http://www.zerohedge.com/news/2014-05-21/who-new-secret-buyer-us-debt
Who Is The New Secret Buyer Of U.S. Debt?
Submitted by Tyler Durden on 05/21/2014 18:50 -0400
- Belgium
- Bond
- BRICs
- Central Banks
- China
- Creditors
- Federal Reserve
- fixed
- Gross Domestic Product
- International Monetary Fund
- Japan
- Monetization
- None
- Purchasing Power
- Quantitative Easing
- Reality
- Reserve Currency
- Trigger Event
- Ukraine
- Unemployment
- Yuan
Submitted by Brandon Smith of Alt-Market blog,
On the surface, the economic atmosphere of the U.S. has appeared rather calm and uneventful. Stocks are up, employment isn’t great but jobs aren’t collapsing into the void (at least not openly), and the U.S. dollar seems to be going strong. Peel away the thin veneer, however, and a different financial horror show is revealed.
U.S. stocks have enjoyed unprecedented crash protection due to a steady infusion of fiat money from the Federal Reserve known as quantitative easing. With the advent of the “taper”, QE is now swiftly coming to a close (as is evident in the overall reduction in treasury market purchases), and is slated to end by this fall, if not sooner.
Employment has been boosted only in statistical presentation, and not in reality. The Labor Department’s creative accounting of job numbers omits numerous factors, the most important being the issue of long term unemployed. Millions of people who have been jobless for so long they no longer qualify for benefits are being removed from the rolls. This quiet catastrophe has the side bonus of making it appear as though unemployment is going down.
U.S. Treasury bonds, and by extension the dollar, have also stayed afloat due to the river of stimulus being introduced by the Federal Reserve. That same river, through QE, is now drying up.
In my article The Final Swindle Of Private American Wealth Has Begun, I outline the data which leads me to believe that the Fed taper is a deliberate action in preparation for an impending market collapse. The effectiveness of QE stimulus has a shelf-life, and that shelf life has come to an end. With debt monetization no longer a useful tool in propping up the ailing U.S. economy, central bankers are publicly stepping back. Why? If a collapse occurs while stimulus is in full swing, the Fed immediately takes full blame for the calamity, while being forced to admit that central banking as a concept serves absolutely no meaningful purpose.
My research over many years has led me to conclude that a collapse of the American system is not only expected by international financiers, but is in fact being engineered by them. The Fed is an entity created by globalists for globalists. These people have no loyalties to any one country or culture. Their only loyalties are to themselves and their private organizations.
While many people assume that the stimulus measures of the Fed are driven by a desire to save our economy and currency, I see instead a concerted program of destabilization which is meant to bring about the eventual demise of our nation’s fiscal infrastructure. What some might call “kicking the can down the road,” I call deliberately stretching the country thin over time, so that any indirect crisis can be used as a trigger event to bring the ceiling crashing down.
In the past several months, the Fed taper of QE and subsequently U.S. bond buying has coincided with steep declines in purchases by China, a dump of one-fifth of holdings by Russia, and an overall decline in new purchases of U.S. dollars for FOREX reserves.
With the Ukraine crisis now escalating to fever pitch, BRIC nations are openly discussing the probability of “de-dollarization” in international summits, and the ultimate dumping of the dollar as the world reserve currency.
The U.S. is in desperate need of a benefactor to purchase its ever rising debt and keep the system running. Strangely, a buyer with apparently bottomless pockets has arrived to pick up the slack that the Fed and the BRICS are leaving behind. But, who is this buyer?
At first glance, it appears to be the tiny nation of Belgium.
While foreign investment in the U.S. has sharply declined since March, Belgium has quickly become the third largest buyer of Treasury bonds, just behind China and Japan, purchasing more than $200 billion in securities in the past five months, adding to a total stash of around $340 billion. This development is rather bewildering, primarily because Belgium’s GDP as of 2012 was a miniscule $483 billion, meaning, Belgium has spent nearly the entirety of its yearly GDP on our debt.
