The tremendous American debt is rising exponentially at a rapid pace. There are no effective restraints in existence to deter an apparent head on rush to potential bankruptcy of the U.S. government. Government spendthrift financial policies seem to be bereft of causal connections to our financial and economic problems.
Government and news reporting agencies are doing a poor job of digging deep enough to find and report on real causes for financial uneasiness. Only the more astute Americans with sufficient time to dig out facts are able to discern and understand problems. But a majority do understand that Wall Street shenanigans directly caused our financial problems. Americans are seeing unemployment and experiencing the fear it creates. At the same time, they see national discussion concerning Wall Street’s amazing recovery, debates on meaningless issues and a fixation on celebrity news. There is no focus on causes and keys to economic recovery. Prolific spending and an awareness of the potential ravages of overspending do not inspire confidence. Confidence is needed for long term economic growth.
With Wall Street shenanigans clearly visible as a casual factor, we have seen $23.7 trillion committed to the bailout of Wall Street allegedly to clear a credit clog. In actuality, bailouts have visibly been used to absorb the mortgage and credit default swap derivative losses of Wall Street. Government and the free press have simply stood by and watched the unwinding of tremendous leverage take a heavy toll on private savers who are the backbone of our monetary system. Interest rate bets (pure Las Vegas type gambling) are bailout repositories for huge Wall Street accumulations of bailout money and have created an enormous financial bubble. I use the term bubble in the sense there is nothing of value behind the accumulation.
Innocent savers lost considerable sums in the leveraged unwinding of the two Wall Street demon derivative creations. Now the government and Wall Street tell us we are better off because Wall Street is well again and can hand large amounts of money back and forth on interest rate bets on a world wide intercurrency basis using citizens taxpaying futures as collateral. Taxpayers take the risk and have nothing to gain. Only Wall Street can gain. I reject the Wall Street explanation of trickle down. They want to reinstate bonuses on derivative activity. That trickle down doesn’t wash anymore.
Tremendous amounts of Wall Street money are in play lobbying Congress to (1) acquiesce to the fallacy that we cannot do without their ingenious creations and (2) deflect attention to regulatory arguments only. Where does the Wall Street money come from? Many of us are convinced it has been printed continuously since 1913 and resides in a Corporation created by the Federal Reserve Act and owned by Wall Street. See my previous article entitled “What the Government doesn’t want you to know”. Taxpayers have provided it through U.S. Treasury Debt. We think that laws that unleashed the demon derivatives should be immediately revisited and new safeguard laws be enacted. Congress does not agree. They give Wall Street a pass.
In 2008, in the midst of the bailout fiasco and citizen losses of savings, the Democratic Congress derailed Republican efforts to expand efforts to increase oil drilling activity in their energy independence drive. They pointed out that Wall Street speculators were driving up oil futures prices on the commodities market and even threatened legislation to stop the practice. What they didn’t tell you was that Wall Street was moving their stock market investments out of the way of their demon derivative devastation path into the oil futures market and letting the Ma and Pa savers take the stock markets hits. Instead of passing legislation to stop this egregious Wall Street practice, they used their knowledge for political expediency only. Now the economy still suffers from Wall Streets manipulation of a commodity that drives major market sectors. How’s that for alertness in fact finding and reporting? Political spin is so, so easy. How’s that for giving Wall Street a free pass and ignoring citizens interests? How’s that for inspiring needed confidence?
When concerned Americans ask questions on behalf of citizens or try to express ourselves, we are branded as whiners and right wing extremists by government and most of the free press without being able to express ourselves.
All citizens need to be asking questions and demanding answers.
Wednesday, August 12, 2009
Thursday, July 30, 2009
What the Government Doesn't Want You to Know
Kudos to Chuck Katlic for his enlightening letter to the editor of the Weatherford Telegram on July 15, 2009 regarding historic consequences of banks opening their printing presses to print money. We should all take heed to the historic truths he alluded to. Especially, we should take note that he correctly identifies the Federal Reserve as a private bank, not a Federal one.
What is disconcerting to me is a related Ray Perryman article in the July 20, 2009 Weatherford Telegram. He completely ignores the historic facts pointed out by Katlic. He recited selected machinations intended to support his premise that “a strong central bank is essential to weathering storms”. Then he recites, what I would describe as politically correct misstatements concerning actions of the Federal Reserve and the opening of the printing presses, the subject of Mr. Katlic’s letter.
His machinations include: (1) the Federal Government almost bankrupted itself in 1812; (2) Andrew Jackson and other politicians were blindly opposed to centralizing bank power (i.e. no monopolies); (3) an allegation that the impressive American industrial revolution was restrained by the lack of a cohesive centralized monetary policy; (4) excessive lending policies by state chartered banks contributed to speculative bubbles that burst and caused depressions; and (5) intervention of a private citizen, J.P. Morgan, was necessary to prevent a meltdown. All of this is nothing but 2009 political spin put on a 17th century scam first introduced in Europe and inflicted on all of us.
Historic records present data which throws an entirely different perspective on the Federal Reserve. The U.S. Constitution gives Congress the authority to coin money, not print money. Hence, it allowed a gold and silver standard for U.S. dollars. In 1913, Congress passed the Federal Reserve Act and the Federal Income Tax Act. The Federal Reserve Act allows the U.S. Treasury to issue its notes to the Federal Reserve in exchange for printed U.S. dollars. This was a skillful trashing of the gold and silver standard. The Federal Income Tax Act allows the Federal government to tax profits. It does not provide for the taxation of wages and salaries.
In the years leading up to the passage of the Federal Reserve Act, a group of Wall Streeters and wealthy Europeans were slicing up territories and fixing prices to monopolize financial markets in the U.S. In 1910, they held secret meetings in North Carolina with the Republican leader of the U.S. Senate. They drafted the blue prints for creating the “Federal Reserve”. Their idea was to legalize a wealthy monopoly and create a way for the government to tax citizens through the hidden tax of monetary inflation to complement its impending ability to tax profits. J.P. Morgan et al used the power of their wealth to usher and pressure a misunderstood, camouflaged Federal Reserve bill through Congress. Their tactics skillfully included a rush, rush, holiday deadline. The blue print draftees got what they wanted, a legalized corporate cartel cleverly named “The Federal Reserve”. They successfully perpetrated the 17th century scam.
In Europe, the scam was known as the “Central Bank Theory”. In concept, it is simple. The government wants more of your money to expand. It goes to the Central Bank (the Federal Reserve) who prints the wanted money on previously worthless paper and lends it to the U.S. Treasury. When the Treasury uses the money, the value of all dollars is diluted. This means your hard earned dollars are worth less in the market place. In effect, you are levied a tax without your knowing it. The government gets the diluted value of the dollars it received from the Central Bank and you can’t buy as much goods and services with your own dollars. WAKE UP AMERICA! You are effectively paying more taxes because of the printing of the dollars. Are you buying the hogwash that the rich will be the ones paying more taxes for an expanded government?
Katlic was giving you historic facts to mull over. He pointed out the effects and aftermath of hyperinflation resulting from overprinting of money. Perryman is giving you political spin. Contrary to his assertions, bank bailouts were not actually used to create liquidity. Lower interest rates of the Fed actually led to derivative bubbles and discouraged private sector investment. The ones who gained from the bank bailouts were the cartel owners/too large to fail banking behemoths. The rest of us suffered detrimental consequences.
The new cartel got paid interest on the U.S. Treasury bills in exchange for the money it printed (I.e. something for nothing). This is more cost to taxpayers. What’s worse is this initially worthless paper gets deposited in a bank, who, with power authorized by law, can lend it out with an additional nine times more printed paper and charge interest on the loan. This Ponzi scheme continues until loans are paid off. Again banks get something for nothing.
Our government has never told us where all the bank bailout money has gone. In fact, contrary to Perryman’s assertions of providing liquidity, initial feedback indicated the bank bailout money was not used in commercial credit activity. It doesn’t take much awareness to know that bank bailout money was being used to prop up derivative bubble bets. To the extent that any bank bailout money was used to reimburse banks for losses on any of the above described initially worthless paper loans, taxpayers are repaying banks for nothing. Not only have banks been given a license to steal, they are likely being handed additional loot by the Federal government.
How many of us are so dizzy from the spin that we can’t see what’s happening to us? Foreigners are not going to continue buying Treasury 1.1% bonds. The Wall Street manipulators are well on their way to wiping out the middle class. The next stock market drop could be debilitating.
What is disconcerting to me is a related Ray Perryman article in the July 20, 2009 Weatherford Telegram. He completely ignores the historic facts pointed out by Katlic. He recited selected machinations intended to support his premise that “a strong central bank is essential to weathering storms”. Then he recites, what I would describe as politically correct misstatements concerning actions of the Federal Reserve and the opening of the printing presses, the subject of Mr. Katlic’s letter.
