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Dear Elaine,

I think you offer your readers amazing clarity on the current banking situation. You raise an interesting point- "How will the Fed/Govt react when it essentially runs out of moves?" I agree that this could be the impetus for war. This is the main reason why McCain must not be elected. So, you see, it is very difficult to exclude politics from money matters. Your discussions on how they all relate are extremely helpful. I'm grateful.

Take care,




this is a good one!!!



WTC 7 "Just pull it"


My back envelope calculation. After the $225B, the fed will only have about $300B of reserve? The rest is funny paper?

But at current rate $300B will only last another year...

And we are anticipating China lashing out in nasty way after olympic. (or something. bottom line with that kind of money, we are not prepared against major financial catastrophy)

Elaine Meinel Supkis

Not another year. Another six months or less! That is the amazing part. We are entering the end game here.

Robert Sczech

Regarding WTC7: It is an amazing video. Thanks for posting this link. Few people know it, but a reputable professor of structural engineering at the ETH in Zurich (Switzerland) said in public that the collapse of WTC1 and WTC2 was a case of demolition. Whatever the truth is, here in the US, we decided a long time ago to delegate the truth to the dustbin of history and go on with business as usual.

Regarding demands of higher interest rates to be paid by Russia: Contrary to the US (which is the greatest debtor in the world), Russia is a net creditor nation to the world. The Fed must keep interest rates low in order to manage the huge interest bill to be paid by the US to its foreign creditors. The interest paid by Russia is peanuts in comparison to the interest paid by the US.

Regarding reserves of the FED: these are irrelevant. Congress can provide them at a moments notice by authorizing the US Treasury to issue more treasury bonds. In a few years, it will not make much of a difference what assets the FED holds because the distinction between funny money and treasury paper will be only academic.

Regarding Hyperinflation: There is too much loose talk about hyperinflation and not enough distinction between low (benign) inflation, moderate inflation, high inflation and hyperinflation. In order to have hyperinflation, prices have to double every few hours or every few days. Doubling of prices within a few months is not hyperinflation, it is only a case of high inflation. Right now, we still have low inflation. Gas at $4 per gallon is still very cheap and still undervalued. The correct price of gas has to be at least as high as the cost of any alternative production of gas via renewable energy sources. Gas would have to sell at $20 per gallon in order to be expensive. Too many armchair economists (which includes academic economists) do not understand the thermodynamics of energy production which is very unfortunate since it leads to all kinds of confusion about rising prices of fuel. In my opinion, prices of fuel were artificially low in the past. The present rise of oil and energy in general is not a case of inflation. It is a case of economic adjustment to the realities of thermodynamics.

Paul S

The WTC7 vid (www.brasschecktv.com) has been removed.

Elaine Meinel Supkis

The WTC: unlike the professor, I have watched the demolition of towers before this, close up. NEVER EVER do they collapse from the top down. It is the reverse. Good gods! There is endless stupidity about the WTC! People just don't want to look at reality. Those buildings were crappy and built dangerously. Had little internal hard structure so it pancaked. NO one should build like that again. Gah.

Many a badly built structure has collapsed in the past! It isn't all that amazing or unusual. But then, people love to imagine these bombs and thus, will be stuck in this mode of thinking forever. I am baffled as to why.

I don't see these people, NOT ONE OF THEM storming the White House! Eh? Yup. This is all noodling around the internet, a new toy. If this were REAL, you guys would be putting your lives on line to stop the bombers. RIGHT?

Of course. The utter lack of action, the refusal to do the logical next step shows us this is a game, not serious.

Bear of Little Brain

Great (and terrifying) graphs, Elaine.

Whilst I agree that politics is fair game here, I think we could save a lot of heat without any light by NOT having any posts on 9/11. Except this one! ;-)

I do not agree with you, but have deleted my previously-intended response. I watched the whole atrocity live, from the time my neighbour told me that a (the first) plane struck. I watched people fall (or jump) to their deaths (you can't edit real-time). I watched their lives being extinguished. I must have spent hundreds of hours trying to figure out what was really happening there. I think all of us feel our viewpoint is valid. Nothing is to be gained by opening a 9/11 discussion here. No doubt you will have started a torrent of postings, but let us end it here. IT SERVES NO PURPOSE.
(There, you've made me raise my voice.)

Can we agree on a 9/11-free forum? There are other places for "discussing" that.


Over at Automatic Earth (http://theautomaticearth.blogspot.com) is a link to Marketwatch.com

"The Federal Reserve is actively considering creation of a lending facility that would accept "very safe" foreign collateral from "sound" global banks in case of a widespread liquidity crisis, Fed Vice Chairman Donald Kohn said Thursday.

A new global discount window is "under active study," Kohn said. "It is possible that over time, major central banks could perhaps agree to accept a common pool of very safe collateral, facilitating the liquidity management of global banks," he said, stipulating that such loans only be made to sound institutions.

Kohn's suggestion came in prepared remarks wrapping up a special conference in New York on liquidity in money markets that was sponsored by the New York Fed and the Columbia Business School."

