talked to a rep at schwab and asked him if investors money is insured against errors and lost data similar to banks and the fdic(yeah, i am aware of the fdic's little known law in favor of the banks records instead of depositors).the rep said that investors money is insured by the "4 letters" something or other(not fdic, but something like that). when i mentioned that fdic is really for the banks benefit and not investors, he said that "no, schwab is insured for the investors benefit against any lost records that might occur at schwab. does anyone know anything about brokerage houses and their insurance?

-- dory (crtwheel@eburg.com), September 16, 1999

Answers

Dory,

Brokerage firms, including Schwab, insure through SIPC and private insurance companies. SIPC covers up to 1/2 million in assets with a limit of $100,000 for cash. The insurance company (I think Schwab uses National Fire Insurance Co.) covers amounts over that, although I am not sure of limits.

I believe SIPC is an insurance collective of the brokerage industry and not a gov't agency. If memory serves me correctly, it was formed about 15-20 years ago and hasn't been tested with more than occasional failures. I haven't read the fine print on the coverage, but I guess I should. I suspect that the Feds consider Schwab too large to let it fail.

If you have cash at Schwab, you may want to think about buying T Bills, which would at least be a direct obligation of the gov't. Make copies of statements and internet downloads so you can prove what you own in the unlikely event that all hell breaks loose.

-- mike (maples@voy.net), September 17, 1999.

But if all hell breaks loose Mike, will the gov.org honour the t- bills - far-fetched possibly, but not if you take seriously what the BIS have been saying recently - not if you take seriously what Greenspan said a year ago, that ALL banks needed to be 100% compliant, that 99% would not be good enough... a respected analyst (forget his name) has been banned from CNN for suggesting a while back that the US Gov. would default on it's debt obligations... I can see this happening if there is worldwide banking chaos in 2000... time for new gold-backed currencies... and smart cards to play the game...

-- Andy (2000EOD@prodigy.net), September 17, 1999.

One more thing Mike...

. Make copies of statements and internet downloads so you can prove what you own in the unlikely event that all hell breaks loose.

I don't think this will cut it, at all.

get to the back of the queue they'll say, if they'll talk to you at all.

Blood from a stone :)

-- Andy (2000EOD@prodigy.net), September 17, 1999.

Andy,

When, in our history, has the gov't reneged on its debt? You would have to believe that Y2K will pose a more serious threat to our system than anything we have ever experienced before. I infer you do believe that, but I don't. No doubt this is a very serious problem which shouldn't be minimized, but we've survived worse. You and I have had this dialogue before; I just don't think the consequences of Y2K on our society will be as extreme as you envision. Honest folks can disagree, but we'll find out which of us is correct in fairly short order.

-- mike (maples@voy.net), September 17, 1999.

Mike - I totally agree with you - this is totally unprecedented.

I've been doing a lot of reading and asking questions and putting 2 + 2 together (and most would say coming up with 5 :) ), but I think I've gone on record several times as pretty much thinking that there would be 3 gold-backed currencies

Euro

Yen

Dollar - in that order, the USA having the highest debt ever in history...

One needs to start reading between the lines, I've been posting the Harry Schultz BIS perspective, take a read of it, then read the article published today by J. C. Lyons -

See what you come up with Mike and Dory :)

[snip]

To get back to reality, this is what the BIS in Europe is saying,

Y2K really annoys the insiders, the establishment, the Tri Lats-- because it's the only thing they can't control, & it threatens to cripple or destroy all their controls. They firmly control the mega- banks, global money system, mega-media, all major political parties (on both sides in every nation), & the multi-nationals. But Y2K snuck up on them, & they're mad & scared. They're desperately spending billions to try to "fix" it but they know it can't be totally fixed, perhaps not ever. It will also be a major setback for Big Brother, in all its aspects, from tax collection to bank rule to centralized bureaucracy & monitoring. As a result, the average person will get a lot of unexpected benefits from Y2K. Some are hoping for a worst-case scenario. "However painful, it's a worthwhile cost to regain individual freedom" they say, in essence. Freedom has never been free. If U don't really feel Y2K is going to be a BIG DEAL, & if therefore it annoys or upsets U to read data reports from people who say it probably IS going to be a big deal, then don't bother to read this article. Skip on to the next one. Mostly, people aren't changing their minds, are decided re Y2K. If U are a new subscriber, U should read this so U see what we consider the critical/updated facts. Unless U get heavy/daily Y2K updated hard data (as we do) then it would be puzzling how U can decide either way--without all the new daily facts. But most people are deciding emotionally, not objectively, not factually. That's their option, even if subconscious. So, read on or not, as U choose.

