Basil 1 Accords (1988): Targeted Japanese Banks, increased reserve requirements, reduced fractional reserve leveraging of debt, contracted the money supply, triggered the Japanese "Lost Decade".
Basil 2 Accords (2007): Targeted American Banks, increased reserve requirements, reduced leveraging of debt, contracted the money supply (M3), triggering the Housing and Mortgage Back Securities collapse.
Basil 3 Accords (2013): Targeting all American and European Banks. will increase reserve requirements, reduce leveraging of debt, contract the money supply. Have yet to be implemented.
Basil 3 was supposed to be implemented Jan 2013 but has been posponed. Do we think Basil 3 will be implemented? What will be the consequences?
STERILIZATION: how money at the top does NOT trickle down. The FED is printing massive amounts of money every month. The money is given free (zero percent interest) to the BIG BANKS and BIG COMPANIES that are registered as banks (GAMC). The banks then buy stock and bonds with that money that serves to artificially prop up the stock market. These Banks also buy US sovereign debt in the form of Bonds as the US continues to spend more than it takes in. CEO's then cash out stock options as the stock market continues to rise. CEO's then are sitting on a mountain of cash while the rest of us are forced to sit with unemployment, underemployment and reduced wages.
I am very suspect of any economist who doesn't talk about the effects of Bank of international settlement Basil Accord policy, the realities of demographics of the economy and Sterilization with regard to why we are not seeing more inflation despite FED printing of money. Too often we just hear predictions of imminent collapse and recommendations to buy gold.
How will this Bond and Derivative Market play out? We have Big Banks using free FED cash to buy up US Soverign debt in the form of Bonds. We have Municipalities and Banks invested in toxic Credit-Default-Swap derivatives. So, can the FED keep this going until WW3, or will there be a tipping point? Banks used to just buy Bonds that at least kept up wtih inflation. Now banks and municipalities are buying-credit-default swaps because these pay out in the short term a better rate than bonds.