“He who controls the spice controls the universe.”

Guild Navigator - Dune (1984)

If you are a science fiction fan you’ll probably remember Dune, the excellent novel (a series of them actually) by Frank Herbert, and the film by David Lynch based on the same book. In it, one of the villains, Baron Vladimir Harkonnen, utters “He who controls the spice controls the universe”, the spice being a rare substance harvested in desert and desolate planet Arrakis and without which the universe would would grind to a halt (if you want to know why and have not read the book or seen the movie…just do it!). Instead of “spice” use “credit” and you’d have an adept metaphor of our universe, our western societies.

This week Spiegel Online interviewed Carmen Reinhart, an american economist known for being the co-author, with Kenneth Rogoff, of the book This Time Is Different: Eight Centuries of Financial Folly, in which they study debt crisis and their aftermaths in the last 800 years.

In this interview Ms. Reinhart gives very clear hints as to what the aftermath of the present debt crisis in western societies might be: inflation and impoverishment of savers and the general population. She also mentions the methods by which such an outcome will be achieved: financial repression and monetization of debt (aka Quantitative Easing aka QE).

Ms. Reinhart holds the thesis that governments have forced Central Banks to relinquish their independence in order to finance government deficits that can no longer be addressed via fiscal policies. What she does not say, be it because she does not believe it or because she does not dare, is that governments are themselves subservient to financial markets, an issue that we addressed in TYR reads “… a de facto coup d’état by Wall Street”. Ms. Reinhart utters some truths and chooses to ignore some other ones. The interview is both illuminating and mystifying, but well worth reading.

At the end of the interview…

…Spiegel asks “That sounds like a perpetual motion…”

…and Ms. Reinhart answers…”Of course it is!”.

It is perpetual motion because credit is the spice of our financial universe, a spice created by Central Banks, where decisions are taken by unelected officials, that channel it, at a very low or no cost, thru the private banking system, that multiplies and redistributes it, at a cost, to the rest of the economy. Ms. Reinhart tries to convince us that it is governments that control money, credit. No, Frank Herbert knew better. It is the Guild, the banking industry and their owners, who control the spice…credit…Central Banks…and in the end governments. How do we know?…ask yourself…Cui Bono? “He who controls the spice controls the universe.”

Some excerpts from the interview:

“So what happens is that money is transferred from savers to borrowers via negative interest rates.”

“If central banks try to accommodate and buy debt, there are risks associated with it. Somewhere down the road you are going to wind up with higher inflation.”

No doubt, pensions are screwed. Governments have a lot of leverage on what kinds of assets pension funds hold.”

“…after World War II austerity was easier to pursue, because you had a younger population and therefore less entitlements. Furthermore, military expenditure was easier to reduce. So, the build-up in debt we have seen since the crisis is very rare. Usually you get that kind of build-up when there is a war.”

TYR reads: Bitcoins Go Parabolic

Zerohedge reports about the parabolic rise in the price of the Bitcoin in the last 48 hours and its 1400% rise since the start of the year. The article rethorically asks…”which line item on the Fed’s Balance Sheet is ‘Virtual Currency Transactions’… what better way to destroy an up and coming currency competitor than to blow a bubble in it and explode it?”

We wrote about Bitcoin a couple of weeks ago in Bitcoin a virtual currency that defies the NWO. It is a brilliantly designed currency, but it can blow up…or be made to blow up. If you plan to use it, study it first and go slow.

“….this is nothing less than legalized plunder of the american people”

“The Fed’s sole purpose: keeping the banks afloat” – G. Edward Griffin @ Casey Research says Casey Summit speaker G. Edward Griffin, author of The Creature from Jekyll IslandHe talks about the Fed’s real role in the US economy and why – contrary to common belief – it is not this banking cartel’s mission to act in the best interest of the American public.

The origin of the FED can be traced to the early years of the 20th century. After the failure of the, first and then second, Bank of the United States, the banking cartel managed to get Woodrow Wilson’s agreement, allegedly in exchange for financial support for his presidential campaign of 1912,  for a bill that would lead to the formation of a central bank for the United States.

“In 1910, a secret meeting took place on the Morgan estate on Jekyll Island, Georgia. Aldrich met with representatives of prominent banking firms. Such men included Henry Davison (senior partner of J.P. Morgan Company), Frank Vandelip (President of the National Bank of New York associated with the Rockefellers), Charles D. Norton (president of the Morgan-dominated of First National Bank of New York), Benjamin Strong (representing J.P. Morgan), and the primary architect of the Act, Paul Warburg (representing Kuhn, Loeb & Co.)”

“Over a period of ten days they drafted the Federal Reserve Act that was voted on in Congress on Monday 22 December 1913….It passed through the Senate the following morning and Woodrow Wilson signed the bill into law later that same day at 6:02 pm. This Act transferred control of the money supply of the United States from Congress as defined in the U.S. Constitution to the private banking elite.”

“The deceptive terminology of the name was carefully chosen because the American public did not want a central bank similar to those in Europe. The Federal Reserve is not a federal governmental entity nor is it a reserve, such as a governmental treasury, backing up its currency. The Federal Reserve is a legalized cartel of the money supply owned by private national banks, operating for the benefit of the few under the guise of protecting and promoting public interests.”

“The meeting on Jekyll Island remained unknown to the public until Forbes magazine founder Bertie Charles Forbes wrote an article about it in 1916, three years after the Federal Reserve Act was passed.”