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Federal Reserve Increases Counterfeiting

February 6, 2014

At the beginning of 2012; readers were presented with a commentary about the U.S. Treasuries market (Maximum Fraud in U.S. Treasuries Market) which merely stated the obvious. There was no visible/legitimate means by which this market, and the massive quantities of new supply coming onto the market could be supported – at all.

With the world having already begun its transition away from the U.S. dollar as reserve currency to China’s renminbi; we had already entered into a new, permanent paradigm of declining demand for the U.S. dollar (and thus U.S. debt). Coupled with this; the large fiscal surpluses which had been used to soak-up U.S. Treasuries (in BRIC economies, and other Emerging Markets) during previous years have shrunk considerably.

Thus we had/have parameters where nations have dramatically less incentive to accumulate U.S. dollars (through buying Treasuries), and these nations have significantly less funds with which to make any purchases of foreign debt. Combined with the explosion in supply; this could only mean an enormous drop-off in demand, and (at best) a sharp spike in Treasuries prices – if not a complete collapse of this (obvious) bubble-market.

Even more outrageous is the fact that we have had these bubble-prices for U.S. Treasuries after it had become totally obvious to anyone paying attention that the United States is now hopelessly insolvent, or in the words of a former economic advisor in the Reagan regime, “bankrupt”. The (to be polite) questionable solvency of the U.S. economy dictates bond prices at absolute lows – not absolute highs. What we are supposed to believe is that virtually overnight; all of the world’s bond-traders suddenly/completely forgot the concept of “risk” with respect to the pricing of U.S. Treasuries.

But on top of all of this; simultaneously we have had U.S. equities markets soaring to record highs. Back when we had sane, legitimate (legal) markets, where the Laws of Supply and Demand still applied; bond markets and equity markets ran counter-cyclical to each other. When one market was moving toward its highs, the other was dropping-off in a trough.

Yet in the magical, arithmetic-defying realm of the U.S. Treasuries market; we had Treasuries prices at record highs, despite the obvious drop-off in demand. We had Treasuries prices at record highs, despite the obvious insolvency of the U.S. government. We had Treasuries prices at record highs, despite U.S. equities markets also, simultaneously soaring into bubble country.

A portion of this massive glut of supply was soaked-up in the Fed’s so-called “Operation Twist”. But first of all, the total quantity of Treasuries-buying was a mere $400 billion, and secondly it was only a temporary operation. It wasn’t enough to soak-up the additional supply the U.S. has been piling onto the market each year since 2007, let alone absorb any of the large drop-off in demand.

A second “round” of this bond-buying is now (supposedly) being wound-down, as the Federal Reserve pretends to begin “tapering” the money-printing publicly devoted to funding this Ponzi-scheme. But even before this mythical “tapering” began; the supply/demand numbers in this market could not possibly add up.

Simply, there were no longer enough buyers to soak-up the explosion in the supply of U.S. Treasuries at any price, let alone the highest prices in history. There had to be another, secret source of funding being used to (fraudulently) prop-up this bubble market.

This descent into Ponzi-style financing was made all the more obvious by the sudden, dramatic changes which the Treasuries Department had instituted with respect to the bond-auction process. Where previously these auctions had been more-or-less transparent; now they had become nearly completely opaque. We can no longer see who/what is really buying all these bonds.

With the U.S. government now turning out the lights each-and-every time it conducts a Treasuries auction; this makes possible virtually any form of fraud imaginable – including counterfeiting. Occam’s Razor tells us that the simplest answer to a question is generally the correct one.

The easiest way to plug the massive hole in demand for Treasuries was for the Federal Reserve to simply begin counterfeiting large quantities of U.S. dollars. With a central bank which absolutely refuses any outside scrutiny of its ledgers, and an auction process where the lights go out every time the buying starts; such fraud is not only plausible, it is being invited into this Ponzi-system.

Why counterfeit U.S. dollars? Why not openly declare this additional money-printing, given the massive quantities of dollars which the Federal Reserve already admits to conjuring out of thin air? Two reasons. The first reason is made obvious simply by looking at a familiar chart:

With acknowledged money-printing already a vertical line; any further spike in this already-insane level of money-printing would bring the word “hyperinflation” to the lips of even the dim-witted charlatans who call themselves “economists”. But there is a second reason why market-manipulators like to conceal their activities.

