The present stage of the Great Depression continues to unravel across the planet. The fixes of the US/UK/EU structure has definitely restored the wealth and power of the international bankers and dealers but have seriously weakened the Home States used as collateral for guaranteeing various OTC and UTC (under the counter) deals. This, in turn, is causing all of the client dictator states to collapse.

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ΩΩFirst, let’s examine Ireland and Iceland. Both are the first nations in Europe to totally go deep into trouble due to reckless bankers. The Icelandic people revolted when their Parliament tried to appease the IMF and the US/UK/EU governments and so Iceland told everyone to basically, eat dirt. No rescue. The Irish were forced to do the IMF’s bidding. The reward for the Irish rescue operation was the beggaring of the Irish people. These people were treated like just so many pesky peasants: they had to pay for the bank losses by being literally starved, as usual. Starving the Irish to keep the elites rich is old, old stuff. Very old. And quite unremarkable for the British elites. Including the Queen, of course.

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ΩΩFor much of the lost money due to crummy lending deals, was money lost by foreigners using Irish banks, seeking higher profits on savings. The US and UK central banks are still offering very low loans relative to inflation, to keep wounded economies afloat. So savers went to higher interest venues such as the Irish or Australian banks, for example.

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ΩΩHere is some interesting news about the day Iceland fell into banking hell just before Ireland fell off the same cliff for the same reasons: Iceland Shows Ireland Did ‘Wrong Things’ Saving Banks (Update1) – Bloomberg.com

It was Oct. 8, 2008, at the height of the global financial meltdown, and Iceland’s bank assets in the U.K. had been frozen, Bloomberg Markets magazine reports in its March issue. Customers flocked to branches of Tomasson’s Glitnir Banki hf to withdraw money, even though the government had guaranteed their deposits. By the end of the day, the vaults were empty, says Tomasson, recalling the drama two years later.

The only way Glitnir and other lenders could avoid a panic the next morning was to get more cash, which they were having trouble doing. A container of crisp kronur sat on the tarmac at Reykjavik’s airport awaiting payment, Tomasson says. The British company that printed the bills, De La Rue Plc, was demanding sterling, and the central bank couldn’t access its U.K. account.

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ΩΩAll the paper money was gone. The central bank and the government of Iceland could not print more money. Why is this? We know that Zimbabwe’s government also didn’t print its own money, too. This vital activity (the literal creation of paper money!) are imports! How bizarre is this? In the modern world, why would a nation be incapable of printing paper money? Seriously.

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ΩΩZimbabwe has the excuse of being a poorly-run former colonial nation with few industries anymore. It is closer to Haiti, actually, worse: #228 out of 230 nations in per capita GDP of only $400 per person per year. Haiti is #206 with a GDP per capita of $1,200. Iceland has a per capita GDP of $38,400 which is #27 in world rankings. More than Germany! Ireland is #30 at $37,600 per capita GDP which is also ahead of Germany and Japan, for that matter. Germany is #32 and Japan sits at #39.

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ΩΩBoth Germany and Japan have money printing ability. Iceland lagged in this matter, nearly fatally. When the powers that be in Britain wanted to blackmail Iceland, they used the printing of money as the process for embargoing Iceland and thus, force the government to hand over wealth (in the form of alien currency notes) to the British bankers. Out of curiosity, I wondered who printed pound notes in Britain.

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ΩΩSeems that the same entity, a private corporation, does this and this entity happens to be the same ones who printed Iceland’s paper money (ah, creating money out of thin air is so much fun)! The ad hoc nature of British money printing is interesting since it reveals the early attempts at turning paper into gold. It isn’t a straight road at all but rather, cobbled together haphazardly. Here is the printer of Iceland’s money two years ago: De La Rue – Wikipedia, the free encyclopedia

The Company was founded by Thomas de la Rue who moved to London [2] In 1831 his business secured a in 1821 and set up in business as a stationer and printer.In 1831 his business secured a Royal Warrant to produce playing cards, in 1855 it started printing postage stamps and in 1860 it began printing banknotes [2] In 1896, the family partnership was converted to a private company.[2] In 1896, the family partnership was converted to a private company.

[2] It was first listed on the In 1921, the de la Rue family sold their interests.It was first listed on the London Stock Exchange [2] The Company, then calledThomas De La Rue & Company, Limited, changed its name in 1958 to The De La Rue Company Limited.[2] A takeover bid for De La Rue was made by the in 1947.The Company, then calledThomas De La Rue & Company, Limited, changed its name in 1958 to The De La Rue Company Limited.A takeover bid for De La Rue was made by the Rank Organisation [3]In 1991 the company’s name was changed again – this time to De La Rue plc.[2] plc in 1968 but this was rejected by the Monopolies commission as being against the public interest.In 1991 the company’s name was changed again – this time to De La Rue plc.

In 1997 De La Rue acquired Harrison and Sons , the stamp and banknote printers, based in High Wycombe. Harrisons had made significent inroads into De La Rue’s banknote printing operations.

