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Fed’s quantitative easing equates to Cypriot government stealing wealth

Max Keiser, the host of RT's ‘Keiser Report,’ is a former stockbroker, the inventor of the virtual specialist technology, virtual currencies, and prediction markets.

Published time: July 08, 2013 09:03
Reuters / Yuri Gripas

Wealth confiscation by governments is not new. Over the years it takes different forms and the politics surrounding it comes in various guises.

Recently we’ve seen some interesting examples; Government agents JP Morgan confiscating wealth from MF Global customers is an updated version of scams on Wall St. decades old - going back to the ‘bucket shop’ days. Another recent example has been the confiscation of wealth by the Cypriot government, grabbing money out of people’s bank accounts is a classic example of a greedy government stealing from its own citizens.

Today we also have the Federal Reserve’s QE (Quantitative Easing) program as a stand out. In this scheme, the government prints record amounts of money; trillions of dollars in fact, and effectively deposits that money into the bank accounts of real estate and stock speculators instead of allowing it to circulate.

We know this for a fact as the measure of M2 - a broad based measure of ‘velocity’ of money is signaling a multi-decade low. Because virtually none of this money enters the ‘real’ economy, GDP continues to stagnate and tax revenues shrink - and the same government that gifts trillions to a few supporters also simultaneously imposes austerity measures - while building a record number of prisons and fighting dozens of wars to pick up the slack. 

To put this in perspective, let’s revisit the gold confiscation by FDR in 1933 in America. The government went door-two-door and took people’s gold in the name of the US government. (Actually, they forced them to sell their gold at $20.67 - and then raised the price of Gold to $35 - devaluing money by 40%). The rationale for the gold confiscation was to give the Government a way to crash the value of the dollar (against gold) and then repay its onerous debt burden with cheaper dollars. They inflated their way out of their debts, in other words. 

AFP Photo / Michal Cizek

Imagine if FDR had confiscated that gold and instead of putting it into Fort Knox (a new gold storage facility built for the purpose of storing the confiscated gold) in the name of the people, simply handed it over to his closest supporters; kleptocrats and monopolists who had caused the country to fall in Depression to begin with. Now you have a better idea of Fed policy in America today.

The Fed, by artificially lowering interest rates down to zero and keeping them there (as part of their ZIRP (Zero Interest Rate Policy), has effectively confiscated hundreds of billions worth of savings from people and handed it over to the Fed’s supporters; speculators, market riggers, drug money laundering bankers and influence peddlers.

Meanwhile, in the Gold market to keep the price of Gold from blowing the whistle on this nightmare; the same folks on Wall St. and the City of London who committed brazen acts of fraud with AIG, Lehman, Bernie Madoff, the ‘London Whale,’ Libor rigging, Forex rigging, derivatives rigging, major accounting firms fraud, rating agency fraud, hedge fund fraud, and terrorism financing - have flooded the market with counterfeit ‘sell’ orders (in the form of illegal 'wash trades') on various gold exchanges to force the price lower despite a global surge in demand that has drained Gold warehouses of most of their inventory.

A change is coming

For thirty years the Fed's crime spree has been financed with lower interest rates that are the by-product of reinvestment back into the bond market of the money printed by the Fed and gifted to society’s worst killers and outlaws. But now, the tide has turned. The thirty year bull market in bonds has hit a secular inflection point and no amount of money printing will ever bring rates down to where they were last year when they hit a 300 yr. low in Britain and a 238 yr low in America. 

Cruelly, things are about to get even worse for the average Joe because when these assassins and thieves can’t make their billions abusing Fed policy any more manipulating markets will resort to the more common form of mayhem by making random arrests and throwing people in jail as a way to steal whatever cash and jewelry that might be available.

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.