World Press Network

McFadden was elected to Congress in 1920 and served until 1934. Though a Republican, he moved to impeach President Herbert Hoover in 1932 and introduced a resolution to bring conspiracy charges against the Board of Governors of the Federal Reserve.


He also made a 25-minute speech on the House floor accusing the Federal Reserve of deliberately causing the Depression. At the time, the chairman of the Federal Reserve Board was Eugene Meyer, who resigned after Frankin D. Roosevelt was inaugurated as president in 1933 and purchased the Washington Post at a bankruptcy auction.


Later in 1933, McFadden introduced House Resolution No. 158, Articles of Impeachment for the Secretary of the Treasury, two assistant Secretaries of the Treasury, the Board of Governors of the Federal Reserve, and the officers and directors of its twelve regional banks. This was McFadden’s political swan song. In the election of 1934, he lost his reelection bid to a Democrat by 561 votes.v

Is that a threat? The cure for a failed banking system is adequate capital and prudent oversight not threats to critics of the system. That's balderdash. Commissar Blair apparently believes that bloggers should be treated the same way as journalists in Iraq, who, if they veer ever so slightly from the Pentagon's "the surge is a great triumph" script, find themselves on the smoky end of an M-16 at some unmarked checkpoint outside Baquba.

"PRESSTV.com branded terrorist. Is the Alternative Media next"

But the bank also revealed that its core equity Tier 1 – a measure of financial strength – was just 2.9 per cent in the first half of 2008. The average for the UK banking sector is 6 per cent.

In some countries, the cash reserve ratios have decreased over time (sourced from IMF Financial Statistic Yearbook):
Country ...........1968...1978...1988...1998
United Kingdom...20.5...15.9.....5.0....3.1
Turkey.............58.3...62.7....30.8...18.0
Germany...........19.0...19.3....17.2...11.9
United States.....12.3....10.1.....8.5...10.3

Ed,

there is a lot in the rags this morning about how we all just found our collective wallet £3bn worse off.

The average for the UK banking sector is 6 per cent.

When two or more storm cells come together and then form a larger and more violent storm, the event is often called a "Perfect Storm". The reference is to the increased ferocity of the combined cells as drenching rain, high winds and rolling gray clouds cover the landscape. It is an event fit for neither man nor beast.

That reference came to mind when I wrote the scenarios for Oil, Jihad and Destiny. "What is the worst case scenario?", I wondered. "What is the probability it could happen?" Although the "Perfect Storm" scenario is discussed in my book, I did not publish the results of my analysis. I could not bring myself to believe an economic catastrophe of that magnitude was probable.

No more. All of the elements are in place. This storm has begun.

The heart of the modern state is the central bank. By heart I mean the very thing that makes it work, and without which the modern state would quickly wither and die. It is the thing that makes the money. As such, it purports to be our stabilizer, our source of employment, the fuel behind the economic growth that brings us technology.

In truth, it does none of these things. What it does do effectively is prop up the leviathan state and all its pomps. You would never know this from the textbook, of course. The subject is rarely mentioned in political science. Historians treat the establishment of the Fed as an event far less important than the creation of the Department of Labor.

It is interesting how rarely its existence is ever questioned, much less condemned. Instead, the head of the central bank is fawned over and courted by all sides of the political spectrum. He enjoys a level of immunity from criticism that no one else in politics has. Again, this is proof of the extent to which we do not believe in authentic freedom, since it is the central bank that is the true source of the decline of our freedom.

"The inflation rate is going to come down," said an economist at Lehman Bros. Most economists agree. And so do investors. TIPS are U.S. Treasury notes that are adjusted to inflation. Investors pay a premium for them in order to get the protection of the feds' inflation adjustment. Thus, the yield spread between these notes and regular 10-year Treasuries is a good measure of how much inflation investors expect. And currently, the yield has dropped to its lowest point in nearly five years.

What is the reason for this stunning defeat of inflation? How come the central banks and financial authorities aren't better at what they do best? The latest numbers we have show them trying hard. Money supplies worldwide are increasing at about 20% per year - five times faster than the rate of economic growth. According to theory, if the supply of money increases faster than supplies of goods and services inflation will result. Is the theory wrong? Or is something else is going on?