In 2003 the Company acquired the Debden based banknote printing operations of the Bank of England [4]

De La Rue sells high-security paper and printing technology for over 150 national currencies . They claim to be the largest such corporation in the world. De la Rue makes paper and prints banknotes for many banks worldwide, including:

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ΩΩNote that Iceland is no longer one of this company’s clients. Note also, the EU central bank gets its money printed by this private corporation. I wonder how this corporation managed to buy out other money printers in England? Who prints the fiat paper money that has zero intrinsic value but has big value when attached to something valuable? This question isn’t academic at all since we know from the Icelandic experience, it really matters where the money is manufactured.

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ΩΩNot so oddly, this is actually a debatable point in many countries today. Note, please, the long list of countries using the former British Empire’s favorite printers! This is a leftover from the gold-standard British empire’s glory days. It still reverberates even as the empire has vanished and financially, the remains struggle to survive. Here is an example from the last 2 years: Proposal that gov’t print money perplexes ministers › Japan Today: Japan News and Discussion

An unconventional proposal by some ruling party members and economists that the government print money to secure enough funds to boost the economy has perplexed cabinet ministers, with the fiscal policy minister calling the idea ‘‘heresy’’ on Tuesday.

The suggestion that the government issue its own money, apart from the Bank of Japan, to procure funds without increasing future debt-servicing costs has suddenly come into the spotlight over the past few days….In Japan, the BOJ alone issues bank notes and the government produces coins. If the government prints its own money that can be used in parallel with the central bank notes, it would expand money supply and beat an expected deflationary trend in the Japanese economy, experts say.

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ΩΩ Here in the US there are many people who want our own government to print money. Well, it does. Here in the US, our government Treasury department prints money and mints debased coins. But this is then distributed by the Federal Reserve Bank! In Japan, the older coin-based monetary system is still ‘government creates the money items’ business but when paper money was introduced, it was done the British way, that is, ‘privately’ by banks rather than publicly by the government.

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ΩΩWe would assume money printing would be a government function yet this isn’t so, not after the British model which triumphed over the more centralized French system. Japan needs better money distribution but printing money won’t do a thing about what ails Japan. All this will do is cause instant inflation of the worst sort. Japan’s problems lie in the hierarchal social system which has relentlessly cut out greater and greater parts of the populace so they have less and less access to jobs, finances and credit.

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ΩΩMoving money from the top of the social pyramid to the middle and lower parts would go a long, long way of fixing what is wrong. It doesn’t matter who prints the money if the money is monopolized by the top 1% of the population. The expansion of the money supply is a tool but won’t make much difference if it is distributed poorly. We see this in the US: it makes not the slightest difference, who prints the money if it is being mishandled.

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ΩΩIceland wanted new kroner printed so this could replace all the kroner pulled from the banks but still inside the economic system, simply removed to private hands at home. Replacing this money which is ‘capital’ with made up kroner so this could flood the country and replace the saved kroner, debased the kroner previously saved and so Iceland had inflation.

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ΩΩThe savers who removed their money got stuck with spending it for much higher food and fuel purchases. So they lost it in the end, anyway. And the government could produce more free fake money at any time if savers punish banks by withdrawing their capital. Iceland’s economy was saved but savers were not saved. They lost.

Let’s contrast this with How Currency Gets into Circulation – Fedpoints – Federal Reserve …

As of December 2007, currency in circulation—that is, U.S. coins and paper currency in the hands of the public—totaled about $829 billion dollars. The amount of cash in circulation has risen rapidly in recent decades and much of the increase has been caused by demand from abroad. The Federal Reserve estimates that the majority of the cash in circulation today is outside the United States.

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ΩΩIf more than half of printed money is outside the US, this means we run our wretched economy on less than $400 billion paper and coin money. Interestingly, the US population is 300 million people. The other thing that is held overseas is around $4+ trillion in US trade dollars which are not in circulation. It sits there, a form of trade capital used to manipulate the value of the dollar so it doesn’t get too debased due to too much in existence.

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ΩΩCurious about the history of the Bank of England’s creation of money, I found this story at their webpage: Bank of England | Banknotes | More About Banknotes | A brief history of banknotes

During the 18th century there was a gradual move toward fixed denomination notes. From 1725 the Bank was issuing partly printed notes for completion in manuscript. The £ sign and the first digit were printed but other numerals were added by hand, as were the name of the payee, the cashier’s signature, the date and the number. Notes could be for uneven amounts, but the majority were for round sums. By 1745 notes were being part printed in denominations ranging from £20 to £1,000.

