By Peter Papaherakles
On Nov. 27 Bloomberg released an explosive report revealing that the Federal Reserve lent $7.77 trillion to the top U.S. banks during 2008-2009 virtually debt free. By taking advantage of these rates, the banks earned an estimated $13 billion.
The report goes on to say that although the banks had received a $700 billion TARP (Troubled Asset Relief Program) bailout from the government in the fall of 2008, they did not want to reveal the real depth of their insolvency. The Fed secretly worked with the top banks and on Dec. 5, 2008 lent them another $1.2 trillion to help them get on their feet again.
“The banks continued to borrow tens of thousands of dollars” says the report. “Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.”
This report is so full of lies and half-truths it’s not funny. What are these mysterious “guarantees and lending limits?” These top banks in essence split all this money amongst themselves. Citigroup got $1.76 trillion, Morgan Stanley $1.36 trillion, Merrill Lynch $1.28 trillion…on down the line.
The banks that received this money are called Primary Dealers and they enjoy a cozy relationship with the Fed. One could even say they are the Fed. They are JP Morgan Chase, Goldman Sachs, Citigroup, Bank of America, Morgan Stanley, Merrill Lynch and Wells Fargo. The private banks that comprise the misnamed Fed are JP Morgan Chase, Goldman Sachs, Rothschild of London, Rothschild of Berlin, Warburg of New York, Warburg of Amsterdam, Kuhn Loeb of New York, Lazard Brothers of Paris, and Israel Moses Seif of Italy.
Notice That JP Morgan and Goldman Sachs are in both groups and the rest are surely interrelated also. So in essence the banks lent themselves money that belongs to us. If the Fed lent $7.77 to the U.S. at no interest – which is how it is supposed to work – then the economy would be up and running overnight.
Another big lie is that these banks were ever in need of a bailout. In 2008 they all made billions in profits. JP Morgan made $15.4 billion, Goldman Sachs $11.6 billion and Bank of America $15 billion. In contrast, GM sustained a $38 billion loss and still stayed afloat.
The report also does not mention that when the Fed was audited in the summer, it was revealed that it was not $7.77 trillion that was secretly lent out by the Fed, but a staggering $17 trillion! Most of the money went to overseas banks. The European Central Bank alone received an eye-popping $8 trillion and the Bank of England almost another trillion.
Through the sleight of hand known as fractional reserve banking, these banks can lend many times more money than they have and collect interest on it. In the U.S they can legally lend ten times as much, and in Europe 33 times. Usually they lend way more than that. Goldman Sachs, aka the Vampire Squid, has been indicted for lending 333 times more! With this kind of leverage the banks had the ability to turn the $17 trillion into at least $400 trillion! And that’s if they followed the rules. That’s “crazy money” when one considers that the whole world only produces about $60 trillion per year.
All this really reveals a very significant secret. That money is not what we think it is. It is all a grand illusion run by those who get to create it. They decide how much to make available and to whom. By convincing us that we have run out of money, they are creating the illusion of bankruptcy, thus making serfs out of all of us.
The whole “financial crisis” we are seeing in Europe and in the U.S. is all smoke and mirrors. If the Fed can create trillions in virtually interest free money for all their banker friends, surely they can do the same for the government they allegedly represent. There is no depression. The Fed is simply driving us into the ground while their friends earn untold billions from our misery.
Peter Papaherakles, a U.S. citizen for more than 35 years, was born in Greece. He is AFP’s outreach director. If you would like to see AFP speakers at your rally, contact Pete at 202-544-5977.