His machinations include: (1) the Federal Government almost bankrupted itself in 1812; (2) Andrew Jackson and other politicians were blindly opposed to centralizing bank power (i.e. no monopolies); (3) an allegation that the impressive American industrial revolution was restrained by the lack of a cohesive centralized monetary policy; (4) excessive lending policies by state chartered banks contributed to speculative bubbles that burst and caused depressions; and (5) intervention of a private citizen, J.P. Morgan, was necessary to prevent a meltdown. All of this is nothing but 2009 political spin put on a 17th century scam first introduced in Europe and inflicted on all of us.
Historic records present data which throws an entirely different perspective on the Federal Reserve. The U.S. Constitution gives Congress the authority to coin money, not print money. Hence, it allowed a gold and silver standard for U.S. dollars. In 1913, Congress passed the Federal Reserve Act and the Federal Income Tax Act. The Federal Reserve Act allows the U.S. Treasury to issue its notes to the Federal Reserve in exchange for printed U.S. dollars. This was a skillful trashing of the gold and silver standard. The Federal Income Tax Act allows the Federal government to tax profits. It does not provide for the taxation of wages and salaries.
In the years leading up to the passage of the Federal Reserve Act, a group of Wall Streeters and wealthy Europeans were slicing up territories and fixing prices to monopolize financial markets in the U.S. In 1910, they held secret meetings in North Carolina with the Republican leader of the U.S. Senate. They drafted the blue prints for creating the “Federal Reserve”. Their idea was to legalize a wealthy monopoly and create a way for the government to tax citizens through the hidden tax of monetary inflation to complement its impending ability to tax profits. J.P. Morgan et al used the power of their wealth to usher and pressure a misunderstood, camouflaged Federal Reserve bill through Congress. Their tactics skillfully included a rush, rush, holiday deadline. The blue print draftees got what they wanted, a legalized corporate cartel cleverly named “The Federal Reserve”. They successfully perpetrated the 17th century scam.
In Europe, the scam was known as the “Central Bank Theory”. In concept, it is simple. The government wants more of your money to expand. It goes to the Central Bank (the Federal Reserve) who prints the wanted money on previously worthless paper and lends it to the U.S. Treasury. When the Treasury uses the money, the value of all dollars is diluted. This means your hard earned dollars are worth less in the market place. In effect, you are levied a tax without your knowing it. The government gets the diluted value of the dollars it received from the Central Bank and you can’t buy as much goods and services with your own dollars. WAKE UP AMERICA! You are effectively paying more taxes because of the printing of the dollars. Are you buying the hogwash that the rich will be the ones paying more taxes for an expanded government?
Katlic was giving you historic facts to mull over. He pointed out the effects and aftermath of hyperinflation resulting from overprinting of money. Perryman is giving you political spin. Contrary to his assertions, bank bailouts were not actually used to create liquidity. Lower interest rates of the Fed actually led to derivative bubbles and discouraged private sector investment. The ones who gained from the bank bailouts were the cartel owners/too large to fail banking behemoths. The rest of us suffered detrimental consequences.
The new cartel got paid interest on the U.S. Treasury bills in exchange for the money it printed (I.e. something for nothing). This is more cost to taxpayers. What’s worse is this initially worthless paper gets deposited in a bank, who, with power authorized by law, can lend it out with an additional nine times more printed paper and charge interest on the loan. This Ponzi scheme continues until loans are paid off. Again banks get something for nothing.
Our government has never told us where all the bank bailout money has gone. In fact, contrary to Perryman’s assertions of providing liquidity, initial feedback indicated the bank bailout money was not used in commercial credit activity. It doesn’t take much awareness to know that bank bailout money was being used to prop up derivative bubble bets. To the extent that any bank bailout money was used to reimburse banks for losses on any of the above described initially worthless paper loans, taxpayers are repaying banks for nothing. Not only have banks been given a license to steal, they are likely being handed additional loot by the Federal government.
How many of us are so dizzy from the spin that we can’t see what’s happening to us? Foreigners are not going to continue buying Treasury 1.1% bonds. The Wall Street manipulators are well on their way to wiping out the middle class. The next stock market drop could be debilitating.
Tuesday, June 30, 2009
Government Squandering Versus Citizen Priorities
The unveiling of the Obama financial regulatory plan is the next big diversion to facilitate continuation of the government spend, spend, spend binge. It will divert American’s attention from the real tasks at hand, the complete overhaul of Wall Street and the rescue of our monetary system.
Eighty percent (80%) of the credit derivative industry is comprised of bets where the betters do not need to own an underlying security that is involved in the bet. See my previous article “Fat Cats Stacking the Deck”. These bets are akin to those in Las Vegas, where chits are exchanged for money to play games. Nothing of value is involved in the exchange of the chits by gamblers. Twenty percent (20%) of the industry is comprised of insurance that has not undergone underwriting prerequisites of insurance laws. The startling simple diagnostic cure to the demon derivative dilemma is stop the Las Vegas like credit gambling on Wall Street and regulate the insurance like derivatives under the insurance laws.
Handing money intended for use in a free market monetary system to chip holders to maintain their bets is complete insanity. That is exactly what the government financial and insurance institution bailout entails. Fat cats on one side of these bets get their chips from leverage (borrowing of script indirectly provided by taxpayers). See my previous article “Government Needs a 180 Degree Turn”, fourth paragraph. Now taxpayers are also providing the bailout backup script for chips in the hands of institutions on the other side of the Las Vegas type bets. If Congress were doing their constitutionally required job to protect the people in the first place, there would already be clearly explicit laws preventing Las Vegas type gambling with the people’s money. Las Vegas betters provide their own chips. Why should the American taxpayers provide financial institutions and fat cats their demon derivative bet chips?
Without laws designed to protect our monetary system, financial oversight by government cannot be effective. Inability to quantify leveraging in demon derivative contracts makes protective oversight ineffective. See an explanation of such leveraging in my previous article, “Government Needs a 180 Degree Turn”. Inability to unravel the demon derivative bundling of Wall Street as alluded to in my previous article, “It’s Time to Let American Know What’s Really Going On” also makes oversight ineffective. Don’t be misled. Outlawing the debilitating use of leverage and the obstructive bundling is prerequisite. The outlawing of the Las Vegas type betting on Wall Street is obviously a huge priority.
Laws are absolutely necessary to mitigate against situations alluded to above. We are on the path to destroying our form of government (the highest achieving one in the history of mankind). Why? Because of the complete incompetence of our Congressional electees to fulfill their governmental roles. We citizens must besiege Congress with demands that term limits be placed on Congress. This is the best hope clear thinking Americans have to cope with our dilemma. The obstructionalists must be removed so that civilization can advance.
To rescue our financial system, we must give priority to retrieving bailout script setting in the behemoth institutions as back up support for the Las Vegas type bets. This is the exact opposite of the policy now being followed by the government.
Citizens must voice their opposition to the thrust of the Executive Branch of government to continue the spend, spend policy which is destroying our form of government. We must discuss this with each other. We must work to advance our knowledge and insight to what is happening in America. We must demand better analysis of facts from all media through letters, boycotts and enlightened use of a free computer internet.
Above all, we must foster a groundswell of opposition to spend, spend, spend. The stakes have been raised far beyond social arguments. The survival of the United States as a leader of the civilized world is in great doubt. Even the Socialist governments of Europe meeting in Brussels drafted a statement on June 19, 2009 announcing they were working on an exit strategy for unwinding previously implemented fiscal stimulus. The world has been telling us to outlaw Wall Street abuses. It’s time we the people insist upon it by protesting in the streets, if necessary. The time to stand up and fight for our economic freedoms in now.
We are not far removed from a potential attempt to devalue the U.S. dollar. For what? To destroy our monetary system and complete the usurping of power by the Executive branch of government. We have moved past possibility toward probability. Citizens must resond.
Eighty percent (80%) of the credit derivative industry is comprised of bets where the betters do not need to own an underlying security that is involved in the bet. See my previous article “Fat Cats Stacking the Deck”. These bets are akin to those in Las Vegas, where chits are exchanged for money to play games. Nothing of value is involved in the exchange of the chits by gamblers. Twenty percent (20%) of the industry is comprised of insurance that has not undergone underwriting prerequisites of insurance laws. The startling simple diagnostic cure to the demon derivative dilemma is stop the Las Vegas like credit gambling on Wall Street and regulate the insurance like derivatives under the insurance laws.
