Endgame Is Near: Helicopter QE Will Never Be Reversed, All World’s Banks Are Bankrupt, And Have Been For Years, Because They All Run On A Fractional Reserve Basis… Richard Russeli – The Huge Propaganda Effort By The Government And The Fed Is Losing Its Believers

InvestmentWatch

Helicopter QE will never be reversed

from Ambrose Evans-Pritchard: Readers of the Daily Telegraph were right all along. Quantitative easing will never be reversed. It is not liquidity management as claimed so vehemently at the outset. It really is the same as printing money.

It would be better for central banks to put the money into railways, bridges, clean energy, smart grids, or whatever does most to regenerate the economy Photo: Alamy

Doug Casey: All Banks Are Bankrupt

L: Doug, there is considerable disagreement over the significance of the Cyprus crisis. A lot of people are saying that it’s just a flash in the pan; Cyprus is a small country, far off, and doesn’t really matter. Other people are saying it’s very significant. The European Central Bank took unprecedented steps. What do you think?

Doug: I think this could be the spark that ignites the keg of dynamite under the current financial system. All banks, all around the world, are bankrupt, and have been for years. That’s because all the world’s banks run on a fractional reserve basis.

L: I know what you mean, but we should spell that out: by law and backed with government guarantees, banks only have to keep a tiny fraction of the money people deposit on hand. They lend out the vast bulk of it, and in even in good times, they could not return all depositors’ money at once, since loans cannot be called in instantaneously, and most would be defaulted on if they were. In bad times, the charade is even more hollow, since many loans that banks are currently owed will never ever get paid.

Doug: Yes, and they are all in that position. It was more serious in Cyprus because that economy is very leveraged to finance. In other words Cyprus was a banking epicenter for Europe. It was easier to make deposits – there were fewer questions asked – making banking the major business of the country. But I think the trouble will spread from there. It could spread to Luxembourg or Malta next; both are at least as leveraged to the financial sector as Cyprus. And from there… who knows?

Anyone with any sense should withdraw whatever cash they have in European banks, whether in euros or any other currency, immediately. Cyprus demonstrated that governments are quite willing and able to confiscate money sitting in a bank account in order to preserve the banking system. We live in Bizarro World.