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Tuesday, January 6, 2015
Former White House Official Warns Of Terrifying Cyprus-Style Global Endgame
Dr. Philippa “Pippa” Malmgren: President & Founder of DRPM Group - Dr. Malmgren was former Special Assistant to the President of the United States for Economic Policy and former member of the U.S. President’s Working Group on Financial Markets.
Eric King: “Let’s talk about that Armageddon scenario, Dr. Malmgren. There is a great deal of concern in the West because bail-ins have been written into law in countries all over the West. That allows for money to be taken directly from bank accounts Cyprus-style. Alan Greenspan once gave a speech where five times he talked about creating money ‘without limit.’”
Dr. Malmgren: “I remember that speech.”
Eric King: “Greenspan talked about derivatives and the crisis that would arise because the irresponsible behavior by the banks would be backstopped by the taxpayers. We have already gotten a taste of that in the 2008 – 2009 collapse. So the concern people have is that the West has now written into law the ability to seize money directly from people’s bank accounts. What we are essentially saying here is that people’s careful savings of a lifetime could be wiped out in the blink of an eye when the next round of the derivatives crisis hits.”
Dr. Malmgren: “This is something that I’ve addressed in my new book, Signals.
Corrupt Governments Will Steal From Grandmothers
Dr. Malmgren continues: “The losses in the financial system are already being passed on to the taxpayers — the grandmothers and the everyday common person. So, yes, there is a big effort by governments worldwide to move that loss off of their balance sheets and onto the backs of their constituents.
They are already applying moral suasion to pension funds by convincing them to hold more sovereign debt. Well, when those bonds eventually sell off, who is going to eat the loss? It’s going to be grandma. So I think people need to become more aware of their vulnerability of this process.
Alan Greenspan’s speech was correct — governments can print unlimited amounts of money. The Federal Reserve still believes they have hardly even started to do that but if they really needed to do it they could. Because they have been able to introduce so much capital into the markets since 2007 without inflation appearing, they now believe inflation is not even an issue. But emerging markets are already seeing historic inflation.”
Government Theft Has Already Begun
Eric King: “The reality is that over one quadrillion dollars of derivatives is too big for governments to backstop. So governments will have to steal money directly from their citizens, won’t they?”
Dr. Malmgren: “I hate to tell you this but that’s already begun. That process is already in place. Governments deliver less services to their citizens, tax them harder, and their standard of living declines. The insidious process of high inflation is another way governments are working to get out of their debt problems without it registering to ordinary people that there has been a transfer of wealth. They are essentially taxing the public to pay for the excesses of the financial system. In that sense the process has already started, it’s just that it hasn’t registered with people yet.”
Terrifying Cyrpus-Style Endgame
Eric King: “But the theft of those bank accounts and retirement accounts will take place as the next major leg of the derivatives crisis gets underway.”
Dr. Malmgren: “Yes. You are right. As an example, pension funds will be told through the regulatory process that they should only hold ‘safe assets.’ Safe assets will be defined as sovereign debt. You can already see this happening right now. Every pension fund is buying sovereign debt like crazy.
But as sovereign governments default, or interest rates rise, then the losses will be incurred. So the pensioners will suffer massive losses. Suddenly 30 percent or more will just be missing from people’s pension funds. Investors will have to be very savvy to make sure that governments don’t offload their losses onto them. So the losses will happen the same way they did in Cyprus, it’s just a question of how we see those losses incurred.”