Le Metropole Members,

(MIDAS note: Jim Willie is as sharp as they get!)

Jim Willie: U.S. central banking is now just ruthless patronage

Submitted by cpowell on 07:49PM ET Thursday, July 24, 2008. Section: Daily Dispatches
10:45p ET Thursday, July 24, 2008

Dear Friend of GATA and Gold:

Market analyst Jim Willie's latest letter, "Gold Ambush Tactics and Potpourri" has some intemperate language, but it is an important elaboration on a point your secretary/treasurer has been trying to make for some time about what central banking has become, particularly in the United States. That is:

"Central banking controls the value of all labor, services, and real goods, and yet it is conducted almost entirely in secret -- because, in choosing winners and losers in the economy, advancing infinite amounts of money to some participants in the markets but not to others, administering the ultimate patronage, central banking cannot survive scrutiny."

(See http://www.gata.org/node/6242)

Willie writes today:

"The U.S. Federal Reserve announced on Tuesday that their lending facilities would be made available to selective large hedge funds. Again, the key word is 'selective.' This opens many new questions. Certainly some hedge funds are working in concert with many entitled Wall Street firms as they busily wreck the national financial structure by supporting the unsupportable U.S. Treasurys and by trying to destroy the indestructible gold and silver market. If not for acting as U.S. Government agents in price control, the system would give them up for carved dinners on the bankruptcy table.

"Give credit where due. These conmen wizard control freaks have wielded leverage and corruption for longer than the 31-year record for previous fiat currency survival. All right, so hedge funds will be given access to bond swaps by the U.S. Fed benefactor. Will some hedge funds be slaughtered much like Bear Stearns, for the same motive?

"The Bear Stearns book contained too many short U.S. dollar positions and too many long gold positions. When they appealed to the U.S. Fed for help, the U.S. Fed killed them instead. Now hedge funds will be in the same predicament.

"A big hedge fund might be intentionally targeted by privileged Wall Street syndicated bank operators for a kill, with the fund's unwanted positions liquidated, but its desired positions in need of protection seized by JPMorgan. A hedge fund that is loaded with almost all unfriendly positions will just be killed outright, a typical tactic being a cutoff of credit by the Wall Street firm itself. The U.S. Fed will come to lend a helping hand, assuming some of the necessary load.

"This is American financial capitalism at its most desperate, most scummy, most bound by elite welfare, and most despicable. This is the fascist business model on display, showing yet another new facet of corruption. ..."

A little more than a century ago the Populists and then the Democrats led by William Jennings Bryan complained that the country's finance and credit were controlled by a small elite in New York and that the House of Morgan itself could cut off credit to three quarters of the banks in the country if they stepped out of line. Has anything really changed? Will China, Russia, and other such countries, themselves unnecessarily in thrall to Wall Street, throw off this tyranny before Americans themselves do?

Let's hope that Jim Sinclair's proposal to organize a Chamber of Mines has some success, for only an industry-wide organization like that is likely to be able to muster the political action and the financial support for the litigation necessary to counter the Wall Street octopus. That is, the world needs a world gold council, since the organization currently using that name functions only to ensure that there never is a world gold council.

You can find Willie's report at GoldSeek here:

http://news.goldseek.com/GoldenJacka...

At Gold-Eagle here:

http://www.gold-eagle.com/editorials...

And at 24hGold here:

http://www.24hgold.com/viewarticle.a...

That link for 24hGold is a little long, so you might prefer this abbreviated link:

http://tinyurl.com/5kn4h5

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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