Federal Reserve

Greece central bank printing euros into existence to keep the government afloat.

"On July 20, the ECB announced it would no longer accept Greek sovereign debt as collateral. Left without any viable alternatives and facing a looming 3.2 billion euro payment due Aug. 20 on a bond held by the ECB, Greece subsequently requested that the amount of short-term bills the Bank of Greece was allowed to accept as collateral in exchange for euros be raised. The ECB granted the request. The new arrangement allows Greece to print T-bills and then sell them to its own banks who then pledge them to the Bank of Greece as collateral for euros. In this way, Greece has already printed 5 billion euros into existence."

So the ECB is offloading its exposure to Greek debt by allowing the Greek central bank to print euros. It seems like this defeats the purpose of the unified currency. The Greek central bank is stealing from everybody across Europe, and that's what the ECB was supposed to keep from happening. But it gets worse.

"Spain's banks borrowed a record 38 billion euros from the ECB in July, bringing the total borrowed to 402 billion. Consider that, according to the Wall Street Journal, Spain accounts for 33% of all eurozone ECB borrowing, while the country's economy only makes up 12% of eurozone GDP. What is more disconcerting than that, however, is that according to the above-cited Rueters article:

...the section of the Spanish central bank's balance sheet that usually denotes so-called 'emergency liquidity assistance,' where losses are borne by Spain itself...[rose] from a lowly 2 million euros in June... to 402 million euros [in July].(emphasis mine)

What's happening, then, is that apparently Spain's banks have run out of ECB eligible collateral and have resorted to ELA funding wherein the Bank of Spain sets the collateral requirements rather than the ECB."

So Spain is doing the same thing, but on a much larger scale.

"Investors must understand the potentially disastrous situation that is currently in the making: If the ECB decides to buy a massive amount of Spanish bonds to keep the country afloat and then the country losses access to the long-term debt market anyway, the ECB cannot give back those bonds. It will be saddled with them and forced to allow Spain to print its own euros (a la Greece) to pay the bonds. This is inflationary to the extreme, not to mention the fact that it imperils the ECB's balance sheet at just the time when the central bank can ill afford to print its way out of trouble.The evidence continues to mount in favor of the prediction that sooner or later, this situation will implode."

Despite all the bailouts, or because of them, the problems in Europe keep getting worse.

Fear that the ECB is racing towards insolvency.

"Otmar Issing, former ECB chief economist and former Bundesbank member, suggested today that weak European banks need to "disappear" and opined that the eurozone in its current form does not necessarily need to be saved. Issing noted that there are too many member nations (something which perhaps should trigger a bit of introspection or self-loathing considering Mr. Issing helped draw-up the euro in the first place), an untenable situation that has essentially allowed fiscally irresponsible members to spend as they please and "pile up debt" without fear of reprisal..."

Sounds like Issing is becoming Austrian. In a couple years, or maybe months, everybody will be an Austrian.

"Furthermore, the central bank's continual relaxation of collateral requirements has led to a situation wherein even mortgage-backed securities and car loans are acceptable. When the ECB announced itsnew collateral rules on June 22 it noted that residential mortgage-backed securities, loans to small and medium sized businesses, and auto and consumer finance loans would be subject to haircuts of 16%, 26% and 32% respectively. This was the only protection the bank had against the credit risk posed by the newly acceptable "assets.""

Now the bankers and the politicians want us to believe that debt is an asset. Truth is treason in the empire of lies. Orwell is laughing at us.

Republicans are pretending to support the gold standard, but of course they are really trying to use that rhetoric to steal more power and money from the people.