Handing money intended for use in a free market monetary system to chip holders to maintain their bets is complete insanity. That is exactly what the government financial and insurance institution bailout entails. Fat cats on one side of these bets get their chips from leverage (borrowing of script indirectly provided by taxpayers). See my previous article “Government Needs a 180 Degree Turn”, fourth paragraph. Now taxpayers are also providing the bailout backup script for chips in the hands of institutions on the other side of the Las Vegas type bets. If Congress were doing their constitutionally required job to protect the people in the first place, there would already be clearly explicit laws preventing Las Vegas type gambling with the people’s money. Las Vegas betters provide their own chips. Why should the American taxpayers provide financial institutions and fat cats their demon derivative bet chips?
Without laws designed to protect our monetary system, financial oversight by government cannot be effective. Inability to quantify leveraging in demon derivative contracts makes protective oversight ineffective. See an explanation of such leveraging in my previous article, “Government Needs a 180 Degree Turn”. Inability to unravel the demon derivative bundling of Wall Street as alluded to in my previous article, “It’s Time to Let American Know What’s Really Going On” also makes oversight ineffective. Don’t be misled. Outlawing the debilitating use of leverage and the obstructive bundling is prerequisite. The outlawing of the Las Vegas type betting on Wall Street is obviously a huge priority.
Laws are absolutely necessary to mitigate against situations alluded to above. We are on the path to destroying our form of government (the highest achieving one in the history of mankind). Why? Because of the complete incompetence of our Congressional electees to fulfill their governmental roles. We citizens must besiege Congress with demands that term limits be placed on Congress. This is the best hope clear thinking Americans have to cope with our dilemma. The obstructionalists must be removed so that civilization can advance.
To rescue our financial system, we must give priority to retrieving bailout script setting in the behemoth institutions as back up support for the Las Vegas type bets. This is the exact opposite of the policy now being followed by the government.
Citizens must voice their opposition to the thrust of the Executive Branch of government to continue the spend, spend policy which is destroying our form of government. We must discuss this with each other. We must work to advance our knowledge and insight to what is happening in America. We must demand better analysis of facts from all media through letters, boycotts and enlightened use of a free computer internet.
Above all, we must foster a groundswell of opposition to spend, spend, spend. The stakes have been raised far beyond social arguments. The survival of the United States as a leader of the civilized world is in great doubt. Even the Socialist governments of Europe meeting in Brussels drafted a statement on June 19, 2009 announcing they were working on an exit strategy for unwinding previously implemented fiscal stimulus. The world has been telling us to outlaw Wall Street abuses. It’s time we the people insist upon it by protesting in the streets, if necessary. The time to stand up and fight for our economic freedoms in now.
We are not far removed from a potential attempt to devalue the U.S. dollar. For what? To destroy our monetary system and complete the usurping of power by the Executive branch of government. We have moved past possibility toward probability. Citizens must resond.
Monday, June 15, 2009
Where is Our Government Leading Us?
Foreigners holding rights to U.S. dollars (U.S. Treasury bonds) no longer believe that investing in the U.S. monetary system has future prospects. They have recently taken losses by selling long term U.S. Treasury bonds. Why losses? Because no one wanted the bonds except the U.S. Treasury, who was forced to prevent a free fall in value, in order to continue what increasingly appears to be a complete bailout and stimulus fraud. The U.S. spending policy has transparent revealings to everyone but the sleeping or brain washed American electorate. We continue to plunge headlong toward full blown uncontrollable bankruptcy of our entire country.
European governments had been urging Obama to clean up our Wall Street mess, as their economies have been hit hard by the economic slowdown that everyone knows was caused by the demon derivatives. Now the European governments have no choice but to prop up their own monetary systems by retrieving their investment in long term U.S. Treasuries. British politicians are feeling the heat from their own constituencies, who are knowingly fed up with government gullibility in not dealing realistically with their situation.
The U.S. has had a reprieve of sorts, by the fact that the Chinese government has a vested interest in the U.S. monetary system. It is the U.S. consumer who provides the majority of the growth funding for the Chinese economy, by consuming a large portion of Chinese goods. The Chinese reinvested some of the proceeds of their long term U.S. Treasury bond sales, but only after the U.S. Treasury offered short term bonds for interest rates it was forced to pay.
This was a response to the Treasury Secretary Geither’s visit to China, where a usually polite Peking University audience snickered at his assertions that the U.S. government was taking necessary measures to protect the U.S. dollar. The Chinese know all about how to keep the power of money out of the hands of its people. It’s not hard to objectively perceive the Treasury tactic I have pointed out to you in a previous article of mine, The Destroying of the Dream on May 27, 2009. The government is poised to bankrupt the U.S. monetary system at will. Complete monetary power does not need a free market monetary system. It just needs taxation power.
Any currency the Chinese government can control in China will serve their purpose. The Chinese are now flexibly poised for the future. The U.S. market is not the only large market in the world. India is enjoying robust growth. It is a beneficiary of employment cutbacks in Europe and America. Improving computer technology is facilitating the transfer of jobs to India.
Not only is the U.S. government trashing our free market monetary system, it is destroying the economic psyche of American savers who are trying to live the American dream. Consider that, utilizing taxpayer money to control General Motors, the government used controlling corporate power to ban “Mom and Pop” bondholders from reorganizational planning meetings. Disregarding “Mom and Pop” bondholders preferences under bankruptcy laws, the government gave legally inferior contractual debtors (labor unions) the more advantageous position in reorganization. This blatant political payback to a controlled voting block, ignored the systemic structure of society that recognizes the rights of a worker to the fruits of his invested savings. Thwarting a basic natural law of civility with political corruption is insanity. It is interesting to note that the “fat cat” bondholders were not given the same shoddy treatment.
Individual investors throughout the Unites States are not going to be indifferent to such an outrage. Are you going to invest your earnings in corporate bonds with government running amuck in our American society? Is such an outrage just another government tactic to insure that everyone follows their lead to spend, spend, spend? What could be more damaging to the operation of a free market? But remember, anarchy doesn’t need a free market, only monetary power.
If the American public were paying attention they would be witnessing the dismantling of a free market monetary system (impending systemic bankruptcy), the destroying of the dominant world free market economy and the creation of a run of the mill anarchy, dictating the use of the U.S. dollar.
Can you believe that’s what the majority of Americans want? It’s not what I want for my grandchildren. There is much to clear up in Wall Street, but we need to reign in the government now. The spend, spend, spend policy must be stopped in its tracks. It will destroy the American economic system and remove the underpinnings for the achievement of economic growth and justice for all citizens.
Wednesday, June 3, 2009
Defiance of the Laws of Nature, Human and Economic
Humans originally led a nomadic life as hunters and gatherers. Civilized growth flourished when reasoning minds realized that accumulations of fruitful work could be shared if workers could be assured of receiving benefits for their labor. This assurance became the cornerstone for an advancing civilization. Our constitution is based on this same premise and provided a unique opportunity for sustaining economic growth.
The work incentive in our free society emanates from what I have described as the America dream and, most importantly, from an innate natural human quality for self preservation that achieves extraordinarily in an atmosphere of human freedom. Consider that savings can only result from work. Without savings being injected into an economy, the economy cannot grow. Without growth there can only be economic contraction through consumption. It’s what people want and need to sustain life (i.e. life essentials) that determines where savings are directed in a free market economy. A disciplined monetary system where money values are determined in an exchange environment dependent upon productivity (work values) is prerequisite for keeping the economic focus on essentials of life.
Our American monetary and economic systems are uniquely designed to accommodate the advance of human civilization. Our government and the fat cats in our society are on the path to control of the money supply which will result in destruction of the system that is facilitating the advancement of civilization itself. A reading of my article “Destroying of the Dream” is informative in this regard.
Fat cats and our government itself are on course to degrading our standard of life, the highest ever achieved. Take away the American dream and the survival incentive of the human spirit and you are succumbing to autocratic control of the many (people) by the few (politicians or fat cats). Politicians and fat cats are adept at hiding truths and vying for monetary power control. Civilization (people) is the huge loser.
Societal structure will regress 233 years if civilization acquiesces to the dismantling of the American dream and stripped of the hope of the hunters and gatherers. Can you envision how the Pharaohs convinced the people to direct their work to the building of pyramids (the desires of the few) instead of sustenance of life necessities (the needs of the many)? Humans have been subjected to autocrats throughout history. When will we learn that life is not sustained by impressive infrastructure, but by natures provisions? Big show and empty promises will eventually prove fatal as they have throughout human history.
When you are lulled to sleep by expectations that someone will give you something for nothing, you have contracted a fatal disease. The best you should strive for in the real world is that you can work for the advancement of civilization while providing for your own welfare. That opportunity is uniquely provided in the United States. However, it is being subjected to rapid elimination in today’s America. The snake oil salesmen are blinding Americans with baseless illusions.
Autocratic control is control over life and death itself. The autocrats control who lives or dies. Confiscation and population control are tools in their hands. They are ultimate destroyers of civilization. Their fruits for mankind are a return to hunting and gathering by the surviving few.
