And that, Ladies and Gentlemen, is how it works (one of the aspects of Fed ‘liquidity funneling’ to the Primary Dealers)…

When the Fed auctions off various financial securities each month (to raise funds to cover monthly deficits), each of those securities is identified by a specific Identification number.  This unique number is called a “CUSIP.” This acronym stands for the “Committee on Uniform Securities Identification Procedures.”

Note this more complete definition:  Committee on Uniform Securities Identification Procedures  –  A board that assigns a nine-digit number to every stock and registered bond that trades in the United States. CUSIP is owned by the American Bankers Association and is operated by S&P. A CUSIP number facilitates trade and settlement by making each security unique from every other of the same class. CUSIP numbers are recorded in each trade. 

Well… on February 14, 2013, the Fed auctioned off some 30-year Bonds (note the CUSIP – “912810QZ4”):

TREASURY AUCTION RESULTS                                                                               Term and Type of Security 30-Year Bond                                                             CUSIP Number 912810QZ4                                                                                       Series Bonds of February 2043

The auction bidders typically include the Primary Dealers, the direct (non-Primary Dealer) bidders and the Indirect Bidders (Central Banks).

The Primary Dealers enjoy a practically conjugal relationship with the Fed, and they are obligated, in accordance with that special to ‘take’ or ‘buy’ whatever portion of the debt auction not bid/purchased by the other bidders.  And that is generally substantial.  According the Federal Reserve Bank of New York, the “primary dealers alone account for 70.9 percent of Treasu8ry securities sold to the public, on average.

Immediately following the Valentine’s Day auction this year (5 days later, on February 19, 2013), the Fed ‘bought back’ the majority of that very same 2-14-13 CUSIP ($39 billion worth – see below) from the Primary Dealers (who were unable to ‘move’ that paper to their clients and did not wish, themselves, to ‘sit on it’).

The Fed repurchases this ‘paper’ in Permanent Open Market Operations (POMOs) and the paper then ‘sits’ in the Fed’s System Open Market Account (SOMA).   The Government then ‘pays interest to itself on money that it borrowed from itself.”

And, guess who gets paid a healthy commission to ‘take’ the paper, and then shuffle it back to the Fed…?

That’s right —  the Primary Dealers (see who they are here).

This would be the equivalent of making a purchase at a Wal-mart, then then returning the product, and being paid a commission to boot.  Here is the 2-19-13 POMO summary (note the same CUSIP “912810QZ4” for $39 billion):

And… the Fed ‘funnels’ a lot of money through the Primary Dealers. Note the blue line (2009-2013) on this chart – courtesy of The Wall Street Examiner:

Fed Cash to Primary Dealers 7/17/13 - Click to enlarge


The Fed’s ‘liquidity funneling’ maneuvers have been weakening the Dollar (vs hard assets) over the past 4 years (inflation).  And very little of the ‘liquidity’ benefits are reaching American families.

It is time for a change.

 The Leviticus 25 Plan.

Social Security and the “Disability Insurance Time Bomb”

The Social Security Trust Fund’s projected 75-year unfunded liabilities is $40 trillion – and growing according to the Wall Street Journal July 15, 2013 .

The “Ticking Time Bomb” within the trust fund is the Social Security Disability Insurance (SSDI) fund.   The SSDI enrollee numbers have soared in recent years with some 11 million American were officially on the SSDI roles in June 2013, collecting a total of nearly $140 billion per year in benefits.  This compares to just 2.7 million in 1970.

Again, the trust fund is now staggering under the weight of a 75 year unfunded liability of “$40 trillion.”

The “looming implosion” from this growng debt obligation has now been pegged to hit by 2016, according to the Social Security Trust Fund Trustees, at which time the fund will be officially “running out of money” – fast.

According to the WSJ, “Disability benefits also pay more than they used to relative to wages, weakening work incentives. And aging population and the increase in women with sufficient work history to qualify have also contributed to the astounding growth of the disability rolls.

Even so, the rising share of 45- to 64-year-olds (the group most at risk for disability and early retirement), due to the aging of the baby boomers, explains only a small part of the disability increases. Disability insurance has clearly become, in part, a form of extended unemployment insurance and early retirement, with Medicare benefits.

