The Day Money Dies November 16, 2014

It is with regret and sadness we announce the death of money on November 16th 2014 in Brisbane, Australia 

‘A mark, a yen, a buck, or a pound
A buck or a pound
A buck or a pound
Is all that makes the world go 'round;
That clinking, clanking sound
Can make the world go 'round.’

      “Money” from Cabaret by Kander & Ebb

In the musical Cabaret, Sally Bowles and the Emcee sing about money from the perspective of those witnessing its collapse in value in real terms in the great German hyperinflation of 1923.

Less than a decade later, and a continent away, a young lawyer from Youngstown, Ohio noted on July 25th 1932 how money’s value could also fall in nominal terms:

"A considerable traffic has grown up in Youngstown in purchase and sale at a discount of Pass-Books on the Dollar Bank, City Trust and Home Savings Banks. Prices vary from 60% to 70% cash. All of these banks are now open but are not paying out funds."

      The Great Depression - A Diary: Benjamin Roth (first published 2009)

In Youngstown the bank deposit, an asset previously referred to as "money", had fallen by up to 40% relative to the value of cash. The G20 announcement in Brisbane on November 16th will formalize a "bail in" for large-scale depositors raising the spectre that their deposits are, as many were in 1932, worth less than banknotes. It will be very clear that the value of bank deposits can fall in nominal terms.

On Sunday in Brisbane the G20 will announce that bank deposits are just part of commercial banks’ capital structure, and also that they are far from the most senior portion of that structure. With deposits then subjected to a decline in nominal value following a bank failure, it is self-evident that a bank deposit is no longer money in the way a banknote is. If a banknote cannot be subjected to a decline in nominal value, we need to ask whether banknotes can act as a superior store of value than bank deposits? If that is the case, will some investors prefer banknotes to bank deposits as a form of savings? Such a change in preference is known as a "bank run."

Each country will introduce its own legislation to effect the ‘ bail-in’ agreed by the G20 this coming weekend. The consultation document from the UK’s Treasury lists the following bank creditors who will rank ABOVE depositors in a ‘failing’ financial institution:

• Liabilities representing protected deposits (in the UK the government guarantee protects 100% of deposits up to the value of GBP85,000)
• any liability, so far as it is secured
• Liabilities that the bank has by virtue of holding client assets
• Liabilities arising with an original maturity of less than 7 days owed by the banks to a credit institution or investment firm
• Liabilities arising from participation in designated settlement systems
• Liabilities owed to central counterparties recognized by the European Securities and Markets Authorities… on OTC derivatives, central counterparties and trade depositaries
• Liabilities owed to an employee or former employee in relation to salary or other remuneration, except variable remuneration
• Liabilities owed to an employee or former employee in relation to rights under a pension scheme, except rights to discretionary benefits
• Liabilities owed to creditors arising from the provision to the bank of goods or service (other than financial services) that are critical to the daily functioning of its operations

The above list makes it clear that deposits larger than GBP85,000 will rank ahead of the bond holders of banks, but they will rank above little else. Importantly, both borrowings of the banks of less than 7 days maturity from other financial institutions and sums owed by banks in their role as counterparties to OTC derivatives will rank above large deposits.

Large deposits at banks are no longer money, as this legislation will formally push them down through the capital structure to a position of material capital risk in any "failing" institution. In our last financial crisis, deposits were de facto guaranteed by the state, but from November 16th holders of large-scale deposits will be, both de facto and de jure, just another creditor squabbling over their share of the assets of a failed bank.

Interestingly, HM Treasury uses the word ‘failing’ rather than "failed" in its consultation document and investors could find their large deposits frozen for a prolonged period in any "failing" institution while the courts unpick the capital structure and decide exactly where any losses should fall.

If we have another Lehman Brothers collapse, large-scale depositors could find themselves in the courts for years before final adjudication on the scale of their losses could be established. During this period would this illiquid asset, formerly called a deposit and now subject to an unknown capital loss, be considered money? Clearly it would not, as its illiquidity and likely decline in nominal value would make it unacceptable as a medium of exchange.

