The Fed is proposing another round of “quantitative easing,” although the first round failed to reverse deflation. It failed because the money went into the coffers of banks, which failed to lend it on. To reverse deflation, the money needs to be funneled directly to state and local economies.

Read more here –

21 Responses

  1. An argument could easily be made that Bernanke’s real goal was to make sure the banks suffer the least in a deflationary spiral (their coffers are filled with money while everyone else goes bankrupt), and he never saw ‘fighting deflation’ as a real possibility. The money-grab and bailouts to banks and wealthy creditors while mainstreet languishes, tends to support this notion.

    The ubiquitous misinformation campaign by the banking and existing government monkey establishment, offering scarey stories of martial law and armed men in the streets, as well as the complete lack of regulatory oversight or judicial proceedings against individuals responsible for long lists of crimes, also tend to support this idea.

    The banks still anticipate deflation and further loan defaults, hence the lack of lending (outside of government guaranteed loans). The banks also secretly suspect other banks are insolvent (and they are correct), hence the lack of inter-bank lending.

    The prevailing thinking has been that Ben wants to ‘fight deflation’, but why would anybody think that ? A confidence game (such as the ponzi asset bubble) only works when the marks are unaware of the game and confidence is maintained. At this stage nearly everyone is aware that assets are highly overvalued, so Ben cannot possibly expect the economy to ‘pick up’ from here.

    He is anticipating a deflationary spiral, but publicly he claims to fight deflation. After all he does have a phd and legacy to defend.

    History will judge his actions best, which were to save banks at the expense of the real economy, at the expense of the US Constitution (which has been shredded, allowing ubiquitous fraud to continue unaddressed, all in the name of national security), and at the expense of the United States itself, as I believe waiting this long to allow deflation and collapse of insolvent banks will lead to an unrecoverable destabilizing of the US Government.

    And why would we expect the head of a private banking cartel to do anything other than save banks at the expense of all else ?

    • I think Helicopter Ben needs a new name. He apparently knows how to reverse deflation, but specifically chooses not to rain money on the people who would use it best. How about Sponge Ben, sucking the life juices from the working poor. Better yet, Sponge Ben No Pants: the emporer isn’t wearing any clothes.

      What baffles me is the abandonment of the ancient understanding that a ruler is only as glorious as his kingdom. They seem to want to reduce the world to a slag heap so they can be absolute rulers of the stinkiest slag heap in creation. Do they really not realize how much more rewarding it is to rule a healthy society on a thriving planet?!!

      I would like to see the establishment of an old school vigilante court set up by the people to try offending members of the establishment for fraud, counterfeit, and treason.

  2. It all comes back to the central issue of “who has the power over money creation?”!! Either it is The People, by and through their sovereignty via their legitimate governments, or it will be as it is now. The current system is money creation by the illegitimately chartered Private System of the Federal Reserve. and the smaller banks via the fractional reserve system.

    Private money creation is the usurpation of the rightful sovereignty of the people. The sooner the people learn that, the sooner we can return to prosperity.

    All the solutions are really very simple, once one breaks through the corrupt current paradigm. That includes the instantaneous repayment of the fraudulent National Debt.

    The answer is to shift the ownership of the Federal Reserve System to the People, and make money-creation truly *sovereign*, and in control of the People – as it should have been all along.

    Keep up the public information campaign, Ellen. You are devoting your life to cutting the economic chains on our People.

    • If you’re in a card game and you can’t figure out who the patsy is, it’s because it’s you.

      The banks are using the apparatus of government to protect their interest (fractional reserve banking) via Bail Outs. The Federal Reserve and FDICs true mission is to protect the lucrative practice. The former as a lender-of-last-resort for troubled banks, and the latter to project the illusion that depositors money was “safe”. Neither of which is true because even today bank runs would expose the fragile leveraged nature of the system.

      It is government bail outs that is protecting and promoting the money creation that you loathe. It is hiding in plain sight. Who’s the patsy?

  3. The banks have had their bailouts and will need more as the balloon notes that were loaned on commercial property require refinancing when banks are tightening lending ratios on depressed properties. We will have additional rounds of quantitaive easing and deflation from defaults around this issue alone through 2014. If you need stimulus, eliminate personal income taxes and spend our own government created dollars to run the government. Let the banks borrow from the US government for their operations and pay the US Treasury interest. No personal income taxes required, no Ron Paul audits either. As for municipal and states, they should charter their own banks, accept tax and retail customer deposits, use fractional reserve banking and borrow for and lend into local and state economies. Privately owned central banks are an anacronism. We need some change Obama. It will never happen because this one they have by his birth certificate.

  4. The aggregation of houses is an important source of “so-called” carbon foot print. Pollution ie carbon footprint is the basis for Cap and Trade calculations and allowances. A mass, perhaps a majority, of homes reposseed, is expected to becomes a key asset for banks.

    You no doubt have already estimated that the calculation of total emissions has special (occult) meaning to wall street and central banking. My friend Loco Lola, says it is to be the basis for determining the money supply of the new world order.

