Kyle Bass: “Massive central bank balance sheet expansion and capital controls” coming…

There are going to be consequences to central bank balance sheet expansion all over the world…   – Kyle Bass

Excerpted from Steven Drobny’s The New House Of Money, (Excerpts accessed from: Zerohedge 12-5-2013 ):                                                                                                  “Bass: There are going to be consequences to central bank balance sheet expansion all over the world. Look at currency cross rates. If all central banks are expanding at the same rate, the cross rates aren’t moving, but your purchasing power, in terms of goods and services in the country where you live, is diminishing. You’re not focused on real returns, you’re preoccupied with the cross rates…..

Bass On inflation:  When you look at what’s going on from an inflation perspective, central banks have printed about $10 trillion dollars since the beginning of the crisis. The first $4-5 trillion went into re-equitizing heavily leveraged structures and bringing down rates. The second $4-5 trillion is making its way into the monetary base, and even though the multiplier is not working, at some point this is going to ignite and set cost pressures off. Again, it won’t be demand-pull, which is technically a good kind of inflation. Rather, it would result from too much money in the system.

Bass On QE’s effects on wealth inequality:                                                                      It will show up in food in the early stages. Global QE is filtering its way into asset prices. Those closest to the proverbial spigot are enjoying the printing the most with most in the middle and lower class not feeling the love at all. All you have to do is look at the gap between median income and mean income growing ever wider. This means the rich are getting richer while the rest stay stagnant or even decline.

Bass: The point is that no one will make those difficult decisions unless they’re forced to make them. The politics of all these situations tell me how this is going to play out, and that’s through massive central bank balance sheet expansion and capital controls.

The Fed recently wrote a paper that actually endorsed capital controls if done concurrently with other nations. It’s hard for me to fathom that capital controls can ever be a great idea, but this is what you’re going to see.”

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America needs a bold new approach.

The Leviticus 25 Plan is the only legitimate comprehensive economic recovery in America today. 

This economic revitalization plan features direct liquidity extensions to U.S. citizens, massive debt reduction at the family level, allocation of capital by the people – rather than by government “central-planning” mechanisms.

The Leviticus 25 Plan would restore economic liberty, reduce the scope of government, re-ignite real economic growth, generate real tax revenue growth (federal, state, local), and make a real difference in peoples’ lives.

The Leviticus 25 Plan is the only plan in America that would deliver meaningful real-time benefits to American families  –  and pay for itself over a 10-15 year period.

The Leviticus 25 Plan 2014 – The $64,000 Solution                                              December 2013 – Updated version:                                                                                  The Leviticus 25 Plan – An Economic Acceleration Plan for America 2014 (242)

Poll: 71% believe “Government is broken”

Fox News – Dec 19, 2013:                                                                                                      “A record number of Americans think the federal government is “broken.”          Seventy-one percent of voters say so, while 21 percent say the government is working “just okay.”  Hardly any — six percent — think it’s working “pretty well,” according to a Fox News national poll released Thursday.

In addition, the new poll shows that the belief that Washington is broken is growing.  It’s up six percentage points since last year and up 13 points since 2010.

The “broken” sentiment is widespread:  majorities of both men (73 percent) and women (70 percent) feel that way, as do urban (65 percent) and rural voters (73 percent), and voters across all age groups.”

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America needs a fresh, new economic plan – one that doesn’t rely on the standard big- government solution. 

And America doesn’t need a healthcare plan dominated by government mandates, higher costs, restrictions on providers and services – with layers upon layers of rules, penalties, bureaucratic red-tape, and administrative overhead.

We need to return to a system that provides appropriate resources for American families to manage their own lives.                                                                                                   And live free.                                                                                                                        The Leviticus 25 Plan.

Goldman Sachs – #7 recipient of Fed’s “secret liquidity lifelines”

Goldman Sachs – a look back: Matt Taibbi, Rolling Stone Feb 17, 2010                   Excerpts:                                                                                                                              “At the height of the housing boom, Goldman was selling billions in bundled mortgage-backed securities — often toxic crap of the no-money-down, no-identification-needed variety of home loan — to various institutional suckers like pensions and insurance companies, who frequently thought they were buying investment-grade instruments. At the same time, in a glaring example of the perverse incentives that existed and still exist, Goldman was also betting against those same sorts of securities — a practice that one government investigator compared to “selling a car with faulty brakes and then buying an insurance policy on the buyer of those cars.”

