Anat, pt3

Anatomy of a General Plunder

Part 3

When Treasury demanded $700 billion from Congress, where did the money come from?

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Chart 1: Data as of 2008 Sep 10, billions
(Sources: Statistical Releases H4.1 and News Releases, various dates, issued by Federal Reserve.)

’08 Sep 10
Borrowed Reserves 199
Swap Authority 43.0
Swaps 55.6
UST deposit account at Fed Res, total 4.9

Table 1: Data for Chart 1, billions. (Sources same as Chart 1)

This chart displays four sets of data:

a)  balance in the US Treasury deposit account (UST Tot) maintained at the Federal Reserve Bank of New York (all money received or expended by the US Treasury passes thru this account);

b)  Federal Reserve Loan authority (swap Authority) for swap arrangements with foreign central banks;

c)  Outstanding swaps (Swaps), which exceeds “authority”; and

d)  Total Borrowed reserves (bor res)(this is the amount American banks had to borrow from the Federal Reserve to meet their ‘required reserves’; see Part One)

All data amounts represent daily averages for week ended on date shown.

The data shown on this chart covers a time period from May, 1996 to 2008 Sep 10.

Let’s examine these sets of data one at a time, starting with the U S Treasury account.

On 2008 Sep 15, Treasury Secretary Paulsen would go to Congress and demand $700 billion and threatened martial rule if his demand was not met.  For Congress to deliver this amount, it had to show up in the Treasury’s deposit account at the Federal Reserve Bank NY.  For the previous twelve years, the balance in this account hovered around $5 billion (plus two or three billion or minus a billion); it briefly ballooned to $14.9 billion as of 2007 April 30, a time of heavy tax payments to the Treasury.

Where was the $700 billion to come from?  At the time, credit markets were frozen.  Thus, borrowing the money was not possible.  Could Congress impose a temporary tax of $700 billion… on a nation of angry taxpayers?  Who would consent to such a tax to save bank executives who were increasingly perceived as responsible for the crisis?

Chart 2: Data as of 2008 Sep 24, billions.
(Sources same as Chart 1)

’08 Sep 10 ’08 Sep 24
Borrowed Reserves 199 Same
Swap Authority 43.0 Same
Swaps 55.6 Same
UST Total 4.9 122.3

Table 2: Data for Chart 2, billions. (Sources same as Chart 1)

The time period of this chart is nearly four years, compared to the fifteen years of the first chart; the events to be depicted will show more clearly with this time frame.

This chart advances the data (for only UST Tot) two weeks, to 2008 Sep 24.  Suddenly, the balance in the Treasury account at the Federal Reserve Bank, NY ballooned from 5 billion to 122 billion (rounded).  Compare this to the first chart, where such balance is shown to bounce around five billion, plus ten to minus one billion – for fifteen years.

Where did it come from?

We are dealing with the Federal Reserve balance sheet.  A basic rule of accounting is that when a change occurs in one account of a balance sheet, one or more equal and offsetting entries must occur somewhere else on that balance sheet.

Thus, this change in the Treasury’s account must be balanced somewhere else on the Fed’s balance sheet.

To answer our question, the first step is to notice a press release issued by the FRB, 2007 Dec 12.  The pertinent language in this press release is,

The Federal Open Market Committee has authorized temporary reciprocal currency arrangements (swap lines) with the European Central Bank (ECB) and the Swiss National Bank (SNB).  These arrangements will provide dollars in amounts of up to $20 billion and $4 billion to the ECB and the SNB, respectively, for use in their jurisdictions.  The FOMC approved these swap lines for a period of up to six months.

Over the course of the crisis, the Federal Reserve would issue additional press releases authorizing greater limits for these swaps and with additional central banks; more later.

These ‘swap lines’ merely give authority to FR bureaucrats to extend ‘loans’ to the mentioned central banks “for use in their jurisdictions”, and do not show up on the FR balance sheet.  When such ‘loans’ are made, they will show on the balance sheet.  From the time of their inception to 2008 Sep 10, they (authority and swaps) represent somewhat unremarkable events on the FR balance sheet, above.  As of Sep 10, swap authority added to $43 billion and actual swaps added to $56 billion.