Clearly, this is impossible, and someone, somewhere, is using Belgium as a proxy in order to prop up the U.S. But who?
Recently, a company based in Belgium called Euroclear has come forward claiming to be the culprit behind the massive purchases of American debt. Euroclear, though, is not a direct buyer. Instead, the bank is a facilitator, using what it calls a “collateral highway” to allow central banks and international banks to move vast amounts of securities around the world faster than ever before.
Euroclear claims to be an administrator for more than $24 trillion in worldwide assets and transactions, but these transactions are not initiated by the company itself. Euroclear is a middleman used by our secret buyer to quickly move U.S. Treasuries into various accounts without ever being identified. So the question remains, who is the true buyer?
My investigation into Euroclear found some interesting facts. Euroclear has financial relationships with more than 90 percent of the world’s central banks and was once partly owned and run by 120 of the largest financial institutions back when it was called the “Euroclear System”. The organization was consolidated and operated by none other than JP Morgan Bank in 1972. In 2000, Euroclear was officially incorporated and became its own entity. However, one must remember, once a JP Morgan bank, always a JP Morgan bank.
Another interesting fact – Euroclear also has a strong relationship with the Russian government and is a primary broker for Russian debt to foreign investors. This once again proves my ongoing point that Russia is tied to the global banking cabal as much as the United States. The East vs. West paradigm is a sham of the highest order.
Euroclear’s ties to the banking elite are obvious; however, we are still no closer to discovering the specific groups or institution responsible for buying up U.S. debt. I think that the use of Euroclear and Belgium may be a key in understanding this mystery.
Belgium is the political center of the EU, with more politicians, diplomats and lobbyists than Washington D.C. It is also, despite its size and economic weakness, a member of an exclusive economic club called the “Group Of Ten” (G10).
The G10 nations have all agreed to participate in a “General Arrangement to Borrow” (GAB) launched in 1962 by the International Monetary Fund (IMF). The GAB is designed as an ever cycling fund which members pay into. In times of emergency, members can ask the IMF’s permission for a release of funds. If the IMF agrees, it then injects capital through Treasury purchases and SDR allocations. Essentially, the IMF takes our money, then gives it back to us in times of desperation (with strings attached). A similar program called 'New Arrangements To Borrow' (NAB) involves 38 member countries. This fund was boosted to approximately 370 billion SDR (or $575 billion dollars U.S.) as the derivatives crisis struck markets in 2008-2009. Without a full and independent audit of the IMF, however, it is impossible to know the exact funds it has at its disposal, or how many SDR's it has created.
It should be noted the Bank of International Settlements is also an overseer of the G10. If you want to learn more about the darker nature of globalist groups like the IMF and the BIS, read my articles, Russia Is Dominated By Global Banks, Too, and False East/West Paradigm Hides The Rise Of Global Currency.
The following article from Harpers titled“Ruling The World Of Money,” was published in 1983 and boasts about the secrecy and “ingenuity” of the Bank Of International Settlements, an unaccountable body of financiers that dominates the very course of economic lifearound the world.
It is my belief that Belgium, as a member of the G10 and the GAB/NAB agreements, is being used as a proxy by the BIS and the IMF to purchase U.S. debt, but at a high price. I believe that the banking elite are hiding behind their middleman, Euroclear, because they do not want their purchases of Treasuries revealed too soon. I believe that the IMF in particular is accumulating U.S. debt to be used later as leverage to absorb the dollar and finalize the rise of their SDR currency basket as the world reserve standard.
Imagine what would happen if all foreign creditors abandoned U.S. debt purchases because the dollar was no longer seen as viable as a world reserve currency. Imagine that the Fed's efforts to stimulate through fiat printing became useless in propping up Treasuries, serving only to devalue the domestic buying power of our currency. Imagine that the IMF swoops in as the lender of last resort; the only entity willing to service our debt and keep the system running. Imagine what kind of concessions America would have to make to a global loan shark like the IMF.
