By: Joshua Gayman
seriously ya’ll this has nothing to do with politics, only finance…
in response to all of the comments posted about how a gallon of gas was $1.81 or whatever when Obama took office: How about a gallon of gas hit $4.00 in 2007 when Bush(a Republican) was in office.
Economics lesson: when currency falls, commodities rise.
Thus, if you want to blame any one party or person for the price of oil rising, blame the central bankers ie: the Fed and the ECB(european central bank). They run BOTH parties anyways!!!
Until we think rationally TOGETHER(ie: both parties thinking of ways to work together to achieve a common goal of a higher quality of life for our nation and future generations), we are going to continue to get run over by the ultra rich and social elite.
I’ve been on to this stuff for about 4 years now. I know people who have done a 1099-OID(see bullet point #9 below) and gotten BIG checks from the US Treasury. One of them got a lien put on their house the day after the IRS sent them the check. So there’s definately some weird stuff going on behind the IRS and Federal Reserve, but we already knew that! 🙂
1. The Federal Reserve Bank is a private banking system created by foreign interests. Call any branch for verification.
2. The Federal Reserve Bank is the sole creditor of the United States and the entire national debt is owed to the Federal Reserve Bank. Write your congressman for verification.
3. There are twelve member banks in this system and according to their bylaws (articles of association) they each have the power to act as depositary and fiscal agent (tax collector) of the United States.
4. Federal Reserve Board regulations and Generally Accepted Accounting Principles prohibit member banks within the Federal Reserve System from lending money from their own assets or from other depositors. Federal Reserve member banks do not make loans.
5. Bank customers fund their own mortgage transactions by signing a note. The note is the creation of currency that never existed before being signed by the customer.
6. Because the banks have monopolized the market on negotiable instruments, only banks will accept your promissory note. You can’t buy groceries with a promissory note for example.
7. The practice of failing to disclose these facts in the mortgage agreement voids and nullifies the note because it violates 12 CFR 226.17(c)(1) of the Truth in Lending Law.
8. Unsecured debts assigned to debt collectors are not legally enforceable without the consent of the customer.
9. The banks must pay their customers back the entire value of each note and credit limit minus fees and interest.
10. These facts apply to both secured (e.g. mortgages, credit cards) and unsecured (e.g. credit card) accounts.
11. There are no disclosure or application requirements for a social security number. There are no penalties for refusing to disclose a social security number to anyone. 26 CFR 301.6109-1(c). This is a ruse perpetrated by the FDIC, Federal Reserve and insurance industry for the purpose of illegally monitoring American citizens.
12. The credit reporting system is the creation of the Federal Trade Commission. Its primary use is to collect and build information databases about Americans. It also provides an inexpensive means for banks to unfairly punish people and destroy reputations by subverting the legal requirements normally imposed upon them under the court system.
Written By: Joshua Gayman
The Financial Times has been running a series this month entitled Capitalism In Crisis. When reading this story, it is apparent just how far we are from fixing this global economic crisis. As Richard Duncan points out in his latest post titled This is not a Crisis of Capitalism, “(it’s) not because of the insights contained in the articles, but because the entire premise of the series is completely wrong. This is not a crisis of Capitalism.”
Capitalism is an economic and political system in which a country’s trade and industry are controlled by private owners for profit. More specifically, Capitalism is where the private sector drives production by accumulating capital and investing back into the system. With true Capitalism, the government’s role is very small.
The truth is that the United States has not been Capitalistic for decades. Our federal government spends 25% of the money in our economy and the central bank AKA “The Fed” creates the money out of thin air and manipulates it’s value. Thus, our economy is no longer driven by capital accumulation and investment like before. So if it’s not capital accumulation and investment that are driving the economy, what is it you ask? The answer is DEBT.
Credit creation and consumption(using stuff) have now become the dominant forces driving economic growth. Thus, we no longer live in a Capitalistic economy.
