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Israel will help wreck the US Dollar by selling bootlegged US bonds
New State Laws Allow Bootlegged US Securities
Israel’s bad credit rating is avoided by sale of Dollar Bonds
A history of two destroyed currencies precluded Israel from selling its own shekel bonds, so back at the turn of the 21st century it invented a counterfeiting scheme to sell U.S. bonds to Americans. It would issue bonds payable in dollars, not shekels. The problem is, the program was a success, and Israel now owes more dollars than it can ever repay because it cannot print dollars, as it prints shekels.
What is Israel’s solution? Israel’s solution is to sell more dollar bonds, and use the proceeds from the new bonds to pay off the old bonds! In this article I will attempt to explain how this differs from a Ponzi scheme.
Israel may be the power behind an insidious change in U.S. state laws. The Development Corporation of Israel (DCOI), with a New York address and U.S. stockbroker connections, is the powerhouse bond salesman that has been working this project for years, with few noticing. I discovered this only when I was told someone is trying to change the laws in the State of Colorado in such a way that only Israel could benefit, and Coloradans, especially state employees, could lose.
It seems through DCOI, the State of Israel has set up 25 sales offices across the U.S. to market its “Jubilee” bonds. It came as a shock to me that “Jubilee bonds” (probably first issued in 1998) are denominated in dollars, not shekels, the currency I had to buy and use when I was in Israel.
How can a foreign state sell bonds denominated in U.S. money? Why would they want to? Israel cannot print dollars, so how can it commit to repaying hundreds of billions of U.S. dollar bonds?
The answer is that:Israel doesn’t plan to repay these bonds. Israel is a small country, smaller in business than Finland or Greece. Eventually the bonds must fail, because the only way Israel can come up with tens of billions of dollars to pay off what they tell us is their seventh series of dollar bonds, is to issue many billions of shekels to buy U.S. dollars in the world currency market, in order to pay the interest and principal on the dollar bonds.
If Israel sells billions of shekels, the shekel will become worthless in the world currency market, which will destroy Israeli businessmen and investors who have bought more U.S. bonds and have their assets in shekels and are doing business in shekels. Since Israeli politicians cannot allow this to happen, the dollar bonds will eventually have to default, even though Israel claims it has never defaulted.
The only other course would be for the United States government to take over the Israeli-issued United States dollar bonds…This would an act of criminal theft against every American citizen.
Contrary to what it claims, Israel has poor credit. In its brief 65 year history, Israel has already cast two of its currencies on the trash heap of worthless paper money. If investors understand this, they won’t touch Israeli bonds; that’s why these Jubilee bonds are denominated in dollars, not NIS (new shekels). This history of devaluation is explained in my paper dated March 2013, Risk of Shekel Bonds.*3 (https://charlesecarlson.com/devaluation-risk-of-shekel-bonds/)
The appeal of the Jubilee bonds is that DCOI offers maturity dates similar to U.S. Treasury bills, notes and T-bonds but returns double the going rates for U.S. instruments. Obviously, the target market for the bonds is large investors who buy fixed income, ultra conservative treasury instruments, because while the income is low, these U.S. issued dollar bonds cannot default, because the U.S. government can print money to pay them off.
Not so when Israel issues bootlegged bonds. The U.S. dollar is America; we own it like a copyright, it represents our values. I ask, who gave this foreign state the right to bootleg U.S. dollar bonds and use our money in competition with our own government, which we are told is in desperate need of dollars to avert another financial cliff?
I say this must stop. Let Israel issue bonds in its own currency and face its own bad credit rating.
If I copyright a book, song, or this paper, and someone else starts using it to make a profit, Is that not a violation of our copyright laws? Would I not have a right to sue? The U.S. Security and Exchange Commission seems to have licensed the sale of these bond in our 50 states in competition with our own U.S. securities. We need to ask our government why it would do that.
Next time Israel devalues, it will be the dollar bond holders who suffer the loss. Someone with Israel’s interest at heart is instigating changes in U.S. state laws to allow state authorities like the Treasury and managers of pension money, to invest in Israeli bonds.
I have learned that other states and cities have already changed laws to allow for public funds to be invested in Israeli bonds. In Minnesota, citizens are suing the states to try to stop such investment. In Colorado, the bill pending in the state legislature is Senate Bill -176-13 that “would “authorize the State Treasurer to invest State money in debt obligation backed by the full faith and credit of the State of Israel.”
Our 50 states are all strapped financially and have little long-term money to invest. The real target is not the Treasury, but the biggest investment accounts in the states–the employee retirement funds–which have a lot of money to invest. In Colorado, retirement accumulation is in its 80th year and PERA (public employees retirement association), according to its own statement, holds over $37 billion in “global equities” investment, of which $8 billion is fixed income. The pension plans in other states are much larger, some with more assets than Israel has. That is enough money to keep Israeli going for a while.
So how does Israel, a foreign government with bad credit, which according to its own “prospectus” cannot be sued if it does not pay… how does this Israel tap into these huge caches of cash owned by U.S. state employees, but administered by agencies of those states, and overseen and limited by laws governing the investment of such moneys.
Israeli appears to be in the process of changing these state laws, one at a time, to allow it to tap into those huge caches.
The Development Corporation of Israel advertises: “Diversify with Israel Bonds.” Its sales office in Arizona is located on posh South Lakeshore Drive in Tempe. *1 (http://www.israelbonds.com/learn/sales-offices.aspx)
Israel is currently selling $1.235 billion of Jubilee Fixed Rate bonds, Seventh Series. The prospectus filed with the U.S. Securities and Exchange Commission on December 15, 2012, tells us that as of December 31, 2012, $735 million, about half of the total issue, had already been sold in the U.S., and that $74.1 million in sales commission was being paid to the bond salesmen, who could be salesmen for American banks and stock brokers. So the U.S. Securities and Exchange Commission is complicit in the bond scheme.
The Jubilee bond literature states: “Israel bonds are a reliable means of preserving capital, diversifying portfolios and obtaining protection from market fluctuations. Israel has never missed payment of principal or interest since the first Israel bonds were issued in 1951.”
Is this true? This argument is a small technical truth that sells a big fib. In fact, “failing to miss a payment ” is called default. Israel may have never done so because the bonds issued up to 1986 were all redeemable in the Israeli Pound and the Old Shekel, both of which were diluted into the ash can of money history, where the paper has more value than the money.
Israel did not have to repudiate its debt; it just diluted the currency by printing and went on paying off creditors with worthless money, like hundreds of overextended governments throughout history. Technically Israel did not default; it devalued, which has the same result.