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OpEdNews Op Eds    H1'ed 8/28/10

Why is America suffering so much from a recession that Germany largely bypassed?

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An interviewer asks Mr. Keiser for clarification

Interviewer: In your initial email you wrote to me as follows:

"The key to understanding the current situation is to understand that house prices, jobs, wages, and pensions in the US are all being attacked with original-issue debt dollar junk. This will continue until the middle class has been completely wiped out."

Can you elaborate on this, please?


Keiser: Yes, what we have here is a Financial Holocaust that is designed to destroy the American middle-class. We face an original-issue deflation, if you will. It's as if Michael Milken ran the Fed. If you look at the work of Steve Keen, an economist in Australia and one of a very few economists, who predicted the crisis of the past three years accurately, you understand that the banking system cannot not work within a system where deposits are the basis for the fractional reserve. Quite incredibly, our banking system works on the basis of loans used as the collateral for yet more loans!


That means that the origination of all the fractional reserve lending that is going on is just more debt! There are no retail deposit reserves or wholesale deposit reserves, just original-issue dollar-based junk debt. And when you understand that only debt is at the bottom of the pyramid, and that there's no equity at all (or capital as this term is usually understood), then you can begin to understand that the banks and the policy makers are continuing a program at the behest of Wall Street to commit a Financial Holocaust to eliminate (reduce to insignificance) the majority in America, which is its middle-class. Wall Street banks (with their CDSs, High Frequency Trading and bogus market making) are injecting the equivalent of financial Zyklon B into the American and world economy. (source article)


Houses and many other things have been encouraged to rise above their true user value through bad-risk lending -- thus the collateral is very suspect. And now the faulty risk has been passed down to the pension funds, etc. putting all middle-class retirements into jeopardy.



Who will profit from the coming depression, and to what extent is its development being orchestrated and even planned by them?


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Several years after receiving my M.A. in social science (interdisciplinary studies) I was an instructor at S.F. State University for a year, but then went back to designing automated machinery, and then tech writing, in Silicon Valley. I've (more...)
 

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