Good morning.
The stock market will get another chance to go all Wonder Woman on
whatever economic indicators are fired off this morning, just like it’s
pretty much been able to do all week. And all earnings season. A dip in
housing starts? Ping! Rising jobless claims? Clack! Weakness on the
manufacturing front? Tzing! A complete halt to the Fed’s cash infusion
flood? Well, she might need to warm up the invisible jet when that time
comes.
But for now, it’s good to be long. And soul-crushing to be short.
Unless, of course, your short call was on Facebook after it debuted a
year ago. Then you’re fine. With just a few exceptions, it’s been a
tough slog for those betting against this thing. According to Miller
Tabak & Co., the Goldman rolling shorts index is up 32% since June
when the market touched its recent low. The S&P is up 29% over that
period.
Therein lies some warning signs, however. “It’s giving the illusion to a degree that the rally is extremely healthy,” Miller Tabak’s top economist told WSJ MoneyBeat. “The buying isn’t as broad or as meaningful as you might expect.” Key market gauges: Unlucky seven for gold looks to be in the offing, with the June contract
GCM3-2.06% delivery down almost 1%. If it closes lower, that will be seven straight sessions.
The loss for the week is approaching 5% as the dollar gains on word of
the Fed potentially winding down its asset-buying program. You might
want to sell your Italian horns ASAP with Credit Suisse’s Ric Deverell
predicting “gold is going to get crushed” and will break below $1,000 an ounce in five years.
The Nikkei
JP:NIK0.67% closed up almost 1% to claw back from yesterday’s dip, while Hong Kong and Seoul were closed for holidays, keeping a lid on volume across the region. Europe
XX:SXXP0.24% is turning higher and looks like a safe bet to close with a weekly gain. As for U.S. markets, futures on the Dow
YMM30.07% and the S&P
ESM30.11% are showing some upside before the opening bell. The economy: It’s been a somewhat dreary
week for economic data — not that the market cares anymore — but we
could end on a high note with consumer sentiment expected to have risen
in May. Economists are looking for a reading of 77.5, up from 76.4, as
the markets have risen and jobs have been more plentiful. Later, the
Conference Board’s leading indicators for April may show a gain of 0.3%
after a dip of 0.1% in March. Read: Spotlight on the economy.
As for the market not caring, this chart tells the story:
Bloomberg
The buzz: Check yo self, Slim! The Nerd from the Northwest has taken back his throne as the richest man in the world, according to the Bloomberg Billionaires Index. Bill Gates returned to the throne he hasn’t held since 2007 after shares of Microsoft
MSFT-0.20% hit a five-year high yesterday. His fortune is up 16% so far
this year at $72.7 billion. A devastated Carlos Slim is toiling at $72.1
billion. More from The Tell.
Facebook
FB-0.15% turns a year old tomorrow, in terms of its life as a public
company. What a lame year it’s been for the stock, especially
considering what the market’s done. Get ready to be Facebook’d to death
this morning and through the weekend with a multimedia deluge of charts,
slides, videos, etc. MarketWatch/WSJ will be as guilty as anybody.
Check out this. And that. Or how about this.
GM
GM0.36% and Ford
F0.20% are trending after European car sales results showed the first monthly rise in a year and a half. Tesla
TSLA-0.27% is grabbing renewed attention after the company priced a chunk of its shares pretty much at market rates, a sign that demand is running high regardless of the recent pop. The chart of the day: Drexel University finance professor Wesley Gray posted this chart showing how NFL execs overpay for their investments, drawing comparisons with the stock market. Chasing the college superstars (one lousy, purple-drank-quaffing
excuse for a Raider springs to mind) is generally a losing proposition.
“Similar to stock investing, on average, buying high-flying growth
stocks is a terrible bet,” Gray wrote. Sometimes it’s just too alluring
to go for the sexy name, even if trading down for value is the obvious
choice. As always, there are the exceptions. “Owners of Microsoft in the
early 80′s won the equivalent of the NFL championship. Try telling them
that growth investing is a waste of time,” he added.
