Since my last foray into the wonderful world of global finance, I encountered some extraordinarily queer things about the way the world economy really works. To say that there a few things that aren’t exactly on the up and up would be a major understatement. Things are far worse for the average American than I could have ever imagined, and the perpetrators can be named with just two words: Wall Street.

The Oxford Dictionary defines the word ‘swamp’ as: “An area of low-lying, uncultivated ground where water collects.”

I can see some similarities here.

“Low-lying”. Secretive, not forthcoming.

“Uncultivated”. Unscrupulous, immoral, and worse yet, unapologetically immoral.

“where water” -or corruption- “collects”.

Swamp isn’t a bad nickname for the cronies down at Wall Street, and if Wall Street is a swamp, the Federal Reserve is a raging swamp monster.

(Boo)

I know, these are fighting words, but I plan to justify them in just a minute.Very few people (including myself for a long time) have more than a cursory awareness of the Federal Reserve, how it works, or what it does.

So, here are some fun facts you ought to know about your “Friendly Neighborhood Colossal Banking Institution”.

Fun Fact #1: The Federal Reserve ain’t Federal

The “Fed” in Federal Reserve is about as federal as the “Fed” in Federal Bikes- an online BMX retailer I just found. The Federal Reserve is not owned by or even affiliated with any branch of the actual federal government. They just picked that name because, presumably, it sounded cute…?

Instead, the Federal Reserve is a private corporation, -yes, private- owned and operated by the who’s-who of massive Wall Street bankers and generational multi-millionaires. Like any other corporation, the Federal Reserve is divided up into shares which any average Joe with an enormous amount of wealth, connections, and privilege can just scrape together a few million for and buy. However, unlike a normal corporation, for “national security reasons” the names of the top individual shareholders at the Federal Reserve are shrouded in mystery, and information about its top officials is notably scarce. Strange that we need national security for a privately owned company, but no matter.

For reference however, Citibank, Chase Manhattan, Morgan Guaranty Trust, Chemical Bank, Manufacturers Hanover Trust, Bankers Trust Company, National Bank of North America, and the Bank of New York are among the largest heavy hitters in this game, and have been reported to own over 63% of the New York branch of the Fed, its most powerful branch by far. So, a whopping 8 banks control the majority influence in the most powerful financial institution in the world? Democracy at its finest.

(Rare image of all the Federal Reserve shareholders together in one place)

I mention this laundry list of names not to bore you, but to remind you that publicly elected officials have virtually no say in what dictates U.S. economic policy. They just take whatever the Fed gives them, and ask no questions about it (I mean that literally, the U.S. government has never audited the Fed, nor are they even allowed to). Instead, known criminal market manipulators like J.P. Morgan Chase have control over what’s said and done with the economy, and the value of your hard earned dollar.

The Federal reserve is an organization built by the elite, for the elite, and was never intended to serve you, the hard-working, taxpaying American. So, why on earth would they be obligated to disclose to you their internal financial workings? The answer is they aren’t.

The whole reason the Fed was even created in the first place was so that congress could fund whatever programs (mostly wars) they liked without having to raise taxes. Raising taxes is always an ugly stain on your reelection campaign, and these guys wanted to stay in power. Furthermore, even if politicians did try to fund their wars and extravagant purchases through tax hikes, they still likely wouldn’t have enough capital to properly finance their expenses. So, they dreamed up an organization they could just borrow the money from, and then have the American people pay off the interest in the form of rising prices. This organization would be privately owned by the richest banks and financial giants in the world, and have unlimited printing power, and the power to make unilateral decisions about the economy. Instead of raising taxes, the inflation created by the Federal Reserve raised prices, and the interest from the loans congress took out to fund their policies (wars) fell on the backs of guess who? The taxpayer.

So, with the creation of the Fed, congress at the time got to have their cake and eat it too. They could fund whatever policies they wanted with an unlimited balance sheet, and stay popular amongst the people. Meanwhile, the American citizens had to pay for every penny congress borrowed for their programs, plus interest, and then some, accounting for inflation. Our government really screwed us every which-way on this one. We’re probably even worse off than we ever would’ve been otherwise. But hey, at least they didn’t raise taxes.

Graduation:

(Whoopee! Off to the Fed!)

