by: Joshua Gamen
Former Prime Minister of Greece said in an interview that he thinks the media and journalists are being too hard on Greece, and that Greek bonds are actually healthier than they seem. He also said that investors should buy Greek bonds. All of this amidst a $170 billion bailout package to Greek, where investors are taking a 70% real loss on Greek bonds! Conspiracy of the rich at it’s finest… For more on the conspiracy of the rich from Joshua Gamen, click here!
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.
The dollar is on a rally the past few weeks, due to the crisis going on in Europe’s economy. But, can it last? Or will that same very crisis in Europe end up leading to a reverse and help the dollar fall faster once the psychology factor levels off?? -Joshua Gamen
It is absolutely madness. Yesterday was a huge injection of dollars into the global financial system by central banks. It seems fiat currencies are swirling the drain now.. Look for precious metals to surge again and listen for new talk of a one world currency..It’s only a matter of time. However, as Robert says, “The people who understand that they must increase their financial education, save themselves and not rely on the rich, or the government, survive and thrive in times of crisis”
So increase your financial education which will lead to increase in cash flow. Rely on God and your faith, not the rich or the government, and thrive in these times of oppertunity! – Joshua Gamen
In my book, Conspiracy of the Rich: The 8 New Rules of Money, I write that bailouts are the name of the game. This means that the ultra rich will never suffer like the middle class and poor do in financial crisis. The institutions that are deemed “too big to fail” will always be bailed out. This also means that sometimes big institutions prefer financial crisis because they know they will be bailed out, and they also know they can make a lot of money from those bailouts.
This week, a bombshell hit on the lending practices of the Federal Reserve to the largest banks in the world during the peak of the financial crisis. As Bloomberg reports in an article entitled, “Secret Fed Loans Gave Banks Undisclosed $13B,”
“The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he ’wasn’t aware of the magnitude.’ It dwarfed the Treasury Department’s better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.”
“The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue.”
Big gets bigger.
Everyone knew that the name of the game is bailouts for institutions that are too big to fail, and while news agencies have been talking about the gargantuan $7.7 billion in commitments by the Fed to save the economy, the details released this week through the Freedom of Information Act show what we’ve known all along – the rich will say anything to protect their ass-ets and build their balance sheets.
For instance, in November of 2008, Bank of America’s CEO, Kenneth Lewis said that his bank was “one of the strongest and most stable banks in the world.” On that same day, Bank of America owed $86 billion to the Federal Reserve in emergency loan money.
Jamie Dimon, CEO of JP Morgan Chase, told his shareholders in 2010 that he only borrowed from the Fed to encourage others to borrow from the Fed. In reality, the bank borrowed twice its cash holdings from the Fed, and on one day in February 2009, borrowed a colossal $48 billion – one year after the creation of the Fed’s emergency lending program.
All in all, the big six banks comprised of JPMorgan, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley accounted for 63 percent of all daily average lending by the Fed to banks and financial institutions, receiving over $160 billion in TARP funds and borrowing around $460 billion from the Fed.
During that time, “Total assets held by the six biggest U.S. banks increased 39 percent to $9.5 trillion on Sept. 30, 2011, from $6.8 trillion on the same day in 2006, according to Fed data.”
Additionally, the Fed helped prop up both Bear Sterns and Wachovia with emergency loans as they were being gobbled up by JPMorgan and Wells Fargo respectively. The Fed transferred $50 billion in secret loans to Wachovia to prevent financial collapse until Wells Fargo could seal the deal, and they sent $30 billion in secret loans to Bear Sterns so that JPMorgan could wrap up that deal—all while providing $29 billion in financing to JPMorgan to fund the deal.
Essentially, the Fed protected the bigger banks and helped them grow even bigger by keeping brain-dead banks on financial life support long enough to graft them into the bodies of bigger financial institutions like a financial Frankenstein.
This was all done in secret, and without the knowledge of the American people and the Congress.
The safety net.
This type of behavior is reckless because it creates a false safety net. The big banks and the ultra rich know they will be bailed out and so they take even greater risks, putting the economy at even greater risk, and playing games with your money.
As Professor Oliver Williamson says, “The banks that were too big got even bigger, and the problems that we had to begin with are magnified in the process. The big banks have incentives to take risks they wouldn’t take if they didn’t have government support. It’s a serious burden on the rest of the economy.”
Of course, this should come as no surprise, as the Fed doesn’t exist to protect the middle class and the poor. Rather, it exists to protect banks and the ultra rich. Something they’ve shown they can do well, efficiently, and without government knowledge or intervention.
Learn the rules of the rich with a financial education
All this is to show what I’ve been saying for many years, you can’t rely on the government to save you, and your definitely can’t rely on the Fed. The government doesn’t even know what’s going on in our financial policy and the Fed hides those details in order to help their friends on Wall Street…after all, the people who run the Fed used to work there, and probably will again someday. You don’t bite the hand that feeds.
If you want to avoid getting wiped out by the next financial crisis, you must understand the rules of the rich and play by those rules. With a new presidential election heating up this year, I’m sure you’ll hear many calls for hope and change on both sides. Many people will believe that their candidate will make a difference and that this will be the time things will change.