I say, define 'safe'. If LIBOR and other benchmarks are fudged, anything can. No wonder Elaine calls them traitors.

Bear of Little Brain

Wow. Just skimmed through the article and the comments (some very good), then tried to wade through the linked text over at the Fed site. What is REALLY going on here? A banking coup d'etat? Is it an attempt to forestall some almighty collapse? It's beyond me.
It is apparent that the central banks are colluding in something.

From Marketwatch:
'A new global discount window is "under active study," Kohn said. "It is possible that over time, major central banks could perhaps agree to accept a common pool of very safe collateral, facilitating the liquidity management of global banks," he said, stipulating that such loans only be made to sound institutions.'

"Very safe collateral"? Like the stuff they're taking now? "Sound institutions"? Like Bear Stern's, maybe Citi soon? Who's he kidding?

From the prepared text (my reading of the sub-text is either, "We are oh so f***d" or, "Out of crisis we shall make opportunity"):
"Globally active banks manage their positions on an integrated basis around the world, and pressures originating in one market are quickly transmitted elsewhere. Central banks should consider how to adapt their facilities to help these institutions mobilize their global liquidity in stressed market conditions and apply it to where it is most needed. That approach will require the consideration of arrangements with sound institutions in which central banks would accept foreign collateral denominated in foreign currencies. Those arrangements are under active study and a number of issues need to be resolved. It is possible that over time, major central banks could perhaps agree to accept a common pool of very safe collateral, facilitating the liquidity management of global banks."

Perhaps they could start with gold.

"Oh, what a tangled web we weave, when first we practise to deceive."

As I said, it's all beyond me. There again, as granny used to say, "Some people are just too clever for their own good."

Bear of Little Brain

RogG? RobG. Sorry


I agree with Bear. I am sick of the 9/11 conspiracies. We are now facing the imminent prospect of all-out nuclear war over the control of oil fields in other countries. Let's discuss that.

So Greg, regarding your WTC 7 posts:

"Just pull it!"

Bear of Little Brain

A light-bulb just lit up. Maybe Kohn IS thinking gold. That Ben Steil/CFR paper on "The End of National Currencies" had this:

"So what about gold? A revived gold standard is out of the question. In the nineteenth century, governments spent less than ten percent of national income in a given year. Today, they routinely spend half or more, and so they would never subordinate spending to the stringent requirements of sustaining a commodity-based monetary system. But private gold banks already exist, allowing account holders to make international payments in the form of shares in actual gold bars. Although clearly a niche business at present, gold banking has grown dramatically in recent years, in tandem with the dollar's decline. A new gold-based international monetary system surely sounds far-fetched. But so, in 1900, did a monetary system without gold. Modern technology makes a revival of gold money, through private gold banks, possible even without government support."

The full paper is here:

But they're trying to suppress the private gold banks ("money laundering"), so are they going to use the idea for themselves? Hmmm.

BTW, while googling for Steil's paper, I found this wonderful video of Mr. Bubbles, sometime last year (posted October, 2007). In this video, it is apparent that he has always been a closet gold man. Amazing. The recording quality is dreadful, but the material is priceless. Well worth watching.



About the only positive thing I see has come out of the way the Fed and Treasury have handled the implosion of the gigantic cheap credit speculative party of the last 25 years is the opportunity for American citizens to see behind the veil of deception.

No one in the U.S. (or any other G7 country can claim now they do not understand that the SOLE PURPOSE of the Fed and Treasury is to feed most of the wealth of their nation directly into the hands of bankers and financiers; and then to protect the wealth of the bankers and financiers from free market consequences when their gambles have turned bad.

NOTHING matters as much to the government of this country as keeping the financial masters of the universe well fed and free from facing the consequences of their own actions.

It has always been thus, since 1789 (yes, Washington, Hamilton, and most others used their government positions to enrich speculators and to speculate themselves). The only exception was Andrew Jackson, who was an evil egomaniac, but who at least refused to use the government as a tool of the banks and speculators.

Elaine Meinel Supkis

Revolutions come in cycles. We are entering such a cycle. Barely. But definitely. The problem is, we have no 'Das Kapital' or Benjamin Franklin or other leaders who can tell us how to deal with today's problems and how to forge a new relationship with humanity. Remember, the promises of the Declaration of Independence were violated instantly when slave owners signed it!

Civil wars and revolutions is what happens when the elites are coddled too much while mucking up too much.


Devaul what was the defining reason that you are in all these countries killing innocent people, and getting ready for nuclear war???? isnt it because of the WAR ON TERROR and what was the significant event that triggered all this, oh thats right the new pearl harbour 911. But hey lets not talk about that, lets just accept the warren commissions report as fact and stick our heads in the sand eh???

you make me sick devaul, you speak with no moral integrity ive seen your rants about blacks, jews and women...you make me sick!