From November 16th 2014 the large-scale deposit at a commercial bank is, at best, a lesser form of money, and to many it will cease to be money at all as its nominal value can fall and it could cease to be accepted as a medium of exchange.

Fortunately, the developed world’s commercial banks are flush with central bank reserves and these are instantly convertible into the banknotes which they may need to meet demand from depositors. While the huge level of reserves on the balance sheet is a buffer, the funding of fractional reserve banks is still very negatively impacted by a shift from deposits to bank notes. With deflationary forces gathering momentum, this further impediment to the extension of commercial bank credit would be another factor preventing central bank monetary largesse translating into growth and inflation.

As the world’s smartest lawyer Charlie Munger is fond of saying, "Show me the incentive and I will show you the outcome." Some simple mathematics reveals that the November 16th announcement will create a very major incentive for investors to change deposits into banknotes.

Consider that the standard pallet measures 1 metre by 1.2 metres and will take 84 piles of Euro 500 banknotes. The UK’s Health and Safety Executive recommends that the height of a pallet should not exceed the widest side of its base. A 1.2 metre high pile of banknotes contains 11,000 notes and thus each pallet can safely hold 84 piles of 11,000 banknotes. A pallet of safely stacked 924,000 Euro 500 banknotes is therefore worth Euro462m.

There is a small warehouse for rent near Newry, at the foot of the Mourne Mountains in Northern Ireland. Given its dimensions (16.5m x 9.0m x 5.6m) one could stack 468 pallets of 500 Euro notes representing Euro 216bn. At the current bank deposit rate of minus 50bp per annum, the cost of carry to have Euro 216bn on deposit with a commercial bank would be Euro 1,081m. The annual cost of the warehousing space is around Euro 7,000!

Now clearly this warehouse will need significant private security, but in Northern Ireland there is an over supply of such security due to a structural change in market conditions, and prices are reasonable. Anyway, just how much security could you afford if you charged clients 20bp to hold their Euro 216bn, and generated an annual fee of Euro432 million, with an annual saving to your clients of about Euro 648 million? 

This represents both a yield improvement and a significant improvement in capital risk compared to bank deposits, as bank notes cannot be "bailed in." There is therefore an annual profit of around Euro432 million for the manager with a warehouse and friends in low places. Anyone for the "Mourne Or Newry Enhanced Yield Banknote Actively Guarded Security", or MONEY BAGS for short?

As ever, there is a first-mover advantage. There are only about 600 million 500 Euro notes available, though sizeable arbitrage profits still exist on warehouses full of 200 Euro notes. As the function of such warehouses is focused on the role of money as a store of value, a role no longer fulfilled by the large-scale deposit, one should expect a premium to develop, and potentially a secondary market in note-filled, well-protected warehouses. For warehouses full of German Euro notes --- those are the ones with a serial number beginning in X --- a particularly high premium may arise due to risks of a future Euro break-up.

Irish legend tells of an X at the end of the rainbow marking the position of a pot of gold. In our post- Brisbane world, investors may be content to find just a bundle of paper marked with an X.

Oh, Mary, this London's a wonderful sight
With people here working by day and by night.
They don't sow potatoes nor barley nor wheat,
But there's gangs of them diggin' for gold in the street

At least when I asked them, that's what I was told,
So I just took a hand at this diggin' for gold,
But for all that I've found there, I might as well be
In the place where the dark Mourne sweeps down to
the sea.’

      Percy French 1854-1920

Credit to Zero Hedge

Chicago Nuke Attack Plan Revealed

Russian bomber patrols to reach Gulf of Mexico

In a show of military muscle amid tensions with the West, Russia will send long-range strategic bombers on regular patrol missions across the globe, from the Arctic Ocean to the Gulf of Mexico, a top official said Wednesday.

The announcement by Russian Defense Minister Sergei Shoigu came as NATO's chief accused Russia of sending fresh troops and tanks into eastern Ukraine.

"Over the last few days, we have seen multiple reports of large convoys moving into Eastern Ukraine," said NATO Secretary-General Jens Stoltenberg. "We assess that this significant military buildup includes Russian artillery, tanks, air defense systems and troops. His statement called the situation a "severe threat to the cease-fire."

