|This editorial appears in the December 20, 2013 issue of Executive Intelligence Review.
Sell Off Fed's Toxic Assets
Lyndon LaRouche on Dec. 17 called for the Federal Reserve to be forced to sell off its mass of toxic assets, which have been accumulated since the launching of its quantitative easing bailout of the trans-Atlantic too-big-to-fail banks.
"Since the 2008 blowout and the Federal Reserve's massive bailout," he said,
As Paul Gallagher reports in this issue, since the end of 2008, all of the $2.2 trillion increase in deposits in the biggest Wall Street banks have resulted from the Fed's money-printing, while all of the Fed's QE "money" went to the biggest U.S. and European banks, and none of it to the real economy. None of it was loaned to farmers, factory owners, or other such businesses. The TBTF banks simply use it for "investments" in speculative paper: financial derivatives, securities, swaps, repo loans to other banks, and financial companies and funds. JPMorgan alone has $1.5 trillion in such speculative activity, dwarfing the bank's total lending to businesses and households.
While this temporarily masks the inflationary impact of the money-pumping, it creates a house of cards that is far larger than that which nearly vaporized the world financial system in the 2007-08 crash.
LaRouche noted that the Federal Open Market Committee was meeting Dec. 17-18 and will be under enormous pressure to extend the QE policy of pumping $85 billion a month in fake money into the banks, to use for gambling on derivatives.
He counterposed this madness with the decision by Russian President Vladimir Putin, in his meeting with his Ukrainian counterpart Viktor Yanukovych, to invest $15 billion in the real economy of Ukraine, and to reduce the price of Russian natural gas to its neighbor by 33%.
"Russia has acted responsibly and given Ukraine a clear alternative to the death sentence being proposed by the European Union," LaRouche elaborated.