Some readers (and media “experts”) have considered my allegation that the Federal Reserve is counterfeiting U.S. dollars to (secretly) buy-up all U.S. Treasuries to be absurd. They say this despite there being no visible support of any kind for this multi-trillion dollar market. They say this despite the fact that these U.S. government “IOU’s” are priced at their highest level in history – even though the U.S. is already clearly bankrupt.

I have to wonder, however, how confident these Skeptics will remain with their criticism following the latest revelations of fraud from this crime syndicate. Essentially we have the banksters now engaged in an open (multi-trillion dollar) “shell game.” For those not familiar with this ‘con’, it’s where the scammer places a pea (or other small, round object) underneath one of three walnut shells. He/she then invites the Chumps to place bets as to which shell conceals the object, while the scammer mixes up the shells.

In the bankster version of the Shell Game, instead of a “pea” the scammers use U.S. Treasuries. The “shells” are all Western Big Banks. And in the bankster-variation, all the banks pretend to have Treasuries underneath all their shells – while the banksters shuffle that paper back and forth from one empty nut-shell to another.

As usual, the propaganda machine has instantly invented a euphemism to try to make this fraud sound like legitimate financial transactions. They’re calling it “collateral transformation” – i.e. financial alchemy. The primary perpetrators of this new bank-fraud are (surprise, surprise!) notorious fraud-factories JP Morgan and Bank of America.

Bloomberg states that these fraud-factories want to ramp-up this shell game to approximately $2.6 trillion in size. That’s how much extra “collateral” which the banksters themselves claim they need to “find” in order to pretend their balance sheets are properly backed – and that’s even with the mark-to-fantasy accounting rules currently in place in the U.S.

The scam gets even more reckless/ludicrous when we look more closely at the details. According to Bloomberg, any “top-rated” securities will suffice to execute this fraud – i.e. anything which receives the “AAA” rubber-stamp of the Big Three ratings agencies. However, as we have already seen (to the tune of $100’s of billions of dollars) many of those “top-rated securities” are already floating in the toilet bowls (i.e. balance sheets) of these Big Banks.

They can’t be sold (at any price) because they’re totally worthless, and so they have sat, hidden on these bankster balance sheets for four years (or more). Now apparently this financial feces is going to be “recycled” – in order to “back” even more obviously worthless banker-paper.

Put another way, the banksters are simply engaging in more of their blatantly fraudulent “leverage”. Let me use some simple numbers to construct a hypothetical example. Suppose there are six of these banks colluding to engage in this scam, and (collectively) they are holding $1 trillion in U.S. Treasuries. Through the magic of “collateral transformation”, suddenly all six of these banks now claim to be holding $1 trillion in U.S. Treasuries – with the other $5 trillion having been “transformed” out of assorted other financial feces.

How clumsy is this fraud? Even the hopelessly myopic, banker-friendly shills at Bloomberg can sense that something is a little fishy here. Through its rose-coloured glasses, Bloomberg openly wonders if the bankers are “hiding risk” (i.e. hiding empty shells).


…At least seven banks plan to let customers [i.e. other Big Banks] swap lower-rated securities that don’t meet standards in return for a loan of Treasuries of similar holdings that do qualify, a process dubbed “collateral transformation.” That’s raising concerns among investors, bank executives and academics that measures intended to avert risk are hiding it instead.

Capping this absurdity is what I remind readers of again and again: U.S. Treasuries themselves are already worthless. They are nothing but bad-cheques from the world’s most notorious Deadbeat Debtor. Having already defaulted on its debts back in the days when the world still used “real money” (i.e. a gold standard); ever since 1971, anyone wanting to redeem any of the $10’s of trillions in U.S. “IOU”s” would quickly find that all they could ever get is another IOU.

As I’ve explained in previous commentaries; this is exactly the same as when a deadbeat “bounces” a bad cheque, and then tries to write another (bad) cheque to replace it. The only difference between the hypothetical deadbeat and the United States is that people continue to accept the bad cheques being written by the U.S. This led me to dub the U.S. “the cheque-kiting economy.” And now their banksters are really getting desperate…


Big Banks Hide Risk Transforming Collateral for Traders

JPMorgan Chase & Co. (JPM) and Bank of America Corp. are helping clients find an extra $2.6 trillion to back derivatives trades amid signs that a shortage of quality collateral will erods efforts to safeguard the financial system…

Posted in News By

Jeff Nielson