For an explanation here; we can turn to former Goldman Sachs banker, and present head of the CPM Group, the infamous Jeffrey Christian. In a 2010 “debate” versus Bill Murphy of GATA (as to the existence of manipulation in the gold market) he observed:

One of the first things you know about intervention in the currency markets, and its true of central banks, but its also true of private institutions is that it [i.e. market-rigging] is much more effective if people don’t know what you’re doing. They only see the effects you know, I mean there are reasons why people don’t want the market to see them coming…then maybe what we have to do is to suspend some publications for a while, so that people don’t see us reporting this almost immediately…  [emphasis mine]

That’s right, in the same debate where Christian was endeavouring to tell us that the gold market is never manipulated; not only did he indicate to us that “intervention” in markets (i.e. market-manipulation) is a common-place activity by these bankers, he pointed out that such market-manipulation is more effective if you conceal it/lie about it.

Why is this? If people actually saw the Federal Reserve printing-up nearly $1 trillion per year (every year) exclusively for the purpose of fraudulently propping-up Treasuries prices to record-highs; even our lowly “experts” would be able to figure out that the U.S. Treasuries market is now nothing but a crude Ponzi-scheme. Conversely; counterfeit the same quantity of dollars, so that no one can see what is supporting prices, and the same charlatan-experts simply gape in awe at this “unsinkable” market.

Reinforcing that the U.S. Treasuries market (and U.S. economy) has degenerated into a fraudulent Ponzi-scheme; in September we had none other than Fed Chairman Bernanke acknowledging that the U.S. could no longer afford to pay “market rates” (i.e. legitimate rates) of interest on its massive debts. Bernanke was forced to back-off on so-called “tapering” at that time because the previous six months of merely talking about “tapering” had caused the interest rate on 10-year Treasuries to nearly double – despite the saturation-manipulation of bond prices.

Indeed; other (non-mainstream) commentators have endeavoured to explain U.S. Treasuries fraud being accomplished through the illegal manipulation of interest-rate swaps. However; this cannot possibly provide a complete explanation. Yes, through fraudulently manipulating interest-rate swaps (and/or credit default swaps) it is possible to manipulate interest rates (and thus bond prices) to any number desired by the One Bank.

However; one can manipulate those markets all day long and it won’t produce one single dollar to buy any of these fraud-bonds. It does the U.S. government (and the One Bank) no good at all to manipulate Treasuries prices to the highest point in history if there are zero Chumps lined-up to buy them. No explanation of Treasuries-fraud can possibly be complete if it does not also account for how/where the trillions of mystery-dollars needed to soak-up all of this supply originate.

Note also that such counterfeiting of U.S. dollars doesn’t preclude additional acts of fraud/deception being employed to hide the fact that the debt-markets of the West’s Deadbeat Debtors (and Japan) are now literally nothing more than illegal Ponzi-schemes. For example; we could easily have some sort of debt daisy-chain. The U.S. counterfeits dollars and then uses them to buy the worthless bonds of the UK; the UK uses newly-conjured pounds to buy the fraud-bonds of Japan, and Japan prints-up a few more quadrillion yen to buy this worthless Treasuries paper.

Old-fashioned counterfeiting is the best explanation of a source for the trillions of mystery-dollars which have been necessary to prop-up the Treasuries market Ponzi-scheme over the past five years, in this new paradigm of permanently declining demand for all forms of U.S. paper. Indeed, from my perspective it is the only explanation.

With visible money-printing now being throttled-down (ever so slightly), this can only mean a commensurate increase in the counterfeiting of U.S. dollars by the Federal Reserve. And market pundits like Jeffrey Christian can only smugly nod in approval as this crime-in-broad-daylight not only survives, but continues to increase.

Jeff Nielson

Jeff NielsonJeff Nielson is co-founder and managing partner of Bullion Bulls Canada; a website which provides precious metals commentary, economic analysis, and mining information to readers/investors. Jeff originally came to the precious metals sector as an investor around the middle of last decade, but soon decided this was where he wanted to make the focus of his career. His website is

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