Moscow denied the allegation as unfounded, but Shoigu also said the dispute with the West over Ukraine would require Russia to beef up its forces in the Crimea, the Black Sea Peninsula that Russia annexed in March.

Shoigu said Russian long-range bombers will conduct flights along Russian borders and over the Arctic Ocean. He said, "In the current situation we have to maintain military presence in the western Atlantic and eastern Pacific, as well as the Caribbean and the Gulf of Mexico."

Shoigu would not say how frequent the patrol missions would be or offer any other specifics, but he noted that the increasing pace and duration of flights would require stronger maintenance efforts and that relevant directives have been issued to industries.

He said the Russian air force's long-range planes also will conduct "reconnaissance missions to monitor foreign powers' military activities and maritime communications."

A senior U.S. military official said Russia has not previously flown actual bomber patrols over the Gulf of Mexico, including during the Cold War.

Long-range bombers have been in the area before, but only to participate in various visits to the region when the aircraft stopped over night at locations in South or Central America. During the Cold War, other types of Russian aircraft flew patrols there, including surveillance flights and anti-submarine aircraft.

The official, who spoke on condition of anonymity because he wasn't authorized to discuss the flights publicly, also said that the pace of Russian flights around North America, including the Arctic, have largely remained steady, with about five incidents per year.

Col. Steve Warren, a Pentagon spokesman, declined to call this a Russian provocation. He said the Russians have a right, like any other nation, to operate in international airspace and in international waters. The important thing, Warren said, is for such exercises to be carried out safely and in accordance with international standards.

Russian nuclear-capable strategic bombers were making regular patrols across the Atlantic and the Pacific Oceans during Cold War times, reaching areas from which nuclear-tipped cruise missiles could be launched at the United States. But that stopped in the post-Soviet economic meltdown.

The bomber patrol flights have resumed under President Vladimir Putin's tenure, and they have become even more frequent in recent weeks, with NATO reporting a spike in Russian military flights over the Black, Baltic and North seas as well as the Atlantic Ocean.

Earlier this year, Shoigu said that Russia plans to expand its worldwide military presence by seeking permission for navy ships to use ports in Latin America, Asia and elsewhere for replenishing supplies and doing maintenance. He said the military was conducting talks with Algeria, Cyprus, Nicaragua, Venezuela, Cuba, Seychelles, Vietnam and Singapore.

Shoigu said Russia also is talking to some of those countries about allowing long-range bombers to use their air bases for refueling.

Ian Kearns, director of the European Leadership Network, a London-based think tank, said the bomber patrols are part of Kremlin's efforts to make the Russian military "more visible and more assertive in its actions."

The new bomber flights "aren't necessarily presaging a threat," Kearns said. "They are just part of a general ramping-up of activities."

But, he added, "The more instances you have of NATO and Russian forces coming close together, the more chance there is of having something bad happening, even if it's not intentional."

Credit to AP

COLD WAR: This Is World War 3

PUTIN, OBAMA & THE BANKSTERS VS. All OF HUMANITY

This is the second part in a series in which it will become clear that Putin, Obama and the banksters are the greatest threat to the welfare of mankind and the world is on a one-way trip to a planned Armageddon. Part one detailed how key Soviet defectors have repeatedly warned the United States about a multi-generational plot to destroy America.  Before this series is concluded, Obama will be clearly implicated in this plot as well. However,the focus for Part Two of this series centers around Putin’s role in destabilizing and destroying America.

PART ONE 

Look, up in the sky, is it a bird, is it a plane, no, it’s Super Putin. He is single handedly taking on the evil bankers and winning.

According to some, Putin will singlehandedly rescue the world from the clutches of the Rothschild/Rockefeller criminal banking cartel. Putin is the modern day version of George Washington who will lead the world to the promise land while crushing the New World Order. I wish this was true, but to believe so would be to engage in the fantasy thinking of a five year old. There are no good guys, there are no bad guys. There are the banksters. They own everything and they control everything. It may be true that Putin appears in control of the world’s chessboard as evidenced by his repulsing of the planned American invasion of Syria and now he controls the high ground on regaining control of Crimea and ultimately Ukraine. Putin may presently control the chessboard, but who is in control of Putin?