More than 20 states today try to shift people from their welfare and Medicaid rolls onto disability insurance and Medicare, which are fully paid for by the federal government. Some unions help their members obtain disability insurance—for instance, when companies are downsizing and laying off workers.”

WSJ continues,”The surge in U.S. disability enrollments has far greater financial implications than the $140 billion spent in 2012 suggests. A new 50-year-old enrollee—the mean age of those who go on disability—will collect to age 66, at which time he or she will transfer to regular Social Security. The present value of disability-insurance benefits, plus Medicare costs, per new disabled worker is more than $300,000. The almost one million new disabled-worker awards in the past 12 months—there were also half a million awards for spouses and children—will cost about $300 billion.”


America’s SSDI obligations going forward are another prime example of the consequences of ‘disincentivizing’ work.

We are slowly sinking deeper into the social insurance quicksand.

America needs a new plan.

The Leviticus 25 Plan would offer Americans something far better than SSDI, SSI, Food Stamps, Section 8 Housing – and all of the other Means Tested Welfare programs and Income Security Programs currently in place.

If any member of Congress has a better plan, they should step up now.

America can’t wait any longer.


Federal Reserve, Part 2: “Infinite fiat” – promoting the concentration of wealth in the coffers of big banks, power brokers and the super-wealthy…

An inside look at the Fed – continued.
Charles Hugh-Smith of OfTwoMinds blog,
Courtesy of ZeroHedge 7-11-13 / Excerpts:
The Fed has infinite fiat, though they try to disguise that fact. It takes no more effort for them to loan a trillion dollars than a million dollars. They will never run out of zeros in their computer system. The zero keys on their keyboards will always function. No matter how much they can print, they always have available an infinitely greater amount of fiat that they can still print. Printing money requires nearly zero effort and zero cost on their part. They don’t get worn out from printing money.
This whole concept of infinite fiat is hard for people to grasp; it is something outside of their experience. People’s lifelong experience with money is that it is a limited resource. It is hard to conceive of a group of people who have unlimited, infinite money. Yet the Federal Reserve has just that. The Fed is not like a doctor who prescribes a short-term stimulus for a patient who is feeling run down. The Fed is not like a parent who temporarily puts training wheels on a bike until the kid learns how to ride it. These metaphors make people think that the Fed’s fiat printing is temporary and limited. It is not.
Its money printing abilities are permanent and unlimited. The Fed also puts on a show about agonizing over the decision of whether to print money. That make it seem like they are agonizing over whether to pull a sum of carefully saved cash out of their vault. But when they lend to Uncle Sam, they do not pull cash out of a vault that has a finite amount of cash in it. They instead get it from a computer that has the capability of printing unlimited zeros.
Summary: The Fed has infinite fiat. It is not limited by any conceivable shortage, or because of Keynesian stimulus theory, or because the Fed has the role of a doctor, or because the Fed’s role is to put training wheels on the economy from time to time, or because it is hard for it to print fiat and there are only so many hours in a day. They have infinite fiat. Their printing is limited only by how much they think they can get away with and their calculations of how they will benefit from it.
So that brings up the final question I shall deal with today. That is, “How does printing money benefit the Fed? Is it better from their point of view to print or not to print?”
The first point in response to this is that they want the government hooked on their printing. They want to be indispensable to the government. A government that balances it budget or reduces the national debt to zero (as the Jackson administration did) is the opposite of what they want.
The Fed’s power over government is similar to the power a drug pusher has over a junkie. As long as the junkie is doing what the pusher wants, the supply of drugs is uninterrupted. If the junkie does not pay, the supply is cut off. If the pusher wants to jack up the price at any time, he can do so. If the junkie objects, his supply is cut off. So here we see it is in the Fed’s interest usually to maintain the supply, but the supply may also be cut off from time to time in order to ratchet up its power over its victim.”
The big banks always benefit from more printing. They profit from it. To the extent that they are cut off from it, they lose money. So from the standpoint of the big banks, the bias is always to print. Note that the Fed can maintain its supply to the banks while cutting off the government. The Fed’s owners must always be served; the government is instead to be manipulated, enslaved and controlled under the guise of serving.
Any active defiance of the Fed is a danger signal for investors. The Fed can cut off the government at any time, thus precipitating economic chaos so as to quash rebellion. At present I do not see any serious defiance of the Fed anywhere.
The Fed’s main goal is to increase the profits of the big banks. That goal is consistent with increased profits for all firms and prosperity in general, so long as the banks and the elites grab the largest share of the profits.
But that goal is also served in the long run by boom-and-bust cycles that have a ratcheting effect of concentrating wealth in the hands of the wealthy. The clued-in super-wealthy can profit both as bulls and as bears, and can purchase prized assets cheaply at the bottom of the cycle (on easy credit from their friends at the Fed).
It is a Clausewitzian principle that individuals, organizations and nations will expand their power until some superior or equal power effectively opposes them and stops them. Because the Fed’s power has no equal, we can expect the Fed’s power to continue to increase indefinitely.
That “superior power,” to halt the grinding advance of debt enslavement in America, is American people.  And the plan for change is currently available – with direct credit extensions for American citizens.
The Leviticus 25 Plan.

