To what extent are rigged bond auctions being used to 'finance' our 'economic recovery'?

The following article originally appeared on OpEdNews.com.

Every word you've heard so far about today's "recovery" is worse than just a big lie -- it's a cover-up for what's easily the largest, most devious wealth swindle of all time.

But first consider the economic backdrop for this swindle:

$1.9 trillion in this year's extra spending; "unfunded" liabilities (e.g. promises to pay social security & Medicare benefits for every American now alive) are soaring past $56 trillion, with the personal family share of this total future indebtedness now amounting to $438,000. Plus bailouts, tax cuts and stimulus spending that have now got us burning through an eye-popping $200 million an hour. And all this is on top of the huge annual interest payments on our $12 trillion national debt, the vast majority of which was bequeathed to us by Ronald Reagan and the two Bushes. All by himself, Bush43, the great "W," doubled the national debt from $5 to $10 trillion as of 9/30/08!

Now, to capsulize the great swindle before we explore it in detail:

* In the simplest terms, it's a government-backed shell game that cheats us in three separate ways:

* The "triple-swindle" starts when bureaucrats prop up their fake"recovery" with tax-funded bailouts and huge "cash advances" from foreign lenders...

* Our Fed secretly funnels billions of dollars to foreign lenders, and then borrows it back again just to keep the scam from collapsing...

* Finally, the "swindle" goes public as Washington openly BUYS BACK their own debt using hundreds of billions more, that they create out of thin air.

Some time ago, people in Washington and on Wall Street got together and started carving up America's future financial security, essentially selling it off to the highest bidder. And they continue to sell off huge chunks of that wealth & security (namely the collective savings of all Americans). How do they do it without you noticing? Mainly they do it by way of "scheduled U.S. Treasury Securities Auctions," better known as "bond auctions." Mutual funds and pension funds, state governments, Wall Street banks, and foreign central banks are the buyers at these auctions. And the seller is our Treasury Department, which essentially gives away shares of our future (i.e. our eventually redeemable savings) -- in exchange for huge cash loans to Uncle Sam and the American consumer, redeemable today.

This provides the cash our government uses to prop up and pay for our economy's fake "recovery," by way of economic stimulus, immense bank bailouts, "cash for clunkers," etc. But it's cash that you and your grandchildren will have to pay back further down the line -- out of the personal savings you thought you were setting aside.

Who are some of the folks we owe ever increasing amounts of this money to?

* Little Luxembourg, no bigger than Rhode Island, has so far loaned us $104.2 billion. Russia has us on the hook for another $120 billion. Brazil, nearly $140 billion. Secretive banks in the Caribbean, nearly $190 billion...

* And what about those thugs that run Iran, Iraq, Libya, Nigeria, Indonesia, and Venezuela? So far -- along with a half-dozen other oil-producing nations -- they've got us dangling for yet another $191 billion in I.O.U.s, i.e. money we owe them, mainly for the oil we've received from them.

* Then too, Great Britain just loaned us $214 billion. Surprisingly, Washington, D.C. borrowed $523 billion from bankrupt state governments. And, as if the bank bailouts weren't bad enough, we're in hock another $630 billion to Wall Street financial firms and other buyers of government debt.

* Japan owns a $712 billion slice of America. China owns a staggering $776 billion call on our capital. And guess who tops the list? The Fed itself, which used dollars they simply printed up, in order to buy up nearly $5 TRILLION of the government's own debt, just to keep the American prosperity illusion alive: http://www.nytimes.com/2009/03/19/business/economy/19fed.html

To repeat the words of Henry Ford, truer now than ever before:

"It is well enough that the people of the nation do not understand our banking and monetary system for, if they did, I believe there would be a revolution before tomorrow morning."

Like any other big time borrower, we must now face this question: For how long can we pile up "cash advances" before creditors come and ask for their money, or threaten to cancel the credit line? Soon we'll all be paying through the nose, as the swindle moves into high gear, via rising taxes, shrinking dollars, and/or canceled promises like withheld and/or greatly reduced Medicare and Social Security payments.

While our foreign lenders might love having America on the hook, they HATE the idea of possibly never getting paid back anything close to what they lent us. So, when it becomes apparent to them that this may very well happen, they quite naturally tend to lose faith, and start threatening to cut us off. And that's already starting to happen:

* "We've lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets," says China's Premier Wen Jinbao. "To be honest, I am definitely a little worried."

* Meanwhile, Russia has already dumped the U.S. dollar as its main reserve currency. And Beijing says the rest of the world should think about doing the same, as do India and China. In fact, representatives from these four countries arranged a meeting from which representatives from the United States were barred. http://www.globaldashboard.org/2009/06/16/10116/

* During a recent speech at Peking University, Chinese students even burst out laughing at Treasury Secretary Tim Geithner when he called China's dollar-backed assets "very safe."

When lenders threaten to expose our "sham recovery," by not showing up with cash to lend, the bond auctions just mentioned threaten to fail. And at least once this year already, that is precisely what happened.

http://www.dailymarkets.com/economy/2009/03/27/what-if-the-us-treasury-h...

The problem here is that even one more failed bond auction could signal to the rest of the world that the jig is up, that the U.S. is done for, and that it's time to bring the lend-borrow cycle (that has provided much of America's widespread affluence over the past 30 years) to a complete halt. http://www.atimes.com/atimes/Global_Economy/HC24Dj01.html

With the bailouts and this fake "recovery" already looking like it will cost more than $24 trillion before it's all said and done, the Fed and the Treasury don't want to let any more failed bond auctions show up in the headlines -- which is why they've taken their "swindle" to a whole new level -- by deciding not to just to fake the "success" of the recovery, but to fake the success of the bond auctions that are supposed to pay for it! http://www.blacklistednews.com/?news_id=5643

Exactly how are they doing this? They are doing it by transferring billions of dollars, under the table, to our nation's lenders, and then paying them interest while we borrow back our own cash!