Remember how your parents told you that working hard and graduating from college will land you a great job with a solid company, and a stable financial future? Well, apparently, graduating from Goldman Sachs lands you a top position inside the Federal Reserve, where you can enjoy such luxuries as golf club, caviar, and casually manipulating the global economy on a whim. In 2015 alone, three vacancies at top positions in the Federal Reserve were all filled by former Goldman alumni.

On the surface, this doesn’t really seem like a large problem, until you realize that that Goldman Sachs owns a sizable interest in the Federal Reserve, and the Fed regularly buys treasury bonds from Goldman Sachs at an astronomically increased price to “stimulate the economy”. Goldman officials landing top positions in the Federal Reserve can then continue ripping the Fed off and giving them the worst possible rates for the government bonds Goldman buys, and keep the cash flowing into Goldman’s coffers. But what does the Fed care if they buy overpriced bonds? It’s not like it’s their money being stolen. It’s yours. Or rather, you’re the one who ends up paying for it.

Fun fact #2: Their shady methods.

The Federal Reserve’s business is rather spooky, to say the least. Remember, the Fed can’t be audited, so we have no idea what they’re really up to. That affords the Fed a unique stature as the only financial organization in history that is not subject to the inquiry of any governing body. They can literally do whatever the heck they feel like doing with the world’s economy and face zero consequences. This probably has something to do with that one time the Fed just lost 9 trillion dollars into thin air (I’m not joking, I can’t make this stuff up). And I don’t mean lost in terms of spent poorly, I mean lost in terms of money that’s gone; completely unaccounted for, vanished. But the most powerful financial institution isn’t just good at “losing” money. They also offer their blessing on criminal business dealings.

As I alluded to before, in 2010, J.P. Morgan Chase was hit with two separate lawsuits for the unlawful price manipulation of silver. Oh, and in November of this year, one of their top traders was arrested again for literally trying to do the same thing. That’s been buzzing all over the news recently, and the ongoing investigation is insightful, and also hilarious (a rare combo).

What most don’t know however, is that the Fed played a hand in this manipulation.

In ‘08 (right before sh*t hit the fan for the economy) the U.S. treasury and the Federal Reserve asked J.P. Morgan Chase to buy Bear Stearns, a failed investment company. But why? What could the Fed possibly have to gain from a U.S. corporation buying a failed investment firm? Well, it just so happens that Bear Stearns held the largest short positions in COMEX gold and silver. So, upon taking over Bear Stearns, J.P. Morgan Chase inherited their role as the silvers’ largest short seller.

For those unaware, short selling is basically borrowing and selling an asset you don’t currently own today, with the expectation that the price will go down. Then, you can buy it back with the money you “made” from the sale, and pocket the difference if the price falls. Selling in the short term is essentially betting the value of an asset will decrease. However, in the case of J.P. Morgan, with its enormous buying power and ability to flood the market with short orders, they caused other investors to panic sell their own silver too. This meant the bank could not only bet on silver falling, they could actually force the price of silver down.

(An image of the silver markets during Chase’s manipulations.)

And that’s exactly what they did. From at LEAST 2008–2010 J.P. Morgan Chase shorted the hell out of silver, more silver than it even physically had, which is pretty hard to do, since, coincidentally, prior to acquiring Bear Stearns, J.P. Morgan just happened to own the largest amount of physical silver in the world. But they didn’t just eclipse their own holdings. Chase took up a short position on more silver than is actually available in the entire planet. How, exactly? Well, don’t ask.

Nonetheless, generally, in times of economic strife, gold and silver prices skyrocket as people fearfully search for an alternative to the dollar for storing their wealth. However, during the crash, silver stayed right put, and even fell along with the market due to Chase’s clever manipulation. That meant silver’s value was too low, artificially low, which would pan out great for Chase because, once again, they owned virtually all of the physically available silver on the market. So, when the price of silver finally rebounded from its artificial lows, guess who would be the biggest silver dealer in town? Bingo. This way, they got to make money on silver’s way down with the short sales, and back up when the price recovered, and they could control the supply and pricing if they wanted to. Oh, who am I kidding? Of course they wanted to.

So, let me get this straight. The Federal Reserve gives J.P. Morgan Chase, a bank with a sizable share of ownership in its most powerful branch, the A-OK to buy a company with the largest short position of silver in the world. Then, through sheer coincidence, an illegal manipulation of the price of silver takes place, scaring the American people from purchasing stores of silver in lieu of the dollar, thus retaining some of the dollar’s strength through the economic crash. Meanwhile, J.P. Morgan Chase coincidentally corners the market on silver for the next time the asset has a bull run?

