What QE3 Will Look Like

Robert Bonomo, Contributing Writer
Activist Post

The recent financial fireworks in the US and in Europe have made it clear that QE3 is close at hand. The third installment described herein is much more than just another revving up of the printing presses, as it will involve a paradigm shift intent on restoring currencies and maintaining the current power structure.

It’s an all too common mistake to see the central bankers and their mainstream media propagandists derided as incompetent fools. These “fools”control the money and the message and it’s their game to lose. Most pundits think the powers that be have lost control and can do little more than kick the can down the road. They are wrong. We are about to witness one of the greatest orchestrated events in human history; a monumental slight of hand that will restore economic prosperity, keep the masses happy and, most importantly, maintain the parasitic elites in power.

Tin Hats or Tin Men

Mainstream sources deride conspiracy theorists as simpletons unable to deal with the complexity of the world; the tin hat crowd are in need of a “God” or “bogeyman” to explain the evils of the world. The sophisticated academics and journalists tell us that history is the product of countless interests fighting for limited resources. The cabal of bankers is nothing more than a mirage conjured up in the thirsty imagination of simpletons.

If one wears a shiny tin hat then the problem, and the solution, are very different: the 1% crowd have created an enormous pyramid scheme supported by magnificent lies preached from schools, televisions, governments, churches, newspapers, universities and the like. The mission is to wake up their brothers and the whole misbegotten scheme will melt into a sea of crisp consciousness.

What is is not in doubt is that the world reserve currency is nearing the end of its viability at least in its current form. The only other two options, the euro and the yen, are in as bad or worse shape. The end game has arrived for the current monetary system which began with Bretton Woods in 1944. The sub prime crisis, Fukushima and the PIGS were the final nails in the coffin of the dollar reserve system.

Why Size Matters

When humans existed in small groups as hunter gatherers, societies were generally egalitarian and specialization of labour was limited. Since there were no full-time enforcers, authority was relative and flexible as most tasks could be accomplished by most people; the groups “stickiness” was determined by the incremental benefits of the group. As society progressed and the groups became larger, labor specialization increased efficiencies, allowing for full-time armed forces and propagandists. Elite rulers thrived off their capacity to control and made it very difficult for individuals to leave and make a go of it on their own.

Men gave up their freedom as soon as they began plowing to eat. The larger that societies became, the more complex the control mechanisms of religion, slavery, standing armies and caste systems.

The main impulse of history has been for the 1% to maintain their power against the brave few intent on to replacing them. The key novelty of the information age is the extreme specialization and unprecedented technologies of control the elites have today. The modern citizen in an industrialized nation is more vulnerable then any other human in history. He relies on his masters for everything from food and shelter to education and entertainment. He is incapable of teaching his children, growing crops, entertaining himself, or, most importantly, thinking for himself. Modern man is the ultimate souless slave.

The modern division of labor consists of a ruling class (top 1%) that control about 40% of all financial assets, a managerial class ( the top 2%-10%) who control about 35% of all assets, with the other 90% of the working masses dividing up the 25% that’s left.

The pyramid is organized by a complex and highly specialized division of labor, state-run education, massive corporations, government bureaucracy, the judiciary, intelligence organizations, mediatic propaganda machines and mainstream religion. Those rare few that actually wake up and see the zombie world are quickly diagnosed by the DSM-5 and given anti-depressants.

There are two things everyone wants all the time, and one of them is money. Control of the money is the magic wand that rules the world. All the other religious, patriotic and historical paraphernalia are directly related to allowing the 1% to control the creation of money. Take that away, and they are nothing but media hacks.

The current era which began with the creation of the Federal Reserve and the involvement of the United States in WWI is coming to an end. The great mistake most “awake” people make is believing redemption is at hand while underestimating the ruling class. The masters of propaganda and finance and are much more in control then they will ever reveal through their own channels. Their imaginations are immense and their capacity to orchestrate drama has no limits. They are the voice of reason while the dissenters are “diagnosed” with a collection of ailments that quickly marginalize them.

The Greatest Brand Ever Created

What should never be underestimated is the importance of the dollar for international commerce. A dollar collapse would inevitably lead to a mad scramble for commodities and an unprecedented global economic downturn. While there are solid world currencies, only three are large enough to be a reserve currency, and all three are mortally wounded. No one will appreciate the incredible role the dollar has provided until it is gone.

The dollar began in the sixteenth century as the Bohemian Tolar which eventually became the eighteenth century standard Spanish silver piece which they pronounced dólar. The Americans called it the dollar, determined it should have 24.057 grams of pure silver and adopted it as the US “money of account”. In 1933 Roosevelt pegged the dollar to .888 g of gold, or $35 per ounce. Finally, under pressure from many central banks to convert their dollars to gold, Nixon established the pure fiat era in 1971. The dollar was the symbol and expression of the American Empire in the 20th Century and it was the the pillar upon which globalization was accomplished.