Autocrats have failed miserably at every turn in the history of mankind. Our government is regressing rapidly to autocratic power.
My comments are not predicative of what is about to happen. But I am frightened that without an American reawakening, they are the logical course. Our government must stop its spend, spend, spend and bailout policies without delay.
The work incentive in our free society emanates from what I have described as the America dream and, most importantly, from an innate natural human quality for self preservation that achieves extraordinarily in an atmosphere of human freedom. Consider that savings can only result from work. Without savings being injected into an economy, the economy cannot grow. Without growth there can only be economic contraction through consumption. It’s what people want and need to sustain life (i.e. life essentials) that determines where savings are directed in a free market economy. A disciplined monetary system where money values are determined in an exchange environment dependent upon productivity (work values) is prerequisite for keeping the economic focus on essentials of life.
Our American monetary and economic systems are uniquely designed to accommodate the advance of human civilization. Our government and the fat cats in our society are on the path to control of the money supply which will result in destruction of the system that is facilitating the advancement of civilization itself. A reading of my article “Destroying of the Dream” is informative in this regard.
Fat cats and our government itself are on course to degrading our standard of life, the highest ever achieved. Take away the American dream and the survival incentive of the human spirit and you are succumbing to autocratic control of the many (people) by the few (politicians or fat cats). Politicians and fat cats are adept at hiding truths and vying for monetary power control. Civilization (people) is the huge loser.
Societal structure will regress 233 years if civilization acquiesces to the dismantling of the American dream and stripped of the hope of the hunters and gatherers. Can you envision how the Pharaohs convinced the people to direct their work to the building of pyramids (the desires of the few) instead of sustenance of life necessities (the needs of the many)? Humans have been subjected to autocrats throughout history. When will we learn that life is not sustained by impressive infrastructure, but by natures provisions? Big show and empty promises will eventually prove fatal as they have throughout human history.
When you are lulled to sleep by expectations that someone will give you something for nothing, you have contracted a fatal disease. The best you should strive for in the real world is that you can work for the advancement of civilization while providing for your own welfare. That opportunity is uniquely provided in the United States. However, it is being subjected to rapid elimination in today’s America. The snake oil salesmen are blinding Americans with baseless illusions.
Autocratic control is control over life and death itself. The autocrats control who lives or dies. Confiscation and population control are tools in their hands. They are ultimate destroyers of civilization. Their fruits for mankind are a return to hunting and gathering by the surviving few.
Autocrats have failed miserably at every turn in the history of mankind. Our government is regressing rapidly to autocratic power.
My comments are not predicative of what is about to happen. But I am frightened that without an American reawakening, they are the logical course. Our government must stop its spend, spend, spend and bailout policies without delay.
Wednesday, May 27, 2009
The Destroying of the Dream
The fathers of our country not only created and structured a government for its new citizens, but they nestled it in the rudiments of time developed arts and sciences of existing civilization. The envisioned theme of its future was growth through individual freedoms. Its value system placed a premium on hard work.
The U.S. dollar was adopted as the medium of exchange for the functioning of commerce and the centerpiece of a monetary system that would allow a functioning economy that would facilitate a reality that was the American Dream.
The essentials of the prescribed monetary system were the same as those of the dream; savings, application of savings to economic replenishment and wise consumption. See paragraph 2 of the first tomk article entitled “It‘s Time to Let America Know What’s Really Going On“. The functioning economy was intended as an inexorable part of the dream.
The role of government was to increase the supply of money when business and consumer demand coupled with banks desire to make loans for a profit created the need for more script. The economy could then grow and the dream would grow with it.
The dream was and is attainable. It is not hard to observe that one can (1) work hard in early life and prosper from the energy of youth; (2) prepare for declining years by deferring certain consumptions to allow savings to be invested in an economy that rewarded savings and facilitated helping oneself in times of increasing and diversifying needs and; (3) live later years in relative tranquility without despair.
Far out stepping the bounds established by the Constitution and with disdain for the accumulations of knowledge gained through observation of economic realities, politicians have constantly sought an economic panacea through the manipulation of money. They have tried spending to end poverty, tax incentives, massive infrastructure spending, fine tuning the business cycle through interest rate tinkering, bailout scheming and completely controlling the money supply. Politicians arrogantly think they can control the economy.
Our economy and the monetary system have been reeling from the inflictions of (1) unrestrained uneconomical leveraging and derivative gimmickry of Wall St. and (2) the political hubris alluded to above. Both Wall St. and the government view money as primarily a power tool and not an exchange medium. Politicians have tried to use money to purvey their ideas of social justice. The Wall St. credo seems to be manipulate the use of other peoples money. Wall St. and the government have suppressed and rejected technical advances in accounting and law that would curtail their reaching for more control of money.
The belief that Congress poses the major threat to our liberty and well being is why the Framers gave it limited enumerative powers. To our detriment today’s Americans have given it unlimited powers.
In addition, the government covertly usurps power. It has not revealed that a real intent of providing bailout money to behemoth banks is to establish the potential to gain control over banks lending policies. This allows the government to dominate all three factors that determine the money supply (the quantity of money, the level of interest rates and the amount of lending provided by the banks). The power grab to control bank lending can lead to an abrogation of the system of checks and balances that control our money supply. Government could then force feed more borrowing when market forces have determined not to increase the amount of debt regardless of availability or rate.
The founding fathers understood that the cornerstone for a successful economy was stability of our nation’s currency. Now political hubris and government neglect that created a depression is ensuring that it is accompanied by intractable inflation.
Our government is doing a good job of shattering not only our free market monetary system, but also the underpinnings of the Constitution. By the way, they are stealing your savings and your freedoms, while destroying the American Dream. Why? To seize complete dictatorial power over you to enable the few to control the many.
Without a definitive plan, the government says it will take a decade or more to restore our economy. Real representatives of the people could reform Wall St., repair the shattered monetary system and have the free market economy working in short order. Just get the politicians whose minds are locked in the steel trap of reelection obsession out of the way.
The U.S. dollar was adopted as the medium of exchange for the functioning of commerce and the centerpiece of a monetary system that would allow a functioning economy that would facilitate a reality that was the American Dream.
The essentials of the prescribed monetary system were the same as those of the dream; savings, application of savings to economic replenishment and wise consumption. See paragraph 2 of the first tomk article entitled “It‘s Time to Let America Know What’s Really Going On“. The functioning economy was intended as an inexorable part of the dream.
The role of government was to increase the supply of money when business and consumer demand coupled with banks desire to make loans for a profit created the need for more script. The economy could then grow and the dream would grow with it.
The dream was and is attainable. It is not hard to observe that one can (1) work hard in early life and prosper from the energy of youth; (2) prepare for declining years by deferring certain consumptions to allow savings to be invested in an economy that rewarded savings and facilitated helping oneself in times of increasing and diversifying needs and; (3) live later years in relative tranquility without despair.
Far out stepping the bounds established by the Constitution and with disdain for the accumulations of knowledge gained through observation of economic realities, politicians have constantly sought an economic panacea through the manipulation of money. They have tried spending to end poverty, tax incentives, massive infrastructure spending, fine tuning the business cycle through interest rate tinkering, bailout scheming and completely controlling the money supply. Politicians arrogantly think they can control the economy.
Our economy and the monetary system have been reeling from the inflictions of (1) unrestrained uneconomical leveraging and derivative gimmickry of Wall St. and (2) the political hubris alluded to above. Both Wall St. and the government view money as primarily a power tool and not an exchange medium. Politicians have tried to use money to purvey their ideas of social justice. The Wall St. credo seems to be manipulate the use of other peoples money. Wall St. and the government have suppressed and rejected technical advances in accounting and law that would curtail their reaching for more control of money.
The belief that Congress poses the major threat to our liberty and well being is why the Framers gave it limited enumerative powers. To our detriment today’s Americans have given it unlimited powers.
In addition, the government covertly usurps power. It has not revealed that a real intent of providing bailout money to behemoth banks is to establish the potential to gain control over banks lending policies. This allows the government to dominate all three factors that determine the money supply (the quantity of money, the level of interest rates and the amount of lending provided by the banks). The power grab to control bank lending can lead to an abrogation of the system of checks and balances that control our money supply. Government could then force feed more borrowing when market forces have determined not to increase the amount of debt regardless of availability or rate.
The founding fathers understood that the cornerstone for a successful economy was stability of our nation’s currency. Now political hubris and government neglect that created a depression is ensuring that it is accompanied by intractable inflation.
Our government is doing a good job of shattering not only our free market monetary system, but also the underpinnings of the Constitution. By the way, they are stealing your savings and your freedoms, while destroying the American Dream. Why? To seize complete dictatorial power over you to enable the few to control the many.