Keep in mind, the plan to replace the dollar is not mere "theory". In fact, IMF head Christine Lagarde has openly called for a "global financial system" to take over in the place of the current dollar based system.
The Bretton Woods System, established in 1944, was used by the United Nations and participating governments to form international rules of economic conduct, including fixed rates for currencies and establishing the dollar as the monetary backbone. The IMF was created during this shift towards globalization as the BIS slithered into the background after its business dealings with the Nazis were exposed. It was the G10, backed by the IMF, that then signed the Smithsonian Agreement in 1971 which ended the Bretton Woods system of fixed currencies, as well as any remnants of the gold standard. This led to the floated currency system we have today, as well as the slow poison of monetary inflation which has now destroyed more than 98 percent of the dollar’s purchasing power.
I believe the next and final step in the banker program is to reestablish a new Bretton Woods style system in the wake of an engineered catastrophe. That is to say, we are about to go full circle. Perhaps Ukraine will be the cover event, or tensions in the South China Sea. Just as Bretton Woods was unveiled during World War II, Bretton Woods redux may be unveiled during World War III. In either case, the false East/West paradigm is the most useful ploy the elites have to bring about a controlled decline of the dollar.
The new system will reintroduce the concept of fixed currencies, but this time, all currencies will be fixed or “pegged” to the value of the SDR global basket. The IMF holds a global SDR summit every five years, and the next meeting is set for the beginning of 2015.
If the Chinese yuan is brought into the SDR basket next year, if the BRICS enter into a conjured economic war with the West, and if the dollar is toppled as the world reserve, there will be nothing left in terms of fiscal structure in the way of a global currency system. If the public does not remove the globalist edifice by force, the IMF and the BIS will then achieve their dream – the complete dissolution of economic sovereignty, and the acceptance by the masses of global financial governance. The elites don’t want to hide behind the curtain anymore. They want recognition. They want to be worshiped. And, it all begins with the secret buyout of America, the implosion of our debt markets, and the annihilation of our way of life.
And.......
Peter Schiff: The Belgian connection
Submitted by cpowell on Wed, 2014-05-21 01:24. Section: Daily Dispatches
From Doug Casey ( Jim Richard's interview )
9:30p Tuesday, May 20, 2014
Dear Friend of GATA and Gold:
Fund manager Peter Schiff today casts suspicions on Belgium's supposed purchase of $215 billion of U.S. Treasuries since last August, a figure about half the size of the little country's gross national product and $20,000 for each Belgian. Schiff concludes that all this is likely the mechanism by which the European Central Bank is returning the Federal Reserve's favor in 2011 of surreptitiously rescuing European banks, with "Belgium" now buying the U.S. bonds whose purchase the Fed purports to be discontinuing.
Whatever is happening here, it is more evidence that Western central banking is essentially the cosmic deception and destruction of markets and of democracy itself, something that by comparison makes the old Nazi Reichsbank look like a model of transparency and accountability.
Schiff's commentary is headlined "The Belgian Connection" and it's posted at his radio program's Internet site, Schiff Radio --
-- and at 24hGold here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Gold Anti-Trust Action Committee Inc.
Zero Hedge: India's return to gold market may trigger a blizzard of BIS paper
Submitted by cpowell on Wed, 2014-05-21 20:14. Section: Daily Dispatches
From ZeroHedge.com
Wednesday, May 21, 2014
Wednesday, May 21, 2014
... So will India finally allow its population again to purchase gold without limit as it appears set on doing? And how will the price of gold react when the formerly largest buyer of gold is back on the bid and scrambles to make up for one year of lost activity?
We should know shortly, but one thing is certain: In the absence of private-sector manipulation now that even the gold-fixing cartel is imploding, the central bank manipulators, especially those at the Bank for International Settlement, will have to work overtime in selling paper gold to compensate for what may well be a tsunami of pent-up physical purchases out of the country with the 1.2 billion population.
