NOTHING LEFT TO RESEARCH, NO MORE MYSTERIES

From Market Skeptics 

By Eric deCarbonnel

Having finished my video series about the ESF and its history, there is nothing left to research.  All the big mysteries have been answered (why JFK died, why 9-11 happened, why there are so many “conspiracy theories”, etc…) in a way that I am satisfied with.  So MarketSkeptics.com will be going back to daily blog entries about current events.

Like Harry Markopolos’s warnings about Madoff’s Ponzi scheme, I doubt the videos on the ESF will be heavily watched until after the dollar collapses.  Only after a Ponzi scheme ends do people realize how obvious it was.

The flaw in any Ponzi scheme is that in the end the promises being made have no collective chance of being kept. UNTIL A DAY OF RECKONING DAWNS, however, THE SPONSORS’ FALSE PROMISES ARE MISTAKEN FOR TRUTH AND PARTICIPANTS IN THE SCHEME APPEAR TO PROSPER. The apparent prosperity of the enterprise tends to disarm critics of the scheme…

… The scheme’s sponsors know that they are running a con game, but subscribers do not.Keeping subscribers and potential critics from learning or guessing this hidden information becomes increasingly difficult the longer the scheme goes on. Once economically unsound elements in the scheme begin to surface—as inevitably they must—public confidence …can collapse rapidly.

Below is quick summery of the videos about the treasury’s ESF:

The ESF and Its History (Part 1)
The Exchange Stabilization Fund (ESF) is a super-secret treasury operation.  The ESF’s official purpose is defending (stabilizing) the value of the dollar.  It operates from within the New York Fed and has authority over all International Monetary Affairs.  The ESF keeps a low profile using the Fed as a front

In 1934, the treasury hijacked the Federal Reserve through the gold reserve act.  The treasury’s ESF was created and took control of America’s gold.  The ESF was a guaranteed disaster because it operates with dictatorial power and no oversight.

The ESF and Its History (Part 2)
The ESF’s begins financing covert operations during World War II and has been running the US black budget ever since.  The ESF designs the current international monetary system (with the dollar as the world’s reserve currency), and creates the IMF and World Bank in its own image to finance cold war covert operations.

The ESF and Its History (Part 3)

Under the cover of “foreign aid”, the ESF wastes the US’s monetary wealth funding all manner of CIA operations: overthrowing democracies around the world, setting up a worldwide propaganda network, etc…  By the late 1950s, the ESF had spent the entire US gold reserves.

Faced with a collapse of the dollar, which would reveal what the treasury had done to wreck the world’s monetary system, the people at the ESF began defending the dollar like their lives depended on it (because they did).

The ESF and Its History (Part 4)
In the 1960s, the ESF begins is desperate dollar defense and multi-decade Ponzi scheme.  This involves:

•  Currency interventions to prop up the dollar (by borrowing foreign money)
•  Gambling in derivative markets
•  The London Gold Pool
•  Deceiving the world (debasing statistics, propaganda, corrupting economics, etc)
•  Arm-twisting "pro-US" governments
•  Seeking repayment on phony IMF and World Bank loans

President Kennedy disagrees with the ESF and dies.  Things spiral out of the ESF’s control until the 1980s when deficits stopped mattering.

The ESF and Its History (Part 5)
Explains why deficits stopped mattering.  This involves:

•  Iran-Contra and the Reagan Doctrine
•  Dollarizing the world through bulk currency shipments
•  Treasury profits from the "war on drugs"
•  BCCI
•  The HIV=AIDs fraud
•  The Mighty Wurlitzer Plays On
•  The "superdollar"

Describes the breakdown in the flow of heroin in 2001 and how deficits were about to start mattering again.  Then 9-11 happened, and now 93% of the world’s heroin is produced under protection of US troops.

Explains the structure of a Ponzi scheme and why there are so many “conspiracy theories” today; how the financial system has been corrupted using the “bad banker” deception; and, finally, how the ESF’s dollar fraud is collapsing.

Part 1:


Part 2:


Part 3:


Part 4:


Part 5:



For the links to all the material covered in Videos, click here.

