Tuesday, December 14, 2010

The House Bank's Proxies

Sometime around the turn of the 20th century the Major US Banks came to an agreement regarding what they thought was the 'proper structure' of the American system of banking and how to formalize its formula.  Many technicalities are not known to be exact, and many questions remain about the original partners:  what was their exact motive?  What was their plan for the short and long term?  One thing is certain, they were to use the guise of the Federal Reserve Bank as a proxy to run the US Government.  Once the Government had given them what they wanted, which is control of industry by ways of corporations, they were to abandon the carcass.  The final move is for the Majors to cut ties with the Central Bank itself, or at least try and parlay the system globally.

The system, despite what many would have you believe, revolves around precious metals; gold plays the biggest part.  In the early 1900's gold was known to be the best store of value and thus it backed the paper currencie specified by the American Government.  At one point, there was a rumor fornicated by John Pierpont Morgan that the banking system was insolvent and there was a panic at the banks and a run on the dollar.  With this the Federal Reserve Began.

The Fed, which operates as a private organization, then began a derivative scheme only lately rivaled, and it was after that the the Nation's gold was confiscated.  This gold was used and operated the collateral structure of the finance system.  It was not until '71 that gold traded on the open market, and then only for private, as the governments stepped out.  The short term advantage was the Federal Resserve and chief proxy to the US Government could issue debt without real credit.  The dollar would now be forced upon the world instead of the gold, but the gold would still have a fundamental role to play.

Due to their great abilities as a ways to trade by being fungible and maintaining value they are kept in the vaults of banks worldwide.  They act as collateral, or more specifically they are reserves.  Reserves but they can be traded as both an asset and a liability, making one's bank sheet extremely flexible.

Yet the fathers of the FIAT system hid the fact, and posting revenue doing it.  Twofold, the gold that was put in the Central Banks was to be loaned out and that same gold was possibly stolen and replaced by tungsten bars (there has been many forgeries over the years and Knox has not been audited since the Second World War.  This may be how COMEX, the LBMA, and the ishares got their gold.

Speaking of COMEX, LBMA, and GLD, where is their gold, and is that gold properly audited?  Is the SEC to be trusted as the auditor?  Is having Moody's as the creditor a conflict of interest?  But as far as the US Governing ruling body is concerned, the audit is trusted, everything is fine.

With that, the banks saddle up on the pony.  Equity in the ETF and Central banks is bought via stocks and bonds, and shorts are put on the same plays as credit default swaps and an equity put option.  So if the Central Banks may not have the gold, and the exchanges and ETFs do not have the gold, then should this gold be sold and should this gold be shorted?  Should the bonds the Banks issue as collateral be sold, bought, and shorted?

The ball is dropping on these scheme, with Americans and the world now taking possession of precious metals as a store of wealth, the Majors are dropping their proxies the Central Banks and Central Governments over board.  What holds in store for the current system is anyone's guess.  What is correct is that gold and precious metals, which have always been the corner stone to the financial system, will continue to hold their weight.


  1. That first paragraph for me killed it - one of the best pieces of prose - and truth - I ever saw.

  2. Off topic, but I like the new color scheme/look much better. Much easier to read, imo.

  3. Thank you Scooter T.

    I am glad if the layout is improving. Thank you for your input.