... For the full commentary:
Central banks have markets in lockdown, Embry tells KWN
Submitted by cpowell on Tue, 2014-05-20 19:04. Section: Daily Dispatches
3p ET Tuesday, March 20, 2014
Dear Friend of GATA and Gold:
Markets are becoming even more tightly controlled by central banks, Sprott Asset Management's John Embry tells King World News today.
"We have the markets in total lockdown," Embry says. "The markets have become so manipulated that it's laughable. The situation has become so bad that we have Deutsche Bank coming out and saying that perhaps the Fed and the central banks are controlling markets too much through their guidance. What a laugh that is. It's a whole lot more than guidance."
Embry's interview is excerpted at the KWN blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Gold Anti-Trust Action Committee Inc.
From Doug Casey ( Jim Richard's interview )
The Collapse of the International Monetary System and the Petrodollar, Part II
by Nick Giambruno, Senior Editor
 |
Below I continue my discussion with Jim Rickards, author of the must-read book The Death of Money. To catch part I of this interview, see here.
Nick: Tell us your take on some of the recent geopolitical events with Russia and China, vis-à-vis the international monetary system. What should we look for next?
Jim: We all see what’s going on in Russia. They’ve invaded Crimea. No one in the United States—left, right, or center—thinks the US should respond militarily. That’s not going to happen, but the US doesn’t want to be seen to be doing nothing, and so the US is engaged in financial sanctions, which is a form of financial warfare. The big difference between Russia and Iran—and of course the US has been in a financial war with Iran since 2012—is that Iran wasn’t in a position to fight back, whereas Russia is. If the US escalates its sanctions against Russia, Russia is in a position to do a lot of things. They could dump their US Treasury holdings; they could freeze US assets in Russia; and at the extreme, they could actually unleash Russian hackers and actually shut down the New York Stock Exchange.
So you have this, which is pretty much a replay of the Cold War, when both sides had enough missiles to destroy the other, but you didn’t want to strike first, because the other side could strike back with their extra missiles, their so-called second strike capability, and both countries would be destroyed. This was called “two scorpions in a bottle.” You put two scorpions in a bottle: one stings the other and the victim will die, but it has just enough strength right before it dies to sting back, and they both die. That was the doctrine of mutually assured destruction or MAD during the cold war. So now we have mutually assured financial destruction, and I do see the US a little surprised by this. I thought the US would tread carefully, but they do seem to be escalating the sanctions against Russia—actually having some serious impact, so you can be sure the Russians will strike back. And if there’s more escalation, this could ultimately lead to the point of where there are very serious consequences for the dollar, or catastrophic consequences for the global financial markets.
Then finally over to China. We all know what’s been going on in China. They’ve been buying enormous amounts of gold furiously—as fast as they can. We’re talking about thousands of tonnes. Officially China says it has 1,054 tonnes; they announced that in 2009. But there’s very good evidence—and I talked about all of this in my book, The Death of Money—there’s very good evidence that they have secretly acquired perhaps 3,000 or even 4,000 tonnes of additional gold since then. We see this mostly in the form of Chinese gold mining output, imports through Hong Kong, and the use of intelligence and military assets to bring in gold off the books. So putting it all together, they’ve acquired an enormous amount of gold, but they don’t want to trash the dollar. They have $3 trillion of US dollar-denominated paper, so they’re probably the biggest supporters the dollar has, but they look at the United States and see that the US is actively trying to undermine the value of the dollar because the US is trying to create inflation. Remember, 10% inflation would represent a $300 billion wealth transfer from China to the United States. China is hedging its positions by buying gold.
