Recently the world was hit by another major financial bubble, the $50 billion loss of investors money by Madoff’s Ponzi scheme. And everybody was amazed by the enormous amount of money that was inolved, and lost. Now I’d like to tell you about a $11 Trillion Ponzi Scheme.
By the way, a Ponzi scheme, being a socalled pyramid scheme, is defined by the wiki as:
A Ponzi scheme is a fraudulent investment operation that pays returns to investors out of the money paid by subsequent investors rather than from profit. The term, “Ponzi scheme,” is used primarily in the United States, while other English-speaking countries do not distinguish colloquially between this scheme and other pyramid schemes.
Now usually those investors are attracted by a high percentage of return. But here I’d like to focus on the main part of the definition: ‘returns … paid by subsequent investors rather than from profit’. With Madoff’s fraud an amazing 50 billion dollars puffed away in thin air.
Well, I’d like to tell you about a Ponzi scheme where almost 11 Trillion dollars will evaporate very, very soon. And the ultimate crook that is capable of such an outrageous, mindblowing, world destroying amount of throwaway money is called … (drumroll) … the United States of America!
Believe me, this isn’t a linkbait article, this is about information that you usually do not read about in regular media. Firstly let me point out that the debt of the USA is rising at an enormous ratio, especially the last few (do I hear Bush?) years. Although that may still sound familiar.
Here is a link to the Wiki article about the US national debt. But you’d better look at the graphs on this page, where you can see what happened since 2002: the debt has risen from 6 trillion to almost 11 trillion dollars (01082009). The actual, current amount can be seen at the national debt clock site.
In the graph above you can see who owns which portion of the US national debt. There are a lot of small owners, 22.7% are foreign (international) owners and over 40% is owned by the Federal Reserve. Of course a debt should be backed up by reserves and or by profits. But the US have no ‘profits’. Almost every year there is a deficit, which means spending exceeds revenue. And so the US debt grows.
But hey, what about the Federal Reserve, I hear you say? The Federal Reserve is a banking system, with twelve regional Federal Reserve Banks located in major cities throughout the nation acting as fiscal agents for the US Treasury. Now the US Treasury has assets (securities) in worth of 835 billion dollars. But. Over 80% of those securities are owned by foreign investors, i.e. that’s loaned money (bonds etc.). Those investors get a yearly return paid by the interest.
You see how my analogy of the 11 Trillion Ponzi Scheme fits into all of this? Eleven trillion dollars of US national debt are backed by 167 billion (835 – 80%) of direct securities. And no profits. And an ever growing ‘army’ of investors. The US needs to lend (print?) more and more money to pay those foreign investors their interest. And to pay the 60% of investors that own the US national debt their interest. And what would happen when those (foreign) investors want their full investment back? The total collapse of the US and the US dollar!
So why is the dollar still such a relatively strong currency? Well, the main reason is because crude oil is paid in US dollars. The whole world is backing up the dollar, because the whole world lives on crude oil. For their cars, for plastics, for paint and for a whole range of products made out of crude oil. And this is part of the technical details of the US Ponzi Scheme, which you can read about in this interesting article and this very interesting video about how this came to be.
Be amazed!
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