Cade Massey/Richard Thaler
The call of the day: Get over your loathing for the airline industry and take a hard look at Southwest Airlines
LUV0.00%, says SumZero contributor Kyle Cerminara. He is looking for the stock to more than double to $32 within a year’s time.
“Management had tripled capacity per share since the peak of the last
cycle while at the same time the share price had fallen by 50%,” he
wrote. In other words, the market is giving you the opportunity to own
six times as much capacity for each dollar of investment. Falling oil
prices could also provide a tailwind, but even if that didn’t
materialize “we would be left ‘only’ owning an under-valued,
well-managed industry leader,” he wrote. Random reads: Let’s commemorate the retirement of Posh’s husband with one of the greatest interviews of all time. (Ear muffs for my millions of grade school readers).
Google+, a beautiful disappointment.
In tough economic times like these, Spaniards simply have to learn to make sacrifices. Like the elephant-hunting king, who is giving up his yacht.
And if it all gets to be too much, there’s always the crack pipe.
Kai from Dogtown? Up for murder? What happened to all that heartwarming “you’re worthwhile and nobody can ever take that away from you” stuff?
I was on the fence about seeing “The Great Gatsby,” until this story informed me that it’s in godforsaken 3-D. Please. Stop.
Americans between the ages of 61 and 70 are withdrawing money from their
IRAs in amounts that are larger, both in absolute dollar amounts and as
a percentage of their IRA account balance, than those taken by older
households, according to a new report from the Employee Benefit Research
Institute.
And what’s especially troubling about that finding is this: IRA owners
under the age of 70½ are not even legally required to start taking
required minimum distributions (RMDs) from their IRAs. Under current tax
rules, traditional IRA account holders are only required to start
taking withdrawals from their IRAs no later than April 1 of the year
following the year in which they reach age 70½.
According to the EBRI report, Americans between the ages of 61 and
70—the so-called pre-RMD crowd—withdrew on average $16,655 per year from
their IRAs, while those between the ages of 71 and 80 withdrew $10,557.
What’s more, the pre-RMD Americans spent most of their IRA withdrawals
on regular expenses, while the post-RMD set actually saved some of their
withdrawal in CDs and the like.
The numbers are even worse for pre-RMD Americans who are in the two
lowest-income quartiles. Nearly half of those households withdrew money
from their IRAs, and on average those in the lowest-income quartile
withdrew 17.4% of their account balance. That amount, by the way,
exceeds the percentages required to be taken by those withdrawing RMDs,
which start at around 3.75% for most IRA owners and don’t exceed 6%
until about 83, said Jeffrey Levine, an IRA Technical Consultant with Ed
Slott and Co. and a contributor to MarketWatch’s RetireMentors.
Now this might not come as a surprise, but the consequences of dipping
into one’s IRA before age 70½ are significant. People could be putting
their future standard of living at risk, especially if they don’t other
sources of income in retirement such as a defined benefit pension plan
or income from employment.
“I think we are seeing for the age group of 61 to 70, people who had
planned to continue working but due to layoffs, a bad economy, and the
like now need to dip into their retirement dollars far sooner than
expected or planned,” said Thomas O’Connell, president of Senior Wealth
Solutions. “With the likelihood of a 20- to 40-year retirement time
frame, this is going to be catastrophic for many of these folks in their
later years.”
You don’t have to search far to find others who share that outlook. “I’m
not surprised by this,” said Jeremy Portnoff of Portnoff Financial.
“Many reports show that people do not save enough so it makes sense that
when they get to retirement—some are retiring too early, they have not
accumulated enough money—their distributions are much larger than they
would be required to be. This probably doesn’t bode well for their
ability to sustain relatively high withdrawals.”
Others see the same problem, but a different cause. “I think what is
happening is many corporations have moved away from monthly pensions for
retirees, thus leaving the money management decisions and the
withdrawal rate decisions up to the consumer,” said Matt Curfman, a
senior vice president with Richmond Brothers.
