Jul 18, 2012

http://usawatchdog.com/one-on-one-with-paul-craig-roberts-2/

The above link has about a 15-minute interview with Paul Craig Roberts, who was at one time the #2 man at the US Treasury. He holds a PhD in economics. He explains the LIBOR rate-fixing scandal in simple terms.

In the order of events, he says that the collapse of the Soviet Union twenty years ago brought about the apparent end of the great Communist enemy. Capitalism won; therefore, they argued that banking regulations were no longer necessary. Greenspan said that the banks could be self-regulated.

In that atmosphere, in 1999 Congress repealed the 1933 Glass-Steagall Act, which had been put in place in the wake of the Great Depression of that time. This Act had separated regular banks from investment banks. The repeal of Glass-Steagall in 1999 allowed the big financial firms to become "too big to fail." So when the banking crisis hit in 2008, these banks were bailed out.

These big banks were turned into banking casinos, because they were allowed to place bets on interest rates. They were able to win those bets and make a lot of money (at other people's expense), because they rigged the interest rates in their favor. Even to this day, they are still making money at other people's expense.

The value of a bond goes up if interest rates go down, and vice versa. Therefore, it was in the interest of the banks holding those "debt instruments" to keep interest rates low. As pressure mounted and inter-bank lending rates began to rise, those debt instruments were being threatened with devaluation. The bank's assets would go down in value, and the bank might become insolvent. So they under-reported the real rates that they were required to pay to other banks, resulting in a lower LIBOR rate than would be otherwise shown.

This was fraud, and the victims were all those who saw the precarious position of the world economic system. These people thought that we functioned under a free market system, so they believed that natural economic laws would force interest rates to go up. Instead, the rates were rigged down. Hence, fraud was perpetrated upon all who were realistic about the world economic system and who bought and sold debt instruments according to the real situation as they saw it.

They did not realize that they were not playing on a level playing field. The game was rigged in favor of the big banks, so that their balance sheets would show that they were in a stronger financial position than they really were. Because the big CEO's like Jamie Diamond of JPMorgue knew that it was rigged, they knew they could not lose on bets. So they placed $70 trillion worth of such bets.

Of course, why not bet the farm if you can control the outcome?

So now the government is faced with a dilemma. Government officials know that any rise in interest rates will destroy the banking system very quickly. They are locked in to low interest rates. If they force the fraud to stop, interest rates will rise, and the system will collapse. So it is obvious that they will not do this. They will do whatever hand-wringing they need to do, and perhaps a few banks will be fined to give back a tiny portion of their ill-gotten earnings. But they will not do anything that might cause a rise in interest rates, unless the people force their hand through politics or litigation.

The real problem is rooted in the repeal of the Glass-Steagall Act of 1933. The only solution is to reinstate it or something like it. Will they do this? Of course not. The monkey has reached into the coconut and has found a lot of tasty nuts. He won't let go of them, even though his fist is now too big to get it out of the coconut. So he will be caught by the monkey hunters. He is too greedy, and the nuts are too tasty. He would rather be caught.

So it is with the big bankers. The greed of Babylon will be their undoing. Government will do nothing to rock the boat, but the other nations are already taking steps to end the fraud. As China, Japan, Brazil, India, Iran, Russia, and other nations move away from the dollar in world trade, fewer and fewer nations are using dollars as a world currency. They are no longer buying US bonds.

So government inaction is only a game of waiting until the other governments of the world cause the dollar to collapse. That way, politicians can shift the blame to those other governments and "forces beyond our control." Meanwhile, those same politicians know that the end is near, so they are already taking steps to move their assets into other countries, other currencies, or into commodities like gold, silver, land, etc.

That way they will prosper while the average American loses everything. Whatever a person possesses in savings accounts, bonds, or other dollar-denominated assets will probably be lost.

That will be a truly revolutionary moment in history. It will also mark the full collapse of Mystery Babylon and the start of a new system foreshadowed by the Medes and Persians in the book of Daniel.

Because the Medes and Persians represented the two arms of silver (Dan. 2:32), I believe that silver will triumph over gold, while paper money and debt notes will become worthless. God Himself will do what the banks refused to do--institute a Jubilee and the cancellation of all debt. And those who have exchanged their paper for something of real value will have assets going into the next administration.

Paper money (or money in a digital account at the bank) was never meant to be saved as a store of value, because it always tends to go down in value over time. Paper money is meant to be spent in daily life on things of real value, so that you can live daily and even save for the future.

Paper money is a means to an end, and should not be considered an end in itself. Those who have purchased Iraqi dinar should understand this as well. When Iraq comes out of chapter VII and their currency is restored as an international currency--regardless of the new rate--everyone in America will have to trade in their dinar for American dollars.

Keep in mind that most of those dollars should probably be spent on something of long-term value, rather than keeping them in long-term storage in a bank account. Because dinar are a foreign currency, its value will be based upon Iraq's natural resources, economic output, and its political stability. If the dollar collapses, the dinar could retain its value, which means that it could go UP in value compared to the dollar. So a dinar-denominated bank account might be a better option than a US$ account.

Yet I think that for most people, the first priority would be to stabilize your life here in America, whether it involves buying a house, farm, food and water source, or silver, gold, and other things that have real value.

I cannot give you specific financial advice, of course. That is not in my job description. But if you understand something about money and the divine plan, you will be able to prepare for the inevitable collapse of Mystery Babylon.