Yes, something else is going on. The world economy is cooling off. After running so hot for so long, a chill wind is blowing. It began almost exactly a year ago - on August 9, 2007 - when the subprime story broke. First, the homeowners got in trouble. And then, the builders. And then the lenders. And then the investors who lent to the lenders. The problem mounted up the financial ladder like a crusader scaling the walls of Constantinople.

For a long time, it looked as though the go-go economies of the Far East…and the commodity producers…would be able to hold them off. The world economy had "decoupled," it was said - with the emerging economies continuing to grow while the old economies of Europe and North America were in a slump. With this huge new demand in front of them, commodities markets continued to move higher…even as stock markets and housing sank.

But now, it looks as though nothing will be spared. Everything is going down. Gold, stocks, property, copper, inflation, GDP growth rates, consumer spending, car sales, student financing, employment, house sales, housing prices - everything.

And against all this…the dollar is going up.

But what does it mean? Well, no one knows

Banks repossessed almost three times as many American homes last month as in July of 2007, while foreclosures jumped 55 percent over the same period, according to a report issued Thursday by RealtyTrac, a California-based seller of foreclosure data.

More than 272,000 properties, or one for every 464 US households, were in “some stage of foreclosure” last month, according to the report. The number of foreclosures in July jumped 8 percent to 272,171 from June, slightly lower than the record 273,001 foreclosures in May.

Even these staggering figures represent an “artificial depression” in foreclosures, Rick Sharga, a RealtyTrac vice president, told Bloomberg News, due to the fact that a number of states—including New York and California—implemented foreclosure moratoriums last month. Most of the affected properties will go into foreclosure in later months, Sharga said.

Last week, Fannie Mae and Freddie Mac had just announced record losses, and so had most reporting corporations. Unemployment was mounting, the foreclosure crisis was deepening, state budgets were in shambles, and massive bailouts were everywhere. Investors had every reason to expect the dollar and the stock market to plummet, and gold and oil to shoot up. Strangely, the Dow Jones Industrial Average gained 300 points, the dollar strengthened, and gold and oil were crushed. What happened?

It hardly took psychic powers to see that the Plunge Protection Team had come to the rescue. Formally known as the President’s Working Group on Financial Markets, the PPT was once concealed and its very existence denied as if it were a matter of strict national security. But the PPT has now come out of the closet. What was once a legally questionable "manipulator" of markets has become a sanctioned stabilizer and protector of markets. The new tone was set in January 2008, when global markets took their worst tumble since September 11, 2001. Senator Hillary Clinton said in a statement reported by the State News Service:


The mystery over what was going on with the dollar the first week in August was solved by James Turk, founder of GoldMoney, who wrote on August 7:


Just as central banks manipulate currencies in concert, so gold can be manipulated by massive selling of central bank reserves. Oil and any other market can be manipulated as well. But markets can be manipulated by only so much and for only so long without fixing the underlying problem. There is more bad news coming down the pike, news of such magnitude that no amount of ordinary manipulation is liable to conceal it.

For one thing, roughly $400 billion in ARMs (adjustable rate mortgages) have or will reset between March and October of this year. Assuming 3 to 6 months for strapped debtors to actually hit the wall with their payments, a huge wave of defaults is about to strike, continuing through March 2009 – just in time for the next huge wave of resets, in option ARMs.3 Option ARMs are loans with the option to pay even less than just the interest on the loan monthly, increasing the loan balance until the loan reaches a certain amount (typically 110% to 125% of the original loan balance), when it resets. The $800 billion credit line recently opened to Fannie Mae and Freddie Mac may be not only tapped but tapped out, at taxpayer expense. The underlying problem is little discussed but impossible to repair – a one quadrillion dollar derivatives scheme that is now imploding. Banks everywhere are facing massive writeoffs, putting the whole banking system on the brink of collapse. Only public bailouts will save it, but they could bankrupt the nation.