Left vs. Right, Republican vs. Democrat, Putin vs. Obama

The illusion of choice is an interesting proposition. In the 2012 election, we saw Obama running for re-election against Obama 2.0. Both Romney and Obama were for “universal” healthcare. Both men were willing to trample on American civil liberties as move headlong into the New World Order. There was virtually no difference between the two.

In the recent 2014 midterm election, the Democrats officially became an endangered species. Some Americans actually believe that by turning the political coin over, that they have actually produced change with their Diebold voting machine controlled elections.

The third paradigm that ignorant Americans are falsely believing is that Vladamir Putin is a hero and Obama is the villain. All of a sudden, Putin is against homosexuality, is a professed Christian, denounces the New World Order , is devoutly anti-Sharia Law and rejects the Petrodollar. Obama is openly embracing the opposite of Putin’s mainstream profession of family values. One look at Putin’s life quickly reveals what a fraud this man is. He is no more of a Christian than Lucifer. Putin is part of a bankster PSYOPS to erode American confidence in their own leaders by being more like a traditional American than the American president.

The media likes to cast Putin in the role of saving the planet from WW III, while his American counterpart is recklessly plunging the World into the inevitable conflict. However, when one looks through Putin’s persona through the lens of common sense, it is clear that the banksters, Putin and Obama are all on the same team. For those who believe this fiction, please take note of this former exchange between President Obama and Russian President Dmitry Medvedev while they were taking part in a global nuclear security summit in South Korea in 2012. President Obama  was caught on tape asking for “space.”  Obama went on to state the following:

 “This is my last election. After my election I have more flexibility.”   Obama assured the departing Russian President he will have the “flexibility” required to deal with missile defense issues after the 2012 presidential election.

So much for the East-West paradigm which is “threatening” world peace, and we are supposed to believe this fiction that Putin is a noble man who is opposing the ruthless United States led by the war mongering Obama? The following tape demonstrates that the Russians, the Americans and the banksters are playing for the same team.

All Wars Are Controlled By the Bankers

World War I was waged by 27 nations. The number of participants totaled 66 million. There were 37 million casualties with seven million who were killed. Its direct costs are estimated at $210 trillion. The indirect costs of the war are estimated at $150 trillion dollars. And these figures do not include the additional billions in interest payments, veterans’ care and pensions, and similar expenses…” In WWI, we see the Rothschild/Rockefeller banking interests prolonging the conflict by at least three years. The only way that this war continued beyond 1915 was because the Federal Reserve was created in 1913 and could make up money out of thin air. This is how the bankers do it. This is how they get endless war by supplying both sides with fiat currency and promoting wars by controlling both sides of the conflict.

Many experts credit Standard Oil with giving the allies the ability to win WWII against the Nazi’s. Yet, The banksters also supported the Nazis in World War Two as Charles Higham documents in his classic book, Trading with the Enemy (1983). Higham clearly demonstrates that  Rockefeller’s Standard Oil supplied oil to the Nazis. George H. W. Bush’s father, Prescott Bush was actually charged with violating the Trading with the Enemies Act in WWII, because the elder Bush was supplying aid and comfort to the Nazis. The charges were eventually dropped and the event was covered up because Bush was in charge of the USO and the damage to American morale could have been significant. Coke and IBM supplied both sides in WWII and the list goes on and on. And we are supposed to believe that Super Putin is above all of this control?

“Al Capone” Is the President of Russia

For those that think that Putin is a desirable alternative to the banksters should consider the following Putinisms which stand as a testament to his absolute moral depravity and thuggery. He is KGB, and then he morphed into a key member of the Russian Mafia along with like-minded thugs of that era. At one time after the fall of Russia, the Russian Mafia was the only viable business alternative (i.e. black market) and it was complete with protection rackets, the murdering of journalists who exposed their criminality and the assassination of politicians who opposed this group of which Putin was a prominent member. Businesses like Life Lock, the identity theft protection agency, owes its existence to Putin and the Russian Mafia. It is the Russian Mafia that has popularized the crime of computer hacking and identity theft. Putin has been a key player in the rise of the former KGB/Russian mafia as the ruling party in the Russian Federation.