Often, he said, a younger retiree, defined as someone in their mid-50s
to mid-60s, will want to draw more out while they are young and healthy,
but they do so at a great risk. “Should they live well into their 80s
or 90s, it is entirely possible that they may run out of money if they
kept that higher withdrawal rate up over longer periods of time,” said
Curfman.
In many cases the higher withdrawal rate at a younger age can be OK as
long as when another source of income comes in, such as Social Security
payments, that withdrawal rate is reduced accordingly, Curfman said.
Absent that, Curfman said the only way a high withdrawal rate will work
is if the rate of return on a portfolio always exceeds that withdrawal
rate. He noted, for example, that from 2000 to the end of 2012 the
S&P 500 average return was 3.45% per year and the actual return was
1.61% per year. “If you were retired for this 13-year period with your
portfolio invested in the stock market and your withdrawal rate exceeded
1.61% it is very likely that your portfolio has lost money or is down
from where you started. That can be unsettling, especially if these were
the early years of your retirement.”
Meanwhile, the author of the EBRI report said IRA owners must be neither
overly cautious nor overly aggressive when it comes to IRA withdrawals.
“As more and more baby boomers enter retirement with large portions of
their retirement savings in IRAs, their financial security in retirement
may well depend on how they manage these accounts postretirement,”
Sudipto Banerjee, EBRI research associate and author of the report, said
in a release. “Some may be overly cautious in drawing down their IRA
balances, sacrificing a more enjoyable retirement, while others may
spend too much too soon, jeopardizing their retirement security.” Read IRA Withdrawals: How Much, When, and Other Saving Behavior.
Exceptions to the rule
In the main, experts advise against withdrawing money from your IRA to
pay for current living expenses. “There’s a reason many people with
large IRA balances or other savings hold off on taking distributions for
as long as possible,” said Levine. “If you can afford to wait, it
generally produces better results.”
But there are exceptions to the rule. In fact some experts recommend
that Americans withdraw money from their IRAs before age 70½ and delay
taking Social Security until age 70. Doing so, the experts say, reduces
the amount of one’s RMDs and taxable income and it also increases the
amount of one’s Social Security benefit. Read Innovative Strategies to
Help Maximize Social Security Benefits. Read also The Baby Boomer’s
Guide to Social Security.
“When I talk to my clients about retirement-income planning we are
talking about several things that are not intuitive to them,” said Craig
Adamson, president of Adamson Financial Planning. “First, when should
they draw on their Social Security? Sometimes it makes sense to pull
money from IRAs in a low-tax environment and let the Social Security
income continue to grow to full retirement age or up to age 70 to
maximize the benefit.”
Of course, when taking early distribution keep a close eye on your tax
bracket: “By taking early distributions from IRAs, are they going to
break through into the next tax bracket to support their lifestyle?”
asked Adamson. “Is this money they could be taken from Roth IRAs,
non-qualified accounts such as bank savings or CDs, or from cash value
life insurance so there is no tax consequence.”
An earthquake with a magnitude measured at 5.9 by Japan’s
Meteorological Agency has struck the northeast of the country. The
epicenter was close to the Fukushima coast and only 200km from Tokyo,
causing buildings in the capital to shake.
Image from Google Maps
RT May 18, 2013
The quake struck at 2:48 pm (05:48 GMT) in the Pacific Ocean,
approximately 50km (31 miles) from land. The United States Geological
Survey recorded the earthquake as being of magnitude 6.1, with a depth
of 33km (20.5 miles).
No tsunami warning has been issued, despite the offshore quake’s
close proximity to Fukushima prefecture, where the magnitude 9.0 quake
in March 2011 instigated the Tsunami, which led to the deaths of at
least 16,000 people and nuclear meltdown at the Fukushima Daiichi plant.
