DG to BENJAMIN FULFORD, on FED RES

September 25, 2009

Dear Ben:

Your article on ‘It is the Federal Reserve Board that is bankrupt, not the USA’ made my eye twitch and I thought there was a heart attack in my immediate future. Luckily, I am healthy in that regard.

Let me present my case as to why I believe that the Federal Reserve Board is NOT bankrupt, but a diametric opposite is the fact? The Fed announced in December 2007 that it would create the Term Auction Facility (TAF). Under the TAF banks would send their troubled assets (only AAA rated securities) to the Fed, in exchange for USD on a 28-day loan, later they added a 84 day loan. Never, has anybody ever acknowledged that the loans have been repaid and the assets returned by the Fed. Never. That program is continuing today and pumped almost $2T into the economy. Therefore, what happens when the Fed lends money to the banks? Although it is all book entries on computers actually, what happens is that the US Treasury orders the Fed to print $2T. The Fed prints $2T and charges interest for doing so. That means the Fed lends the money to their affiliated banks, supposedly on orders of the UST and the US taxpayer picks up the tab. It doesn’t end there. The UST needs to finance (find the money) so they conduct an auction, and they sell bills, notes and bonds, ranging from 4 weeks to 30 years. These securities are backed by the full faith and credit of the United States of America. Nowhere in the corporate USA structure does it say the Federal Reserve Board will be backing or be responsible for the credit worthiness of these securities. Perfect scheme where they get paid principal and interest for creating money from nothing.

The above is only one example, then consider TARP, TALF and the endless facilities all designed to increase the money supply. My personal favorite is the Fed will buy mortgage-backed securities (MBS) using the system above and become the largest landlords in the world.

I want to state that it is a good possibility that we are not aware of, but you may be, of a dealings occurring in the background, which may have bearing on the current financial position of the Fed? Until we hear otherwise, it is my belief that the Fed is alive and well. Well until the USD collapses and oddly enough WWIII begins. Jeez, that’s never happened before, a world war started by the elite bankers?

Until Next Time,

DG