Without a definitive plan, the government says it will take a decade or more to restore our economy. Real representatives of the people could reform Wall St., repair the shattered monetary system and have the free market economy working in short order. Just get the politicians whose minds are locked in the steel trap of reelection obsession out of the way.
Wednesday, May 20, 2009
Poof Goes the Dream
The beginning of the end of the American Dream of our forefathers has reached its climax. It was set into motion by government relaxation of monetary and regulatory control. It was instigated by a Wall Street power play and facilitated by government policy that resulted in a magnetic upward seizure of monetary control.
America’s oldest generations have been stripped of their freedom and ability to provide for their own welfare. Their savings have been wiped out by government policy to decrease interest rates that forced them into the chasm with Wall Street’s derivative bets. They were devoured as the derivative bets destroyed their investment underpinnings. These facts have been known to knowledgeable observers and widely understood. Senior citizens have paid a heavy price, but lack a political voice and the stamina to fight back.
Unborn children are now causalities. The government is enslaving them with debt under the smoke screen of financial bailouts of institutions too big to fail. This is occurring after all the feedback clearly reports that all financial bailouts have failed. You are supposed to believe that clueless politicians will handle everything. Unborn children can’t cry out against the bailout folly.
Circumstances are zeroing in on the average citizen as being the next big casualty of the enemy within. Pension funds have already been hit hard as a direct result of fat cat deleveraging of toxic mortgages. Now the mega banks have released bogus first quarter reports with inflated values of bad derivative assets, inadequate loss reserves and bogus profits from marking down their own debt. The government says mega banks need more capital. The taxpayer is being set up again.
It doesn’t make any sense for taxpayers to mortgage their future to provide capital to pay off fat cats for behemoths foolish derivative bets. The cure for such bets is abolishment and outlawing. It is time for the “too big to fail” to do just that. It’s time to stop the dismantling of the American Dream.
The dream can be essentially dismantled by destroying the value of the U.S. dollar. This is well underway. We must force the government to stop lying to us and, most importantly, to stop its spend, spend, spend policies. With the economy shaking out nonproductive jobs, we need productive savings to rescue the monetary system. What we don’t need is the printing of more money by the government. Printing devalues our currency and robs us of our ability to replenish the monetary system with real value in the hands of the people.
This continued unfettered so called bailout spending has but one ending, the devaluation of the U.S. dollar. What this means to you is that your hard work is valueless. You are witnessing the American dream being torn asunder with disregard for the safeguards of the constitution and the oaths of political office.
The government heaped additional debt on taxpayers to save jobs at General Motors and Chrysler and they are now in defacto bankruptcy where they needed to be in the first place. Taxpayers gained nothing. Bailouts are pure and simply stealing from taxpayers to absorb the deleveraging of the fat cats.
The real perpetrators of our economic dilemma have made still another bet with their derivatives. They have bet that the majority of Americans are so blinded by ideology, partisanship and distractions that their freedoms can be stolen due to divisiveness, inattentiveness and manipulation.
America’s oldest generations have been stripped of their freedom and ability to provide for their own welfare. Their savings have been wiped out by government policy to decrease interest rates that forced them into the chasm with Wall Street’s derivative bets. They were devoured as the derivative bets destroyed their investment underpinnings. These facts have been known to knowledgeable observers and widely understood. Senior citizens have paid a heavy price, but lack a political voice and the stamina to fight back.
Unborn children are now causalities. The government is enslaving them with debt under the smoke screen of financial bailouts of institutions too big to fail. This is occurring after all the feedback clearly reports that all financial bailouts have failed. You are supposed to believe that clueless politicians will handle everything. Unborn children can’t cry out against the bailout folly.
Circumstances are zeroing in on the average citizen as being the next big casualty of the enemy within. Pension funds have already been hit hard as a direct result of fat cat deleveraging of toxic mortgages. Now the mega banks have released bogus first quarter reports with inflated values of bad derivative assets, inadequate loss reserves and bogus profits from marking down their own debt. The government says mega banks need more capital. The taxpayer is being set up again.
It doesn’t make any sense for taxpayers to mortgage their future to provide capital to pay off fat cats for behemoths foolish derivative bets. The cure for such bets is abolishment and outlawing. It is time for the “too big to fail” to do just that. It’s time to stop the dismantling of the American Dream.
The dream can be essentially dismantled by destroying the value of the U.S. dollar. This is well underway. We must force the government to stop lying to us and, most importantly, to stop its spend, spend, spend policies. With the economy shaking out nonproductive jobs, we need productive savings to rescue the monetary system. What we don’t need is the printing of more money by the government. Printing devalues our currency and robs us of our ability to replenish the monetary system with real value in the hands of the people.
This continued unfettered so called bailout spending has but one ending, the devaluation of the U.S. dollar. What this means to you is that your hard work is valueless. You are witnessing the American dream being torn asunder with disregard for the safeguards of the constitution and the oaths of political office.
The government heaped additional debt on taxpayers to save jobs at General Motors and Chrysler and they are now in defacto bankruptcy where they needed to be in the first place. Taxpayers gained nothing. Bailouts are pure and simply stealing from taxpayers to absorb the deleveraging of the fat cats.
The real perpetrators of our economic dilemma have made still another bet with their derivatives. They have bet that the majority of Americans are so blinded by ideology, partisanship and distractions that their freedoms can be stolen due to divisiveness, inattentiveness and manipulation.
Monday, May 4, 2009
Considering Underlying Facts and Revelency of Needed Action
Since the government began bailouts of financial institutions, I have decried that practice and castigated unproductive leveraging of corrupted financial documents that have been widely identified and acknowledged as being direct contributing causes of the credit crisis that led to current economic problems. I have summarized the situation in the first three written articles.
Without doubt, the present Democratic administrations continuation of the previous administrations fallacious financial and economic policies are sustaining systemic intolerable situations that need to be purged and are destroying those who are the embodiment of the American economic dream upon which our country was built.
We have not yet suffered the currency inflation to come from the third demon derivative, interest rate bets that will be unleashed by the investment and commercial banking behemoths. We must reject the political brainwashing that says these behemoths are too big to fail. We must purge the interest rate derivatives and let the behemoths fail.
With the Federal policy continuing to be spend, spend, spend, and maintain low interest rates to allegedly reverse an economic decline, the real effect is the destroying of private capital as the economic engine of the capitalistic system. Interest rates must rise to rescue the U.S. dollar for the U.S. people.
Small investors who have saved for retirement and pension plans established to provide retirement security have been severely impaired by the demon derivatives and uneconomic leveraging I have alluded to. Contrary to the politically promoted illusion that government will shift tax loads to the rich and redistribute wealth, what is happening is wealth is being stripped from those who have labored for the American dream and shifted it to the fat cats. Private capital is being handed to the fat cats to invest in tactical maneuvering in the global economy using the same tactics that have devastated middle class Americans. The intent is to benefit the fat cats, not the American taxpayer.
That power shift is being enabled at the expense of American youth, who are being saddled with the debt buildup which is funneling bet payoff money through financial institutions to the fat cats, who hold the winning hands in the gambling bets that are enabling this destroying of the American system of economic ownership by citizens.
The coup de gras on this fiasco is that our financial institutions have bet heavily that interest rates will not rise in the future. With the Feds poised to bail out the banks, the American taxpayer is caught in a catch 22 situation. Bail out the banks or face economic collapse. Bail out completes the power shift from the people to the fat cats. It also means we acquiesce our freedom and the democratic power of people to the government. Don’t you believe the catch 22 situations. The solution is to unwind the bets that have been made to put the American taxpayer into this supposedly untenable situation. The American taxpayer must revolt to stop the continuation of bailouts of banks and insurance companies. Time is not an ally of the American people.
The political ploy is to keep the American giant asleep. Wait and give Obama a chance! Wait for what? He is not addressing the problem.
Meanwhile the balance sheet of the United States Government has deteriorated to look like that of a troubled financial institution. The government is not acting to save our way of life. It’s now squarely up to the taxpayers themselves.
Without doubt, the present Democratic administrations continuation of the previous administrations fallacious financial and economic policies are sustaining systemic intolerable situations that need to be purged and are destroying those who are the embodiment of the American economic dream upon which our country was built.
We have not yet suffered the currency inflation to come from the third demon derivative, interest rate bets that will be unleashed by the investment and commercial banking behemoths. We must reject the political brainwashing that says these behemoths are too big to fail. We must purge the interest rate derivatives and let the behemoths fail.
With the Federal policy continuing to be spend, spend, spend, and maintain low interest rates to allegedly reverse an economic decline, the real effect is the destroying of private capital as the economic engine of the capitalistic system. Interest rates must rise to rescue the U.S. dollar for the U.S. people.