The reality is that nothing has changed in decades. The rich take care of the rich and grow richer. The poor and the middle class grow poorer. And the people who understand that they must increase their financial education, save themselves and not rely on the rich, or the government, survive and thrive in times of crisis.
Take charge of your financial future so that you can live large when hard times come.
By: Joshua Gayman
The reason Occupy Wall Street is happening right now is because there is a huge movement of young people who want to reclaim this country from corporate interests. These protesters feel that our political system has been hijacked by Wall Street and their corporations. Not only that, but they feel that our elected officials now serve the interests of the wealthy upper 1%, instead of “the 99 percent.”
I’m gonna write..Dang it!!! I’m gonna write…
It’s not that I can’t do, but that I can reach more people online than I can on the street. Also, I can capture attention. Why protest when I can speak more clearly through my mac sitting in my bedroom. I don’t oppose the Wall Street crashers. They are frustrated. They feel that the system has hijacked the way of life their parents had and that they planed to continue, and they are right.
The solution is that we need to reclaim our own money. If America acts now, we still have the financial and political power globally to reclaim our position. China will fight us hard, but we really need not compete directly. We don’t have to buy Chinese. If we open back up the factories we can put millions back to work and produce value back into our society. My God, can you imagine what stuff we would have cooking right now if everyone was working hard to better society? We are geniuses. I don’t really know why, but for some reason us Americans kick ass. In all actuality, I don’t think we have anything that any people don’t have. It’s just the timing and in my honest to God opinion, it’s God’s plan for this time.
So how did we really get where we are now? The world has turned upside down in the past 3 years!!
Well..Life happens. The only thing constant in this world aside from God’s love is change. Because of this thing called time, everything constantly evolves.
So what happened?
1700’s – USA is founded. We say F U to Britain because we do not want to use their currency and pay their taxes anymore. We draft a constitution that we will never let another entity print our currency and we will never have an income tax. We kick their butt and start our own country on free market using gold to back our currency. As an interesting sidenote..The South made their own currency during the Civil War, but with no gold backing it inflated to zero value..
We go from Wild West to Industrial Revolution. Life is changing rapidly with new mechanics. Lots of production is created, in fact, it is exponentially created because of leverage and tools.
Let’s face it..The media is about as honest with us as a politician. So when you think about it, how do you really know what you learned in school was even truth? I know I hear you already, “Oh here we go, another conspiracy article..” NO – Listen to this: John D. Rockefeller founded the US Board of Education in 1903. What did that guy want with the school system? And since he did buy it..Why didn’t he add education on money into the school system? Why do we still have a school system that is hundreds of years old and was created to manufacture military? Now here is my point, we have no idea if the things we read in our history books are true. History is not math, gramar, or science. History is one of the biggest tools used for manipulation and deception.
10 years later, John D Rockefeller, along with other ultra rich men such as JP Morgan, and Paul Warburg, founded a company and called it the Federal Reserve. This company would issue currency to countries. The trade off that they could offer to the Congress was that if they printed the money, they could give it to the government. Scandals in the Congress are nothing new, and the Federal Reserve Act passed.
Time for an income tax!!
The income tax was supposed to be to fund WWI, but we still pay it today, 100 years later…
20’s…HUGE recession, but it was removed from Rockefeller’s history curriculum in our education system that he hijacked.
GREAT DEPRESSION: Debt from WWI is too much to pay. we need more currency. The government confiscates gold and then raises the dollar-associated value to it by over 50%, hijacking over 50% of the real money in circulation and jeopardizing our whole system.
WWII – America wins. Bretton Woods Act is passed, making the United States’ currency known as the Dollar, the Reserve Currency of the World. Oil is now traded in dollars, making it so that other countries must exchange their currency for dollars and then purchase oil. This causes the value of the dollar to increase drastically and therefore makes it easier for the United States to get credit from foreign investors who are eager to invest in the luxurious American economy. After all, their debt is backed by the good faith of their tax payers.. Remember too, the Congress can now go the Federal Reserve whenever they want, increase their “debt ceiling,” and borrow more money.
America rocks like rock stars for 27 years, get involved in some turmoil overseas, increased the debt more. Then Nixon said let’s have a REALLY big money supply, since everyone in the world treats our dollar like gold! He totally cuts the link between the Dollar and gold. Expanding the money supply to infinity.
A few years later, the “Employee Retirement Income Security Act” is passed, making it so that the tax payers are responsibly for their own retirement, and the burden is lifted from corporations. Birth is given to the IRA and 401K. This makes it so that retirement money flows to Wall Street and they can operate the money as a ponzi scheme, with money from new investors paying out the old people as they retire. *Another sidenote: Social Security(Which was enacted during the great depression), also operates as a ponzi scheme, with the money flowing into the system from young workers’ paychecks and out to the retired older folks. The money retirees paid into the system has been spent.
For nearly 40 years, we lived out of our minds!!! There were recessions and expansions, but the reality is that no matter what, we could always get more money because we had a credit card with no credit limit. The credit card company was the rest of the world buying our debt, and the Federal Reserve company selling it.
