30 April

www.EConRealities.org
 

“Quantitative Easing” (QE) Technicalities

Plus Further Ways the Fed Serves Its Primary Purpose:

Transferring Ever More Wealth from the Many to the Few

The graph of Total Uncle Shame Debt (cash basis¹) demonstrating Federal Reserve becoming dreaded
Lender of Last Resort

simply subtracts what the Fed reports as “Excess Reserves” from the total of outstanding US Treasuries,

because these extra reserves the Fed conjures onto bank balance sheets are precisely what’s spun as QE.

As noted on the Portal page, Excess Reserves are plugging titanic holes in Wall Street balance sheets,* the main
reason those criminal megabanks are still standing. – The linked page lists numerous of their crimes long since
past the statue of limitations to prosecute: By far the worst financial crime spree will remain forever unpunished.

The great majority of Excess Reserves are balanced by US Treasuries on the Fed’s balance sheet since QE2
began in 2010, hence, QE2 is largely the Fed being Lender of Last Resort to Uncle Shame.

Since, however, currency (greenbacks) is also balanced by Mortgage-backed Securities (MBS) on the Fed’s balance sheet,
there’s no precise way to calculate exactly how much Fed conjuring is due to taking on Uncle Shame’s
debt (Treasuries) vs. taking on toxic MBS. But the numbers do reveal the large majority of the $Trillions
Fed has conjured since 2010 purchased Treasuries as Uncle Shame’s Lender of Last Resort:

The total of Treasuries held by the Fed since it began “acquiring” them by conjuring excess reserves
out of nothing in August 2010 has increased by close to two $Trillion. The difference between the total increase
of ( Treasuries plus MBS ) since then minus the increase in currency in circulation is only a bit higher,
hence: Most of what is spun as QE since 2010 is the Fed being Lender of Last Resort to Uncle Shame.²

MBS the Fed takes on, however, are toxic assets, due to mortgage defaults. The meltdown of MBS after the
housing bubbled started collapsing in 2005 was the primary trigger of the 2008 financial near-death experience.

The Fed thus had to become banking’s, that is, the 1%’s Lone Ranger riding to rescue these Crooks in Charge.

Hence, whether the Fed conjures dough to take on Treasuries investors are fleeing, or imploding MBS,
it’s all about continuing to concentrate evermore wealth in ever fewer, ever more powerful hands, especially
via debt money dollars, banksters’ latest version of its age-old “Scheme for the Confiscation of Wealth.”

Although it thus matters little in the big scheme of things, the above analysis demonstrates
the formula used to calculate the graph may overstate how much the Fed is being Lender of Last Resort
solely to Uncle Shame (via purchasing Treasuries) by at most a few hundred $Billion.

Another aspect makes clear this question is like splitting hairs: Official reporting does not reveal how much
of the toxic MBS Fed launders come from the private sector or from the largest holders of MBS, Uncle Shame’s
own MBS issuers like GSE’s Fannie Mae and Freddie Mac (that US salvaged during the SubPrime ambush.)
While the Fed has undoubtedly made toxic MBS whole for numerous privileged members of the 1%,
it’s likely most such private sector bailouts, as official reporting suggested, occurred in 2008 and 2009.
It’s thus likely most if not virtually all the MBS Fed has laundered since
has been from the GSE’s, now clearly just another arm of the Uncle Shame continent-wide octopus.
Hence, virtually if not every penny of QE since 2010 has been desperate Lender of Last Resort to Uncle Shame.

Devils in the Details

MainSpin Media would never dare mention the Fed takes MBS especially off the hands of those fortunate
enough to have sufficient insider connections with the Fed, specifically the NY Fed in the heart of Wall Street,
the Fed branch that handles nearly if not all such transactions.

Those royally/tyranically privileged ones receive close to if not sticker price for their toxic MBS,
then 99% suffer the consequences of that much more conjured debt money chasing prices ever upward.*

QE is thus just further egregious insult to the outrageous injuries suffered by millions of victims
Wall Street suckered into the SubPrime trap especially via the now
toxic MBS the Fed makes whole for the Crooks in Charge and their megabanks,
thus rewarding these ruthless, heinous criminals and their enterprises for raping and plundering most Americans.

(Again: The rest of the toxic if not worthless MBS Fed takes on are from US government agencies, mainly GSE’s.)

Without the $Trillions the Fed thus pumped into the financial system via QE,
the current hopelessly bankrupt system would have long since collapsed in an unfixable heap.

The graph thus accurately reflects how much the Fed, via what’s spun as QE, has become dreaded
Lender of Last Resort
to allow especially Uncle Shame to keep the lights on,
plus also helping provide life support for the brain-dead US financial system – for NOW! –
Again: QE is making the eventual outcome that much worse for the great majority of Americans.

