How the Bailouts are making things worse!

Kia Ora,

The Bailouts are going to save the world from Financial Crisis! Yeah Right they are actually making things worse.

For those that don't know this is how it works.

The big banks(those too big to fail) trade in the shadow banking world with debt such as CDO's & the derivatives market. Things start to go wrong so the government goes to the central bank & gets them to create some currency from nothing to stimulate the economy. Governments no longer create or print the currency themselves. They let the private banks that are the central banks do that on their behalf then pay them interest(your taxes)for doing it.

Now this new currency goes to buy the debt of the major banks therefore monetizing that debt, so although it is called quantitive easing, by monetizing the debt is just like printing currency.

But since the major banks actually make up the cartel that runs the central banks they were always going to get bailouts.

So that extra currency causes the fiat currency(a currency backed by nothing but a promise & debt) people have in their wallets to loose value. But since the banks are not passing the 'stimulus' on to create businesses & jobs, therefore kick starting the economy, people are loosing out.

There is less work around, prices are rising & the only people benefitting are the banks with big fat bonus payments.

So where does security fit in with this?

Well we only have to look at what is happening in the world & in particular Tunisia as an indicator of what is going to happen.

Food riots, riots over austerity measures, rises in crime in particular violence, extreme politics & xenophobic(dislike of new comers or foreigners)behaviour are evident around the world at present.

But back to Tunisia & look at a statement out here in New Zealand in the last few days. In the last quarter of the year New Zealand had a jump in inflation which has been blamed on the rise in GST(Goods & Services Tax). That is more like smoke & mirrors.

Why?

Because the Federal Reserve in the US in particular is carrying out quantitive easing to buy debt to save the major banks. This is causing inflation in food prices(despite what the manipulated CPI's tell us) across the world.

The president of Tunisia is said to have tried to take measures to stem the rising prices including cutting taxes(take note all those that want to cut GST from food, fuel etc it doesn't make much difference in the end) but the prices just kept rising.
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It apparently forced people to have to live out on the street to survive, one of whom was doing business with an illegal black market food stall. The trigger event apparently was the slapping of his face by a female police officer. More of this has been made than the reason he was there in the first place.

So right now the military & the police are trying to get on top of things in Tunisia so a new government can be installed & changes made.

What those carrying out these policies of quantitive easing forget is though on their budget food maybe a very minute thing in many countries including the US it can make up to 70% or more of the weekly budget. If that keeps increasing then people start to take drastic action such as theft, robbery, maybe even a coup or two.
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So whilst trying to make it look like they are saving the world, they are actually dooming it to collapse of the financial system. They could save the financial system if they took the action the people of Iceland forced their government too.

But they won't as it will mean admiting they failed & loss of power. The lessons of history tell us what is likely to happen but again people like to believe what their governments tell them!

Might be a requirement for good security though if you can afford it!

http://www.foxhoundsecurity.co.nz