Giant Italian Debt Bubble Is Popping

From Zero Hedge: 
As was reported last week, Europe has suddenly found itself shocked, shocked, that the bond vigilantes decided to not pass go and go directly to the purgatory of the European core, in the form of the country that, at €1.5 trillion euros, has more debt than even Germany, but far more importantly, has a debt/GDP ratio of over 100%, and has the biggest amount of net notional CDS outstanding (not to mention that it has dominated Sigma X trading for the past several weeks). Italy. On Friday we explained why things are about to get really ugly for the boot as a flurry of bond auctions is now imminent. Which is why it was not surprising to read that tomorrow morning the European Council has called an emergency meeting "of top officials dealing with the euro zone debt crisis for Monday morning, reelecting [sic; we assume Reuters means reflecting] concern that the crisis could spread to Italy, the region's third largest economy." Newsflash: the crisis has spread to Italy. And it will only get worse at this point as Spain is largely ignored for now (until its own mortgage crisis starts making daily headlines like this one, however, where courtesy of the insolvent Cajas which are simply a GSE waiting to be nationalized, the can will be kicked down the road for at least 6-9 months ) and the vigilantes start dumping Italian debt and buying up every CDS available and related to Italy. "We can't go on for many more days like Friday," a senior ECB official said. "We're very worried about Italy." But, but, didn't Draghi just say Italy's banks will pass the second, "far more credible" stress test en masse? Welcome to the second, and final, part of the European insolvent dominoes contagion, the one which culminates with everyone bailing each other out... and the death of the euro currency of course.
As a reminder, this is the key chart that matters vis-a-vis Italy.

More from Reuters:

European Central Bank President Jean-Claude Trichet will attend the meeting along with Jean-Claude Juncker, chairman of the region's finance ministers, European Commission President Jose Manuel Barroso and Olli Rehn, the economic and monetary affairs commissioner, three official sources told Reuters.

The talks were organized after a sharp sell-off in Italian assets on Friday, which has increased fears that Italy, with the highest sovereign debt ratio relative to its economy in the euro zone after Greece, could be next to suffer in the crisis. A second international bailout of Greece will also be discussed.

We reported on the UniCredit collapse, but here it is again:

Shares in Italy's biggest bank, Unicredit Spa, fell 7.9 percent on Friday, partly because of worries about the results of stress tests of the health of European banks that will be released on July 15. The leading Italian stock index sank 3.5 percent.

The market pressure is due partly to Italy's high sovereign debt and sluggish economy, but also to concern that Prime Minister Silvio Berlusconi may be trying to undermine and even push out Finance Minister Giulio Tremonti, who has promoted deep spending cuts to control the budget deficit.

"We can't go on for many more days like Friday," a senior ECB official said. "We're very worried about Italy."

Greece or Italy? Pick one.

Monday's emergency meeting will precede a previously scheduled gathering of the euro zone's 17 finance ministers to discuss how to secure a contribution of private sector investors to the second bailout of Greece, as well as the results of the stress tests of 91 European banks.

Back to "square one."

A senior euro zone official told Reuters on Friday that rather than progress being made in the talks with the IIF, as IIF managing director Charles Dallara has said, all sides were close to being "back to square one."

Dallara will attend the meeting of euro zone finance ministers in Brussels on Monday.

Since the euro zone's debt crisis erupted last year, the region's rich governments have aimed to isolate it to Greece, Ireland and Portugal, which have signed up to bailouts totaling 273 billion euros -- a sum that is small compared to the financial resources of the zone as a whole.

Spain, commonly seen as the next potential domino in the crisis, has managed to retain its access to market funding through fiscal reforms. But because of the large sizes of the Spain and Italy, pressure on the euro zone would increase dramatically if those countries eventually needed financial assistance.

Actually make that square minus one. So as Europe scrambles to convince itself it is not insolvent, America is doing the same across the pond. And when everything comes crashing down, as it will, once again nobody "will have been able to predict any of this."
__________


Related:

EU President Calls Emergency Meeting On Italy, As Brand New Game Of Chicken Emerges In Europe

US hedge funds bet against Italian bonds

Funds increase short positions in Europe’s largest bond market amid the highest yields since October 2002 and growing fears over the country’s ability to finance itself

ECB Insider: European Rescue Fund Not Big Enough to Save Italy

Italy May Enforce Naked Short Selling Ban As Early As Tonight To Prevent Market Rout

Regulatory Panic Spreads As Italy Orders Short Sellers To Disclose Positions

EU Calls Emergency Meeting on Italy; Don't Worry "It's a Coordination, Not a Crisis"; Short Sellers Blamed; Junckeritis Spreads

Italy and Spain must pray for a miracle

Italy's economy: in graphs

Wait, You're Following The Mecklenburg-Vorpommern Regional Elections, Right?

