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$50 Billion Madoff Swindle is Miniscule Compared to Federal Reserve's Ponzi Scheme

By Mike Adams, December 13, 2008 | Key concepts: Ponzi scheme, Wall Street and Bernard Madoff

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The world press is ablaze today with news of the arrest of elite Wall Street broker Bernard Madoff. They say he ran an elaborate Ponzi scheme that bilked high-profile investors for more than $50 billion. Even Geneva banks lost more than $4 billion, Reuters is reporting.

A Ponzi scheme works like this: The con artist uses money from new investors to pay the apparent gains to previous investors, creating the appearance of dividends. With a solid track record of apparent gains, he attracts a growing base of new investors who funnel even more money into his hands. Behind the scenes, though, he's burning cash on an opulent lifestyle, using other people's money to make himself rich, even while cooking the books to make everybody think their money still exists.

In the end, of course, the whole thing collapses. There never was any steady growth. All the money is gone, and investors are left scratching their heads: Where'd my money go?

That Madoff, the former NASDAQ stock chairman, managed to do this with $50 billion without regulators noticing is perhaps the Wall Street story of the century. Somehow he was scamming some of the biggest players in the world while evading all accountability. Everybody was fooled.

But I say there's a story that's even bigger... one that's still evading accountability and will explode into the financial story of the millennium when it finally blows up in our faces. What story is that? The much larger Ponzi scheme being run by the Federal Reserve and the U.S. Treasury.

Consider this: The Fed has created over $7.7 trillion in new money in order to bail out all sorts of incompetent (but wealthy) individuals and companies. In effect, it's using new money to cover the losses of existing stakeholders, and as the system is nearing collapse, the only way it can keep the whole scam running is to create even more new money and thrust it in to the same money hole.

Does that sound like a mammoth Ponzi scheme, or what?

You see, Madoff could have survived his ordeal if he only had his own currency printing press. Just whip up another $50 billion in counterfeit currency and your problems are solved! But Madoff didn't have a printing press. The Federal Reserve does. And it's using it to expand the biggest Ponzi scheme the world has ever seen.

It's doing it all in complete secrecy, of course, refusing to reveal where all this money is going (http://www.bloomberg.com/apps/news?...)

Meanwhile, it's throwing money in all the wrong places, rewarding the economy's most incompetent money managers while refusing to let bad companies fail like they're supposed to. The perception of favoritism is growing to the point where one Senator now warns that bailing out the auto giants could lead to riots in the streets (http://www.businessandmedia.org/art...).

Meanwhile, home prices continue to plummet and foreclosures are still on the rise across America. We're looking at a new generation of American homeless as everyday families lose their incomes and their homes, ending up living on the streets where they can't even afford their Starbucks lattes anymore!

Home prices are so depressed that they may not recover in our lifetime after accounting for inflation, warns one investment analyst (http://www.usatoday.com/printeditio...). If that's true, it means all those people who bought homes at the peak in 2006 or 2007 are going to be holding and waiting until the day they die just to break even.

To keep the national Ponzi scheme going, the Fed is pumping money into the economy more frantically than a one-legged man in an ass-kicking contest. New (counterfeit) money keeps bailing out old money, and the stakes grow larger and more dangerous with each passing week. For every incompetent company that isn't allowed to just fail like it's supposed to, there will be an equal or larger wipeout in taxpayer savings when this Ponzi scheme can no longer be sustained.

Money isn't free. Somebody somewhere pays the piper. And in this case, that's going to be the U.S. taxpayer, whose future has already been mortgaged beyond all reason. In a contracting economy, with nearly a million new jobless every month and with the national savings rate below zero, how are U.S. taxpayers supposed to foot the bill for $7.7 trillion in rich bankster bailouts?

They're not. Like any Ponzi scheme, there is no way out other than collapse. The U.S. government has no method by which it can pay back its debt, and that makes the piling on of more debt an accounting scam. It's like the family living next door realizing they have to declare bankruptcy, so they go on a spending spree and max out all the credit cards right before filing.

Henry Paulson is the next Bernard Madoff.

And when this Federal Reserve Ponzi scheme breaks, it won't just be a few wealthy investors who are hit by the news... it will be every last one of us who pays taxes in America.

I've done the math on this. There are 147 million people employed in the U.S. The national debt will now require each and every U.S. worker to come up with about $68,000 in order to pay off the debt. Most workers don't even earn that much salary in a year, after taxes. Many are working low-wage jobs that barely keep them scraping by as it is. How is every taxpayer supposed to come up with $68,000 to pay off international creditors?

And on top of that, the Fed's creation of yet another $7.7 trillion in new money is going to cause accelerating currency inflation starting in 2009 (and growing for many years thereafter). So the money people earn will be worth less and less. Taxes will have to be raised to ridiculous rates, leaving people with smaller and smaller take-home checks.

This Ponzi scheme, you see, is being played out with the taxpayers' money but without their consent! You've all been signed up for the greatest Ponzi scheme in the history of the world, and when this one goes bust, you'll be lucky to wind up holding ten cents on the dollar.

My financial preparedness audio course offers strategies for protecting yourself: http://www.truthpublishing.com/Heal...

If you don't take steps to prepare yourself for the collapse of the Federal Reserve's Ponzi scheme, you might as well go out and buy yourself a tent at Wal-Mart. Why? Because a whole lot of Americans might find themselves living in one.

During the Great Depression, my grandparents lived in a tent at a construction work camp. They considered themselves lucky to have a job at all. I never thought I would see America reverse its prosperity to the point where we would see shanty towns cropping up again, but now it's clear that they're coming.

I warned NaturalNews readers so get out of the real estate market in late 2005. You can read a summary of my warnings here:


Or read the full warning articles here:

Housing Bubble Crash Part One: http://www.naturalnews.com/016209.html

Housing Bubble Crash Part Two: http://www.naturalnews.com/016241.html

The bottom line? People should have seen this coming, and they should have prepared for it. But the public preferred to remain drunk and blind, living in a fantasy world of easy money and endless gains, believing the days of hard work were being replaced by an era of a universal lottery where everyone wins.

They were wrong before, and they're going to be even more wrong when the Fed's Ponzi scheme comes tumbling down. It won't be pretty, and as I've said before, the United States of America as we know it today will not survive its own debt. Are YOU ready for that reality?

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