If Everybody's Borrowing, Where's the Money Coming From?

We've watched with considerable interest—no pun intended—the way everyone is rushing to borrow money. The banks need to borrow money to cover their growing losses, the governments need to borrow money to lend it to the banks and pay for other activities, the corporations need to borrow money to cover their debts. Virtually every major institution needs to borrow cash, and lots of it. And, according to published reports, they are getting their loans. Which raises the question: If everybody's borrowing, where's the money coming from?

Take the U.S. Government, for example. It raises its money by selling bonds through the Federal Reserve. Now we know the Fed has been buying some of those Treasuries itself, but it claims it is doing so for interest-rate management reasons, not because it can't find buyers. We suspect that's not quite true. Is it possible that the Fed is buying far more than it admits, because the market for hyperinflating U.S. debt is drying up? One way this might be done is for the Fed to loan money to the primary dealers to buy the debt at the auctions, and then loan money to the banks or other parties to buy them from the primary dealers. Or the Fed could simply be buying more than it admits, and faking its books, just like the banks. We don't know, but we do know the Fed is capable of such deception, and we see no reason to believe a damn thing it says. It has lied too many times.

It should be pretty obvious that when everybody is borrowing, there is no one to lend. Which means that the claims of borrowing are phony. The whole system at this point is nothing more than a shell game, propped up temporarily by lies and perceptions. We can't say for sure what specific games are being played, but it is obvious that the truth is far worse than has been revealed so far. And that's saying a lot. This is the last gasp of a dead system. As we said back in July 2007 when the system blew up, it is not possible for a bankrupt monetary system to bail itself out. The more money the central bankers create, the faster it loses its value.

http://www.larouchepac.com/node/18129