Goldman hedged its massive blind bet by purchasing from AIG a “virtually unregulated form of pseudo-insurance called credit-default swaps”  Goldman did not apparently concern itself with the fact that “AIG wasn’t required to [and didn’t] actually have the capital to pay off the deals.”   

AIG had sold $440 billion of this ‘worthless crap’ to various bank (like Goldman)… a large portion of which the “taxpayer ended up having to eat.”

AIG was taken over by the government in September 2008, and instead of the normal course of bankruptcy-arbitration, the government saw to it that “Goldman was paid 100 cents on the dollar on an additional $12.9 billion it was owed by AIG…”

Less than one week after the massive AIG bailout, Goldman Sachs and Morgan Stanley were granted permission to become bank holding companies – will full access to borrowing funds, at very low interest rates, at the Fed Discount Window.

“Borrowing at zero percent interest, banks like Goldman now had virtually infinite ways to make money. In one of the most common maneuvers, they simply took the money they borrowed from the government at zero percent and lent it back to the government by buying Treasury bills that paid interest of three or four percent. It was basically a license to print money — no different than attaching an ATM to the side of the Federal Reserve.”

“You’re borrowing at zero, putting it out there at two or three percent, with hundreds of billions of dollars — man, you can make a lot of money that way,” according to one prominent hedge fund manager.

Goldman then tapped into “a new federal operation called the Temporary Liquidity Guarantee Program [which] let insolvent and near-insolvent banks dispense with their deservedly ruined credit profiles and borrow on a clean slate, with FDIC backing. Goldman borrowed $29 billion on the government’s good name, J.P. Morgan Chase $38 billion, and Bank of America $44 billion. “TLGP,” says Prins, the former Goldman manager, “was a big one.”

Bloomberg  Nov 28, 2011:  “On Sept. 21, 2008, a week after Lehman Brothers Holdings Inc. went bankrupt, Goldman Sachs Group Inc. converted to a bank holding company, gaining access to the Federal Reserve’s last-resort lending program for banks, the discount window. While it took only $50 million from the window, New York-based Goldman Sachs had been borrowing from the central bank for six months from two temporary programs for broker-dealers: the Term Securities Lending Facility and the single-tranche open market operations, or ST OMO. On Dec. 31, 2008, Goldman Sachs had $34.5 billion of loans from ST OMO, some of it at an interest rate of 0.01 percent.”

Peak Amount of debt as of 12-31-2008:  $69 billion

That hardly tells the full story, however.

Epilogue:  Goldman had also received a $10 billion TARP loan, but quickly paid it back, proudly exclaiming that “the firm does not require further capital” and the $10 billion can now be “used by the government to revitalize the economy, a priority in which we all have a common stake.”

“During the three months following Goldman’s re-payment of its $10 billion TARP loan, the Fed purchased $27 billion of MBS from Goldman.”

“In all, the Fed would purchase more than $100 billion of MBS from Goldman during the 12 months that followed Goldman’s TARP re-payment,” according to a Dec 15, 2010 Business Insider report.

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Is there any question that U.S. citizens should now be granted the same access to liquidity that was provided to major banking interests during the banking crisis of 2008-10?

The Leviticus 25 Plan 2014 – The $64,000 Solution                                              December 2013 – Updated versionThe Leviticus 25 Plan – An Economic Acceleration Plan for America 2014 (233)

 

UBS AG – #6 recipient of Fed’s “secret liquidity lifelines”

UBS Ag is Switzerland’s largest bank.  Headquartered in Basal and Zurich, this global financial services company also specializes in investment banking, asset management and wealth management.  UBS existed as Union Bank of Switzerland prior to 1998 – at which time it merged with Swiss Bank Corporation.

Bloomberg  Nov 28, 2011   Excerpts:
“UBS AG, Switzerland’s biggest bank by assets, received a capital injection of 6 billion Swiss francs ($7.12 billion) from the Swiss government in October 2008. The next month, the Zurich-based lender borrowed $77.2 billion from the Federal Reserve after customers removed a net 83.6 billion francs from its money-management units in the three months through September. At the peak, UBS got $37.2 billion from the Commercial Paper Funding Facility, $20.5 billion from the single-tranche open market operations, $12.5 billion from the Term Auction Facility and $6.9 billion from the Term Securities Lending Facility. A UBS spokeswoman declined to comment on whether the bank also tapped the Swiss National Bank or other central banks for liquidity.”