Small investors who have saved for retirement and pension plans established to provide retirement security have been severely impaired by the demon derivatives and uneconomic leveraging I have alluded to. Contrary to the politically promoted illusion that government will shift tax loads to the rich and redistribute wealth, what is happening is wealth is being stripped from those who have labored for the American dream and shifted it to the fat cats. Private capital is being handed to the fat cats to invest in tactical maneuvering in the global economy using the same tactics that have devastated middle class Americans. The intent is to benefit the fat cats, not the American taxpayer.
That power shift is being enabled at the expense of American youth, who are being saddled with the debt buildup which is funneling bet payoff money through financial institutions to the fat cats, who hold the winning hands in the gambling bets that are enabling this destroying of the American system of economic ownership by citizens.
The coup de gras on this fiasco is that our financial institutions have bet heavily that interest rates will not rise in the future. With the Feds poised to bail out the banks, the American taxpayer is caught in a catch 22 situation. Bail out the banks or face economic collapse. Bail out completes the power shift from the people to the fat cats. It also means we acquiesce our freedom and the democratic power of people to the government. Don’t you believe the catch 22 situations. The solution is to unwind the bets that have been made to put the American taxpayer into this supposedly untenable situation. The American taxpayer must revolt to stop the continuation of bailouts of banks and insurance companies. Time is not an ally of the American people.
The political ploy is to keep the American giant asleep. Wait and give Obama a chance! Wait for what? He is not addressing the problem.
Meanwhile the balance sheet of the United States Government has deteriorated to look like that of a troubled financial institution. The government is not acting to save our way of life. It’s now squarely up to the taxpayers themselves.
Monday, March 9, 2009
Government Needs an 180 Degree Turn
Americans are angry that the greed, the bad judgment and the lack of integrity of the fat cat executives who have fractured our monetary system, upset our economy and caused financial harm to everyday citizens appear to have gone unpunished. What is even worse in the minds of many is that these white collar crooks continue in their highly placed jobs, enjoying multibillion-dollar bonuses and extravagant perks. They feel justice is sadly lacking in “The Establishment” when hard working Americans are the ones being made to pay for the egregious acts of the spendthrift and the dishonest who treat us with disdain.
We headed for disaster on Wall Street several years ago when paper assets referred to as derivatives rushed into heavy use. They incorporated all the worst that could be expected of the banking culture. About five years ago, a demon derivative arose in sub prime mortgage markets, clothed in paper instruments called mortgage backed securities. These investments, sub prime CDO’s (Collateralized Debt Obligations), were basically bets on whether or not the average American homeowner with a poor credit rating could make his monthly mortgage payment on his inflated home.
For bankers and mortgage brokers, loan applicants who previously would have been considered bad risks suddenly became great clients. That’s because the higher risks they represented meant the lender could charge higher rates and fees and quickly sell off the mortgage to unsuspecting institutions. With Greenspan’s low Treasury rates, low inflation and easy credit, the banks made big yields. That is, until everything started to go wrong. Then, these miracle bets began to unwind.
These bets were bought on an enormous amount of leverage. As an example, a fat cat investor goes to a broker with one million dollars. Then based on his credit rating, he leverages this amount three times. The resulting four million dollars can be invested in a fund of funds that will in turn leverage this four million three of four times and invest them in a hedge fund. Then the hedge fund will leverage these funds another three or four times and buy derivatives like sub prime CDOs, which are often themselves leveraged nine or ten times. At the end of this long credit chain, the initial one million of equity can become a one-hundred million investment out of which ninety-nine million is debt and only one million is equity. So we get an overall leverage ration of 100 to 1. The leverage money comes largely from banks who borrowed the money from the U.S. Treasury.
A problem arises when mortgages begin defaulting and the fat cat’s credit rating is downgraded. They have to put up more money to cover the bet. In order to do so, the bank, the hedge fund, money market fund, private equity fund, etc. must sell investments. Problem for everyone is nobody wants derivative investments (like CDOs). They have to sell good investments (like stocks). And naturally when things sell, prices drop, which causes further selling ,and further downgrades and so on. That’s why stock, investments and markets that seem so removed from the sub prime mortgage meltdown are being affected by it. This dropping in the stock market hurts the little guys who were putting their money into banks and IRA’s. Instead of their savings being recirculated in the economy, they got forced into this fiasco that is ruining our monetary system. This is directly causing fear and anger in the American people.
The economy continues to slip away and confidence in the entire “establishment” gets even worse. We are experiencing deepening banking and credit crises and spinning toward what might be a global deflationary collapse as leverage unwinds itself. Derivative shake outs have a long way to go. Corporate deleveraging still has a toll to take.
What we are now seeing in Washington is a continuation of the monetary and fiscal policy followed by Alan Greenspan in attempting to change economic cycling. It is based on the Money Supply Theory which holds that massive amounts of money can enhance and increase consumer demand. Those in control of economic policy believe that more money will keep prices up (reduce deflation scare) and improve output. But if one’s eyes and ears are open, they will sense that people are angry and scared. They don’t take on more debt or run out and spend more just because money supply has been increased by the government. Many will resent being deluged with more taxpayer debt in the economy, which will only prolong the downturn.
This kind of government policy is what fed the leveraging and the derivatives that have plagued us in the first place. It reveals that government is not acknowledging the errors in policy that need urgent changing. It’s core beliefs are flawed.
People are scared of the debt and rightfully so. There are limits to what the monetary system can endure. When people are scared, they save, cut back and use their money to pay down debt. When debt is removed, economic activity will pick up. This is Economic Debt-Deflations Theory and it has been proven in reality. The Money Supply Theory has failed in past reality.
We need to get to work cleaning up the debris of spend, spend, spend policy and make a complete overhaul of Wall Street gimmickry. Abusive practices must be eliminated. Then watch the American confidence take over. The big problem is we are doing the opposite of what is needed.
We headed for disaster on Wall Street several years ago when paper assets referred to as derivatives rushed into heavy use. They incorporated all the worst that could be expected of the banking culture. About five years ago, a demon derivative arose in sub prime mortgage markets, clothed in paper instruments called mortgage backed securities. These investments, sub prime CDO’s (Collateralized Debt Obligations), were basically bets on whether or not the average American homeowner with a poor credit rating could make his monthly mortgage payment on his inflated home.
For bankers and mortgage brokers, loan applicants who previously would have been considered bad risks suddenly became great clients. That’s because the higher risks they represented meant the lender could charge higher rates and fees and quickly sell off the mortgage to unsuspecting institutions. With Greenspan’s low Treasury rates, low inflation and easy credit, the banks made big yields. That is, until everything started to go wrong. Then, these miracle bets began to unwind.
These bets were bought on an enormous amount of leverage. As an example, a fat cat investor goes to a broker with one million dollars. Then based on his credit rating, he leverages this amount three times. The resulting four million dollars can be invested in a fund of funds that will in turn leverage this four million three of four times and invest them in a hedge fund. Then the hedge fund will leverage these funds another three or four times and buy derivatives like sub prime CDOs, which are often themselves leveraged nine or ten times. At the end of this long credit chain, the initial one million of equity can become a one-hundred million investment out of which ninety-nine million is debt and only one million is equity. So we get an overall leverage ration of 100 to 1. The leverage money comes largely from banks who borrowed the money from the U.S. Treasury.
A problem arises when mortgages begin defaulting and the fat cat’s credit rating is downgraded. They have to put up more money to cover the bet. In order to do so, the bank, the hedge fund, money market fund, private equity fund, etc. must sell investments. Problem for everyone is nobody wants derivative investments (like CDOs). They have to sell good investments (like stocks). And naturally when things sell, prices drop, which causes further selling ,and further downgrades and so on. That’s why stock, investments and markets that seem so removed from the sub prime mortgage meltdown are being affected by it. This dropping in the stock market hurts the little guys who were putting their money into banks and IRA’s. Instead of their savings being recirculated in the economy, they got forced into this fiasco that is ruining our monetary system. This is directly causing fear and anger in the American people.
The economy continues to slip away and confidence in the entire “establishment” gets even worse. We are experiencing deepening banking and credit crises and spinning toward what might be a global deflationary collapse as leverage unwinds itself. Derivative shake outs have a long way to go. Corporate deleveraging still has a toll to take.
What we are now seeing in Washington is a continuation of the monetary and fiscal policy followed by Alan Greenspan in attempting to change economic cycling. It is based on the Money Supply Theory which holds that massive amounts of money can enhance and increase consumer demand. Those in control of economic policy believe that more money will keep prices up (reduce deflation scare) and improve output. But if one’s eyes and ears are open, they will sense that people are angry and scared. They don’t take on more debt or run out and spend more just because money supply has been increased by the government. Many will resent being deluged with more taxpayer debt in the economy, which will only prolong the downturn.