The Federal Reserve, Part 1: Promoting ‘debt enslavement’ for America…

Excerpts from Charles Hugh-Smith of OfTwoMinds blog,
Courtesy of ZeroHedge 7-11-13                                                                                                          
“…The essence of the Fed and … why the financial Status Quo is doomed.
People are confused about the Fed, and I think it would be better if everybody had a clear understanding of what the Federal Reserve is and what it is not.
First of all, the Federal government thinks of the Federal Reserve as a service bureau, whose function it is to print money that the government can spend. As long as the Federal Reserve performs that function–reliably printing, let’s say, a trillion or more each year to top off the Federal budget–then Congress will be happy with the Federal Reserve (their rainmaker) and will follow its advice and try to keep it happy.
It should be emphasized here that the whole Keynesian smokescreen and sideshow has very little to do with the reality of the relationship here. The Federal Reserve’s job is not just to lend Uncle Sam some money during a recession so as to provide temporary stimulus. The Fed is a milk cow for Uncle Sam. Its job is to give milk all the time.
So to summarize this first point, the Fed is a service bureau for the Federal government whose job it is to provide the government with freshly printed fiat every year [in the form of selling ‘Treasury bonds to fund Federal deficits, but it does not “print money” in the sense of adding money to the nation’s money supply. It borrows money by selling newly issued U.S. Treasury bonds.’].
The Fed is also a service bureau to the big banks that own it. Its job is to give unfair advantage to those banks, either by granting them low-interest loans that can be rolled over into infinity, or by buying their bad debts and disposing of them properly, or by doing any number of other special favors for them that increase their profits and executive bonuses. The Fed is not independent in the sense that it is self-governing. It must provide service to the banks who own it and to the Federal government, which controls its legal environment. Big banks have owned and controlled the Fed since its inception in 1913.
Summary: The Fed is also a service bureau to the big banks. It is not as independent as it proclaims itself to be; it provides services for its owners. Its owners have a profit motive.
The Fed also has its own institutional agenda. It wants to expand and increase its own power. It wants to operate in a safe and predictable environment. It wants to eliminate threats. The Fed advances its own agenda by printing or withholding money. As time goes on, the Fed has asserted more and more control over government. The Federal government is now addicted to freshly printed debt-money. This gives the Fed enormous power over the government.
The big banks who own the Fed also dominate Congress and the Obama administration due to the massive bribes they deliver each year. Thus over time the Federal Reserve has become more and more the master: what it wants it gets, what it doesn’t want doesn’t happen.
Summary: The Fed is also a selfish, power-seeking institution.
Some people think the Fed prints money, but when you ask Ben B. about it, he says, “The Fed does not print money. We lend money.” Printing money is easy to visualize and understand. Lending money is also easy to understand; it’s what banks do. But what the Fed does is somewhat more difficult to understand. To put it into one phrase, “they print debt-money.” They print money, but each dollar they print has the chains of debt attached to it. Each dollar they print represents a debt that somebody owes.
A Federal Reserve note is an IOU from the Fed that says “we owe you one dollar.” There does exist in the world paper money that is not debt-money, but the Fed does not traffic in that. As the Fed prints more debt-money, they tighten the chains of debt enslaving the government and the people.
A national debt of $1 trillion is manageable. It might be paid off in a few years. But a debt of $17 trillion is permanently enslaving (unless it is defaulted upon).  Ben’s printing press, then, is also an enslaving press. If Americans were to try to default on $17 trillion of debt, The Powers That Be would unleash their full wrath on the American people.
Summary: Ben B. runs a printing press that is also a debt-enslaving press. We are wrong to focus just on the inflationary effects of his money printing. We should also be alarmed by the enslaving effects.
Full article:  ZeroHedge 7-11-13
Note:  As bad as the debt numbers are, the real U.S. debt / deficit numbers are not even referenced.  The U.S. Net Present Value (NPV) of unfunded liabilities puts the total debt up in the range of $80-100 trillion
The U.S. has averaged over $5 trillion in annual deficits for each of the past 5 years (on an NPV basis). As economist/statistician John Williams notes:  At $5 trillion per year, you could take all of the money earned by all Americans, and you’d still have a deficit.
The debt is “beyond containment.”
America needs to change course.
The Leviticus 25 Plan.

