I was pretty upset when I found out that the Treasury Department put the American Taxpayer on the hook for $450 billion so the Fed (who conjures up cash for literally NOTHING and charges us interest on it) would not incur any losses on the $4.5 trillion that they are going to use to buy High Yield (Junk) bonds.

You can imagine that I was even more irate when I learned from Wall Street on Parade that it is FAR worse than I could have imagined. We have seen the Fed increase its balance sheet by over $3 trillion in the last few months. I assumed that, since they conjured up the “money” out of nowhere and bought those assets that that was the end of it.

Not so. The Federal Reserve is owned by member banks in its region. Wall Street on Parade looked at the financial statements of the 12 regional Federal Reserve Banks. What they found was- to me- astonishing. Most of the Fed’s balance sheet came from the New York Fed. There are 12 regional banks but nearly half of the asset purchases (3.9 Trillion were from one region- NY. Of course, the main beneficiaries of the Fed’s largesse are their owners- the major banks like JP Morgan, Citigroup, Goldman Sachs and Morgan Stanley.

So it appears that the Fed conjures up “money” out of nowhere, buys assets, owns assets, charges interest on “money” that was created out of nowhere and, if the assets should lose value we are on the hook for just about ALL OF IT.

Wall Street on Parade …

“When we did the math for all 12 regional Fed banks, the bank share owners were responsible for just 1.8 percent of the 6.98 trillion in liabilities that the Fed has created with the flick of an electronic button. In other words, an institution controlled by five unelected people, with insane power to create money out of thin air by pushing an electronic button, have put taxpayers (and the next generation) on the hook for $6.85 Trillion.”

Let’s not forget about the “printing” they are doing to allow the US government to spend like drunken sailors. The first trillion in US government debt took 205 years to amass from 1776-1981. The last trillion took about 4 weeks. Think about that. We are in the blow-off phase of this credit expansion. It is inflate or die and it appears that all other avenues to create more debt have been utilized and now the Fed is the lender, buyer and OWNER of last resort. They win. We lose.

What about the Swap Programs for 50 foreign central banks and the trillions of dollars that are being sent overseas? Are we on the hook for that too? If the collateral that the Fed takes back for these swap lines goes bad do we eat that too?

The more I learn the more I wish I could just stay in the dark.

Life would likely be more simple if I just ignored all of this- right up until the time we go over the cliff and find out that being prepared was a great idea.

This absurdity has to be the reason that central banks and major banks have been loading up on gold and silver and keeping the prices suppressed so they can get as much as possible. It is obvious to anyone that we the people have been saddled with debts that cannot be repaid with our currencies worth anywhere near where they are today. The USdebtclock.org shows the ghastly numbers. Of course, it does not show the 6.85 trillion we are on the hook for if the Fed’s assets go bad but it does show declining tax revenues, massively increasing national debt (over 25.3 trillion now), massive (over $150 TRILLION) in unfunded liabilities and massive amounts of unemployed Americans. How can anything be repaid with 70% of people USING that freshly conjured up cash to survive on? This means it is conjured up, consumed and all that is left is the debt and interest payments to the Fed that got the debt issued virtually for free. See why you and I would be jailed for counterfeiting? What a racket!

As I am writing this I am seeing that there are riots taking place across the globe. In Chile, people are rioting because they are starving. That has been happening in many other places as the regular people have been pushed to the brink.

I believe that if the US dollar was not the reserve currency of the world the exact same scenario would be playing out right here. Our cash creation machine is still cranking out currency units and the economy is being artificially held up- at least for now.

Just think how sick our economy really is. The US (admitted) deficit for 2020 could be $4 trillion or possibly MUCH higher. Using traditional thinking that $4 trillion would be around 19% of GDP. That is a staggering deficit BUT it is but a pittance of the truth.

According to USDebtclock.org Federal, state and local spending accounts for $9.5 Trillion of our GDP. This produces no output and may actually COST more than the benefit of the spending. This is 44.6% of GDP- government spending (debt-fueled).

In re-doing the numbers, I believe the real GDP- that which actually produces goods and services would be around 11.8 Trillion. This would balloon the deficit to 33.9% of GDP and is a more accurate portrayal of what is happening here.

How long can 70% of our population continue to collect chits that are created from nothing and with no intrinsic value, continue to use this illusion as money for real goods and services? How much more will government spending have to be this year because of the unemployment crisis?

To summarize we have fake “money” creating fake asset prices that “identify” as markets but in reality are just managed casinos. One day, the fake money will hit a number that will likely cause the entire scheme to fall apart. Assets being propped up will fall and assets being held down will fly higher as the real “market” takes over without the central bank, bank and hedge fund interference. That day may be days, weeks or months away but I believe it is approaching. The only thing that appears to me to be a good hold right now are hard assets, companies that produce them and possibly some currencies that can help out if the US dollar loses a good portion of its value- which with what is taking place right now is extremely likely. Actually, it may be necessary to keep this scheme going a little longer.

Do you have a plan in place or are you like the majority who have their fingers crossed and are hoping that “The Fed has our backs”? Clue- The Fed only cares about its- and its owners backs. You and I are simply a means to an end- that they own and control it all. They are WELL on their way!

Be Prepared!

Any opinions are those of Mike Savage and not necessarily of those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The information in this report does not purport to be a complete description of securities, markets or developments referred to in this material. The information has been obtained from sources deemed to be reliable but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.

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