Capitalism was a phenomenon of the 19th century, one that did not survive past the 1st World War. WWI destroyed the standard upon which Capitalism was built. This standard was the gold standard, and once it was gone, central banks and governments gained near-total control over economic production.
The ENORMOUS expansion of government debt that was used to fund WWI created a credit bubble that we know refer to as “the Roaring Twenties.” This bubble of the Roaring Twenties soon popped and became the Great Depression of the 1930s once the debt was too big to repay.
WW2 was no different, with again complete government control over the economy. In the coming decades after, government spending surged on social programs and military expansion. By the 1960s, the government was using Keynesian tools to control monetary policy and the rate of economic growth. In 1971, President Nixon removed the dollar from the gold standard, which meant that dollars were no longer backed by gold. This gave way to a HUGE explosion of a fiat currency supply(money backed by nothing but the faith the people have in their government’s currency). This expansion in the money supply transformed our world and gave way to the biggest economic boom in human history.
In 1964, the total of all credit in the United States hit $1 Trillion. By 2010, the credit supply had expanded 50 times to $50 Trillion(Source: Richard Duncan). This new found money, or credit, created enormous wealth, profits, jobs, and tax revenues, and ultimately brought on a new age of a global economy. As long as credit keeps expanding, prosperity increases. Credit has replaced Capital as the key driver of the economy.
The economic crisis of 2008 had nothing to do with Capitalism. The crisis of 2008 and that we are still facing today stems from issues with credit creation. Because for what caused the biggest boom(or bubble) in human history, is a debt that must be repaid(unlike Capital). The debt that was taken on which drove the expansion of the last 40 years cannot be repaid, hence the crisis. Even more disturbing, is that now a large percentage of the population is now not credit worthy. This makes further credit expansion nearly impossible. And under this credit-ran economy we now live under, when the credit doesn’t expand, the growth slows, until eventually, the music stops altogether.
This 40 year period of credit expansion birthed a new era in the global economy. The United States has been de-industrialized as a result of being able to buy products from low wage countries on credit. As Industry got smaller in the US, the Finance sector became the dominant sector of the US economy. But the music has slowed down dramatically in the Finance sector as well, now that Americans can’t bear any additional debt. Now that we are weak in industry and in way too much debt, it is a growing problem for the United States to be able to act as the driver of the global economy.
But it’s not just the US who’s economy is no longer capable of working successfully. It’s also the economies of all the countries, such as China, that have seen growth as a result of strong manufacturing and export. This is another global imbalance yet to correct.
Truth is, at least to a large extent, the government now manages our nation’s economy. The US’ demand is still the most important factor to economic growth to the global economy. The world NEEDS us to buy their stuff! But without credit, we can’t!
Now, the actions of other governments and government-related institutions(IE: the European Union) must be carefully monitored. Point in case, the news 2 months ago by the European Central Bank(Europe’s Fed) that they would lend Euros($630 billion worth) to European banks for up to 3 years at low interest rates, is the reason that global stock markets have been gaining over the past 6 weeks. The stock market is also at a high since the 2008 crisis, following news from the Federal Reserve that they would keep interest rates at near zero level through 2014.
Global markets have came back sharply not because of the success of the intervention from the Central Banks itself, but because investors are realizing that more government-directed interventions will come when necessary to prevent future crises.
It is flat out sad that the global economy depends on government intervention. This topic leads to a very controversial political subject regarding smaller or bigger government. Once side argues for bigger government to avert the crisis and the other wants small government with less regulation to get us out of the mess. The reality is, unless we can come together to find a true solution to our monetary problem, both sides will get slaughtered as the biggest bubble in human history pops and credit stops, wiping out the America middle class and taking the benefits with it that we have seen as a by-product of our global economic status.