    Compare how current money is created from consumption of petroleum and various other valuables with how simple it would be to create money based upon the single value of total filth from carbon emissions. A stroke of Molochian genius, God of perpetual debt, money at interest and stock exchange swindle finance, origin of all pollutions, says I. Thanks RDuanewilling. Read MONEY: The 12th and FINAL RELIGION.

  5. There definitely is a “push me – pull you” issue at hand. The greedy elite continue to push for economic “growth” as “the answer” as it allows them to continue to make huge profits while trickling down something to the masses.

    However, what is really needed is debt load reduction for the consumer. Ideally, the lowering of credit card interest rates on EXISTING DEBT for those customers who are intent on PAYING DOWN their unsecured debt is a no brainer, but isn’t being done.

    Reracking all home mortgages to 4% would free up additional money to pay down unsecured debt while also giving the government a slight boost in taxes since homeowners would have less of a monthly deduction based on interest, another win win.

    Neither of these ideas requires any bailout money.

  6. […] Ellen Brown is not an economist, but a very smart women.  Her conclusions were derived from keen observance and commons sense.  It is nice to see that see that Ellen has discovered New Monetary Theory.  Not surprising as it ties very nicely with her long term support for local state owned banks. …The failed QE experiments in Japan and the U.S. suggest, however, that there is a third alternative.  Printing dollars to pay the debt (referred to by Russell as “inflating the debt away”) might actually eliminate the debt without creating inflation.  This is because federal bonds and Federal Reserve Notes are interchangeable forms of liquidity.  Government securities trade around the world just as if they were money.  A $100 bond represents a claim on $100 worth of goods and services, just as a $100 bill does.  The difference, as Thomas Edison said nearly a century ago, is merely that “the bond lets money brokers collect twice the amount of the bond and an additional 20%, whereas the currency pays nobody but those who contribute directly in some useful way. . . . Both are promises to pay, but one promise fattens the usurers and the other helps the people.” The Fed’s earlier attempts at QE involved swapping $1.25 trillion in mortgaged-backed securities (MBS) for dollars created on a computer screen.  As noted in the NPR segment, many of those securities have come due and have gotten paid off, putting cash in the Fed’s till.  The Fed now proposes to use this money to buy long-term Treasury debt rather than MBS.  That means the Fed will, in effect, be buying the government’s debt with dollars created on a computer screen.  The privately-owned Federal Reserve is not actually an arm of the federal government, but if it were, the government would thus be printing its way out of debt – just as Helicopter Ben proposed in 2002.  Recall that he said, “the U.S. government has a technology, called a printing press” – the U.S. government, not the central bank that has done all the QE to date. Running the government’s printing presses to pay its bills has not seriously been tried since the Civil War, when President Lincoln saved the North from a crippling war debt at usurious interest rates by printing Greenbacks (U.S. Notes).  Other countries, however, have tested and proven this model more recently.  They include Germany, which pulled itself out of a massive financial collapse in the early 1930s by printing a form of currency called “MEFO bills”; and Australia, New Zealand and Canada, all of which successfully funded public works in the first half of the twentieth century simply by advancing the credit of the nation.  China, Malaysia, Guernsey, Jersey, India, Argentina and other countries have also revived their economies at critical times by this means.  The U.S. government could do this too.  It could print dollars (or type them into electronic bank accounts) and spend the money on the sorts of local public projects that would put people back to work and get the economy rolling again.  (link to full article) […]

  7. Just read this . . .

    “A ‘state’ might not qualify as an ‘individual, partnership or corporation’ under Section 13(3) of the Federal Reserve Act, but a state-owned bank would. Bruce Cahan, an attorney and social entrepreneur in Silicon Valley, California, proposes that the Fed could diversify its role by buying long-term bonds in existing or newly-chartered state-owned banks. These banks, which would have a mandate to serve state and local communities, would more quickly and accountably lend for in-state purposes than private banks do now.”

    A similar approach hasn’t worked out too well for the Germans.

    Favored State banks turn into mini-Fannies and Freddies.

    If you really want to do a helicopter drop, just deposit, say, $10,000 (or whatever amount) in each household checking account. Cut out all the middle-men.

    • On the German public banks, compare Thomas Geoghegan in The Nation:,4

      5. Set up small government banks like the German Sparkasse.
      Ironically, in this time of bailouts, the failure of so many small banks has reduced the lending the country needs. In Illinois alone, thirty-seven banks have failed since the Wall Street crack-up. The big ones like Citibank, Bank of America and JPMorgan Chase are not just “too big to fail” but too big to lend.

      How to fix that?

      Set up small, government-run banks all over the country, like the little Sparkasse banks one sees all over Germany.
      It would do something for our base. It’s simple to understand. It fits into a plan — to make the country more competitive so we can bring down the trade deficit. In Germany the Sparkasse banks are especially designed to help small manufacturers compete — the kind of small but high-value-added firms that the big banks like Deutsche Bank ignore but that play an important role in racking up a favourable trade balance for Germany.