Tokyo Electric Power Co.’s two nuclear plants in the prefecture
reported no immediate irregularities as a result of the quake, according
to the local Kyodo news agency.
Miyagi prefecture, further north, suffered the strongest impact from
the quake. No information has been released on potential injuries.
However, its Onagawa nuclear plant also recorded no irregularities,
according to its operator Tohoku Electric Power Co. “We have received no reports of damage so far,” an official from Fukushima prefecture told AFP.
Bill Benson’s findings, published in “The Law That Never
Was,” make a convincing case that the 16th amendment was not legally
ratified and that Secretary of State Philander Knox was not merely in
error, but committed fraud when he declared it ratified in February
1913. What follows is a summary of some of the major findings for many
of the states, showing that their ratifications were not legal and
should not have been counted.
The 16th amendment had been sent out in 1909 to the state governors
for ratification by the state legislatures after having been passed by
Congress. There were 48 states at that time, and three-fourths, or 36,
of them were required to give their approval in order for it to be
ratified. The process took almost the whole term of the Taft administration, from 1909 to 1913.
Knox had received responses from 42 states when he declared the 16th amendment ratified on February 25, 1913, just a few days before leaving office to make way for the administration of Woodrow Wilson.
Knox acknowledged that four of those states (Utah, Conn, R.I. and N.H.)
had rejected it, and he counted 38 states as having approved it. We
will now examine some of the key evidence Bill Benson found regarding
the approval of the amendment in many of those states.
In Kentucky, the legislature acted on the amendment without even having received it from the governor (the governor of each state was to transmit the proposed amendment to the state legislature). The version of the amendment
that the Kentucky legislature made up and acted upon omitted the words
“on income” from the text, so they weren’t even voting on an income tax!
When they straightened that out (with the help of the governor), the
Kentucky senate rejected the amendment. Yet Philander Knox counted Kentucky as approving it!
In Oklahoma, the legislature changed the wording of the amendment so
that its meaning was virtually the opposite of what was intended by
Congress, and this was the version they sent back to Knox. Yet Knox
counted Oklahoma as approving it, despite a memo from his chief legal
counsel, Reuben Clark, that states were not allowed to change it in any
way.
Attorneys who have studied the subject have agreed that Kentucky and
Oklahoma should not have been counted as approvals by Philander Knox,
and, moreover, if any state could be shown to have violated its own
state constitution or laws in its approval process,
then that state’s approval would have to be thrown out. That gets us
past the “presumptive conclusion” argument, which says that the actions
of an executive official cannot be judged by a court, and admits that
Knox could be wrong.
If we subtract Kentucky and Oklahoma from the 38 approvals above, the
count of valid approvals falls to 36, the exact number needed for
ratification. If any more states can be shown to have had invalid
approvals, the 16th amendment must be regarded as null and void.
The state constitution of Tennessee prohibited the state legislature from acting on any proposed amendment to the U.S. Constitution sent by Congress until after the next election of state legislators. The intent, of course, is to give the proposed
amendment a chance to become an issue in the state legislative
elections so that the people can have a voice in determining the
outcome. It also provides a cooling off period to reduce the tendency to
approve an idea just because it happens to be the moment’s trend.
You’ve probably already guessed that the Tennessee legislature did not
hold off on voting for the amendment until after the next election, and
you’d be right – they didn’t; hence, they acted upon it illegally before
they were authorized to do so. They also violated their own state constitution
by failing to read the resolution on three different days as prescribed
by Article II, Section 18. These state constitutional violations make
their approval of the amendment null and void. Their approval is and was
invalid, and it brings the number of approving states down to 35, one
less than required for ratification.
Texas and Louisiana violated provisions in their state constitutions
prohibiting the legislatures from empowering the federal government
with any additional taxing authority. Now the number is down to 33.
