Bailout: The name of the game

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.”

Additionally,

“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.

Written by: Robert Kiyosaki

Advertisements

What happened to our money, to our country?!

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.

Moving on…

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….

Present Day:

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,

1.

Is “Occupy Wall Street Confused?”

“Some of those individuals that are demonstrating are against profits and against companies. I do a lot of criticism of wall street and the banks, but I think if people get rich because they are insider traders with the federal reserve system or are getting contracts form the government, and then they get bailed out when they get into trouble, no wonder people get upset. But if you have a Steve Jobs, that is very wealthy because he produced a good product and the people loved the product and he produced a lot of jobs, I think that is entirely different.” -Ron Paul

 

 

BS: “The Recession is Over.”

By Joshua Gamen

Sure. I recall a lot of hype last summer that the real estate market had hit bottom too.. Try telling that it has hit bottom to the millions of Americans who have lost their home to foreclosure this year. Or to their neighbors, who continue to throw their money at their sinking ship home while the foreclosures around them sink it’s value, and any hope for a return in their lifetime.

Who is the recession over for? The millions of unemployed people? The business owners who don’t have any customers? The guy trying to sell his home? The elderly lady trying to retire? The young adult trying to start his business? TELL ME, WHO IS THE FREAKING RECESSION OVER FOR?!

Let’s look at housing numbers:

  • Almost $6 trillion in housing wealth has been lost since 2005
  • Home values have dropped 30 percent
  • Existing home sales dropped 27 percent over the previous month
  • Housing inventories stand at 12.5 months(some part of the country, 24-36 months), over twice what’s considered healthy

What about Income, or Unemployment?

  • The unemployment rate is officially at 9.6%. It is a lot higher unofficially, because many unemployed Americans have been without a job for too long for the government to consider counting them.
  • Americans with jobs have seen their income fall over 4% between ’07-’09, and the % of Americans living BELOW the poverty level rose to 14.3%!
  • The gap is widening largely between the rich and the poor. Furthermore, the gap between the rich and the middle class is growing rapidly, as is the pace.(The top 20% of households now account for over 50% of all pre-tax income in the country = bye bye middle class.)

To quote the great educator/businessman/investor, Robert Kiyosaki:

“Maybe when the NBER says the recession is over, they mean it’s over for the ultra-rich. After all, many corporations are now posting better than expected earnings reports and balance sheets are getting healthier. For instance, FedEx recently announced that their earnings more than doubled. They also announced that they’re firing 1,700 people. Why? I believe it’s because they know what you already know, the recession may be “officially” over—but it’s not really over. Is the recession over for housing? Not according to the numbers. Thanks to high unemployment, new home orders are down 15 percent over last year, foreclosures are still rising, and pricing is not recovering. People are predicting that the housing inventory, which is more than double healthy levels, will take up to three years to work through. There will be no recovery until that happens.”

MORE COMING!

I wish I could post some stats to show that the market is taking a positive direction, but that would be covering up the truth with illusions. There are plenty of illusions out there to hide behind, but let’s be real..

Unemployment is still rising, and without jobs, nothing can get done. Business owners can’t provide jobs if they don’t have customers. And there aren’t any customers if there isn’t any money to spend. Sure, more money can be printed, but it will only become worth less as they print more and more, and they are..

MASSIVE government printing of US Currency. I call it currency, because it is just that-it’s not money! In 1971 President Nixon took the US off of the gold standard, meaning that the dollar was no longer attached to anything of value. It is simply a piece of paper that is backed by the good faith of the citizens of the United States.(See US dollar bill) They can print as much of this paper as they want, but the problem is, supply and demand will always work their course. Too much supply brings the equilibrium price down, and with the rate they have been running the printing presses the past few years, the market will soon be flooded with worthless pieces of green paper. –

If you study the history of currencies, since the earliest recorded times, every civilization that has had a currency not attached to something of value(ie: gold or silver), has gone to 0. That means, as more and more of the currency comes into existence, the existing currency is devalued, until the currency is no longer worth anything. Sound like pennies? Soon this will be nickels, then dimes, then quarters. Even the metal in them won’t be worth much, since they haven’t been made from silver since the late 60’s.(Weird how the government stopped using real silver and snatched it out of the money supply just a few short years prior to 1971 when our currency was removed from it’s tie to gold. Conspiracy?? 😉

In 1974, the government passed a law called ERISA. This made it so that people’s retirement was up to themselves, not the employer. It gave birth to plans like the 401k, and mutual funds, plans that were devised so that you could “invest for your retirement.” When this happened the American citizens turned to mutual funds, stocks and 401k’s for retirement plans. What they were actually doing was handing their money to wall street to play with until they retire, and expecting that wall street would automatically grow their money for them.

As we saw with the recent stock market crash, Wall Street is not looking out for the mutual funds or 401k accounts, Wall Street is looking out for their FAT KATS. What’s worse is, regardless of your opinion on the stock market, it doesn’t take a lot of intelligence to see that when the largest demographic of citizens(Baby Boomers) start to retire, money will flow out of the stock market like never before. This will be a the second dip of this what I believe to be, double dip recession.

Foreclosures can’t slow down, not yet. Go to google and type in mortgage resets. You will see graphs that will show you the largest mortgage product ever sold – the 5/1 Adjustable Rate Mortgage(ARM), and when these loans will adjust. These loans were primarily written in 2006 and 2007, right at the end of the real estate bubble, and will be resetting over the next 2 years. This will cause another HUGE drop in real estate values, as the number of foreclosures will sky higher, and at a more rapid pace than current.

Good News??

There is good news…

When markets bubble and then pop, the money doesn’t disappear, it just flows into another asset class. It moves.. The money is going somewhere, so where is it going? Well, take a look at the value of gold, or silver. Go to Google, and type in “gold spot.” Examine the value of gold as it has climbed over the past week, month, year, 5 years, or further. Then check out the same for silver. Since forever, gold and silver have always been used for exchange, hence making it the real money of the world. Until the rich figure out where they can put their money to make more money, they are holding it in the form of real money, gold and silver. It’s catching on quick, think of how many places you see driving to work and back that say, “WE BUY GOLD.” It is the next major bubble, but we’re still early to the trend. Gold just went over $1,300 an ounce today, but we will see gold hit $13,000 per ounce, and in the not too far future.

Assets are cheap. Real estate, businesses, etc. Now is a good time to gather as many assets as you can, that will reward you as the economy turns around. Buy investments for what they will provide you in cash flow, do not worry about selling for a profit. That is speculation. Whatever you grow your asset and sell it for later should be the gravy. Now is an excellent time to pickup businesses for cheap, cut out the expenses, make the systems more efficient, and get the asset as profitable as possible. Now is an amazing time to buy real estate that will cash flow for you as well.(Rental income exceeding the loan you are paying to own the property.)

So…

The recession is not over. We are in a new economy, the old one is not coming back. We are in a shift from the industrial era to the information age. In this new economy, knowledge is money. You can print your own money just like the the Fed does. Financial IQ is the way out of the paycheck chasing. Get real, get right, and get assets! Financial knowledge, is the greatest asset you have, so acquire as much of it as you can!

~Josh