For those few who are still reading (:-), here's the latest: Many are comforted to hear that govt & biz have Y2K "contingency plans." Instead, that glib phrase should scare them. Think about it! If all govt depts, banks, biz, military, airports, hospitals who claim they are Y2K- compliant (as most now claim) were really bug-resistant, why would they need vast contingency plans? "Contingency" isn't just a throwaway word; it means something, ie, what we'll do if our individual company/bureau/system breaks down.

They're spending massive money on contingency plans, which means they've little confidence in their claims they're fully Y2K- compliant. Some have thrown in the towel, admit they can't get compliant in time, & will rely mainly on contingency plans. At least they're honest. That can't be said for the blowhard bluffers who are hoping to con people they're foolproof. Fools, yes. Foolproof: unlikely. Only a minority submit to audits of their repair/test/compliance claims.

Many insiders admit they're far behind schedule & will be on a "fix- on-fault" basis in 2000, ie they'll fix/repair embedded chip/computer/system breakdowns if/as they occur. That means after trouble. The catch is: how do they get back up if the whole system is down? Bottom line: the world is one big web of contingency plans & fix-on-fault. Nobody is 100% safe/compliant, because it's impossible to attain. And that is fact, spoken by the world's leading engineering group. US Senate Y2K Report: "Y2K is not going to be just another 'bump in the road.' No, it's going to be one of the most serious & potentially devastating events the US has ever encountered." Govts tend to soft-pedal bad news, so that statement should be a wake-up call to many. Turn up your hearing aid!

The BIS (Bank for Int'l Settlements, Basel, Switzerland) is the central bank for all other central banks. Their Y2K view is not cheerful. In a fat report they say "some problems will be missed; new problems will be inadvertently introduced via the remediation process; even the best test programs may not detect all potential errors; uncertainty will remain up to & after Jan 1. In other words, it is inevitable there will be Y2K disruption, athough it's not possible to predict how serious or widespread this disruption will be."

So there U have it. Central banks will go into 2000 not knowing if these systems are fixed. They know most are not fixed, worldwide. Compare BIS language to your local bank's PR rubbish. The BIS report goes on in great detail. If U read it all U lose any shred of optimism. The general threat is a breakdown of the inter-bank payments system. And once down, how to get it back up? BIS says: Y2K is "unlike any other disruption problem where identical backup sites can be activated. But any uncorrected Y2K problem is likely to affect both sites so the backup would not be a contingency."

It gets worse. BIS, who says what neither private banks nor govt banks dare to say, reveals: "The inability of a major payment & settlement system to function smoothly, or have procedures for isolating problems, will intensify uncertainty/concern. In the extreme case, this could have repercussions throughout the global & domestic systems." Conclusion: the world economy is at acute risk. This is not some "doom/gloom" offbeat writer's view; it's the bluest of the blue chip banks. If your hair hasn't turned grey so far, read the following:

The BIS advises banks to get the home phone numbers of regulators & govt officials so they can be contacted at night or on weekends to discuss the prudence of "closing markets & declaring an emergency financial bank holiday." This is scarier than any Y2K newsletter writer (except Gary North) has dared to say. And it's the real thing! U see, if banks go down, there can be no stock/bond/property mkt, or any other mkt, except black mkts of course, using cash. And all this is separate from equal risks from no power, oil, water, & no phones/fax/e-mail. U don't like this? Does that mean it can't happen? Or can it happen even if U don't like it? Try to separate wish from reality. Author Dr.Edward Yardeni, chief economist/global investmnt strategist at Deutsche Banc-Alex Brown has come back from Y2K retirement & says: "Y2K summary: Most have eyes wide shut....My prediction for a global recession in 2000, at 70% odds remains...Stock mkt down 10-30% (that's 1-3000 DJIA pts). Recession major causes: breakdown in just-in-time manufacturing system, & in global oil industry. Y2K could cause another energy crisis." (I'm virtually sure of it--HS)

EY notes Y2K press coverage is childish, reports the good news press releases, make no comment, ask no questions. "Some frame Y2K as an all-or-nothing story. Either planes fall out of sky or nothing happens. None consider in between. Anyone who talks in between is lumped into the doomsday category & dismissed as far-fetched..Public is led to believe the casual assurances of the few means everyone will be ready. EY says: "Y2K will turn out to be the greatest story never told--- properly." Reporters squeeze answers out of politicians thought to be in hanky-panky, but never ask ONE question about any Y2K report by anyone in banks/govt/biz.