This confusion – actual exceeding authorized – is partly owing to the practice of the FRB, for about two years after starting the program, to include swaps in an account with other foreign assets without particularly identifying amounts of the account’s components.  During that time, swap amounts are given by an educated estimate; and errors may range between $10 and $15 billion for each reporting period.

However, please notice that the first authorization occurred just prior to the unprecedented increase of borrowed reserves, beginning 2007 Dec 12.

After 2008 Sep 10, we omit ‘unremarkable’ and replace it with ‘remarkable’; some would say, ‘unprecedented’; see next chart.

Chart 3: Data as of 2008 Sep 24.
(Sources same as Chart 1)

’08 Sep 10 ’08 Sep 24
Borrowed Reserves 199 Same
Swap Authority 43.0 253
Swaps 55.6 Same
UST Total 4.9 122.3

Table 3: Data for Chart 3, billions.

This chart brings data for the Treasury account at the FRB and swap authority forward to 2008 Sep 24.  The swap authority ballooned from $43 billion to $253 billion.  Also, please notice that the scale on the vertical axis has changed from 250 billion to 300 billion.

Now, let’s bring estimated swaps up to date.

Chart 4: Data as of 2008 Sep 24, billions.
(Sources same as Chart 1)

’08 Sep 10 ’08 Sep 24
Borrowed Reserves 199 Same
Swap Authority 43.0 253
Swaps 55.6 133
UST Total 4.9 122.3

Table 4: Data for Chart 4, billions.

Swaps increased from 56 billion to 132 billion during this two week period.  Swaps are an asset item and the Treasury account is a liability item on the FRB’s balance sheet.  So, this shows that dollars loaned to the European Central Bank and the Swiss National Bank to have been transferred, thru a series of transactions, into the Treasury’s account.  This could easily have been done as ultimate customers of these central banks borrowed those dollars and then gave instructions to their brokers to purchase U S Treasury securities (the funds go from a central bank to a private bank in its jurisdiction and then to a customer of such private bank).

Next, let’s complete this update thru Sep 24.

Chart 5: Data as of 2008 Sep 24.
(Sources same as Chart 1)

’08 Sep 10 ’08 Sep 24
Borrowed Reserves 199 367
Swap Authority 43.0 253
Swaps 55.6 133
UST Total 4.9 122

Table 5: Data for Chart 5, billions.

This brings all four sets of data current to 2008 Sep 24.  Here, total borrowed reserves increased from 200 billion to 367 billion; and the scale has increased again, from 300 to 400 billion.  As far as timing is concerned, there is perfect coordination among these four sets of data.  Panic has begun; and martial law is just a pen stroke away… unless Congress allows bank executives to conduct a general plunder of American taxpayers – or, more correctly, a general plunder, thru the sale of Treasury securities, of future generations of Americans.

Now we will bring all four sets of data forward four weeks to Oct 22.

Chart 6: Data as of 2008 Oct 22, billions.
(Sources same as Chart 1)

’08 Sep 10 ’08 Sep 24 ’08 Oc 22
Borrowed Reserves 199 370 711
Swap Authority 43.0 253 784
Swaps 55.6 133 478
UST Total 4.9 122.3 548

Table 6: Data for Chart 6, billions.

Numbers for these sets of data are, as of 2008 Oct 22,

a) total borrowed reserves, 711 billion;

b) swap authority, 784 billion;

c) swaps, 478 billion; and

d) Treasury account, 548 billion.

This chart sort of shows that the money borrowed by American private banks to build up their reserve position was an operation closely coordinated with the activity in swaps and the Treasury account.

From December of 2007 to February of 2011, the FRB issued sixteen press releases pertaining to authorizations for swaps with fourteen central banks.  In two of those press releases, the FRB authorized four central banks (English, European, Swiss and Japanese) to borrow “any amount they wish”.  On the chart, this “any amount” is given a value of $50 billion for each of the four central banks and added to their previous limits.

Of those fourteen central banks one was the European Central Bank.  It is not really a central bank; but a conglomeration of all central banks within the European Union; sixteen in all.  Thus, the total foreign central banks involved in this raid of the US Treasury added to almost thirty central banks.

So, now we will bring the chart forward another four weeks, to 2008 Nov 18.