In 1759, gold shortages caused by the Seven Years War forced the Bank to issue a £10 note for the first time. The first £5 notes followed in 1793 at the start of the war against Revolutionary France. This remained the lowest denomination until 1797, when a series of runs on the Bank, caused by the uncertainty of the war, drained its bullion reserve to the point where it was forced to stop paying out gold for its notes. Instead, it issued £1 and £2 notes. The Restriction Period, as it was known, lasted until 1821 after which gold sovereigns took the place of the £1 and £2 notes. The Restriction Period prompted the Irish playwright and MP, Richard Brinsley Sheridan, to refer angrily to the Bank as “… an elderly lady in the City”. This was quickly changed by cartoonist, James Gillray, to the Old Lady of Threadneedle Street, a name that has stuck ever since.

…The Bank has not always been the sole issuer of bank notes in England and Wales. Acts of 1708 and 1709 had given it a partial monopoly by making it unlawful for companies or partnerships of more than six people to set up banks and issue notes. The ban did not extend to the many provincial bankers – the so-called country bankers – who were all either individuals or small family concerns. However, the Country Bankers’ Act of 1826 allowed the establishment of note issuing joint-stock banks with more than six partners, but not within 65 miles of London. The Act also allowed the Bank of England to open branches in major provincial cities, which gave it more outlets for its notes.

In 1833 the Bank’s notes were made legal tender for all sums above £5 in England and Wales so that, in the event of a crisis, the public would still be willing to accept the Bank’s notes and its bullion reserves would be safeguarded. It was the 1844 Bank Charter Act which was the key to the Bank achieving its gradual monopoly of the note issue in England and Wales. Under the Act no new banks of issue could be established and existing note issuing banks were barred from expanding their issue. Those, whose issues lapsed, because, for example, they merged with a non-issuing bank, forfeited their right of issue. The last private bank notes in England and Wales were issued by the Somerset bank, Fox, Fowler and Co in 1921.

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ΩΩThis system is basically based on trusting the Royal Family. Royals have a long history of not being trustworthy. Note also, the bank distress cycles were mainly due to war debts. The US has been continuously at war since WWII. Our ocean of red ink is due to being constantly on the verge of invading someone or actively at war. We have conducted long, long wars this way.

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ΩΩNote that the British Crown got in trouble due to things like the Thirty Years War and the series of wars against France from 1700-1820. The US colonies had many disputes with paying for the French Indian wars which Parliament wanted the colonies to fund via various trade restrictions and taxes. Money created by private banks in England had to circulate out of the US and flow into London to capitalize the banks which were stressed out by lending money to the Crown for its many wars.

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ΩΩScotland and Northern Ireland are yoked to the private/public banking system rigged up so haphazardly by the Brits over the last 250 years. Here is some recent changes in the bizarre system: Bank of England | Banknotes | The Bank of England’s Role in Regulating the Issue of Scottish and Northern Ireland Banknotes

The Banking Act 2009 and its subordinate Scottish & Northern Ireland Banknote Regulations 2009 give the Bank of England responsibility for regulating the authorised banks’ note issuance, replacing the Stamp Office. The provisions in the Act are designed to ensure that holders of banknotes issued by the authorised banks receive a similar level of protection to that provided to holders of Bank of England notes. This is achieved by requiring the banknotes issued by the authorised banks to be fully backed by backing assets at all times. These backing assets are ringfenced for the benefit of noteholders, so that in the event of an issuing bank failing, noteholders can obtain full value for the banknotes they hold. Backing assets are held partly in Bank of England notes or UK coin (or a combination) and partly in balances in interest bearing bank accounts at the Bank of England. The Bank of England notes used are special one million and one hundred million pound notes – known as Giants and Titans. These notes are not for general circulation.

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ΩΩSince England no longer runs on gold, they have these goofy Giant and Titan notes which stand in for gold but are not gold at all. They are mere pieces of perishable paper. And in a pinch, can be added to by the printers via fiat calls for more money . The new bank laws are designed to lock any community that allows bankers to operate there, to pay for any losses no matter how little this community was actually involved or benefited from the bank lending money recklessly.

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ΩΩThis law protects British savers and it was needed because Britain runs in the red at every level and so has to attract Asian and Middle Eastern savers to hand over their capital. Since the central banks of the EU, UK and US get to set interest rates which satellite bankers use to borrow funds, we get all sorts of fun games such as setting interest rates well below the rate of inflation (degradation of the value of paper money): 2nd UPDATE: Euro Zone Inflation Rises Higher Above ECB Target – WSJ.com

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ΩΩThe EU is keeping near-ZIRP rates of 1% even though inflation is over 2.5%. The US, Japan, UK and EU are all running central bank to international bank lending at a ridiculous rate. Ever start a fire? I heat my home this way. You pile up lots and lots of kindling and a log. You then take some paper, crumple it off and then strike a small flame with a match. The paper begins to burn. It, in turn, sets everything on fire. That is all it takes: some paper and one tiny match. And that lights with one small spark.

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ΩΩThe dangers of inflation should be obvious. All the tricks and schemes created to hedge inflation fail when governments and bankers want to print money for themselves. There is no way around this.

Email: emeinel@fairpoint.net

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