Max Keiser does not really understand what the monetary expansion has to cover.
You have according to the BIS 600 trillion in derivatives against a 81 trillion dollar world GDP or a multiple of 7. The BIS coordinates only the banks so this figure does not include insurance company derivatives or others in private industry unless a bank is connected to the transaction so it is grossly understated. Some Swiss bankers tell me it is more like 1.2 quadrillion and others up to 2.5 quadrillion. 1.2 quadrillion gives you a multiple on the world GDP of 14 and 2.5 quadrillion a multiple of 30.
Let’s say Citadel, famous for the bailout with Steve Cohen of Melvin Capital on the Gamestop short, has 3 trillion in derivatives on a 35 billion dollar fund. If it goes down, it can detonate the 1.2 quadrillion in a chain reaction as its three trillion of derivative position involuntarily unwinds accurately described by Warren Buffett as a financial weapon of mass destruction. This phenomenon already threatened the world financial system in the Long Term Capital Management Crisis of 1998. Warren Buffett in his last report seems to have a derivative problem himself as he is holding over a 125 billion dollars in cash against a total equity of 428 billion. These derivatives exposures may be buried in his insurance companies. When asked why he did not use this money in the briefly crashing market last year, he said that he had to have these cash reserves to handle any untoward eventualities.
What insurance subsidiaries does Berkshire Hathaway own?
- Berkshire Hathaway GUARD Insurance Companies
- Berkshire Hathaway Specialty Insurance
- Applied Underwriters
- Gateway Underwriters Agency
- General RE
- MedPro Group
- National Indemnity Company
- United States Liability Insurance Group
Larry Fink was brought in last year essentially to run the Fed in this crisis being a 24.3 million dollar yearly salaried man at BlackRock to literally replace Jerome Powell who is a 203.5k salary man at the Fed to bail out the ETFs and Wall St. derivative exposures lest the entire financial superstructure unravels causing a crash worse than 1929. He was the perfect choice as he knew where all the bodies were buried. These derivatives are essentially rigged gambling casino type exposures that the participants understand will not be allowed to implode as it will bring down the system, so that a Citadel being part of the cartel knows if it is heads he wins keeping the profits and if tails he does not lose as that loss will be absorbed by the Federal Reserve Bank of the US as it was last year when it increased Federal Reserve Credit three trillion dollars:
It is important to give some perspective to what it means to raise the Federal Reserve Credit from 4 trillion above to 7 trillion over several months last year. The Federal Reserve was created in 1913-1914 and by 2008 it had created bout 900 billion dollars in credit. It took nearly a hundred years to do that. When they talk about the money supply they mean that let’s say M-3 reflects the expansion of the Federal Reserve Credit through the fractionalized banking system dependent on what the reserve requirements are. If reserves are 1%, then about a hundred trillion dollars in bank credit can be created using a trillion dollars as the base. Here are the M-3 figures.
M3 is a measure of the money supply that includes M2 as well as large time deposits, institutional money market funds, short-term repurchase agreements (repo), and larger liquid assets. M2 is a calculation of the money supply that includes all elements of M1 as well as “near money.” M1 includes cash and checking deposits, while near money refers to savings deposits, money market securities, mutual funds, and other time deposits.
The cartel operates under the protection of the Department of Justice under the too big to prosecute doctrine of Eric Holder.
While we have seen sensational headlines on the naked short position of Melvin Capital backed by Steve Cohen and Ken Griffen at Citadel, this is nothing to the manipulations of the market by what they call cash settlement that reaps trillions a year for the cartel as described by this piece below in footnote one. It is introduced by a derivative discussion where the derivatives can be detonated by the shutting of the Straits of Hormuz destroying the entire world financial system and then explains how these derivatives work.
The answer to the derivative problem is to unwind the 600 trillion to 2.5 quadrillion of derivatives just as Warren Buffett did when he acquired the Swiss Re reinsurance company. They are a form of parasitism. There are demands in some quarters such as the former CIA operative Robert David Steele that these Wall St. financiers are guilty of high treason through their manipulations for diverting bank credit to wasteful purposes. This would probably be the same position of Antifa regarding these economic criminals as in Soviet Russia they were shot as exploiters.
The Red Terror, implemented by Dzerzhinsky on September 5, 1918, was vividly described by the Red Army journal Krasnaya Gazeta:
At the direction of Lenin, the Cheka performed mass arrests, imprisonments, and executions of “enemies of the people“. In this, the Cheka said that they targeted “class enemies” such as the bourgeoisie.
If we want to look at more traditional forms of treason, we could see it in Mitt Romney who is trying to impeach Donald Trump in that Mitt Romney used the rigged currencies to transfer American jobs overseas that could not have happened in a free floating currency regime. This is discussed in my exchange next with Robert E. Rubin who was then the Secretary of the Treasurer. This can be construed very well as a traditional form of treason.
The point we are making as in 1933 Germany is that the Wall Street oligarchs may not just be facing jail for their crimes against the United States but they could be tried if Robert David Steele has his way for treason facing the ultimate penalty.