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The Prodigal Son: Federal Reserve Bankruptcy; Silver Lining or Wall Street Marvel?
The Federal Reserve as Lender of last resort does not mean kamikaze. We may well see the final failures of the Fed in our lifetimes.
Kondratieff documented 50 year generational Jubilee Waves first identified in the Old Testament of the Bible. Every 50 years prices, property returned to their rightful owners, those who saved and lived righteously. Slaves bought their freedom.
http://www.kwaves.com/kwave.pdf
We may be nowhere near the bottom line endgame after the Jubilee Peak in 2000, despite a 57% decline in the US Dollar and 84% decline in the Dow in terms of gold.
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3251493
The banks still hold $592 Trillion of derivatives, according to the Bank for International Settlements most recent report. If only some of these trillions implode, we may fall further underwater, deeper into a cleansing Depression returning us to healthy producing and saving, rather than consuming and borrowing.
http://www.bis.org/statistics/otcder/dt1920a.pdf
The Fed employs 20 times leverage on a balance sheet which more than doubled credit in a year, with a 508% increase in Treasury Debt, a 1004 % increase in currency and no increase in gold stock.
http://www.federalreserve.gov/releases/h41/Current/
A 5% decline in Fed or Treasury balance sheet assets from either higher interest rates, currency devaluation or bad loans wipes out Fed equity.
The Federal Reserve and US Treasury may have a death grip on each other. Could this be good news for most Americans, returning them to self-reliance rather than Big Brother?
How much longer can the leaders of our country pretend more debt and funny money are the solution to a financial crisis brought on by too much credit profligacy in the first place? The emperor may have no clothes.
Anyone with carotid artery pulses knows bank balance sheets were decimated by $200 Trillion of off balance sheet derivatives. Derivatives destroyed assets like Kronos devoured his children. $13 Trillion bailout stims are either a down payment or drop in the bucket.