Phone-hacking becomes UK's Watergate

From PressTV, Sun Jul 10, 2011 

The phone-hacking scandal in Britain is turning out to become the country's Watergate, a spreading scandal that will endanger all including politicians, the media and police.

The scandal enjoys the potential to topple Rupert Murdoch, known as the UK's most powerful man since then Prime Minister Winston Churchill as well as David Cameron, the current Prime Minister of Britain.

The escalating scandal has become a controversial issue like the US Watergate saga, which brought down the government of the then American president Richard Nixon in 1974.

Like Watergate, the core of the problem will be the cover-up. It's always the attempt to cover-up that does the damage.

The phone-hacking scandal grows legs by the day and is now certain to be long-running, according to British media reports.

The scandal resurfaced after it was revealed that a newspaper secretly listened to telephone messages of murdered schoolgirls and other private citizens. It produced shock and anger.

Police are investigating allegations that a News International's executive deleted millions of emails from an internal archive, in an apparent attempt to obstruct inquiries into phone hacking.

On Friday, police also arrested Andy Coulson, former editor of Britain's best-selling newspaper, News of the World. The investigation led him to resign in January as communications director to David Cameron.

Coulson was arrested on suspicion of bribing police officers and conspiracy to phone hack. Meanwhile, Clive Goodman, the News of the World (NOTW)'s former royal correspondent, was held in a dawn raid on suspicion of bribing police officers. Both of the men were bailed.

At a Downing Street press conference, Cameron defended his decision to appoint Coulson as director of communications, but admitted his relationship with senior members of the Murdoch empire had been too close.

"The deeper truth is this... because party leaders were so keen to win the support of newspapers we turned a blind eye to the need to sort this issue, get on top of the bad practices, to change the way our newspapers are regulated," he said. "I want to deal with it."

Cameron said he now thought it was wrong to keep Ms Brooks at the company: "It has been reported that she offered her resignation over this and in this situation, I would have taken it."

Cameron was also asked whether James Murdoch remained a fit and proper person to run a large company, following his admission that he personally approved out-of-court payments in a way, which he now accepted was wrong.

"I read the statement yesterday. I think it raises lots of questions that need to be answered and these processes that are under way are going to have to answer those questions", replied the Prime Minister.

It also appeared that Cameron ignored several warnings that the man he appointed his chief press officer had taken part in much more illegal activities than he had ever admitted.

However, Cameron has promised that a judge will lead a full public inquiry into the case after police complete their investigation.

"Murder victims, terrorist victims, families who have lost loved ones, sometimes defending our country, that these people could have had their phones hacked into, in order to generate stories for a newspaper, is simply disgusting", boasted the Prime Minister.

He also called for a second investigation.

"The second inquiry should look at the culture, the practices and the ethics of the British press. In particular, they should look at how our newspapers are regulated and make recommendations for the future. Of course, it is vital that our press is free, that is an essential component for our democracy, for our way of life. But press freedom does not mean that the press should be above the law", he said.

On Thursday, the company News International said it will stop publishing the weekly News of the World. News International belongs to Rupert Murdoch's News Corporation, also known as News Corp. The one hundred sixty-eight-year-old newspaper will publish for the last time on Sunday.

Phone-hacking and Watergate scandals had both small beginnings - a break-in at a hotel, and a single “rogue” reporter and private detective.

MOL/HE

Source of terror threat is in UK Government, says a police Principal Intelligence Analyst

from TERROR ON THE TUBE:

Tony Farrell had been employed for twelve years as ‘Principle Intelligence Analyst’ for South Yorkshire Police, 13^th largest of the 44 police forces in the UK. His job involved producing a yearly ‘Strategic Threat Assessment Matrix’ to determine how the police force had to prioritise its activities. Assessed ‘threats’ ranged from ASBOs (anti-social behaviour orders) to the terrorist threat presented by local mosques. Having a statistics degree, it was his job to translate the different ‘strategic threats’ into a ‘matrix’ of relative numerical weighted probabilities.
In 2010, one week before the 5^th anniversary of 7/7, Tony (who had never previously doubted government versions of events) stumbled across ‘9/11 Truth’ material on the web. Like so many millions before him, he was shocked to the core by this experience. He quickly realised that there was a great mass of evidence relating to 9/11 kept hidden by the mainstream media. As a Christian, Tony consulted his church minister, who suggested that he consider, whether the same might be true for the London 7/7 bombings?
Something he had not suspected ‘in his wildest dreams’ then started to unfold. After reading much of the available but publicly-unreported witness statements and other evidence relating to 7/7, Tony found that he could only conclude that the official 7/7 narrative was ‘a monstrous lie.’ Instead of the official ‘suicide bombers’ narrative, which he and all of his colleagues had believed without question, he realised that the weight of evidence strongly points far more towards 7/7 being an event stage-managed by British intelligence than anything else.
The unthinkable but inescapable question thus intruded: Does there exist an ‘internal tyranny’ worse than any external foe?
All the assumptions he had held about the ‘strategic threat’ from terrorism were shattered and lay in ruins, and he found himself now doubting the size of any threat allegedly coming from Al-Qaeda and home-grown extremists.  Within the police service, he felt horribly alone not knowing who to talk to about this matter – a situation made acute because he would have to present his annual threat assessment to the ‘Intelligence Strategic Management Board’ on July 8^th -  mere days away.
From his Christian perspective 9/11 and 7/7 could only now be perceived as expressions of a Satanic dimension concerning the ascent of what everybody was calling a ‘New World Order’. He saw these deceitful events as false-flag operations perpetrated in order to justify illegal and wicked wars. This was a deep personal crisis – one that would terminate his career.
On July 6^th he ‘stuck his head above the parapet’ by alerting his boss – that he was developing a very different conceptual model of the strategic threat.
The terse document he handed over, suggested that the untruth of the 9/11 story implied ‘a huge potential for a total breakdown in trust between the government and the masses’ and it warned of ‘a tipping-point’ that would surely arrive as it slowly dawned upon citizens that their own government had conspired against them andhad lied to them and had murdered innocents in the process.
Likewise he warned that, if indeed 7/7 had been ‘deliberately engineered’ to justify British PM Tony Blair standing shoulder to shoulder with Bush in the illegal was in Iraq, ‘There will be total outrage within the masses and a complete breakdown of trust between the Government and the people of the UK.’
In the presence of two intelligence managers, he alerted the Detective Superintendent, the Director of Intelligence for the South Yorkshire Police, explaining that all of his work used open-source material – he was not violating ‘official secrets’. He alluded to secret societies and a Masonic influence as being very central. The Director of Intelligence distanced the other two managers and they held a one-to-one conversation. The biggest single threat to the UK, Tony Farrell explained to him, was now coming from internal tyranny and in his opinion ‘far exceeded’ any threat from Islamic terrorism. ‘Tony, you and I will never get them to tell the truth’, came the philosophical reply, ‘- we are mere foot-soldiers of the government.’
That indeed was sensible advice, from someone who cared for his welfare – but, something more important was stirring within Tony Farrell: the voice of his conscience, and that would not permit him to go along with the ‘monstrous lie’.
His seniors, seemingly concerned for his well-being expressed a wish for Tony to visit Occupational Health. This irked him, as he felt and indeed was in perfectly good health.
On July 7^th 2010, his first line manager, a Detective Chief Inspector spent a good part of the day with him trying to steer him into keeping to the original plan and to avoid rocking the boat. Could they not achieve some sort of compromise – then he could take his three weeks’ leave? To comply with that, he would have had turn a blind eye to his own assessment and deliberately hand over misleading analysis. His ‘strategic’ models were looking promising according to his line manager – yet he could not set aside his new views about ‘internal tyranny.’
As a seemingly lone voice in his police force, Tony Farrell found himself wrestling in the ‘Valley of Decision’ at home that evening, a theme he found expressed in the Book of Job, Chapter 3. He also pondered the 9th Commandment, ‘Thou shalt not bear false witness.’ He experienced an epic struggle going on that seemed to him to resemble that described in the Book of Ephesians, Chapter 6.
So that evening, 5 years to the day from the London bombings, he reached his own momentous personal decision. He resolved to take a stand knowing it would probably lead to him being sacked.
On July 8^th he handed over a very short version of the ‘Strategic Assessment Matrix,’ which averred that the real terrorist ‘threat’ to society was almost entirely of the state-sponsored kind, and it alluded to both 9/11 and 7/7 in this context. Other threats from other ‘domains of criminality’ were, his brief report claimed, ‘insignificant’ by comparison.
This was hardly following the National Intelligence Model guidance, relating to ‘Threat and Risk Assessment models’ that he was supposed to use.  ‘Tony we can’t do business like this,’ his manager pleaded.
He was asked to create a personal report: how had he arrived as such an unheard-of view? His privileges were withdrawn and his computer accessed, but as he had done his investigation at home and with open-source material, nothing untoward was found.
And so he was absent from the board meeting that afternoon, even though it was anticipating the yearly presentation from him. Instead he was sent home to compile a report, explaining his stance. He offered to produce a full report with backup evidence, for his shocking new views, but that wasn’t required.
Sacked for his beliefs
His work ‘could be helpful to the police service’ the DI remarked cryptically. Everything had happened so quickly, much too quickly. Tony Farrell was summoned to a hearing chaired by the Director of Finance a member of the Senior Command Team on 2^nd September 2010.  He was told that he held beliefs that were ‘incompatible’ with his position.  There was no allegation of any misconduct. In dismissing him, the Director of Finance said this: “It is a very sad occasion as you have done some excellent work for South Yorkshire Police and I have never been involved in a situation like today. Your beliefs are very sincere and you may be right, but it is I’m afraid incompatible at the moment with where we are.”
He took the matter to the South Yorkshire Police Authority Appeal’s Committee but his case was dismissed.   He has since put the case into an Employment Tribunal where final hearings are scheduled to be held in early September 2011 in Sheffield. This will be a public event, and it is likely that South Yorkshire Police will feel embarrassed by the repercussions. This case has potentially far-reaching implications.