Stockman: Household sector “$13 trillion of credit market debt” – Fed policies not helping. U.S. sovereign debt is now “too large and too embedded in social, economic, and political realities to be resolved.”

 The ‘clock is ticking’ for America…


David Stockman’s book ‘The Great Deformation’                                                     Courtesy of ZeroHedge 6-22-13                                                                                    Excerpts:

“[After 5 years of Fed pumping and big-government central planning] the household sector still had just under $13 trillion of credit market debt outstanding, amounting to nearly 190 percent of wage and salary income.

The nation’s households are not even close to having repaired their balance sheets, meaning that the next phase of deleveraging will actually result in a body slam to the Keynesian aggregates.”


 More…  Courtesy of ZeroHedge, 6-23-13

“The proximate cause of this recession waiting to happen is the federal government’s unfolding encounter with Peak Debt. The latter is not a magical statistical point such as a federal debt ratio of 100 percent of GDP, but a condition of permanent crisis. From the failed election of 2012 forward, every dollar of additional borrowing will induce new political and financial pressures while every dollar of spending cuts and tax increases will further impair the rate of GDP growth.

The mainstream notion that there is a choice between fiscal austerity and fiscal stimulus is wishful thinking. It does not recognize that owing to the triumph of crony capitalism and printing-press money America has become a failed state fiscally. Deficits and debt have now reached the point where they are too large and too embedded in social, economic, and political realities to be resolved. Accordingly, what passes for fiscal governance will become a political gong show that will make the New Deal contretemps pale by comparison.

What lies ahead is a continuous, mad-cap cycling back and forth – virtually on an odd-even day basis – between deficit cutting and fiscal stimulus to the GDP. Thus, deficit cutting will be in play every twelve months or so in order to purchase enough “conservative” votes to raise the federal debt ceiling by another trillion dollars or so. Yet every upward increment will become harder to pass in the House and Senate, ever the more so as the debt ceiling soon breaks above the $20 trillion mark and begins to soar well above 100 percent of GDP.

The fact is, the great unwashed masses on Main Street know full well that Washington is trifling with national bankruptcy, so the debt ceiling votes have become the one clarifying legislative moment in which they can demand a halt to the madness. Accordingly, the template from the August 2011 debt ceiling crisis will become the recurring framework of fiscal governance: in return for more debt ceiling, the reluctant House and Senate majorities which are finally assembled will get a new package of fiscal restraint in the form of targets, promises, and processes to develop plans to implement budget savings.

Before the ink is even dry on these deficit reduction packages, however, they will become part of the permanent, rolling “fiscal cliff”; that is, a recurrent series of pending tax and spending shocks that would cause negative GDP prints and adverse job reports if implemented. In effect, the Main Street economy will appear to be continuously confronted by the prospect of a “fiscal recession” or a dip in activity because it will be viewed as too weak to absorb the tax increases and spending cuts needed to close the nation’s yawning and unshakeable budget gap.”


America needs a new plan.  One that takes care of business at ‘ground level’ first.

The Leviticus 25 Plan delivers real-time benefits for American families.

It provides massive debt relief at the family level.                                                          Massive reduction in the scope of government.                                                        Robust economic growth.                                                                                        Economic liberty for all U.S. citizens.

And The Leviticus 25 Plan pays for itself over a 10-15 year period.                              The only plan of its kind.