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DEATH OF THE AMERICAN EMPIRE AND ECONOMY DEATH AMERICAN THE EMPIRE ECONOMY AND "Creative financing" with credit default swaps and derivatives trading has brought the United States, and much of the rest of the world, to the brink of economic disaster and demonstrated the failure of the capitalist system. I believe that banking institutions are more dangerous to our liberties than standing armies. — Thomas Jefferson (1743-1826), United States President "Creative merica is dying. It is self-destructing and bringing the rest of the world down with it. The sub-prime mortgage collapse, as it's often referred to, obfuscates the real reason. By associating tangible, useless, failed mortgages with it, at least something "real" can be blamed for the carnage. The problem is, this is myth. The magnitude of this fiscal collapse happened because it was all based on hot air. The banking industry renamed insurance betting guarantees as "credit default swaps" and risky gambling wagers as "derivatives". Financial managers and banking executives were selling the ultimate con to the entire world, akin to the snake-oil salesmen of the 18th century. By October 2008, it was a quadrillion- dollar (that's US$1,000 trillion) industry that few could understand. Propped up by false hope, America is now falling like a house of cards. How did it come to this? It all began in the early part of the 20th century. In 1907, J. P. Morgan, a New York private banker, published a rumour that a competing, unnamed, large bank was about to fail. It was a false charge, but customers nonetheless raced to their banks to withdraw their money in case it was their bank. As they pulled out their funds, the banks lost their cash deposits and were forced to call in their loans. So people now had to pay back their mortgages to fill the banks with income, going bankrupt in the process. The 1907 panic resulted in a crash that prompted the creation of the Federal Reserve, a private banking cartel with the veneer of an independent government organisation. Effectively, it was a coup by elite bankers in order to control the industry. When signed into law in 1913, the Federal Reserve was able to lend and supply the nation's money, but with interest. The more money it was able to print, the more "income" it generated for itself. By its very nature, the Federal Reserve would forever keep producing debt to stay alive. It was able to print America's monetary supply at will, regulating its value. To control valuation, however, inflation had to be kept in check. The Federal Reserve then doubled America's money supply within five years. In 1920, it called in a mass percentage of loans. Over 5,000 banks collapsed overnight. One year later, the Federal Reserve increased the money supply by 62 per cent, but in 1929 it again called the loans back in, en masse. This time, the crash of 1929 caused over 16,000 banks to fail and an 89 per cent plunge on the stock market. The private and well-protected banks within the Federal Reserve System were able to snap up the failed banks at pennies in the dollar. The nation fell into the Great Depression. In April 1933, President Roosevelt issued an executive order that confiscated by Tanya Cariina Hsu © 2008 Posted on 23 October 2008 under the title "Death of the American Empire" on the Global Research website http:/Avww.globalresearch.ca under the title NEXUS ¢ 23 Posted on 23 October 2008 http:/Avww.globalresearch.ca DECEMBER 2008 — JANUARY 2009 www.nexusmagazine.com