Putinisms

New England Patriots owner Robert Kraft went public with claims that Russian President Vladimir Putin stole his 2004 Super Bowl ring during his visit to Russia in 2005. All of you naysayers, turn off your computers and save your printer ink, this is too well documented to not be true.

In 1991, Putin, then deputy mayor of St. Petersburg, organized a number of scams involving meat imports into the poor, starving city. This drive is believed by many to have enabled Putin to make himself incredibly wealthy with an amassed fortune of almost $70 billion.

Putin has even had his 9/11 false flag moment. While trying to drum up a reason to invade Chechnya, the FSB engineered a false flag event by blowing up Russian apartment buildings. Putin seized upon this false flag moment to develop a reputation as a get-tough guy on terrorism, when in fact, Putin is a mass murderer.

Of course there are those that would cast Putin, including himself as a Christian. If he’s a Christian, I would have to denounce my religion. When Putin was a member of the KGB (i.e. the Russian Mafia), East German Intelligence described him as a philander and a wife beater! Some Christian! Understandably, Putin’s wife divorced him. She is lucky to still be alive.

The above Putinisms are merely a small sample size of a consistent and much larger and verifiable set of concerning behaviors. As a former therapist, I would diagnose Putin as a man who has exceptionally poor impulse control, prone to knee-jerk reactions, one who dehumanizes and depersonalizes everyone he comes into contact with. Further,  he lacks complete empathy for others. Putin is the marriage of what psychologists used to call a psychopath and a sociopath. Today, the clinical term is Anti-Social Personality Disorder. Charles Manson, Richard Speck, Stalin and Mao share the same diagnosis. Putin is extremely dangerous and very unpredictable.

Conclusion

Character counts and neither man is a desirable leader. The people of Ukraine are left with a lose-lose proposition as its people attempt to choose between East and West and, for that matter, so is the rest of the world.

Attention America, if it takes a war to hand off Ukraine to the banksters, whose kids do you suppose will be fighting to further the bankster goals? Who do you think will be paying for this coming calamity?

The days of Ukraine are numbered.With the CIA created ISIS, Syria’s days are numbered as well. In short, humanity’s days are also numbered as the battle lines have been draw.  It is Putin, Obama and the Banksters vs. all of humanity.

In tomorrow’s article, I will expose Obama’s complicity in this plot to destroy America.

Credit to Common Sense

James Turk ¨Dollar Will Eventually Go Over the Cliff¨

China Unveils Sophisticated Stealth Fighter Aircraft

ZHUHAI/BEIJING (Reuters) – China unveiled a sophisticated new stealth fighter jet at an air show on Tuesday, a show of muscle during a visit by U.S. President Barack Obama for an Asia-Pacific summit.

China hopes the much-anticipated J-31 stealth aircraft, developed by the Aviation Industry Corp of China (Avic), the country’s top aircraft maker, will compete with U.S.-made hardware in export markets.

The twin-engine fighter jet was unveiled at the China International Aviation and Aerospace Exhibition in the southern city of Zhuhai, a biennial event at which China shows off its military technology, a Reuters witness said.

The J-31 conducted a demonstration but was not put on display afterwards although a mock-up version was on show.

An Avic spokesman declined to comment on any orders for the aircraft.

“We were told not to do any promotion for the plane,” said the spokesman, Fu Mingyao. He did not elaborate.

There are slated to be at least two more J-31 demonstrations at the show, Avic officials said.

China hopes the J-31 will compete with the U.S.-made F-35 stealth aircraft as China works to strengthen its standing as an arms producer, according to China military watchers and state media reports.

“Experts predict that the J-31 will make rapid inroads in the international market in the future, and will undoubtedly steal the limelight from the F-35,” the ruling Communist Party’s People’s Daily reported on its website in August 2013.