Furthermore, not least because the Fed is never publicly audited, the Fed is able to launder toxic MBS
without outsiders being able to calculate how many have melted to worthless,
since the Fed simply deletes such from the total reported without noting how much was written off,
thereby obscuring how much the US mortgage market continues melting down.
(New MBS obviously counterbalance imploded ones in reports of total MBS nationwide.)

The Fed and banksters thereby keep under wraps how much mortgages implode each year,
laundering and concealing what banks would otherwise have to report as losses,
hence making whole what banks and other MBS owners would otherwise suffer.

It’s likely the nearly two $Trillion of MBS now on the Fed’s book represents many if not more than
ten $Trillion of worthless MBS Fed Welfare for the Wealthy made whole for especially the 0.1%.

Assuming a total of only 5 $Trillion, distributing that massive largesse to all Americans instead
would have provided almost $15,000 per person, or about $40,000 per household, divided equally.

*Re: Erroneous Understandings of Quantitative Easing

including its other primary function: Plugging Titanic Holes in Foundering Banks;

Plus Revealing Details Banksters Work Hard to Obscure,* just like all other cons ever

*along with God only knows how many complicit investing pros and pundits.

Since banksters feed oceans of spin & BS to 90+%, especially to keep sheople from catching on how
their “Scheme for the Confiscation of Wealth” ever transfers ever more wealth from the many to the few,
one rarely to never encounters adequate understanding in US media of banking in general,
and especially not bankster jargon like Quantitative Easing and Excess Reserves.

E.g: Despite much hand-wringing otherwise by endless pundits, the commercial banking system
= all banks that offer checking or savings accounts* are NOT doing anything with the $Trillions of QE
the Fed conjured onto their balance sheets except holding on for dear life (explanation below).
– In fact, that’s all commercial banks can do with QE, overall (see below).

*including the few Savings and Loans remaining after megabanks virtually eliminated that industry
that was their main competitor, especially via endless treachery during the 1980’s.

It is true, however: QE does cheapen the dollar, because the original anointed recipients of the conjured Fed
funds – whether Uncle Shame, or privileged individuals or institutions liquidating worthless MBS* –
are then able to spend that windfall however, thereby increasing the amount of dollars swirling everywhere:
As economists know: More money chasing the same amount of goods and services pushes prices skyward.

The resultant increases in price also maximally benefit the wealthy at everyone else’s expense: As the above
Scheme link explains: continually rising prices ever transfer ever more wealth from the many to the few.

*Although impossible to calculate, Fed taking on Treasuries as Lender of Last Resort
also includes many $Billions if not $Trillions of DOOMED Treasuries
the 1% have thus been able to unload at unheard-of, all-time maximal prices for Treasuries,
also thanks to the Fed’s QE driving prices out of this world while trampling interest rates.

Since all conjured funds remain in the banking system, QE ends up increasing (commercial) banks’ reserves.

Banks most in need of them will end up with them because they won’t lend them out.

One can thus understand QE’s main function, to plug holes in the commercial banking system:
a bank in desperate need of them will simply hang onto them.

Then again, in light of the $Trillions gushing into 1% pockets via QE, maybe THAT’s its main function.

A related crucial consequence of Excess Reserves:

Since the Fed conjures them out of nothing, nothing balances them in the commercial banking system;
QE assets are acquired when the Fed simply conjures funds to purchase them into the seller’s account.

Thus QE does not create debt money the way commercial banks do when they make a loan:
In the latter case, a loan balances the funds advanced against it. (Hence, the commercial banking system overall
ever remains in balance, e.g: paying down principle on a loan withdraws funds from the system (overall*).)

*Since total lending ever mushrooms in a debt money system (until crashes like Subprime),
new lending usually not only absorbs principal payments but exceeds them.

QE is somewhat analogous, e.g: If the Fed diminished its portfolio of assets by selling some,
the funds transferred to the Fed in exchange would simply vanish. The Fed originally conjured the funds into
the commercial bank system, hence when returned to the Fed they return to nothingness, vanish,
hence do not show up anywhere on the Fed’s balance sheet.

Consequently: commercial banks can only transfer QE funds among each other, cannot extinguish them.
A bank using up some of its excess reserves to purchase an asset will thus transfer the excess to the seller’s bank.

Commercial banks are the delighted recipients of QE but have no ability to eliminate it.

Only the Fed can withdraw QE from the monetary system, because the Fed conjured it out of nothing.