Jacquelyn Williams-Bridgers, US Inspector General,testified in Senate: Half of 161 nations assessed are reported at medium-to high- risk re Y2K failures in telecommunications, energy &/or transport. Her strong conclusion: "The global community is likely to experience varying degrees of Y2K-related failures in every sector, in every region, & at every economic level. The risk of disruption will likely extend to int'l trade, where a breakdown in any part of the global supply chain would have a serious impact on the US & world economies." Now, tell me dear readers, WHY doesn't TV & the press tell U this? My answer: the banks won't let them. Maybe U have a different answer?

As I reported before, the US State Dept will issue Y2K travel advice in Sept. 3 cheers to USSD for integrity in this regard. But it will shock a lot of people. The penny will finally drop. US govt Y2K topdog Koskinen says the US is considering evacuating US citizens from nations with widespread Y2K failures. Each ambassador will make that decision. More than a penny is dropping now. More like a silver dollar. I've only scratched the surface of all there is to report. What bothers me most is the nuclear power plant risks, a global risk, at least in the northern hemisphere. But I can't cover it all. And most people don't even want to hear it.

I'm optimistic that Y2K will paralyze most tax collecting computer systems to such an extent that govts will quickly switch from the income tax to a sales tax (the only fair system), which isn't computer complex & will allow govt to function, ie, bring in money, their 1st concern, 1 of the Holy Trinity of govts (the other 2: power & control).

Here's some more reality.

The problem is worldwide, systemic, interconnected.

"As a net is made up of a series of ties, so everything in this world is connected by a series of ties. If anyone thinks that the mesh of a net is an independent, isolated thing, he is mistaken...."

Buddha

"The conveniences and comforts of humanity in general will be linked up by one mechanism, which will produce comforts and conveniences beyond human imagination. But the smallest mistake will bring the whole mechanism to a certain collapse. In this way the end of the world will be brought about."

Sufi Prophet Pir-o-Murshid Inayat Khan's prophecy made in 1922 (Complete Works, 1922 I, p. 158-9)

[end snip]

Now read this perspective published today... check out in particular the last few paragraphs, the conclusions...

Money, Debt & Gold

by

J. C. Lyons

Money & Debt

What is Money?

Today's money is debt,

If there is no debt,

There is no money,

In order to increase the money supply,

There must be an increase in debt.

How can money be debt?

The U.S. financial structure is based on a fractional reserve banking system. Under this system, if you deposit $1000 in your local bank, your bank will then deposit this money at the Federal Reserve Bank (Fed). At a reserve requirement of 10%, your local bank can now lend out $10,000. Thus, $1000 deposited puts $10,000 into the system. This also means that money creation can only occur through debt.

Now we know that the expansion can only happen through debt, but the initial reserve deposit is not debt.

Wrong. At the top of a dollar bill it says "FEDERAL RESERVE NOTE", a note is a debt or a promise to pay. Technically, the banks use these "notes" to purchase government bonds, which are then used as the reserve base to expand the money supply. If the Fed wanted to contract the money supply it would buy these bonds back from the banks and the banks would have to contract their credit(lending) ten fold.

What are reserves?

Reserves can be defined as collateral for loans (Fed notes) outstanding. Thus, government bonds (debt) are collateral for more debt.

So debt is a necessary ingredient for money expansion?

Debt is the only ingredient for money expansion. Money is put into the system through bank credit(debt), with the Fed(Central bank of the United States) as the controlling agent.

So the whole financial infrastructure of the United States is based on debt?

Yes. Since just about every country has the same kind of structure it is safe to say that the financial infrastructure of the world is based on debt.

How does a government get in debt to the central bank?

When government expenditures exceed revenues they must sell bonds. The bonds that are not purchased by the public are purchased by the Fed. The Fed and commercial banks own over 1.25 trillion dollars in U.S. government securities.

Where does the Fed get the money to purchase government bonds? They create it. These government bonds are then used as an asset(or base) to expand the money supply.

What would happen if the U.S. Government paid off its debt?

Under the present system, the money supply would implode. This contraction would strangle the economy and a severe economic crisis would ensue. Remember that the Fed uses government bonds as a base to expand the money supply. Without government debt the Fed loses its most potent economic tool  Open Market Operations.

Once in debt it is almost impossible for a country to become debt free.

Correct. Reducing debt would reduce the money supply, this contraction would severely depress an economy. The tax base would erode. The present system not only encourages debt, but enslaves a country by its debt.

Is that why every country with a central bank is heavily in debt with the debt growing each day?