Chart 7: Data as of 2008 Nov 18, billions.
(Sources same as Chart 1)

’08 Sep 10 ’08 Sep 24 ’08 Oc 22 ’08 Nov 18
Borrowed Reserves 199 370 711 1,005
Swap Authority 43.0 253 784 919


55.6 133 478 561
UST Total 4.9 122.3 548 570

Table 7: Data for Chart 7, billions.

Again, the coordination with respect to timing is nearly perfect.

These numbers are, as of 2008 Nov 19,

a) total borrowed reserves, 1,005 billion (that is, just over one trillion);

b) swap authority, 919 billion (this includes $200 billion to represent four times “any amount they wish”);

c) swaps, 560 billion, and

d) Treasury account, 570 billion.

By this time, Congress had approved the general plunder demanded by banks; but only because those voting for the measure had joined in the plunder thru so-called ‘ear marks’ (that is, ‘pork barrel’, ‘taking their cut’, graft, or whatever else one chooses to call it).  That is, by this time, large amounts of cash had been dumped into the Treasury’s account; and it had begun to be disbursed.  The raid was in full swing.

Chart 8: Data as of 2011 Mar 30, billions.
(Sources same as Chart 1)

’08   Sep 10 ’08   Sep 24 ’08   Oc 22 ’08   Nov 18 ’11   Mr 30
Borrowed Reserves 199 370 711 1,005 1,023
Swap Authority 43.0 253 784 919 700
Swaps 55.6 133 478 561 Zero
UST Total 4.9 122.3 548 570 63.5

Table 8: Data for Chart 8, billions.

This chart brings all data to the present (2011 March); and reverts back to a time span of fifteen years.

What happened?

The situation appears to have been this: major banks were sitting on large amounts of uncollectible debt instruments: residential and commercial loans, student loans, credit card loans, car-lot inventory loans et cetera.  They wanted to shift losses onto taxpayers; but the US Treasury had no cash to buy banks’ bad paper.  Owing to lengthy negotiations between the secretary of the US Treasury, on one side, and central banks in Europe, the Far East and elsewhere, an arrangement was made for the Federal Reserve to lend money to these central banks for re-lending to troubled major international banks.  These latter, then would use the proceeds to purchase UST securities.  The new cash received by the UST would then be gifted to major international banks who would use the proceeds to payoff money borrowed from the Federal Reserve thru foreign central banks.

The result?  An Additional $700 billion added to debt piled onto future generations of Americans; a debt that cannot be paid – and does not deserve to be paid.  One pile of bad paper was exchanged for another pile of bad paper.

That’s what happened.

Did a false flag fizzle?

A notable event on this chart occurs near the end.  On 2010 May 12, the FRB authorized 700 billion of swaps; the authority expired 2011 Jan 30.  In the meantime virtually no swaps were extended.

The first time the FRB authorized swaps in such magnitude, the financial crisis of 2008 Sep swept the globe.  This tells of foreknowledge, at least; and, more probably, complicity in orchestrating such catastrophe.

But, this time, in May of 2010, they prepared the way for another great catastrophe (or general plunder) with new swap authority… and nothing happened.  Or, did it happen… and the market failed to react according to expectations?  Or, did something happen they did not expect… and caused them to call off their new catastrophe?  Did the oil spill in the Gulf of Mexico (2010 May 29) interfere with their plans… or fail to produce the desired results?

The events depicted on these charts are beyond unprecedented.  They represent a major, or unprecedented, financial operation.  In such a case, one central banker does not call another and say, “Hey, I want to conduct a general plunder of your nation tomorrow, and need a hundred billion dollars to pull it off,” and expect the other central banker to say, “Of course… I’ll deliver the money in an hour.”  The scale of this operation and its nearly perfect coordination are possible only after months, maybe years – or even decades of negotiation and preparation.

It sometimes takes a year to finalize all financial details to purchase a house.  To conduct a general plunder of a nation is many orders of magnitude greater than the purchase of a mere house.

Let us step back now, and ask a question, “What are they doing?”

Let’s start with a list of facts,

For the past twenty years, Red China has accumulated large amounts of U S government securities, as of 2010 December, the total exceeded $1.1 trillion.