$77.2 billion – Peak Amount of Debt on 11/28/2008

“The Fed’s Secret Liquidity Lifelines:  The U.S. Federal Reserve mounted an unprecedented campaign to head off a depression by providing as much as $1.2 trillion in public money to banks and other companies from August 2007 through April 2010.  The emergency loans were intended to help recipients cope with cash shortfalls and keep credit from grinding to a halt.  Bloomberg News sorted through more than 29,000 pages of previously secret documents and Fed spreadsheets detailing more than 21,000 loans to compile a database showing which companies got the emergency liquidity, and when.”
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It is time for U.S. citizens to receive to receive equal access to liquidity lifelines, to repair family balance sheets and “help recipients cope with cash shortfalls.”

 The Leviticus 25 Plan 2014                                                                                 Updated December 2014:                                                                                              The Leviticus 25 Plan – An Economic Acceleration Plan for America 2014 (222) 

 

4 years of Fed pump-priming and big government central planning – and economy is all set to drag itself into the new year…

Rich Yamarone – Chief Economist, Bloomberg                                                     Accessed from John Mauldin | Dec 11, 2013 Outside the Box

“There’s a little known rule of thumb in the economics world: when the annual growth rate of several economic indicators falls below 2 percent, the macro economy eventually slides into recession. Currently several of these statistics are flashing warning signals: real GDP (1.6 percent), real disposable personal incomes (2 percent), real consumer spending (1.7 percent), and real final sales of domestic product (1.6 percent). These are the broadest measures, possessing exceptional recession predicting abilities. The explanation for this is simple: like riding a bicycle, if you don’t pedal, you tip over. And when the tier one indicators don’t advance by a 2 percent pace, the economy grinds to a halt amid softer employment, incomes, and spending.”

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America needs an economic acceleration program that delivers some power to Main Street America.                                                                                                               The Leviticus 25 Plan.

Inflation Since 2000: Inside the Consumer Price Index

 

American families have been getting skinned over the past dozen years with Fed-generated 39% inflation – racking the middle class and hammering the working poor. 

 Chart – courtesy of Jim Quinn of The Burning Platform blog, Accessed from: ZeroHedge 12/4/13                                                                     ____________________________ 

It’s time to straighten things out – with a plan that provides equal access to economic liberty for all Americans.                                                                                                     The Leviticus 25 Plan. 

State Street Corp – #5 recipient of Fed’s “secret liquidity lifelines”

State Street Corp, a Boston-based financial services holding company, is one of the oldest financial institutions in the U.S..  This multi-national corporation became the largest security services firm in the world in 2003 – even larger than JP Morgan and The Bank of New York Mellon.

Excerpts from:  Bloomberg  Nov 28, 2011                                                                            “Unlike banks that drew liquidity from the Federal Reserve in 2008 out of desperation, Boston-based State Street Corp. initially did so for profit. State Street, the third-largest U.S. custody bank, collected $75.6 million as a middleman for the Fed’s Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, or AMLF. Under the program, it borrowed from the Fed to buy securities from money-market funds, helping them meet customer redemptions while being indemnified against losses on the securities. By October 2008, State Street had joined peers in tapping the Term Auction Facility and Commercial Paper Funding Facility, emergency-liquidity programs. On March 31, 2009, its total borrowings from the TAF and CPFF reached $18.5 billion, about the amount its excess liquidity fell that year.”                                                                                           Peak amount of debt on 10/1/2008 :   $77.8 billion

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U.S. citizens deserve nothing less than equal access to liquidity  as was provided by the Federal Reserve to major banking interests during the credit crisis of 2007 – 2010.

America is starved for liquidity at the family level – and U.S. citizens deserve like access to credit in order to eliminate debt and gain financial stability – in the same way that major domestic and foreign banks, through the Fed “secret liquidity lifelines” accessed credit to eliminate debt, unload “troubled assets,” and regain financial stability.

The Leviticus 25 Plan establishes the mechanism for this endeavor for the benefit of American families  – by means of a  Citizens Credit Facility.

It is time for a change….