No brand in history has ever become so ubiquitous. From Tijuana to Tehran, from Vladivostock to Vanouver, from Senegal to Stockholm, a fistful of green backs will get you whatever your heart desires. Through the greatest slight of hand in history, the 1% turned this once receipt for gold into nothing more than paper that they produced at will and for a dear price. The dollar is the backbone of their parasitic existence, and QE3, the final QE, will be a valiant, brilliant attempt to restore the validity of the dollar regime and their control of it. QE3 will be a radical transition to a new era, similar to the period of 1912 –1918.

The top 1% was hurt in 2008. The financial disaster that was the sub prime debacle put them on the ropes, leaving QE1 focused on buying up about $1 trillion in mortgage paper that had become almost impossible to move. QE2 flooded equity and commodities markets with liquidity until the SP500, as well as most major commodities, had regained their pre-2008 valuations in one of histories greatest bull markets. QE1&2 restored the financial wealth that the 1% had lost during the crisis. Unfortunately, in doing so, the Feds (Federal Reserve and Federal Government) have put the last nails into the current dollar’s coffin. They would argue that the dollar was already on its last legs post 2001, and they simply hastened the end by a few years- a small price to pay for restoring the fortunes of their masters.

To Kick or not to Kick (the can)

One should never confuse politicians — chronic can kickers — with the 1%. Politicians are the shills and lackeys of the real power and generally are incapable of any kind of policy creation on their own. The current stop-gap measures to save the euro, the dollar and the yen were never meant to be anything more than breathing room for the 1% to recuperate their massive losses. Their fortunes have been restored and now it’s time to create a new, post-American period of wealth and prosperity. This will be accomplished by none other than mystery man himself, Barack Hussein Obama.

The are no major economic, political, or social problems in the developed, industrialized world that threaten the 1% other than excess debt. The debt problem is not a real problem, but an abstract claim on present and future income (work) by the 1%. The system is so utterly clogged that is reaching a point of complete paralysis . We have entered the tumultuous and inevitable debt destruction period that is often the death knell of regimes. Deflation, hyperinflation, default and revolution are the usual outcomes. But there is another way.

The Big Finale

The New York Times recently reported on how banks were reducing the principal on thousands of performing loans by about 50% in exchange for small increases in interest rates and new, clean promissory notes, with no MERS involvement. As long as the Federal Reserve “adjusts” the reserve requirements for the bank to reflect half of the money that the bank created as “disappeared”, then for the bank, it’s no harm no foul. They are off the hook for the same amount that they reduced for the borrower, and the small adjustment in interest rate recaptures some of the lost future interest earnings from the smaller loan size.

This solution serves two absolutely critical functions for the banks and the 1% that control them. First, the banks morbid balance sheets are wiped clean, marked to market and made pure. No more zombie banks threatening the world. Second, it frees up vast amounts of consumer income to re-charge the economy, create jobs etc.

The second part of the QE3 will be the ‘public debt crisis’. Act I was the S&P downgrade and AIG (government owned) lawsuit against Bank of America which by a wild coincidence all happened on the same “Black Monday” as the European Central Bank beginning quantitative easing by purchasing Spanish and Italian bonds. Act II will see a few very large banks being ‘nationalised’ in both the US and Europe, (Bank of America and SocGen for example) and a massive mortgage principal reduction of about 50% will follow as the President can nationalise banks without congressional approval through the “orderly liquidation authority” or OLA provisions under Dodd-Frank. Act III will see the US $14 trillion, as well as the Italian, Spanish, UK, Japanese etc. public debt being halved in exchange for balanced budgets and reduced social spending. The $50 trillion or so in US unfunded liabilities will be wiped out in a new “social contract”. Some student loan and Third World debt forgiveness will be thrown in for the full Kumbaya effect.

All of this will emerge out of a new “Bretton Woods” type of agreement that will be followed like the World Cup, Dancing with the Stars, Eurovision, the Superbowl, and the rest of the circus events meant to keep the plebs entertained. The Euro, doomed to failure, will escape the fangs of a new dark age and emerge triumphant with the Ode to Joy playing in the background. Logic will overcome chaos and a new age of enlightened corporate slavery will begin. The only difference will be that the dollar will be replaced by a new reserve system that spreads ultimate control over more than one currency.

Barack Obama will emerge as the new Franklin Roosevelt, the reluctant revolutionary who saved the world. Prosperity will return and the holders of the dollar, euro and yen debt, while not avoiding a nasty haircut, will in exchange get a world willing once again to buy hand over fist again their oil and the products of their manufacturing base. All of this will take place in a massive drama worthy of Hollywood (because it actually will be written by Hollywood types), keeping the sheeple glued to their televisions, talk radio etc. They will cheer when it all finishes with the good guys winning, just as they did when Bin Laden was killed, and when “major combat operations” ended in Iraq.

Will the masses demand to know how banks can simply create and destroy money with a few clicks of a mouse? Will they insist on dismantling the Fed and halving the size of the Federal Government? Will they not rest until all their soldiers are brought home and the war mongers who started these conflicts brought to justice?

Unfortunately, no. They won’t ask any questions that can’t be explained away by the talking head de jour on Fox or MSNBC and the charade will continue, the matrix intact, for another generation to try to dismantle.

Read more from Robert Bonomo at his blog, Cactus Land, which continues to explore the ideas of his novel, Cactus Land available at Amazon.