-- Posted Monday, 16 February 2009 | | Source: GoldSeek.com

The USA Empire is the first debt based empire in the history of the world.  Previous empires, like the British Empire and the Roman Empire were based on colonization, political and military domination.  The unique power of the USA Empire is that once the subordinate power has been ensnared in the US dollar trap, the USA Empire gains immense control over the subordinate without having to resort to military threat.  Moreover, no other power in the world is able to usurp the power of the USA Empire in these situations.  It does not matter whether the subordinate power owns US dollar denominated debt instruments or has loans outstanding that are denominated in US dollars.  Let's look at the current situation with the EU as an example:

It has recently come to light that EU banks have many trillions of US dollar denominated toxic assets on their books.  These are (fraudulently originated) structured finance products from New York and London.  Of course the US banking system is full of these toxic assets as well.  The key here is that since the toxin is dollar denominated, only dollars can fix the problem and only the USA Empire can create dollars for no cost.  The solution to this problem has been for the USA Empire to create dollars and for the EU to create euros and for the two entities to do a currency swap.  Of course the USA Empire can set the conditions on this swap deal, and you may rest assured that those conditions are set so as to uphold the strength of the US dollar.  For instance, if the US Empire only creates 90% of the required dollars to fill the toxic hole, then the EU must go out and buy dollars on the open market to fill the rest.  Alternatively, the exchange rate between the two currencies may be explicitly controlled by the exchange rate determined as part of the swap agreement (note that the swap occurs at some exchange rate, and there is no reason to believe that the USA Empire needs to abide by the exchange rate set on the FOREX marketplace).  After the currency swap is completed, the EU has a revived balance sheet (but no US dollars) and the USA Empire has a boatload of euros, which represent ongoing control over EU affairs.

Prior to the last year, the USA Empire controlled subordinate powers by loaning them more dollars than they could ever repay, and then by presiding over the ensuing bankruptcy, claiming natural resources and other goodies.  I am giving this mode of debt based empire a name, debt empire via bankruptcy, and it is well described in the following book: Confessions of an Economic Hit Man.  The scenario described above is a new dynamic, which I will call, debt empire via asset implosion.

Frankly, I wonder whether the USA Empire is swapping gold for US dollars in secret with the EU powers right now.  There is reason to believe that the USA Empire gold has been encumbered (over the last 15 years) in gold swaps and that the remaining EU gold might in fact be encumbered USA Empire gold.  This encumbrance could be reduced or eliminated if US dollars (to keep the EU financial system alive) are being swapped in exchange for gold.  Note that the USA Empire has reported constant gold holding for 35 years.  Could it be that at the end of this, the USA Empire will have all of its gold and what is left of the EU gold will be gone, swapped for US dollars in a desperate trade?

by Vincent Bressler
vincentbressler@yahoo.com

-- Posted Monday, 16 February 2009 | Digg This Article | Source: GoldSeek.com

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