This kind of government policy is what fed the leveraging and the derivatives that have plagued us in the first place. It reveals that government is not acknowledging the errors in policy that need urgent changing. It’s core beliefs are flawed.
People are scared of the debt and rightfully so. There are limits to what the monetary system can endure. When people are scared, they save, cut back and use their money to pay down debt. When debt is removed, economic activity will pick up. This is Economic Debt-Deflations Theory and it has been proven in reality. The Money Supply Theory has failed in past reality.
We need to get to work cleaning up the debris of spend, spend, spend policy and make a complete overhaul of Wall Street gimmickry. Abusive practices must be eliminated. Then watch the American confidence take over. The big problem is we are doing the opposite of what is needed.
Fat Cats Stacking the Deck
The ingenuity of Wall Street has been instrumental in the growth of the American economy. Now the corruption of Wall Street creations appears to be tearing down that same economy as well as the emerging world economy.
Financial leveraging within our monetary system was the springboard that facilitated economic growth. Now it is a vehicle in the hands of the fat cats it inadvertently created, who have exploited it for transfer of political power (leveraged buyouts) and to take greedy advantage in monetary system functioning (leveraged use of demon derivatives).
In a previous column, I alluded to the corruptive use of a leveraged subprime CDO (Collateralized Debt Obligation) and referred to it as a demon derivative. It was an aberration of a simple document created to facilitate the transfer of title on sales of mortgages.
The next demon derivatives of Wall Street, credit default swaps (CDS) appear to be on the verge of being released in full fury on an already staggering banking community. They are the aberration of an original simple document used to insure a bond holder against the risk of default by the originator of the bond. Now they are a potpourri of designs used to cover many risks including defaults; bankruptcies; and credit rating downgrading of corporations, banks, other financial entities and countries.
Their distinguishing features are (1) that the firm selling the CDS is not required to set aside any reserves from the premiums received to insure against possible future loss claims and (2) the buyer does not need to own an underlying security or have any other form of direct credit exposure. What was originally intended as insurance has become a bevy or highly leveraged speculative bets. You can take a bet that Citibank, General Motors and Abu Dhabi will go bankrupt.
In a typical CDS deal, as originally conceived, a hedge fund will sell protection to a bank, which will then resell the same protection to another bank and such dealing will continue, sometimes in a circle. This practice has the potential to put investors into webs of relationships which are not transparent. The failure of an insuring company can unravel the hedging use of CDSs and lead to increasing risks of bankruptcy. The fear of this eventuality after the demise of Lehman Bros. (investment bank) and AIG (insurance company) was a contributing factor in the massive decrease in lending liquidity in the fall of 2008. Fear of the potential for loss of insurance actually froze the credit market and the cycling of funds in the monetary system. This injection of fear had a debilitating effect on the functioning of the financial system.
But we haven’t seen anything yet. Using leveraged (taxpayer) money to bet on the survival of large companies, banks and even sovereign countries is wildly reckless. We will soon find out why, the hard way. Purely speculative use of CDSs should be outlawed without delay. Those using leverage to finance such betting have put a potential multitrillion dollar noose around the neck of our economy. The magnitude of the exposure is hard to predict because the extent of offsetting hedging, if any, is unknown. The noose could be removed by the simple act of outlawing purely speculative derivative gambling retroactively and removing all outstanding bets effective immediately.
In the past seven years trading in the CDS market has leapt a mind boggling hundred fold. The Depository Trust and Clearing Corp. which runs a warehouse of trade confirmations for CDS (about 90% of the market) held $29.2 trillion of outstanding trades as of December 26, 2008. The market growth is largely attributed to investors wishing to bet for or against the likelihood that particular companies or portfolios would suffer financial difficulties, rather than those that insure against bad debt.
Since these bets are all based on the future creditworthiness of a country, company or consumer (basically a bet on the ability of a party to repay his debts) they’re all about to go horribly wrong.
In a global economy made up of thousands of corporations and institutions, many of which borrowed 10-100 times their capital in the past few years, most will be unable to repay their future debts. This means these new demon derivatives are going to unwind rapidly with fall out potentially much larger than that caused by the credit crisis so far…unless Congress acts swiftly.
Our economy can recover quickly when Americans work through the malaise with confidence. We need to scream loudly in protest of the spending and insist upon the complete removal of gambling from our financial system. Economic recovery spending is digging the hole of taxpayer debt and gambling is wrecking the stability of our monetary system.
But Congress is (1) too busy spending and creating debt to be piled on taxpayers backs; (2) oblivious of the present and impending damage to our monetary system emanating from the infiltration of pure gambling and (3) will allow the derivative leveraging to be absorbed in impending losses to be borne by the economy or by future bailout money. Either way, the enrichment of fat cats using leverage (taxpayer money) will be completed. Remove the betting and fat cats don’t win their bets. Rather, they will participate in absorbing the losses that will otherwise be inflected on the rest of us.
Another way to explain this, is that the losers of these bets will be banks who have already gotten bailout money and government loans (taxpayer debt) that will complete the absorption of the leverage. The irony of this is that these loans and bailouts would enrich fat cats instead of being used as economic stimulants.
The government is so absorbed in the false notion that spend, spend, spend is the only policy to follow that they are only applying band aids and not diagnosing the illness. Growing cancers need to be removed. Fat cats are gambling with your money where you can only be a loser, never a winner.
Financial leveraging within our monetary system was the springboard that facilitated economic growth. Now it is a vehicle in the hands of the fat cats it inadvertently created, who have exploited it for transfer of political power (leveraged buyouts) and to take greedy advantage in monetary system functioning (leveraged use of demon derivatives).
In a previous column, I alluded to the corruptive use of a leveraged subprime CDO (Collateralized Debt Obligation) and referred to it as a demon derivative. It was an aberration of a simple document created to facilitate the transfer of title on sales of mortgages.
The next demon derivatives of Wall Street, credit default swaps (CDS) appear to be on the verge of being released in full fury on an already staggering banking community. They are the aberration of an original simple document used to insure a bond holder against the risk of default by the originator of the bond. Now they are a potpourri of designs used to cover many risks including defaults; bankruptcies; and credit rating downgrading of corporations, banks, other financial entities and countries.
Their distinguishing features are (1) that the firm selling the CDS is not required to set aside any reserves from the premiums received to insure against possible future loss claims and (2) the buyer does not need to own an underlying security or have any other form of direct credit exposure. What was originally intended as insurance has become a bevy or highly leveraged speculative bets. You can take a bet that Citibank, General Motors and Abu Dhabi will go bankrupt.
In a typical CDS deal, as originally conceived, a hedge fund will sell protection to a bank, which will then resell the same protection to another bank and such dealing will continue, sometimes in a circle. This practice has the potential to put investors into webs of relationships which are not transparent. The failure of an insuring company can unravel the hedging use of CDSs and lead to increasing risks of bankruptcy. The fear of this eventuality after the demise of Lehman Bros. (investment bank) and AIG (insurance company) was a contributing factor in the massive decrease in lending liquidity in the fall of 2008. Fear of the potential for loss of insurance actually froze the credit market and the cycling of funds in the monetary system. This injection of fear had a debilitating effect on the functioning of the financial system.
But we haven’t seen anything yet. Using leveraged (taxpayer) money to bet on the survival of large companies, banks and even sovereign countries is wildly reckless. We will soon find out why, the hard way. Purely speculative use of CDSs should be outlawed without delay. Those using leverage to finance such betting have put a potential multitrillion dollar noose around the neck of our economy. The magnitude of the exposure is hard to predict because the extent of offsetting hedging, if any, is unknown. The noose could be removed by the simple act of outlawing purely speculative derivative gambling retroactively and removing all outstanding bets effective immediately.
In the past seven years trading in the CDS market has leapt a mind boggling hundred fold. The Depository Trust and Clearing Corp. which runs a warehouse of trade confirmations for CDS (about 90% of the market) held $29.2 trillion of outstanding trades as of December 26, 2008. The market growth is largely attributed to investors wishing to bet for or against the likelihood that particular companies or portfolios would suffer financial difficulties, rather than those that insure against bad debt.
Since these bets are all based on the future creditworthiness of a country, company or consumer (basically a bet on the ability of a party to repay his debts) they’re all about to go horribly wrong.
In a global economy made up of thousands of corporations and institutions, many of which borrowed 10-100 times their capital in the past few years, most will be unable to repay their future debts. This means these new demon derivatives are going to unwind rapidly with fall out potentially much larger than that caused by the credit crisis so far…unless Congress acts swiftly.
Our economy can recover quickly when Americans work through the malaise with confidence. We need to scream loudly in protest of the spending and insist upon the complete removal of gambling from our financial system. Economic recovery spending is digging the hole of taxpayer debt and gambling is wrecking the stability of our monetary system.
