekly H.4.1 balance sheet report.  You can see in the Liabilities area of Section 9 (under “Other deposits held by depository institutions”) that the amount is right around $1 trillion.

Point 5) Point 4 presents a dilemma. The international banks are sitting on $1 trillion in their excess reserve accounts that they don’t want to circulate into the economy.  You’ll learn why as we go on.  The Fed is “pretending” like the Mortgage-backed securities that they purchased from the international banks are worth $1 trillion, when they’re really only worth around $350 billion (35 cents on the dollar – from Point 3).  How are the bankers ever going to use their $1 trillion?  How can the Fed ever sell its $1 trillion of Mortgage-backed securities when they are really only worth 35% of that?  IMPORTANT!!!  THE FED HAS A $650 BILLION DOLLAR HOLE TO FILL!  How are they going to fill it, while making the public think that the hole doesn’t even exist?  Let’s put this in a different way.  You know by now that money is simply a claim on the future labor of others.  The Fed is sitting on $650 billion dollars where the labor behind the claim will NEVER be completed.  It’s worthless!  Yet they pretend like the future labor behind the claim still exists.

Point 6) There are still 35% of the mortgage holders making their monthly payments on the $1 trillion of MBS that that Fed owns.  For the sake of discussion we’ll pretend that all of the mortgages are for $200,000, are 30-year fixed, and have 25 years of payments remaining.  We’ll also assume that the interest rate on each mortgage loan is 7% - since many of the loans were to folks with less than stellar credit, and rates were higher over past years.

We know the formula for calculating a mortgage payment is:

PYMT = [AMT * (i / 12)] / [1 – (1 + (i / 12)) ^-N]

Plugging in the numbers we get a monthly mortgage payment of $1,330.60.  We’ll round it to $1,330 for this discussion.

After 5 years of payments the loan balance would be:

AMT = [PYMT * [ 1 – (1 + (i / 12)) ^-N]] / (i / 12)

Again, plugging in the numbers leaves us with a remaining loan balance of $188,177.58.  We’ll round this number to $188,000 to keep things relatively simple.

The next task is to figure out how much of the current payment is principal on the promissory note and how much is interest.

The interest amount will be:

INTEREST = (i / 12) * REMAINING BALANCE, which is (0.07 / 12) * $188,000 = $1,096.66.  We’ll call it $1,095.00.

The principal amount will be:  PRINCIPAL = MONTHLY PAYMENT – INTEREST = $1,330 - $1,095 = $235.00.

We’re almost done with our data gathering.  We’re estimating that 35% of the $1 trillion dollars of Mortgage-backed securities (MBS) that the Fed owns are having payments made on them.  How many of our average $200,000 loans will go into $350 billion (35% of $1 trillion)?

$350 billion / $200,000 = 1.75 million loans

We can now estimate that the Fed is receiving approximately $411 million of principal payments each month (1.75 million loans x $235 per loan).  Likewise, they are getting $1.92 billion of interest payments (1.75 million loans x $1095 per loan).

Are you still with me?  We’re now to the really interesting part.

The Fed is bringing in $1.92 billion dollars of pure profit from interest payments each month.  Here’s a simple question that really, really needs to be answered…

Point 7) WHERE’S THE MONEY???

Is the interest money recorded as profit to be returned to the Federal government? No.  Is it listed as an asset? No. Is it listed as a liability?  No.  Don’t believe me?  Here’s the link to the Fed’s weekly balance sheet report H.4.1.  See if you can find where that money is going.  There’s even archives of past reports at the link to help in the search.

Wait a minute here.  It absolutely HAS to be one of those!  Our does it?

Think about it for a minute.  The Fed is receiving $1.92 billion in cash each month.  The Fed has ABSOLUTELY NO USE for cash.  It distributes cash out into the economy – it doesn’t hold it on its books.

Here’s the point people need to understand.  The Fed is taking the interest money and throwing it into the $650 billion dollar hole, in order to start filling up the hole with what that cash represents – claims on our future labor!

Point 8) What happens with the $411 million the Fed receives each month in MBS principal payments?  Normally, principal payments cause the underlying loan to decrease by the amount of the principal payment.  There’s a problem with this – it doesn’t meet the end-game goal of the fraud that the Fed is promulgating.

The Fed does not want the outstanding balance of the MBS that it holds to decrease!  They don’t want the incoming principal payments to apply to the loans.  How can they avoid this?

How many remember the Fed announcement from August 10th, where they decided:

“To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve's holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities.”

The Fed is taking principal payments that should go to reduce the MBS debt, and instead using those to buy more US Treasury securities.  This takes cash coming in the back door as principal payments and transforms it into Treasury securities that are claims on our future labor.  No new money is created during this exercise.

Effectively, the Fed uses the newly purchased Treasury securities to replace the MBS amount that would have been paid down with principal.  The MBS notes reduce as the borrowers pay them off, but the reduction is replaced with new securities that have claims on our future labor!

Point 9) So what do we have?  We have principal and interest payments coming in the back door.  The interest is thrown into the enormous hole that the Fed won’t admit exists, causing some of that previously uncollectable claims on future labor to reconstitute itself.  The principal is funneled through the front door to buy US Treasury securities so that the Fed doesn’t need to hold any cash, and so that the Treasury securities can replace the amount that was paid down on the MBS loans.

The goal of the Fed is to continue this little game until the MBS hole is refilled with fresh claims on our future labor – instead of no claims on anybody’s labor like it originally had.  What happens when the hole gets filled up?

Point 10) The Fed will eventually reach the point where it has filled the $650 billion dollar hole with new claims on our future labor.  It will also still have the original $350 billion dollars that the borrowers paid off, since it converted this money to Treasury securities instead of marking down the loans.  In other words, the Fed will hold $1 trillion dollars - $350 billion of Treasury securities and $650 billion of MBS securities – all of it backed with claims on our future labor.

Do you see what happened?  The entire $1 trillion dollars of MBS and Treasury securities has now been made whole against claims on our future labor.  The entire $650 billion loss that the banks originally had has disappeared!  The banks will be stealing $1 trillion dollars from us ($650 billion from the hole they had, and $350 billion in Treasury securities against loan principal that should have gone away).

Point 11) Now we have the Fed sitting on $1 trillion dollars of securities that are claims on our future labor.  We have the international banks sitting on $1 trillion dollars cash in their “excess reserve” accounts that the Fed originally paid them, in exchange for their toxic Mortgage-backed securities.  What happens next?

The Fed will sell the $1 trillion of securities it holds in exchange for the $1 trillion dollars that the international banks hold.  The banks will now own the securities – and the claims on our future labor.  The Fed will own the $1 trillion dollars in cash – which it will simply destroy, reducing the Fed’s balance sheet by $1 trillion dollars.

The media will trumpet the fact that the economy has improved SO MUCH that the Fed is able to bring its balance sheet down to a more manageable $1.3 trillion dollars, instead of the previous $2.3 trillion.

People will blindly take this “great” news as a sign that the economy has turned the corner – not realizing in the least that the international bankers have just robbed them to the tune of $1 trillion dollars.

Point 12) How much new money will have been added to our economy (circulating) through this entire process?  The answer is zero.  The international banks will have not only kept the deflationary course they desire intact, but they will have accomplished the largest transfer of wealth in the history of the world.

How long America?  How long?

Your comments and questions are welcome…

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