Wow, that seemed to work out great for both parties. Especially since one party is part owner of the other. Huh, I wonder if that was at all coordinated? Nah, that’s just speculating.

Anyhow, that’s just two incidents in which the Fed was seemingly party to some shady business, and they’re not even the worst things the Fed has been up to. No, no. This next trick takes the swamp monster cake. Or mud pie. Whatever they eat.

(Swamp Le Cordon Bleu)

Fun Fact/Shady Trick #3. Quantitative Easing.

Quantitative easing? I’ve never heard such a beautified, puffed up term for simple money printing. Well, it isn’t that simple, but it’s still money printing. Quantitative easing is the magical “cure” to our last economic crash. And the Fed, who, as we’ve discussed, have the American citizen’s best interests at heart, since we, the people, have elected them, (haven’t we?) assure us that there is no economic downside to this strategy.

Here’s the method. The Federal Reserve wants money in the stock market, (because, what corporation doesn’t?) but the markets aren’t doing so well. Disregarding the fact that the crash was at least partly due to the Fed hiking interest rates on the momentum of an artificially inflated housing bubble, and the false economy didn’t have enough liquid capital to pay off the rising interest rates on their own debts, the Fed has come up with a solution…(to the mess they helped create).

To get money flowing back into the market, the Fed starts a program to reward traders who sell off their government bonds with free money. The idea is that pulling people away from government bonds and investing in riskier stocks (and perhaps even small businesses) will stimulate the economy, and free money is a great incentive for doing that. Also, giving traders more capital gives the Fed a great opportunity to flood the market with brand new liquidity. But it doesn’t stop there. Not only does the Fed use these funds to reward traders, it also uses it to overpay for more of the treasury bonds it loves purchasing at an exorbitant markup from massive banks like Goldman Sachs. And, since traders were then highly motivated to ditch their government bonds, central banks could swoop in and purchase them dirt cheap to resell to the Fed at a hefty profit.

Sounds like a win for everyone, right? The banks secure their profits, the government has a solid market for it’s debt, the traders get their free money to play with, and the whole system is running like a well oiled machine.

(Recently surfaced image of a very happy investment banker during the first round of QE)

So, where is all this extra money going to come from to pay for this? I mean, that’s the same question politicians ask when voters ask for programs that actually benefit them, isn’t it? When universal housing, affordable healthcare, free higher education, improved public education, sensible gun control, reliable government pensions, improved public infrastructure, paid maternity leave, social security for the elderly, criminal justice reform, green energy based jobs, and a livable minimum wage, are proposed to the government, (all of which are currently in full effect in other countries) the checkbook seems rather short, doesn’t it? It’s probably because war and corporate tax cuts are infinitely more expensive, (and far more profitable in the short term for the elites) that we don’t have any room for these things in the budget. So, I wonder exactly how the Fed plans to pay for injecting billions, if not trillions into a dying economy.

Did you think the good fellows at the Federal Reserve were going to write up a check from their own pockets to reward these traders? They should’ve, since they’re called the Federal Reserve, after all. But no. They didn’t. Or, more accurately, they couldn’t, since that’s not how the American monetary system works.

Instead, they printed -I mean- quantitatively eased the money into the traders’ accounts, and purchased massive amounts of government bonds using digital ones and zeros. There’s no product, service, or goods being exchanged in order to generate this wealth, it’s just drawn up and deposited out of thin air. And this is all perfectly legal.

But wait. You’re telling me that if I cut you a check for ten thousand dollars I don’t have, that’s called fraud, and I’m going to jail. But if the Fed cuts you a check for ten million dollars that it doesn’t have that’s called “quantitative easing” and it’s “good” for the economy?

My forehead is begging for a palm.

Anyhow, this is the brilliant solution the most powerful financial giants in the world came up with to halt the economic downward spiral the American people faced after perpetual wars, fiscally irresponsible purchases, tax cuts, and predatory lending practices destroyed the economy. They’ll just paper down the effects of an artificially inflated economy with more artificial inflation! Bravo, Federal Reserve. Bravo. Why should we be surprised? Of course, an institution whose primary relegation is the creation of new money thinks the solution to an economic collapse is the creation of new money. Duh.