No Elaine i dont see you storming the white house regarding the nuclear war and the end game either WHY NOT?????? IT SEEMS PRETTY IMPORTANT!!!!

so dont throw rocks from your own glass house. The same people who perpetrated 911 are now stealing all your money and laughing at you, but i dont see you doing anything about it, except for repeating the same bi laden consiracy theory that bush, cheney and rumsfeld espoused............must be true if dubya says so eh elaine??????

Elaine Meinel Supkis

I have stormed the White House and Congress in the past! I will do it again in the future. Gads. I actually go to DC to raise hell regularly. Of course, sometimes I can't do it. Like right now due to domestic problems so I harass them from the internet.

But I advocate taking this forwards. Anyone with passions should do this. When, for example, the 2000 election failed, I went to DC to twist arms about counting the votes. When I arrived, NPR and the other news media talked about me for about one hour then noticed no one was following me around so they shut up.

I was the person who broke the story that one of the GOP senators was defecting to the Democratic party! And I told the GOP head of the Senate, he was doomed.

But again: NO ONE CAME WITH ME even though I talked about it on the forums and many people promised.

But that DIDN'T STOP ME. Even one person can shove the wheel of history forwards if they try hard enough. What I see here is the 9/11 people hassling neighbors and friends while NOT hassling the people in DC. Get the difference?

Frankly, I hope to be more active in this sense in the future. I love going around, making things actually happen.


"you make me sick devaul, you speak with no moral integrity ive seen your rants about blacks, jews and women...you make me sick!"

What the hell are you talking about?

I am not FOR war or invading other countries and have spoken against this many times. Everyone here knows this.

There are no rants about Jews, blacks, and women, and you cannot produce them.

I do not need to "speak with moral integrity" to indicate that I am REALLY tired of the 9/11 conspiracy discussions. We all know the government enabled it. That is enough right there to hang them all for treason. Anymore is just wasted breath.

I think, in light of your vicious, unfounded rant above, that you should take a long look in the mirror to see whether YOU speak with any moral integrity.

Bear of Little Brain

Greg, DeVaul

This is the problem with 911, and why it is best left to other forums. It is too emotive for us to deal with in blog comments here, and only serves to channel our anger into a place where it can have no effect instead of somewhere that it could (a gallows, for example). It plays into the hands of the perpetrators.

You both seem to have the same views on 911, yet end up attacking each other. I hope you can agree to it being a misunderstanding. Now I risk being stoned by both of you! :-)

Peace, bro's.

Just for information, I had seen that video some time ago elsewhere. Bringing it to our attention was well intentioned. I just think the events surrounding 911 are too far off-topic for this particular blog. I think we need an executive decision on future 911 material though, Elaine. It's your site.


Well, I agree Bear, and this is why I asked Greg to can it -- albeit not nicely, but Elaine has already asked many, many times to end this discussion of exactly how the buildings collapsed and I am really tired of reading about it. Civil engineering does not interest me on this blog.

Now, this does not even begin to address Greg's outlandish portrayal of me in his long rant. If someone agrees with his opinion of me, I would like to know who it is and why. I have never attacked someone in such a manner as that before ever on this blog or anywhere online simply because they ridiculed my "signature" line or questioned my conviction about a particular incident. That is why Greg is upset, but that is no excuse for making up things about me.

I can always resort to name calling also, but I don't. I have enough respect for someone else's blog to not engage in that kind of behavior.

Elaine Meinel Supkis

I luv ya, DeVaul.



According to a recent Merrill Lynch & Co. report, the U.S. Treasury Department has effectively given Gulf Arab oil producers the green light to break their currency peg to the dollar and instead rely on a currency basket for their financial stability. This report reveals that the Treasury Department issued its own report to Congress admitting that the record inflation rates among Gulf Cooperation Council (gcc) states were, at least partially, because of their currencies’ peg to the dollar. The Treasury also stated that the U.S. government now believes the dollar is strong enough to thrive without the support of the Gulf states. But this green light may well be a harbinger of a massive stampede away from the dollar to other currencies like the euro or yen.

Merrill Lynch & Co. says that both the United Arab Emirates and Qatar will probably break their dollar peg and move to a currency basket within the next few months. Kuwait already enacted both of these measures over a year ago, and Saudi Arabia may do the same before the end of next year.

The long-term prospect is much bleaker.

Gulf state initiatives to diversify their foreign exchange holdings amount to a vote of “no confidence” in the dollar. In effect, this will signal the last days of the dollar’s reign as the world’s reserve currency. Gulf states would stop buying U.S. treasury bonds as a means of regulating their own currencies and instead may even start selling their current dollar holdings. Over the long-term, the breaking of the petrol-dollar peg would mean reduced global demand for dollars, and thus the long-term value of the dollar would likely be biased to the downside. However, if other countries with large dollar reserves, like China and Japan, were to try and offload some of their dollar holdings before the dollar further devalues, a dollar crisis could develop and then the immediate consequences for the American economy would be disastrous.

Gary W

Don't feed the troll.

Gary W

Don't feed the troll.


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