Yes. The more a country is in debt to the central bank the more leverage the central bank has in controlling the economy. If all money is debt and debt requires payment of interest, does this mean that all money requires payment of interest?

Yes, each dollar printed or computer entry representing dollars is a debt instrument collecting interest.

Who collects this interest?

The issuer. The Fed creates the money which is channeled through the banking system.

Are you telling me that for each dollar in existence, whether a Fed note or computer entry representing dollars, the banks are siphoning off a percentage of the value of that dollar?

Yes, each time a dollar circulates through the system the general public loses a percentage of its wealth to the banking community.

Under this type of a system it is virtually impossible for the general public as a whole to accumulate wealth.

Correct. Technological advances will give the impression of wealth enhancement, but real wages and standard of living in relative terms will stagnate or decrease.

If what you are saying is true, eventually the banking system will slowly siphon all of the money out of the system.

If the money supply were fixed the redistribution of wealth would be evident, but since the money supply is constantly growing the banking community gains an ever increasing percentage of total wealth.

Is there anything that will guarantee that a dollar keeps circulating through the system?

Yes, Karl Marx explained that a progressive income tax in conjunction with a central bank was a necessary component for controlling a nations economy. Income tax guarantees the circulation of Fed notes.

Isn't the Fed a government institution owned by the citizens of the United States?

No. The Fed is owned by private shareholders.

Who are these shareholders?

The Fed is not required to reveal the identity of their shareholders.

How did the Fed become the sole money monopolist for the United States?

According to a Federal Reserve Bank of Minneapolis publication and many other sources, in 1910 Paul Warburg of Kuhn, Loeb and Company met with several other Wall Street financiers to discuss a way of implementing a central bank like that of European central banks. Others attending the meeting were Frank Vanderlip, president of National City Bank; Harry Davison, a J.P. Morgan partner; Benjamin Strong, vice president of Banker's Trust Co. and future governor of the N.Y. Fed; A. Piatt Andrew, assistant secretary of the Treasury and Senator Nelson Aldrich, Chairman of the National Monetary Commission. This private task force designed the present Federal Reserve System.

These were some of the most powerful and influential men in the financial world. Maybe they were trying to figure out a way of returning some of their power and control to the American people? That would fall under the realm of possibility.

Who's in debt?

Every nation in the world, almost every major corporation in the world, and most of the people in the industrial countries of the world.

In debt to whom?

In debt to the issuers of the money (debt) The central banks, private banks, commercial banks, and IMF. Don't get confused, some of this money is lent out again by you and me in the form of investment, but the source of the debt is the banks acting through the central bank.

So banks should be abolished?

No. Banks perform a vital function in our economy. It is the present banking system that creates a perpetual spiral of debt reliance and dependency. The practice of debt creation without constraint is an inherent evil that has only one inevitable ending Economic Collapse.

Money & Gold

What is the connection between money and gold?

Since the United States went off of the gold standard in 1971, Federal Reserve notes(dollars) backed mostly by government bonds are the dominant form of money. Gold has officially been demonetized and now only represents a very small portion of reserves.

Why was gold demonetized?

Gold restricts the amount of credit a bank can issue. Alan Greenspan stated that "The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to unlimited expansion of credit."

Since gold has been stated to be officially demonetized, does it unofficially still posses monetary qualities? Gold has served as a form of money for over 5,000 years, Federal Reserve notes for 86 years. Lets not be fooled, gold always has been, still is, and always will be the greatest store of value. Currencies come and go, gold is forever.

Does a gold standard guarantee a sound currency?

Not necessarily. A gold standard provides a framework for note issuance. Only a certain proportion of notes can be issued in relation to gold held in reserves. Unfortunately, this ratio is often lowered until the gold standard becomes irrelevant.

Since a "note" is a promise to pay, what does the Fed promise to pay for their notes?

In the past it was a promise to pay gold, then it became a promise to pay silver, then it became a promise to pay nothing.

How did this come about?

Early on gold and silver were used as money. Since gold is very cumbersome, goldsmiths with large vaults began to store peoples gold. They would issue "notes" verifying a persons deposit. When a depositor wanted his gold they would give the note to the goldsmith and he would return to them their gold. Soon these notes began to circulate as money. Goldsmiths evolved into banks and banks issued notes redeemed in gold. In the United States, Federal Reserve notes were redeemable in gold until 1933, and silver until 1964. After this point notes were redeemable for nothing.

What happened to the gold?

The central bank of the United States (Federal Reserve Bank) owns it.

How much gold does the Fed own?