It said the aircraft would be particularly attractive to countries that are cut off from U.S. arms exports.

The J-31 is about the same size as the F-35, the U.S. Department of Defense said in a report this year.

Stealth aircraft are key for China’s air force to evolve from a mostly territorial air force to developing the ability to carry out both offensive and defensive operations, the Pentagon said in the report about developments in China’s military.

The J-31 is China’s second domestically produced stealth fighter. Analysts say development of stealth aircraft enable China to better project its power as it takes on a more assertive stance in the East China and South China seas.

President Xi Jinping has been pushing to strengthen China’s 2.3 million-strong armed forces.

Obama, attending an Asia-Pacific Economic Cooperation forum meeting in Beijing, is due to meet Xi on Wednesday.

Credit Washington Free Beacon

Insider Exposes Secret Power Structure

Palestinian leader accuses Israel of religious war

RAMALLAH, West Bank (AP) — Palestinian President Mahmoud Abbas accused Israel on Tuesday of leading the region toward a "religious war," saying frequent visits by Jewish worshippers to a site sacred to both Islam and Judaism are fueling clashes that have raised fears of a widespread outbreak of fighting.

The accusation drew a sharp response from Israeli Prime Minister Benjamin Netanyahu, who said Abbas was making matters worse.

"Instead of calming tempers, he is inflaming them. Instead of educating his people for peace, Abu Mazen is educating them for terror attacks," Netanyahu said in a nationally televised address, referring to Abbas.

After meeting his Security Cabinet for several hours, Netanyahu also said security forces had been bolstered, and that he would begin imposing tough measures against violent demonstrators.

Much of the recent unrest has stemmed from tensions surrounding the holy site in Jerusalem's Old City known to Jews as the Temple Mount and to Muslims as the Noble Sanctuary.

Visits by Jewish worshippers have raised concerns among Muslims that Israel is secretly trying to take over the site, fanning strife in a region already on edge following the collapse of U.S.-led peace talks, Israel's bloody war last summer in the Gaza Strip, and new Israeli settlement construction plans in east Jerusalem.

Israeli soldiers stand guard on the main road near the West bank village of Bet Sahour during the fu …

The tensions at the shrines have frequently boiled over into violent demonstrations and have provided the backdrop to a series of bloody attacks on Israelis by Palestinians.

In a fiery speech to thousands of supporters at his West Bank headquarters, Abbas said Israel was trying to divide the Jerusalem site, which includes the Al-Aqsa Mosque, much as it split a shared holy site in the West Bank city of Hebron after a Jewish settler gunned down 29 Muslim worshippers 29 years ago.

"Leaders of Israel are mistaken if they think they can divide the Al-Aqsa Mosque as they have done in Ibrahimi Mosque, and they will retreat from this one, too," Abbas said.

"By dividing the mosques, they are leading us to a religious war, and no one — Muslim or Christian — will accept that Jerusalem be theirs," Abbas said, urging Palestinians to defend the site. "Jerusalem is our capital, and there will be no concessions."

Abbas' speech marked the 10th anniversary of the death of Yasser Arafat, the longtime Palestinian leader and founder of the dominant Fatah faction.

Credit to Yahoo.com

Global Economic Reset Is Underway Way NOW

Iran’s Uranium Stockpile Grows Before Deadline for Nuclear Deal

VIENNA (Reuters) – Iran’s stockpile of low-enriched uranium gas has grown by 8 percent to nearly 8.4 tonnes in about two months, U.N. atomic inspectors say, an amount world powers probably will want to see cut under any nuclear deal with Tehran.

The International Atomic Energy Agency issued a confidential report on Iran to IAEA member states on Friday, less than three weeks before a Nov. 24 deadline for Iran and six world powers to resolve their stand-off over Tehran’s atomic activities.

Iran’s holding of refined uranium gas is one of the factors that could determine how much time it would need for any attempt to assemble nuclear weapons. Iran says it has no such goal but the West wants verifiable action by the Islamic Republic to make sure it cannot produce an atomic bomb any time soon.

Credit to The Washington Free beacon