Our economy boomed and we just kept continuing to kick ass. We got fat, lazy, and greedy, but we stayed smart. We powered through at the front of the line with our advances in technology, especially with computers and the internet. We created several huge bubbles with the stock market, precious metals, dot com, and real estate, but we never thought about the larger bubble that was emerging around all of the other bubbles. The credit balance that we had…The biggest bubble of all, debt!
In all reality each bubble helped us. Because off of each bubble, we could sell more debt, increasing our limit. The last one we benefited from was real estate. When we all could buy a house or re-finance one and get a rediculous amount of money for, with nothing down but a signature. How bitchin is that!? You could make $30,000 a year, live in a $300,000 house, drive a $30,000 car and have mad toys. All you had to do was refinance your house when you needed more money to cover your bills.
Then it popped. It popped because people could not afford the minimum debt payments on their mortgage payments anymore. Even with interest only loans and low interest short term adjustable loans, the mimimum monthly debt was just too much. The world quickly realized that the actual real estate was never truly worth what we sold the debt for. Values plummeted, but so did families losing their homes.
The government tried to keep the bubble going(and still is) by lowering interest rates, again and again and again. The Federal Reserve is happy to do so because it preserves the system of debt. If we stop selling our debt, they cannot continue to gain power over us for our indebtedness. Also, with all of the other countries attached to our debt system, known as the dollar, it keeps it easier for them to have a leash on the entire planet.
With mortgage payments stopping, lending stopped. Now, even with super low interest rates, the people are simply not allowed to take on anymore debt, unless they still have some collateral left that they are willing to put up, and most don’t..
With a country that’s whole currency system operating on debt, not getting any more loans, the economy dried up.
2007 – The banks failed because nobody could afford their loans. They sold a product that was risky, and they lost. The collateral from the loans was not sufficient to cover the exposure they had. Congress decided that if the banks failed, lending would stop, people could run to the banks to withdraw their money, and the economy would die, so they took on more debt from the federal reserve, pinning the tax on the US taxpayers back still(but now getting exponentially larger) and marched on with the debt system, even tho it was by all means bankrupt. They gave it to the banks, “to lend to the people.”
The banks didn’t loan shit to the people. The rest of the world gets mad(particularly China), because we are now exponentially increasing our money supply, and thus devaluing our debt to them.
With no buyers left outside of our country to buy our debt, and no assets to pledge them, the company knows as the Federal Reserve decides that they will just buy our debt themselves. This keeps the cash flowing into the United States, and stays off a collapse for the short term. The money supply keeps exponentially increasing, as prices rise on exports to combat the artificial expansion of our money supply.This is what is known as “quantitative easing.”
Meanwhile, people keeping losing their houses, their jobs, their businesses. Everyone keeps waiting for life to go back to normal. But it doesn’t happen…
The stock market goes up and down, but it doesn’t have any effect on anyone. The people that have money seem to keep getting bigger. But everyone you know is broke and jobless. People hear what the banks did with the money that they were given that was supposed to be for lending. They hear about the bonuses to all of the CEO’s that took their house.
Student loans never stop, but everyone is starting to figure out that the debt created by going to school is huge and they aren’t making nearly enough to make it manageable, if they are making anything at all.
Let’s face it…The debt system is broken. We still have some HUGE values that we contribute to the world. I like all of our professional sports, Google, Aaple, Nike, I could name many many more. But, we don’t have anything left to pledge as collateral to keep receiving debt to live on. We already pledged it up….
We go to Wall Street. We protest about the greed and corruption. We don’t go the the corporation the Federal Reserve who created the system, instead we go to the investors on Wall Street who’s job is to keep money flowing into the market to satisfy the system and pay our people’s retirement’s through pensions. Without Wall Street, many retirees would lose their retirement. Retirees like teachers, firemen, and police officers.
We need to take back over our systems. It’s sad to say, our currency is falling to zero like a slowly bleeding cow. And there is nothing anyone can do to stop the bleeding. We try to stop it with band aids such as expanding the money. But expanding the money without expanding the demand for the debt can’t create real value. So the dollar will die.
Value is coming back. Value is king. If you have a trade, great. If you don’t, learn one. What do you love? How can you do that so as to benefit society? If we can get back to creating real value, they’ll keep buying our debt. But we should not let Congress give away our value to the Federal Reserve. We can sell our debt directly if we are going to sell it at all.
What will happen next?
I don’t know.
I suspect that to preserve the system of debt, the central banks will create a globally currency. The world will buy into it because they won’t have a choice. The debt bubble in Europe popped too. Asia is next. The Chinese have been devaluing their currency to try and combat the inflation of the Dollar. The global currency will be digital, as in all actuality the Dollar is now digital itself. I don’t know which part of the world will receive the biggest inflow of the global currency, but I suspect that it will be the gographic location which produces the most value. Competition is inevitable.
No matter what, we aren’t here for a long time, we’re here for a good time…
Peace and love,
Sent from my iPhone