You see, for the scam to keep working, it has to look like foreigners still really want to buy our bonds. So the Fed prints out billions of dollars, then uses a clever buyback strategy to secretly stuff those billions into our foreign lenders' accounts, so that they, our lenders, can keep on pretending they really want to buy more of our debt: http://www.ictmag.info/politics/are-foreign-purchases-of-u-s-treasury-bo...

So what's the strategy the Fed uses to make these huge, under-the-table, cash transfers? It works like any other money laundering scam. We reimburse the foreign government lenders for big chunks of bad or toxic "agency debt" -- like for toxic and now largely worthless bonds sold to these governments by failed agencies Fannie Mae and Freddie Mac -- and then these governments write us a check, using the cash we just gave them, to buy more of our treasury bonds. Just so long as our government can keep this shell game under wraps, and keep paying them off under the table, the buyers of our treasury bonds will keep showing up to buy more. You wonder why Fed Chairman Ben Bernanke refused to answer Senator Bernie Sanders' question about where all the additional trillions went, over and above the TARP funding? This is why:

http://www.youtube.com/watch?v=oOpQkRsEfaU&feature=youtube_gdata

But for how much longer can the Fed and the Treasury Department keep this scam going?

With the U.S. borrowing up to $100 billion through these bond auctions every week, and another bond auction happening, on average, every three days, that's a lot of opportunity for the Fed to "launder" money in this way. So far, the Fed has already used this backdoor cash swap strategy to buy back over $640 billion in toxic assets from our foreign lenders, with the tacit promise that they will in turn show up at the next bond auction and throw some of that cash back our way. (To see chart of Chinese ownership of toxic assets, go to: http://www.marketoracle.co.uk/Article17566.html)

However, by this means, American taxpayers are taking a beating twice over -- first, as all that printed money dilutes and weakens even more of our saved-up purchasing power, and second, because our Treasury now has to use our tax dollars to start paying interest on the money of ours that it borrowed back!

The Great "Recovery" Rip-Off, Part Two:

Outright THEFT, Backed by the Fed

What's the boldest "swindle" of all? It's when the Fed throws all caution to the wind and writes themselves a check, made out to "cash.' Example: just recently -- on a Thursday, last August -- agents for the Fed stepped into one of their own bond auctions and snapped up $7 billion of America's own 7-year Treasury notes!!!

And that's after buying more than $7 billion worth the day before; so it was over $14 billion in all, and they paid the tab the way the Fed always does, with freshly printed cash. That's like whipping out your Visa card to pay your American Express bill! And that wasn't the first time they've done this. (Supposedly this practice ended in October of 2009: http://www.marketwatch.com/story/fed-ends-treasury-buying-now-what-2009-...)

Yet early this year, the Fed actually announced that it would buy up to $300 billion worth of its own debt. This is what they call "monetizing the debt." (It's about time most Americans learn what these arcane terms mean! -- and also what the long-term implications and risks are.) http://www.dailypaul.com/node/86603

All told, says the Wall Street Journal, the Fed's looking to pump up to $1.2 trillion back into U.S. government bond purchases -- on top of the $1.25 trillion they plan to blow on buying up all the toxic mortgage-backed securities (so as to help the banks, foreign and domestic, and all the other major investors who bought this crap). But for how long can the U.S. government print monopoly money to pay its bills?

This, then, is the most blatant theft of all, because printing money to jolt the economy now, represents a cost we will all have to pay for later with interest, plenty of interest. This assumes that the US economy holds together and does not go belly up in the foreseeable future.

But is that a safe assumption? Just over the past year, our pals at the Fed more than doubled the number of paper dollars in circulation -- from $800 billion in August 2008 to $1.7 trillion a year later. And of course you know what happens when the supply of anything goes up too fast: the market value of whatever it is, goes down. http://www.democraticunderground.com/discuss/duboard.php?az=view_all&add...

Governments have always loved to pay back their debts in newly devalued currency because then they get to pay back today's debts with tomorrow's cheaper dollars. But if, as a citizen of that debtor country, you've got personal savings in the bank, or in a CD, you get stuck on the other side of the deal. Example: every $10,000 you had saved this time a year ago has already lost $211 in purchasing power. Go back five years, and you've lost $1,205; ten years, and it's $2,259.

Forget losses in the stock market. That's money that might as well have been stolen directly out of your account! And it was, in a way, because that's how governments transfer the cost of the reckless borrowing from the public to the private individual -- by sticking it to anyone unlucky enough to hold dollars, as they unleash the three stages of their well-crafted scam.

Bottom line: Washington policy makers are mortgaging our future, and our children's future, in unprecedented and devious ways. It's unsound, immoral, and unsustainable. If nothing else changes, the United States will owe 240% more than every business in the U.S. makes each year, and it will happen in less time than it takes a child born this morning to reach age 35! But what foolish lender is, for that long, going to keep lending us the money we need to keep our crazy and supremely wasteful ship of state afloat?

The source of the statistics and central points in the foregoing report:

https://reports.agorafinancial.com/fstfrd/LFSTL200/landing.html

http://www.nowpublic.com/world/recovery-0