But Congress is (1) too busy spending and creating debt to be piled on taxpayers backs; (2) oblivious of the present and impending damage to our monetary system emanating from the infiltration of pure gambling and (3) will allow the derivative leveraging to be absorbed in impending losses to be borne by the economy or by future bailout money. Either way, the enrichment of fat cats using leverage (taxpayer money) will be completed. Remove the betting and fat cats don’t win their bets. Rather, they will participate in absorbing the losses that will otherwise be inflected on the rest of us.
Another way to explain this, is that the losers of these bets will be banks who have already gotten bailout money and government loans (taxpayer debt) that will complete the absorption of the leverage. The irony of this is that these loans and bailouts would enrich fat cats instead of being used as economic stimulants.
The government is so absorbed in the false notion that spend, spend, spend is the only policy to follow that they are only applying band aids and not diagnosing the illness. Growing cancers need to be removed. Fat cats are gambling with your money where you can only be a loser, never a winner.
It's Time to let America know what's really going on
Most of our policy makers lack a clue at what is really going on and what is really at stake when dealing with (1) our monetary system and (2) economic matters. While these two are inexorably entwined, there is a disconnect. The monetary system involves tangible script and more static truths while the economy is more reactive to cyclical change and psychological influences.
In the former, the functioning of the system depends on savings, application of savings to economic replenishment and, wise consumption. These functions are mandatory not optional. Quantifiable boundaries, although fluctuating with economic growth and contraction are breachable with economic collapse an eventual result.
In the latter, psychological factors play a large role in economic cycle beginnings, fluctuations and endings. Such factors must be recognized when monitoring economic realities and considered when courses of action are contemplated.
The Enron fiasco planted the seed of distrust of Wall Street and the government in the minds of investors after it was determined that a tactic referred to as off balance sheet financing was used to hide debt and rip off investors. This same tactic has now been clothed in paper instruments called asset backed or mortgage backed securities. It has been used by banks to hide debt that prevented regulators from detecting violations of rules setting leverage limitations on banks. These paper instruments proliferated when the Feds implemented their ill conceived policy of attempting to alter economic cycles by tinkering with interest rates.
The securities included simple loans bundled together, then sliced and diced up into a big beautiful salad. The idea was to sell individual servings of financial salad around the world. The securities were insured by more dubious paper instruments called credit default swaps. These swaps were more in the nature of gambling bets than insurance as normal underwriting procedures were not involved in their creation. Of course, all were offered for huge fees. Wary of such creations, global investors declared a buyers strike against these paper instruments. They left the salad for we Americans.
Alan Greenspan created a feeding frenzy on the salad when he began lowering treasury bond rates to historic lows tinkering with the economy. He drove safe investment money into the salad.
Anxieties were created among American investors when the toxic waste of housing foreclosures appeared in the salad. Eat some and you are dead. Americans began realizing that the salad was being served while the Chairman of Fannie Mae was liberalizing lending policies and leveraging assets at 100 to1 to the detriment of the taxpayer, a reckless, inconceivable reality.
The American psyche has been fractured by this gimmickry along with our monetary system. The public has lost all confidence in the government and Wall Street. The economy is tanking.
The Feds and Wall Street then place a veil of secrecy over the use of bailout money. They are hiding the devastating carnage of leveraged buyout corruption. The odor is revealing.
Now our policy makers must face a real dilemma. They must stimulate the fading economy without cratering the monetary system. Without a clue, they are panicking toward out of control spending, the path to collapse of the monetary system. We must seek ways to repair the American psyche. More thoughtful planning must be openly revealed. Obama is pushing for better regulation of Wall Street. We need to crack down with tough new laws now.
Our policy leaders in Washington are thinking domestically only, when our credit crisis is global. It is not that the world lacks money; it is that the world’s money is sitting on the sidelines. The first challenge is to reform our financial system quickly. The first step should be to make any future for asset-backed paper more transparent and credible or return to simpler forms of asset pass throughs. We need the U. S. dollars consumed in the purchasing of foreign goods to be returned as replenishments in our monetary system. This need must be facilitated, not discouraged.
Much more needs to be cleaned up in the way American business, in general and Wall Street in particular, operates. Most Americans feel that businesses flagrantly make things more complicated in order to hide real risks. How can trust be rebuilt amid today’s deceptive propositions, double talk, disclaimers and lack of consumer protection? Business needs to do more than improve governance and raise capital. They need to incorporate clarity and simplicity into their programs and communications. They need to come out from behind unintelligible language. They must discontinue leading blind politicians into self serving actions that disadvantage consumers.
Government has abdicated its responsibilities to the American people. It is devoid of leadership; handicapped by political ideology; and political hubris; and plagued by incompetency. Individual Americans must step up to the plate with some clout.
Obama needs to seek exclusive consensus of the most knowledgeable economists who understand the functioning of the monetary system. He must explain the causes, I have alluded to. He must explain how the path chosen will avoid monetary system collapse and how it will provide jobs. He must let natural bankruptcy clear out the garbage.
In the former, the functioning of the system depends on savings, application of savings to economic replenishment and, wise consumption. These functions are mandatory not optional. Quantifiable boundaries, although fluctuating with economic growth and contraction are breachable with economic collapse an eventual result.
In the latter, psychological factors play a large role in economic cycle beginnings, fluctuations and endings. Such factors must be recognized when monitoring economic realities and considered when courses of action are contemplated.
The Enron fiasco planted the seed of distrust of Wall Street and the government in the minds of investors after it was determined that a tactic referred to as off balance sheet financing was used to hide debt and rip off investors. This same tactic has now been clothed in paper instruments called asset backed or mortgage backed securities. It has been used by banks to hide debt that prevented regulators from detecting violations of rules setting leverage limitations on banks. These paper instruments proliferated when the Feds implemented their ill conceived policy of attempting to alter economic cycles by tinkering with interest rates.
The securities included simple loans bundled together, then sliced and diced up into a big beautiful salad. The idea was to sell individual servings of financial salad around the world. The securities were insured by more dubious paper instruments called credit default swaps. These swaps were more in the nature of gambling bets than insurance as normal underwriting procedures were not involved in their creation. Of course, all were offered for huge fees. Wary of such creations, global investors declared a buyers strike against these paper instruments. They left the salad for we Americans.
Alan Greenspan created a feeding frenzy on the salad when he began lowering treasury bond rates to historic lows tinkering with the economy. He drove safe investment money into the salad.
Anxieties were created among American investors when the toxic waste of housing foreclosures appeared in the salad. Eat some and you are dead. Americans began realizing that the salad was being served while the Chairman of Fannie Mae was liberalizing lending policies and leveraging assets at 100 to1 to the detriment of the taxpayer, a reckless, inconceivable reality.
The American psyche has been fractured by this gimmickry along with our monetary system. The public has lost all confidence in the government and Wall Street. The economy is tanking.
The Feds and Wall Street then place a veil of secrecy over the use of bailout money. They are hiding the devastating carnage of leveraged buyout corruption. The odor is revealing.
Now our policy makers must face a real dilemma. They must stimulate the fading economy without cratering the monetary system. Without a clue, they are panicking toward out of control spending, the path to collapse of the monetary system. We must seek ways to repair the American psyche. More thoughtful planning must be openly revealed. Obama is pushing for better regulation of Wall Street. We need to crack down with tough new laws now.
Our policy leaders in Washington are thinking domestically only, when our credit crisis is global. It is not that the world lacks money; it is that the world’s money is sitting on the sidelines. The first challenge is to reform our financial system quickly. The first step should be to make any future for asset-backed paper more transparent and credible or return to simpler forms of asset pass throughs. We need the U. S. dollars consumed in the purchasing of foreign goods to be returned as replenishments in our monetary system. This need must be facilitated, not discouraged.
Much more needs to be cleaned up in the way American business, in general and Wall Street in particular, operates. Most Americans feel that businesses flagrantly make things more complicated in order to hide real risks. How can trust be rebuilt amid today’s deceptive propositions, double talk, disclaimers and lack of consumer protection? Business needs to do more than improve governance and raise capital. They need to incorporate clarity and simplicity into their programs and communications. They need to come out from behind unintelligible language. They must discontinue leading blind politicians into self serving actions that disadvantage consumers.
Government has abdicated its responsibilities to the American people. It is devoid of leadership; handicapped by political ideology; and political hubris; and plagued by incompetency. Individual Americans must step up to the plate with some clout.
Obama needs to seek exclusive consensus of the most knowledgeable economists who understand the functioning of the monetary system. He must explain the causes, I have alluded to. He must explain how the path chosen will avoid monetary system collapse and how it will provide jobs. He must let natural bankruptcy clear out the garbage.
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