In late 2009, stories started to appear (Los Angeles Times and MSNBC, for example) about Chinese tour companies organizing tour groups of Red Chinese to travel to the United States for the sole purpose to do nothing but inspect houses for sale.

During the Carter administration, Congress ratified a treaty that gave the Panama Canal to Red China.

It was during the Nixon administration that trade relations with Red China began to take shape.  One of the items that had to be discussed was the method of payment that would be made for goods coming out of China.  The most secure method for China would be to take gold for the goods that it exported.  But, this is not what U S officials wanted; if this method had been practiced, it would have drained Fort Know of gold in a matter of two or three years.  This, of course, presumes there is, or was, gold in Fort Knox, which is very doubtful.

U S officials wanted something very different.  They wanted to establish trade relations with Red China as a means to finance the federal government’s borrowing needs.  When a buyer in America purchases a lawn mower, for example, made in Red China, this sequence of financial transactions takes place: a) the buyer sends payment of $100 to the maker of lawn mowers in Red China; b) this maker deposits the check in his account at a Red Chinese “private” bank; c) this “private” bank converts the dollars to the local currency (for the benefit of the lawn-mower maker) and d) sends the check to the Red Chinese central bank for newly-issued local currency (to replace the amount put in the lawn-mower maker’s account); e) the Red Chinese central bank sends the check to its deposit account at the Federal Reserve Bank of New York; f) instructions are then given to the FRBNY to convert the funds into U S Treasury securities.

This is the series of transactions, multiplied many millions of times, by which the Red Chinese central bank has accumulated more than a trillion dollars worth of U S Treasury securities.

The size of this stash has given many people cause for worry.

For example, the size of the stash is equal to the amount of new Chinese currency issued by the central bank.  This has caused unusually high rates of inflation in Red China.

If the exchange rate of the dollar should drop in world markets, the Red Chinese central bank would suffer losses accordingly.

If the Red Chinese decided to reduce their holding of U S Treasury securities by importing real goods – such as gold, base metals, commodities or economic goods – the dollars used to pay for those real goods would require a simultaneous reduction of Chinese currency.  This would cause an economic slow-down… or catastrophe in Red China and inflation in the country that sold goods in question.

If they decided to merely sell U S Treasuries on world markets, they might be able to sell five or ten billion every month.  Too many people around the globe realize this action would drive the value of the dollar down – possibly to zero.  The general opinion regarding this alternative is that, if the financial community merely suspects that Red China is preparing to set it in motion, there would be a world-wide panic that would result in catastrophic losses for the dollar.

This would destroy every major – maybe all – banking systems on the planet.

I don’t think the Red Chinese fully anticipated these dilemmas that ensued from their agreement to take U S Treasuries for their goods.  But, at the same time, they were not anxious participants.  One thing that had to be done to gain their participation was to give them possession of the Panama Canal.  They must have been told they could use the canal as a choke point in case they had trouble redeeming those U S Treasuries.

The picture must be wider that I am here painting it.  Owing to a wide range of facts, it appears criminal and useful-idiot classes – thru agencies of the Federal Reserve, nearly thirty central banks, the US Treasury, the alliance of Chinese triads, Mexican and Colombian drug cartels, and the Chinese Communist party – are preparing to completely dispossess the American people for the benefit of their new Red-Chinese overlords.  One step at a time, it will be Chapter 45 of Genesis all over again.

Timely, and related, pages,

Summaries of articles pertaining to “Financial” Grievances: Since most of my articles run 5-35 pages, I thot it would be more time efficient to have one page to summarize each article with one paragraph. Please visit.

Summaries of articles pertaining to “Totalitarian” Grievances: … more time efficient. Please visit.

Turn Back the Clock.  I’m 69 (in two months) but I have the health, vitality and body of a near-professional athlete, aged 25 to 35.  I routinely have former pro and college baseball players tell me I would “do well” (a modest remark) if I played “men’s senior league”, a level of play equal to a major college.  In other words, I’m living proof that people do not have to grow old; they can retain or recover the health and vitality of youth; they don’t have to suffer from arthritis, diabetes, kidney failure or any of hundreds of other ailments.  Look what you’ll gain: more strength and a longer life to enjoy the adventures we all know are coming.  You might even want to take part in them.


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