Tony Farrell gave an interview with Richard Hall on Sky TV released on July 8, 2011 (used as the main source for this article) and also that same day a 10-minute interview was broadcast on a Bristol local radio; synchronously enough, South Yorkshire’s Chief Constable announced his retirement on that same day 8th July – after nine years’ of service. Was this indicating some stress within the Force?  The whole story focuses by odd coincidences upon anniversary-dates of the London bombings, over the last couple of years.

Ellen Brown: Why QE2 Failed: The Money All Went Offshore

By Ellen Brown

Global Research, July 9, 2011

On June 30, QE2 ended with a whimper.  The Fed’s second round of “quantitative easing” involved $600 billion created with a computer keystroke for the purchase of long-term government bonds.  But the government never actually got the money, which went straight into the reserve accounts of banks, where it still sits today.  Worse, it went into the reserve accounts of FOREIGN banks, on which the Federal Reserve is now paying 0.25% interest. 

Before QE2 there was QE1, in which the Fed bought $1.25 trillion in mortgage-backed securities from the banks.  This money too remains in bank reserve accounts collecting interest and dust.  The Fed reports that the accumulated excess reserves of depository institutions now total nearly $1.6 trillion.    

Interestingly, $1.6 trillion is also the size of the federal deficit – a deficit so large that some members of Congress are threatening to force a default on the national debt if it isn’t corrected soon. 

So here we have the anomalous situation of a $1.6 trillion hole in the federal budget, and $1.6 trillion created by the Fed that is now sitting idle in bank reserve accounts.  If the intent of “quantitative easing” was to stimulate the economy, it might have worked better if the money earmarked for the purchase of Treasuries had been delivered directly to the Treasury.  That was actually how it was done before 1935, when the law was changed to require private bond dealers to be cut into the deal.   

The one thing QE2 did for the taxpayers was to reduce the interest tab on the federal debt.  The long-term bonds the Fed bought on the open market are now effectively interest-free to the government, since the Fed rebates its profits to the Treasury after deducting its costs.   

But QE2 has not helped the anemic local credit market, on which smaller businesses rely; and it is these businesses that are largely responsible for creating new jobs.  In a June 30 article in the Wall Street Journal titled “Smaller Businesses Seeking Loans Still Come Up Empty,” Emily Maltby reported that business owners rank access to capital as the most important issue facing them today; and only 17% of smaller businesses said they were able to land needed bank financing.      

How QE2 Wound Up in Foreign Banks 

Before the Banking Act of 1935, the government was able to borrow directly from its own central bank.  Other countries followed that policy as well, including Canada, Australia, and New Zealand; and they prospered as a result.  After 1935, however, if the U.S. central bank wanted to buy government securities, it had to purchase them from private banks on the “open market.”  Former Fed Chairman Marinner Eccles wrote in support of an act to remove that requirement that it was intended to keep politicians from spending too much.  But all the law succeeded in doing was to give the bond-dealer banks a cut as middlemen.   

Worse, it caused the Fed to lose control of where the money went.  Rather than buying more bonds from the Treasury, the banks that got the cash could just sit on it or use it for their own purposes; and that is apparently what is happening today.

