"Real money is not what we have in this country. Real money is issued by the state against the economic power of the country. What we have is monetized debt. Its purpose is to inject a level of profit into the system: the interest that government must pay to finance the debt. The one thing that congress will not debate is what we really need to do: return to state-issued money. This was true until the creation of the Federal Reserve in 1913. " –Joseph Farrell
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The US banking system is in very serious trouble. In fact, as an institution, American banking is probably broke. The reason is incompetent management of foreclosures. Two things have gone wrong. First, banks have carried foreclosed properties at unrealistic valuations. Second, millions of titles have been thrown into uncertainty by flawed foreclosure procedures and illegal foreclosures.

In fact, just as the original mortgages were worthless when bundled into securities because there was no way to determine their actual value, the foreclosed properties are worthless because there is no way to determine whether or not they have clear titles. So the inflated valuations cannot simply be lowered to more realistic levels. There is no realistic level.
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After the large French bank BNP Parabas suspended three fundsearlier today, the European Central Bank was compelled toinject $130.1 billion into the banking system as a rushon cash caused interest rates in Europe to soar. Both the USand European stock markets reacted to the crisis bydropping, and President Bush issued a statement that thepresent financial crisis had been brought on by “improvidentlending.” The ECB said that it would provide unlimited fundsat its current benchmark rate of 4%. Meanwhile, the GermanCentral Bank was meeting to discuss details of a rescuepackage for IKB Deutsche Industriebank, which is alsoexposed to the collapsing subprime loan market.read more