The Fed owns slightly over 8000 tons which is about a quarter of worldwide central bank reserves. Aggregately, central banks of the world possess about a third of all gold bullion.

If gold lacks monetary significance, why do the central banks have 33% of all gold bullion in existence?

Because gold does not lack monetary significance. Central bankers have verbally tried to downplay the importance of gold. Token sales and a media blitz have convinced many that gold is just a commodity.

Why would central bankers want to deemphasize the significance of gold?

Several reasons:

Maintain stability: Currencies and gold have an inverse relationship. A large outward movement towards gold would weaken the value of paper currencies. Remember that the central banks are owned by shareholders whose business is paper wealth.

Cover short positions: Central banks have leased an estimated 14,000 tons of gold. This gold has been leased to shareholders and close affiliates. A large upswing in prices would spell doom for short holders.

The Future of Money

How long can the current fiat monetary system last?

A debt pyramid monetary system supported by debt has a finite life span. The American super economy is now drowning in the same debt that has encompassed the rest of the world. The dominos are in place. Any event that contracts the money supply or diminishes confidence in the dollar will expose the inherent flaws in a system grounded in debt.

What will happen to the U.S. economy?

Stocks will be worthless. Corporate bonds will go into default. Loss of confidence and inflation will cause a flight of capital from U.S. government securities. Real estate prices will plummet. The U.S. dollar will lose its purchasing power. The only investment alternatives remaining will be items of intrinsic physical worth .such as gold.

If money will contract how can there be inflation?

Money will contract in the private sector, this will open the floodgate for excess U.S. Government spending. This will lead to stagflation; high inflation accompanied by low output and high unemployment. Since the government spends and does not produce, money entering the system will just raise prices. Post-war Germany is a good example of future monetary events.

How can wealth just disappear?

It never existed in the first place. Paper wealth(today's money) is not value in itself. It is value based on what it can purchase. Paper wealth accumulates in mutual funds, pension funds, the stock market etc. It represents money but is not used to buy goods or services. It is simply used as a store of value. This value or wealth is perceived but does not exist in reality. Reality is exposed when too many people try to use this paper wealth at the same time. Paper money growth accompanied by the realization of paper value are the basis for boom and bust cycles.

What kind of a monetary system will be implemented after the collapse?

I believe there will be a return to a gold standard.

Why?

Gold has been centralized between the central bankers and big investors.

Who are these big investors?

The London Bullion Market Association (LBMA) sets the price and is the world's largest trader of gold. Each transaction is kept secret. Large investors are anonymous.

What will happen to currencies?

I believe that world currencies will regionalize around the dollar, euro, and yen in a progression toward one international currency.

Will gold be involved in this process?

Gold will act as the stabilizing force in the integration process.

J. C. Lyons lyons23@yahoo.com

17 September 1999

Link at :

http://www.gold-eagle.com/editorials_99/lyons091799.html

======================================================================

What is happening now? Gold is being driven down down down, and being looted, stolen, by the Cabal, the cronies, TPTB, call them what you will, the folks orchestrating all this, The Bilderbergers...

Gold Eagles can now be bought for $274 a pop.

Pay attention.

-- Andy (2000EOD@prodigy.net), September 17, 1999.

One more thing - if they can keep the markets up by hook or by crook until y2k - BINGO - perfect scapegoat for the American public, when they see their 401k's disappear, it can all be blamed on the computers, not the culpability of the fiat fed/debt situation...

problem / reaction / solution [(tm) David Icke]

the solution being 3 currencies

-- Andy (2000EOD@prodigy.net), September 17, 1999.

Top.

-- Andy (2000EOD@prodigy.net), September 17, 1999.

Andy,

I'm taking a bit of a lunch break and saw your response of today. I know this doesn't surprise you but I'm not convinced. To my mind, it's all about keeping things in context.

For example, you offer the BIS quote about the payment & settlement system. I haven't read the report myself but I trust you to quote it accurately and completely. You then go on to state that the world economy is at "acute risk." Did BIS use this term or is it YOUR conclusion?

Take, also, the EY quote on a stock market drop of 10-30%. Sounds like a normal bear market to me. No big deal. To be honest, I personally expect something along the line of a 50% drop. That is a severe bear market, but not TEOTWAWKI. The S&P dropped 50% over 18 months in 1973-74 and we are still here. No anarchy, no banking meltdown, just a big-time bear market.

Keep the faith-we'll make it. Y2K is a man-made problem and I am betting that man will figure out how to fix it short of total chaos.

-- mike (maples@voy.net), September 17, 1999.