Don’t get me wrong, market forces still have an important impact in the economy. My point is that now, more often than not, it is government or central bank’s action that has so much influence on market forces that it becomes a very grey area as to where the government influence stops and the market influence itself begins. Supply and Demand still play the key role in setting value. It’s just that today, governments have an enormous role in influencing both. It is imperative that we recognize this, and understand that this is not Capitalism. We must no longer worry about fixing the crisis with Capitalism but instead shift our attention to the crisis in the current economic system that exists in this global economy, a system of debt. The only question we should be asking is this, “Do we try to fix the current debt system, or do we need a better system? Do we need to abolish the current system and go back to the former phenomenon that was a true Capitalistic economy?” I woud say this, either way, one must understand what is going on in the global economy if he(or she) wants to join the rich, as opposed to be forced into the poor, as the middle class is wiped out.
Written by: Joshua Gayman
Last week the World seemed to take a break from worrying about Europe and focused their attention back to the United States and the meeting of the Federal Reserve AKA the Fed. The proof? The Euro rised big against the Dollar.
Ironically, the United States’ problems far surpass the debt problems of the European Union. The difference? We have a Central Bank that can print our currency out of nothing!
The Fed introduced an “Inflation Target,” which they set at 2%. This is something that has never been done before! Last year’s inflation numbers were closer to 3.5-4%, but given that the outlook for coming months is to drop significantly, expectations point to a drop under 2%, at which time would be a perfect scenario for the Fed to come out and unveil a 3rd round of quantitative easing AKA QE3.
The Fed also said they will keep short term rates(“over-night rates”) at all time lows through 2014. The Federal Reserve has never stated a policy that would last 3 years! What’s more crazy, is that debt is the only product the Central Bank sells. Can you imagine if a large company came out and said, “We are going to sell our one and only product at all time lows for the next 3 years.”? I am thinking we’d question whether they could survive another 3 years. The same should be true for the Fed, but I doubt it will. People are still so blinded by the illusion that they actually produce something..
The monetary policy by the Fed to keep rates low KILLS savers. This included anyone who has money in checking, savings, any type of deposit account, IRA, 401k, mutual funds, pensions, etc. If you have your money in one of these places, don’t expect a return for…YEARS.
So where do you see the economy going in the next few years? Well, if the statement by the Fed is any indication, I would say a strong recovery is not on the horizon.
I really don’t see these long term low rates benefiting the masses. I do see it benefiting small business owners who rely on short term loans. I also see it benefiting those who have Adjustable Rate Mortgages AKA “ARMS.” And the group I see being benefiting most by this are those savvy entrepreneurs who will use this cheap money to buy cash flow producing assets.
So what’s the bottom line?
The bottom line is that nothing is free. Money is no exception. There is a “cost for capital.” This means that there is a cost for borrowing money. DUH! The problem is that the cost of capital would be much higher if it weren’t for the Federal Reserve who can set the interest rate anywhere they want. By the Fed placing interest rates under the cost for capital, mal investment is brought into our economy by people who are getting loans for things they shouldn’t. It is because of this that I think the Fed needs to back off and let the market find it’s true equilibrium. This would allow for the smart money to come back into the marketplace. The smart money will stand on the sidelines as long as the Fed holds interest rates low. Investors can’t compete with the Fed when the Fed gets it’s capital by printing it out of thin air! Because the Fed simply “prints” their “capital,” they can hold interest rates at all time lows as long as they need to. Of course this is terrible for the economy as it means we are at their mercy.
If stimulating more debt would help us recover, I think it’s safe to say we’d have recovered by now. The reality is that pushing more debt into the system will not make our problems go away. It won’t slow the foreclosures, it won’t add jobs, and it won’t make life cost less money.
Like any private company, the Federal Reserve exists for one main purpose….PROFIT. The Federal Reserve can’t profit if it doesn’t exits. And it wouldn’t exist if people realized they don’t create anything of real value.
An indebted society is not a healthy one. Look at Greece.. If it weren’t for the US being able to print money, we’d be no better off than them.