Anyhow, I suppose things shouldn’t end too badly if the Fed only quantitatively eased a little, right? So, just how much quantitative easing has the Fed been up to since they hatched this plot?

Well, we have to take the Fed at their word for this because, again, they can’t be audited, but apparently the Federal Reserve’s expenses since its inception in 1913 all the way up to 2008 totaled 880 billion dollars. However, after ’08 with the advent of QE, the Fed ballooned the money supply to over $4 trillion.

(Here’s the Fed’s balance sheet before QE)

(Here’s the Fed balance sheet with a Quantitative Easing Makeover!)

As you can see, quantitative easing expanded the federal balance sheet exponentially. They were dreaming up dollars at a rate of about $85 billion a month, which meant that they were churning up and artificially injecting more money into the economy over the course of a year than was necessary for all its previous operations in the entire nation’s history. And that’s only a chart for up to 2013, in which span they more than tripled the nation’s money supply. Not bad for a couple of years, eh?

Now let me explain why that’s terrible.

You can’t print prosperity. Period.

It doesn’t work like that. The amount of money in a given economy has to be at least somewhat proportionate to the goods and services or “value” in circulation. The wealth isn’t in the money, it’s in the value you can buy with the money. If money generation starts outpacing value creation, the money loses its value, obviously. This is inflation 101, and it’s happened a thousand times in a thousand failed economies before.

Now, the Federal Reserve already knows this, and will likely take steps to combat said inflation, say for example, raising interest rates. Well, that might’ve worked, if the Fed hadn’t just spent the entirety of the last decade babying the economy by slamming interest rates to the ground, and jacking up the stock market on the sugar high of trillions in free money to play with.

(The Federal Reserve and the S&P 500. Look at those two, thick as thieves. By now, the stock market has become totally dependent, addicted to the artificial cash infusions of the Fed. Needless to say, if the Fed stopped “expanding” aka printing up free money, the stock market would spiral out of control.)

So, when the Fed is forced to tighten the money supply to combat runaway inflation, all of the work the Fed had done to reflate the economy and save us from the consequences of the last recession will be undone. The Fed didn’t “fix” the last economic crisis, they just kicked the can down the road and printed trillions of dollars on top of it. Bad move. That’s how countless economic regimes have gone down. We really should’ve known better. But we didn’t.

Now, we’ve been precariously floating above recession on the backs of a massively over-printed currency, with no means of turning back the clock. When the bottom finally falls out of this game, and it most certainly will, we’re going to crash back down to the same economic depressions we faced before, only exponentially worse. This time around, since we can no longer puff up the economy with an increasingly devalued currency, we’ll have no exit plan for the failing economy.

We’re caught between the ultimate rock and a hard place. Option one is to suffer the consequences of a recession we should’ve faced over a decade ago, a monster which will have gotten much, much larger from our decision to delay in tackling it. That monster will most likely destroy us, (economically speaking) and perhaps we deserve it. Or, option #2, we can take our chances with runaway inflation, do absolutely nothing about the increasing money supply, and continue right on printing the U.S. dollar into oblivion. That will definitely destroy us. Note this well. There is no third alternative here. The Fed has to stop printing money at some point, and further yet, they must find a way to reduce the money supply, (likely selling back those overpriced treasury bonds at a huge loss) and when they do, the gains of the false economy will vanish, leaving us indefinitely worse than we were before.

This isn’t speculation either. This process is already in the works. The Fed has already begun tightening, interest rates are climbing, analysts are already insisting the real estate market in key areas is showing dangerous signs of capitulation and the stock market has already begun plummeting, closing with some of the worst numbers since the great depression. The treasury secretary has also inadvertently warned the public of an impending liquidity crisis too, because, why not complete the cycle of incompetence?

The signs are out there, you just need to know where to look. Don’t be fooled by the false bullish sentiments, and the apparent “strength” of the U.S. dollar. If you recall, this is the exact sentiment we had about the economy in 2008, with catastrophic result. We are not on good footing, in fact, the outlook has probably never been worse. Be wary when the mainstream thinks the waters are clear. Because right when everyone is comfortable and confident in the stability of the economy, when everyone is lax and fully at ease with the future of any market is exactly when that market is at its weakest point.

In hindsight this will probably all seem obvious, but for now, it still isn’t. So, I’ll keep sounding the alarm to help alert as may people as I can. With enough notice in advance, perhaps you can take the proper steps to prepare yourself and your family for what’s to come. Good luck.