For megabanks who each hold up to several hundred $Billion of these “excess reserves” at any one time,
the seemingly tiny 0.5% interest the Fed pays banks on these windfalls can amount to $Billions in annual income!
God only knows how many mega yachts and Caribbean islands have been purchased therewith.

Nor how many $millions if not $Billions got kicked back into pockets of the Fed’s Board of Governers,
few of whom if any aren’t multi-millionaires, or become so on the Board.
Certainly no other institution has anything like the Fed’s ubiquitous access to bank’s most cherished secrets.

One who grasps these complexities also sees lots of possibilities to cook the books, especially since
the Fed is owned by the banks it serves and allegedly supervises, and is never subject to independent audits:
Fed stock, hence votes are apportioned according to a bank’s size. Hence: Megabanks rule!

Or rather: the ultra-wealthy owners/controllers of megabanks truly RULE, DOMINATE and
EXPLOIT imperially, free of virtually any restraint.

The auditless Fed also makes it impossible to know how much of the toxic assets the Fed has laundered have
simply vanished without a trace, without a loss damaging any commercial bank responsible for the fraud(s)..
nor – Heaven forbid! – touching any of the banks’ owners’ personal wealth, those truly responsible for the crimes.

Especially since most everyone nowadays is hooked on credit, depends on bank loans in many to lots of ways,

God forbid banks suffer any losses! God forbid anything threaten this nation of debt addicts’ drug pushers!

Pervasive secrecy among banks, not least the Fed, reflects their primary function,
the primary function of the debt money system they implement: the “Scheme for the Confiscation of Wealth
Greenspan decried in his youth before he sold out to become the worst debt money Maestro ever,
who facilitated the transfer of untold $Trillions of wealth from the rest to the 1% and up.

Such nitty-gritty realities make obvious why the Fed vigorously protects and defends its secrecy, not least
via only reporting its account balances, never revealing totals nor other details of its transactions (certainly not
in any verifiable way). It’s thus impossible to know how many $Trillions of toxic assets the Fed has redeemed
for God only knows how many and which privileged insiders.

In endless ways the Fed continually intervenes in markets to promote the interests of
especially its über wealthy owners, as well as Uncle Shame. E.g:
Without the NY Fed trading desk continually intervening in the Treasury market 24/7/366 to
keep a lid on interest rates, God only knows how many years ago Treasuries would have melted
down the drains into history’s bottomless ocean.

One who grasps the really big picture, however, knows even the Fed’s days are numbered,
to be supplanted by the global central bank that will rise from the ashes of the impending global collapse.
Perhaps the existing Fed buildings will simply be renamed as branches of the
Most High Supreme One’s Divine Universal Bank.

Heaven on Earth is undoubtedly just around the corner.

Hmmm, has some human sometime said something relating power with corrupting?


¹ Uncle Shame Debt in the graph is total “Debt Held by the Public,” i.e, outstanding Treasuries Uncle Shame owes lenders,
hence excludes federal “intragovernmental holdings.” The latter are mostly worthless IOUs for excess social security
tax payments Uncle Shame received over decades past but spent on other programs over the decades rather than invest them*
toward especially Uncle Shame’s catastrophic obligations to Baby Boomers his bare cupboard now has nothing to meet.
Outstanding “Debt Held by the Public” thus also fails to include the dozens if not more than a hundred $Trillion in benefits
Uncle Shame is obligated to provide especially Baby Boomers but present law including taxation rates are utterly unable to meet.

*like all private pension/retirement plans have to by law

² Note re: the violet Lenders/Investors area in the graph:
The informed reader will know this area includes a small tranche of Treasuries held by the Fed to back greenbacks,
but that does not affect the gap representing QE:
Around 1 $Trillion of the Treasuries on the Fed’s balance sheet back greenbacks in circulation (currently – far less in previous decades).
Hence, the formula used to calculate the violet Lenders area includes those Treasuries the Fed balances against greenbacks.*
Since, however, the main function of the graph is to demonstrate how much the Fed had to become Lender of Last Resort,
somehow distinguishing that small tranche of Treasuries the Fed holds against greenbacks would unnecessarily complicate
the graph, but not change the QE gap in the graph, the main issue the graph illustrates.
Furthermore, currency certainly contributes to dollars ever losing value as their numbers increase, hence
excluding that corresponding amount from the graph would significantly understate Uncle Shame’s significant contributions
to what is spun as inflation, a term suggesting expansion when in fact it refers to money imploding in value.
– Ah, but how would the American sheople cope if they knew the truth?!!!!

*the effect of those Treasuries is also subtracted before calculating QE (excess reserves)
on the Fed’s balance sheet, since the latter exclude currency in circulation.