Have outsourcing, open borders destroyed the U. S. banking control system?

By Dan Cunningham

It was not just mortgage fraud or Federal Reserve manipulation that brought about the current banking malaise.

There were two big, opposing major trends going on that have apparently doomed the banking system as a control mechanism.

When the Federal Reserve Bank was created it centralized money creation outside the government and in the hands of a few big bankers. The system allows the creation of money out of thin air, to be loaned out to borrowers to buy either assets or services. The control mechanism is that the borrower now has to hustle to pay back the loan, with interest.

A home bought for $200,000 at 7 percent interest will result in a buyer having to pay back almost $479,000 over 30 years. The buyer has to accumulate not only the original $100,000 which he did not have, but an additional $279,000 to cover interest costs. Obviously, if money supply stays stagnant, as interest is skimmed from the money supply and given to the bankers the banks or lenders end up holding more and more money as the overall supply of money available for borrowers to earn shrinks.

The suits at CNBC will tell you that the Fed is an inflation fighter. In reality, one of its major roles is to expand money supply so there will be excess dollars available to flow to the lenders. Thus the system would break down. You can argue that the government expands money supply through deficit spending, but the government is only a conduit. The actual money is created by the Fed, borrowed by the government, which then also owes interest on the money it borrows and thus it needs an inflating money supply so it can pay back its lenders.

We know the Fed is not an inflation fighter because since its creation the value of the dollar has dropped 95 cents. What you could buy for a nickle in 1913 should roughly cost about one dollar now.

As the money supply expands, business charge more for services and goods and as more inflationary dollars flow into the companyhy or governmetn agency,such as a school district, raises are periodically given to workers so they can try to keep up with the interest payments they have to pay, plus for the rising cost of goods and service that they need.

If inflation stops and deflation kicks in, then banks have to shrink their balance sheets and the result is a slowdown or reversal in the creation of money. Business in turn contracts and people lose jobs and if it gets serious, as after 1929, an economic depression can occurr.

So the American system, as financed by usury banking, requires ever rising inflation to stay ahead of the game.

But other globalists, some of them the same people running the banking scheme, began pushing the mantra of a borderless world, free markets, free flow of labor and goods. To accomplish this goal requires that the bottom third of the world be brought up to the middle third, while the top third is brought down to the middle third. But the goals can be more short sighted than that, and not based on any global scheme, but on a very limited, provinicial theme.

Companies in the past 20 years have learned they can skim a bigger profit by outsourcing production to bottom third countries, and then selling those products and services to their customers in the top third. Aided and abetted by the mantra of free markets and capitalism, chanted by both Democratic and Republican limousine leaders, outsourcing kicked in full throttle and millions of high wage jobs have been abolished. At the same time, the out of work formerly well paid workers were now having to compete against a new pool of cheap, foreign labor - both ecuated and uneducated - being brought in to halt wage inflation and to start bring U. S. wages down to lower levels. America was told it has to compete against low cost labor in Mexico and China, as well as low-cost labor from Mexico and Indian being imported into this country. -- all for the goal of keeping wages in check.

It is now apparent that American wages - except in some government and highly manipulated areas like investment banking and trading - are indeed stagnant.

It is this wage stagnation that dooms the American banking usury system, which must have ever rising inflation in wages and costs to make usury work.

The big blow off from the mortgage banking scandal is also a culprit - it was an accelerant that brought slow moving counter trends to a head.

Even as late as early this year suits on CNBC were arguing there is no real mortgage crisis since so few homes were actually involved in subprime deals, according to their calculations. However, the losses from subprime are so huge and so pervasive and so global in scope because of the distribution of the losses, one is led to suspect that the pooled mortgages that were marketed may have included nonexistent loans as well.

The initial response from the Fed to the subprime blowoff has been to pump money not into consumers but simply to lenders, saying failure to do so will cause them to go away. However, because these inflated dollars have been placed in the hands of the lenders, simply to stuff black holes in their ledgers, is not helping the underlying need to keep pumping more money to borrowers so they can keep up with usury.

But remember, there are two major economic currents flowing across the world, and against each other.

The absolute necessity for inflation to keep usury banking in business, and the counter trend of lowering wages to create a global economy with a more level playing field. Inevitiably, as the Chinese become more rich, they will rise more toward an American consumption level - even as outsourcing and open borders moves Americans downward to a lower consumption level.

When I read the Daily Reckoning by Bill Bonner and his staff, who have homes in several countries, travel the globe and live a high life, they opine that the American consumer has to consume less. They do not seem to be themselves. But they are intellectual and economic elities who have indeed out thought the rest of us and accumulated more.

However, their opinion is like billionaire George Soros writing in The Atlantic that now that he has made his piles of money, everyone else should live under communitarianism, his speaking in code for socialism, or modified communism.

In socialism there is less room for banking. The government itself is the control mechanism.

And now that the globalists are seeing their end game in sight, they apparently are willing to let their outsourcing and open border and deflation scenario take out the banks, for they will be replaced by totalitarian SWAT teams and troops and police states.

This must be what they have in mind. Because the outsourcing and open borders, in the long run, is the enemy of inflation, and inflation is the covert agent of the banks.

The banks may think they are just in for a bit of a chill for a while, a slowdown.

But if you look at the big picture, what was the banking scene like in Soviet Russia? And today Russia is on the ascendancy. Russia easily stopped the dual citizen Israeli -Georgian war minister dead in his tracks and kicked him out of South Ossetia before he killed another 120 Russians and added to the $4 billion demolition program accomplished in just a few weeks.

The Soviet symbol was a globe surrounded by sheaths of wheat, as I recall. This is very similar to the symbol for the U. N.

The free market globalists, heirs of the grand poo bahs who controlled the ancient spice trading routes, may or may not have Russia included in their grand scheme. It is now easily observed that the Jewish forces that took over Russia in 1917, then somehow accumulated billion dollar fortunes in a supposedly classless society when the Berlin wall fell, have been routed from their country. Remnants of Judaism remain. These remnants hailed the Russian military rescue of S. Ossetia, calling what the Israeli-
Georgian war minsiter did appalling.

Russia is growing its banking system. Islam has a screwy kind of banking system that does not have interest but has mismatches between what is put out and what is paid back in.

But the U. S. banking system seems to be pausing. The next big scary thought is that credit card debt - which grew 7 percent last year - may now have to, gasp, contract, because deflating wages will make it difficult to keep up with 24 percent interest rates.

About 100 banks are expected to fail in the current crisis, not many out of 6,000. About 2,000 banks failed in the late 80s and early 90s, but the banking system weathered the storm. This was helped by the Fed inflating the money supply to keep the scheme going overall.

But if there is to be a banking recovery ahead, it will have to overcome the fact that globalists have apparently busted wage inflation once and for all. Commodities are inflating, pushed up rising world demand. But Americans will not have inflating wages to help them buy coal and oil and food.

Where does that leave the banks? People will have to spend what increasingly little they have on shelter, food and transportation to and from work. They does not leave much left over for interest.

Something will have to give.