Twelve other states, besides Tennessee, violated provisions in their constitutions
requiring that a bill be read on three different days before voting on
it. This is not a trivial requirement. It allows for a cooling off
period; it enables members who may be absent one day to be present on
another; it allows for a better familiarity with, and understanding of,
the measure under consideration, since some members may not always read a
bill or resolution before voting on it (believe it or not!). States
violating this procedure were: Mississippi, Ohio, Arkansas, Minnesota,
New Mexico, West Virginia, Indiana, Nevada, North Carolina, North
Dakota, Colorado, and Illinois. Now the number is reduced to 21 states
legally ratifying the amendment.
When Secretary Knox transmitted the proposed amendment to the states,
official certified and sealed copies were sent. Likewise, when state
results were returned to Knox, it was required that the documents,
including the resolution that was actually approved, be properly
certified, signed, and sealed by the appropriate official(s). This is no
more than any ordinary citizen has to do in filing any legal document,
so that it’s authenticity is assured; otherwise it is not acceptable
and is meaningless. How much more important it is to authenticate a
constitutional amendment! Yet a number of states did not do this,
returning uncertified, unsigned, and/or unsealed copies, and did not
rectify their negligence even after being reminded and warned by Knox.
The most egregious offenders were Ohio, California, Arkansas,
Mississippi, and Minnesota – which did not send any copy at all, so Knox
could not have known what they even voted on! Since four of these
states were already disqualified above, California is now subtracted
from the list of valid approvals, reducing it to 20.
These last five states, along with Kentucky and Oklahoma, have
particularly strong implications with regard to the fraud charge against
Knox, in that he cannot be excused for not knowing they shouldn’t have
been counted. Why was he in such a hurry? Why did he not demand that
they send proper documentation? They never did.
Further review would make the list dwindle down much more, but with
the number down to 20, sixteen fewer than required, this is a suitable
place to rest, without getting into the matter of several states whose constitutions limited the taxing authority of their legislatures, which could not give to the federal govern authority they did not have.
The results from the six states Knox had not heard from at the time he made his proclamation do not affect the conclusion that the amendment was not legally ratified. Of those six: two (Virginia and Pennsylvania) he never did hear from, because they ignored the proposed
amendment; Florida rejected it; two others (Vermont and Massachusetts)
had rejected it much earlier by recorded votes, but, strangely,
submitted to the Secretary within a few days of his ratification proclamation
that they had passed it (without recorded votes); West Virginia had
purportedly approved it at the end of January 1913, but its notification
had not yet been received (remember that West Virginia had violated its
own constitution, as noted above).
A PRIMER ON HOW WALL STREET PULLED OFF THE GREATEST
MORTGAGE INVESTMENT SWINDLE IN HISTORY WITH THE ASSISTANCE OF THE US
GOVERNMENT!
by Michael Rivero
BREAKING: 11-09-10 GREENSPAN ADMITS ON VIDEO FRAUD AND CRIMINALITY IN US BANKING SYSTEM!
1. SOME HISTORY
This story begins back before the United States was the United States.
The original thirteen colonies printed their own currency, and it
worked very well at empowering commerce and turning the young America
into a powerful growing economy, free of the poverty and unemployment
that even then crippled London. But the bankers of Europe, long used
to private banks issuing the public currencies, were horrified by the
American approach and saw it as a threat to their deeply cherished
religious belief that the gods intended for the bankers to have all the
wealth of the world. So, the Bank of England lobbied King George III
to impose the Currency Act on the colonies, which forbade the colonies
to use their own money and required them to borrow their lawful tender
from the Bank of England, at interest.
It took only a few years for this scheme to reduce the formerly
prosperous and productive colonies down to the poverty and unemployment
typical of London at the same time period, as depicted in the literature
of Charles Dickens, among others.
While the state-run American schools teach that the revolution was
about the Stamp act and the Tea tax, it was primarily the rage created
by the enforced impoverishment of the Currency Act which fueled the
rebellion. Why the Currency Act is not mentioned in the public schools
will become apparent further on. 2. THE ORIGINAL AMERICAN ECONOMY
Following the American Revolution, the Founding Fathers reverted back
to the system which had worked so well before the Currency Act.