Putting all this together, we have Saudi Arabia backing away from the petrodollar, US confronting Russia in a financial war, and China acquiring gold to hedge against the dollar collapse. You can look around the world and see a lot of forces. So when the next crisis comes—we can expect it sooner than later—there’s a large group, really most of the world, that wants to walk away from the dollar. That would lead very quickly to a dollar collapse.
Nick: Recently, Senator Carl Levin was talking about using the Foreign Account Tax Compliant Act, or FATCA, as a way to indirectly sanction Russia. What are you looking for next in terms of what the Russians will do?
Jim: Well, that’s another hare-brained scheme. What does FATCA actually do? FATCA is a new law—it was passed in 2010, but it hasn’t come into effect yet—it’s supposed to come into effect July 1, 2014. But the fact is, basically it orders every country in the world to enter into a tax information-sharing agreement with the United States to the satisfaction of the United States. If you do not do so, if you fail to do so, then any interest payments on your securities to parties in your country will be subject to a withholding tax at the source, and the rate is fairly high. I think it’s 30%. And so now Russia was actually in the process of negotiating such a treaty with the United States, but that negotiation was blown up by the confrontation over Crimea. As of now, Russia has no such agreement with the United States, which means that come July 1, Russia will not be in compliance with the dictates of US law, which means that interest payments on Treasury securities to account holders in major Russian banks such as Sberbank and VTB will be subject to this withholding. So what would you do? Well, you would dump the Treasuries, because you don’t want to sit there and hold the Treasuries, if they’re going to be subject to a withholding tax. So basically it’s a way to force the Russians to dump US Treasuries, which increases US interest rates, which hurts our housing recovery and hurts our stock markets. This is like pointing a gun at your own head and saying, “If anyone moves, I’ll shoot.”
Nick: Yeah, it’s ridiculous. Shifting gears, we often talk a lot about the financial effects of the anticipated collapse of the international monetary system, but let’s talk about the sociopolitical effects. In your book you stated, “In the ontology of state power, order comes before liberty or justice.” You want to expand on what that means for those living in the United States?
Jim: In a stable world or a society, you can have liberty and you can have justice; but if society begins to break down, if there are money riots (which I expect), if there’s social unrest—the kind of thing we’ve seen in recent years in Greece and Europe but on a much larger scale: we’ve seen it in Turkey; we’ve seen it actually all over the world, except in some of the developed economies and the US—but if that breaks out, don’t expect the United States government to just sort of roll over and say, “We hear you; we’re going to get rid of inflation and have a stable dollar.”
States don’t go down without a fight, so what you could expect is a kind of neofascist response—executive orders, suspension of civil liberties, you know… just look at your local police force. These are not people who get kittens out of trees. They are in many cases heavily armored, with armored personnel carriers, body armor, night vision goggles, flash bang grenades, high-tech battering rams, surveillance drones, automatic weapons—these are people who are ready to break down your door.
And so what I expect is that as the financial system collapses, the elites will try the SDR, but it will be hyperinflationary. There will be a critical point at which governments will have a decision. If they want to return to something like a gold standard and reestablish confidence in money and rebuild an economy based on real growth as opposed to phony derivatives growth and unsustainable credit driven growth, then you might be able to get society back on the right course. But if, in fact, you want to continue with these money games and social unrest grows, then you should expect something that more closely resembles neofascism. History shows that most people go along with it. They just want to keep their jobs, they want to keep their heads down, they’ll do what they’re told, and so don’t expect a large uprising. We’ve seen this time and again in history.
You know, Nick, I say a lot of things and I write about a lot of things in my book that sound a little bit apocalyptic, in fact, but they’re not. You could look at history, and it’s happened over and over again. There’s no reason not to expect it in the future.
Nick: Yeah, you’re absolutely right; and that’s precisely why we focus on international diversification strategies here at Doug Casey’s International Man. I’d urge our readers to pick up a copy of The Death of Money so that they can better understand the coming reshuffle in the international monetary system and how it affects them.
Jim, thank you again for your time.
Jim: Thank you, Nick.
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