In carrying out its QE2 purchases, the Fed had to follow standard operating procedure for “open market operations”: it took secret bids from the 20 “primary dealers” authorized to sell securities to the Fed and accepted the best offers.  The problem was that 12 of these dealers – or over half -- are U.S.-based branches of foreign banks (including BNP Paribas, Barclays, Credit Suisse, Deutsche Bank, HSBC, UBS and others); and they evidently won the bids.   

The fact that foreign banks got the money was established in a June 12 post on Zero Hedge by Tyler Durden (a pseudonym), who compared two charts: the total cash holdings of foreign-related banks in the U.S., using weekly Federal Reserve data; and the total reserve balances held at Federal Reserve banks, from the Fed’s statement ending the week of June 1.  The charts showed that after November 3, 2010, when QE2 operations began, total bank reserves increased by $610 billion.  Foreign bank cash reserves increased in lock step, by $630 billion -- or more than the entire QE2.  

 In a June 27 blog, John Mason, Professor of Finance at Penn State University and a former senior economist at the Federal Reserve, wrote:  

In essence, it appears as if much of the monetary stimulus generated by the Federal Reserve System went into the Eurodollar market. This is all part of the “Carry Trade” as foreign branches of an American bank could borrow dollars from the “home” bank creating a Eurodollar deposit. . . .

Cash assets at the smaller [U.S.] banks remained relatively flat . . . . Thus, the reserves the Fed was pumping into the banking system were not going into the smaller banks. . . .  

[B]usiness loans continue to “tank” at the smaller banking institutions. . . .

The real lending by commercial banks is not taking place in the United States. The lending is taking place off-shore, underwritten by the Federal Reserve System and this is doing little or nothing to help the American economy grow.  

Tyler Durden concluded: 

. . . [T]he only beneficiary of the reserves generated were US-based branches of foreign banks (which in turn turned around and funnelled the cash back to their domestic branches), a shocking finding which explains . . . why US banks have been unwilling and, far more importantly, unable to lend out these reserves . . . .  

. . . [T]he data above proves beyond a reasonable doubt why there has been no excess lending by US banks to US borrowers: none of the cash ever even made it to US banks! . . . This also resolves the mystery of the broken money multiplier and why the velocity of money has imploded. 

Well, not exactly.  The fact that the QE2 money all wound up in foreign banks is a shocking finding, but it doesn’t seem to be the reason banks aren’t lending.  There were already $1 trillion in excess reserves sitting idle in U.S. reserve accounts, not counting the $600 billion from QE2. 

According to Scott Fullwiler, Associate Professor of Economics at Wartburg College, the money multiplier model is not just broken but is obsolete.  Banks do not lend based on what they have in reserve.  They can borrow reserves as needed after making loans.  Whether banks will lend depends rather on (a) whether they have creditworthy borrowers, (b) whether they have sufficient capital to satisfy the capital requirement, and (c) the cost of funds – meaning the cost to the bank of borrowing to meet the reserve requirement, either from depositors or from other banks or from the Federal Reserve. 

Setting Things Right

Whatever is responsible for causing the local credit crunch, trillions of dollars thrown at Wall Street by Congress and the Fed haven’t fixed the problem.  It may be time for local governments to take matters into their own hands.  While we wait for federal lawmakers to get it right, local credit markets can be revitalized by establishing state-owned banks, on the model of the Bank of North Dakota (BND).  The BND services the liquidity needs of local banks and keeps credit flowing in the state.  For more information, see here and here.  

Concerning the gaping federal deficit, Congressman Ron Paul has an excellent idea: have the Fed simply write off the federal securities purchased with funds created in its quantitative easing programs.  No creditors would be harmed, since the money was generated out of thin air with a computer keystroke in the first place.  The government would just be canceling a debt to itself and saving the interest. 

As for “quantitative easing,” if the intent is to stimulate the economy, the money needs to go directly into the purchase of goods and services, stimulating “demand.”  If it goes onto the balance sheets of banks, it may stop there or go into speculation rather than local lending -- as is happening now.  Money that goes directly to the government, on the other hand, will be spent on goods and services in the real economy, creating much-needed jobs, generating demand, and rebuilding the tax base.  To make sure the money gets there, the 1935 law forbidding the Fed to buy Treasuries directly from the Treasury needs to be repealed. 

Ellen Brown is an attorney and president of the Public Banking Institute, http://PublicBankingInstitute.org. In Web of Debt, her latest of eleven books, she shows how the power to create money has been usurped from the people, and how we can get it back. Her websites are http://webofdebt.com and http://ellenbrown.com.  

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