      And if all that is too abstract, think about this: the Sparkasse hand out credit cards with low interest rates.
      Isn’t that the ultimate “public option”? A government credit card, at a lower than Bank of America rate.
      Yes, it’s simple. It’s universal — everyone can use a credit card. And it adds up to a plan, to create a fair and just economy that can lift the middle class by increasing sales abroad.

  8. Everyone needs to read your book Web of Debt. And somehow, we need to find a way to get a Congress elected that will implement your ideas.

  9. Hi Ellen,thanks for all and more.Castro admit communism don`t work,he is ready to try something else.We need to do the same thing,to keep playing these money games,we`re fooling nobody but ourselfs.I hope we all go to workers own & public banks,we can stop playing the “games”. Thanks

  10. Ellen, I agree with everything you say, but there might be a problem. Even if we had state-owned banks, we would still have a massive trade deficit, because the USA no longer makes anything except weapons and awful movies. Too many American jobs have been sent overseas. If all of us got some money through a helicopter drop into state-owned banks, then our pain would be eased somewhat, but only temporarily. Without real manufacturing to back up that money, the US dollar will continue to weaken in real terms.

    On the other hand, if we had state-owned banks, then perhaps they would stimulate local manufacturing for local needs (the rest of the world be damned).

    Our enemy is the central banksters, who created this Depression to set the stage for a single global currency called the “Bancor,” which will be controlled by a single privately-owned global bank. If you think this is a myth or rumor, then Google the words “Bancor” and “IMF.”

    Most of mankind will exist to serve this planetary bank, and will be held in eternal debt-slavery. Only the super-rich will retain their freedom, since only they will participate in power. After the private global bank is established, the next step will be a cashless planet, effected via biochip implants for all except the super-rich. The Depression will become so severe that mankind will beg for this biochip. Any sovereign government that refuses to submit will be attacked economically and / or militarily.

    State-owned banks might delay this nightmare if they were used to develop local self-sufficiency as far as possible, without the need for imports. Local regions would have to grow their own food, devise their own alternative energy sources, and so on.

    • State owned banks would surely “delay the nightmare” and revitalize local economies by de-centralizing the power of the central bank and its client megs-banks.

      But more than that, the state bank movement could, and should, be the prelude to the nationalizing of the central bank itself, and the end of the private banking model. It has demonstrated its incompetence for all to see.

      Don’t mistake this gross incompetence for some hideous NWO master plan to create a one world central bank. If the private central bank cannot effectively and competently manage a mere national financial system, there is precious little chance it will morph into a global financial dictatorship.

      The financial debacle we are in represents the failure of that particular globalist agenda, not its success.

  11. Great info on your blog for Debt Consolidation. If more people would visit blogs like yours and mine then more people would be living a debt free lifestyle. The info is out there and most are free, they just have to look!

  12. Ellen, as always, well said and I agree with you. I can’t help but to think that when Obama, Bernanke, and Geithner get into a room that there isn’t discussion as to what the consequences of their money printing activities might be… it’s not as if there’s a complete lack comprehension of history amongst those men… unless of course there is. I’ve posted my version of a story of you’re very familiar with on my blog – The Wonderful Wizard of Oz –

  13. Just stumbled across your blog, looks like we are interested in the same sort of information – will read through in depth.

  14. I dont get it Ellen. How come printing dolar (quantitative easing) to swap with bond does not effect money supply?

    That newly printed money did not exist before. If you print it, it come into existance. Just like money supply grow when bank create credit to a borrower.

    I think QE increase the money supply. What it can’t quarantee is it increase the total money supply (total credit market).

    • The banks had the bonds, the Fed had the dollars. (They didn’t actually print them, just wrote them into an account.) The Fed credited the banks with the dollars and took back the bonds. The banks were no richer than before; they just had dollars instead of bonds. They could have “spent” the bonds whenever they wanted by turning them into dollars. The Fed just did that for the banks.

      • I still not get it Ellen…

        Now the Fed has the bond. Yes, bank are not getting richer, but now the dollar equivalent of asset become double in the system. Bank keeps lets say 1 trillion, but the Fed is also getting 1 trillion that they didn’t has before. Isn’t it mean money supply increase 1 trillion?

        So you mean what QE does is it increase the cash or it’s equivalent (bank reserve) and it does not increase M3 & total credit market. (Fed holding of bond or any other asset are not calculated as money supply?)

        Hm… If so, is all people around the world is being fooled (lied) by media that we are going to hyperinflate because of that QE?

        Why the media are lying?

        Doesn’t all that new reserve / cash has any impact on economy? Bank might not lend it to consumer, but they can lend it to their speculation firms to speculate on financial market. Lately all commodities are going up. Gold make new record every day now.

        • One more thing Ellen,

          During QE, bank sold toxic asset to the Fed at face value. The supposed deflation is cancelled by the Fed because banks no longer has default loans on their book.

          The money they get is also good quality asset (cash / equivalent), it’s tier 1 capital, which has a higher fractional power. Isn’t it?

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