As the above diagram shows, the Founding Fathers of this nation set
up a simple economic system that did not rely on a private central bank.
Government issued the public currency and spent it into circulation
where it was used by the public free of interest. Then the money was
taxed back into the government's hands, then to be re-spent back into
circulation. For each fiscal year the money issued equaled the money
collected. Nothing was lost. The dollar was based on a weight measure of
silver, which meant the value of a dollar was fixed and not subject to
the whims of government or bankers. 3. THE FIRST BANK OF THE UNITED STATES
This is a system which has worked very well for the civil population
throughout history. It made the new nation immediately prosperous. This
alarmed the European banking clans, which feared the American
inspiration might spread to other nations (as it did to France in 1793).
Where Britain's military might failed, politics succeeded and spurred
on by Alexander Hamilton, the first Bank of the United States was
granted a 20 year charter in 1791. Almost immediately, the spiraling
debt in the government budget, championed as necessary for international
commerce by Hamilton, began to drain the livelihood of ordinary
Americans. The furor over the debt was one of many issues that led to
the famous duel between Hamilton and Aaron Burr which resulted in
Hamilton's death on July 11, 1804. As a side note, the pistols which
were used in the duel are today in the possession of J. P. Morgan Chase
& Co. Hamilton continues to be lionized by the private banking
cartels he championed.
"Everything predicted by the enemies of banks, in the
beginning, is now coming to pass. We are to be ruined now by the deluge
of bank paper. It is cruel that such revolutions in private fortunes
should be at the mercy of avaricious adventurers, who, instead of
employing their capital, if any they have, in manufactures, commerce,
and other useful pursuits, make it an instrument to burden all the
interchanges of property with their swindling profits, profits which are
the price of no useful industry of theirs." --Thomas Jefferson
By 1811, the owners of the First Bank of the United States had become
rich while ruining the lives of ordinary Americans. Congress had
prudently limited the charter of the bank to 20 years and it expired in
1811. A move to re-charter the bank failed due to public opposition.
"The Bank of the United States is one of the most deadly
hostilities existing, against the principles and form of our
Constitution. An institution like this, penetrating by its branches
every part of the Union, acting by command and in phalanx, may, in a
critical moment, upset the government. I deem no government safe which
is under the vassalage of any self-constituted authorities, or any other
authority than that of the nation, or its regular functionaries. What
an obstruction could not this bank of the United States, with all its
branch banks, be in time of war! It might dictate to us the peace we
should accept, or withdraw its aids. Ought we then to give further
growth to an institution so powerful, so hostile?" --Thomas Jefferson
4. THE WAR OF 1812
The following year, with the conclusion of Britain's wars with
Napoleon, the Bank of England demanded King George re-invade the United
States to force them back into the clutches of private central banking,
this time with the Bank of England. Thus was initiated the war of 1812, a
war like any other war; created and waged for profit. 5. THE SECOND BANK OF THE UNITED STATES
The war of 1812 failed, and again political and monetary pressure
succeeded where military force had failed, and in 1816, President
Madison chartered a Second Bank of the United States, in part to deal
with the expenses created defending the nation from Britain a second
time and the runaway inflation caused by private banks issuing their own
banknotes without restraint. Like the First Bank of the United States,
the second one was granted a 20 year charter. By the time the charter
was due to expire, the nation was once again struggling with debt and
poverty while the bankers were growing richer every day.
As a result, Andrew Jackson opposed the renewal of the bank charter and made it a major platform of his campaign in 1832.
"Gentlemen, I have had men watching you for a long time and I
am convinced that you have used the funds of the bank to speculate in
the breadstuffs of the country. When you won, you divided the profits
amongst you, and when you lost, you charged it to the bank. You tell me
that if I take the deposits from the bank and annul its charter, I shall
ruin ten thousand families. That may be true, gentlemen, but that is
your sin! Should I let you go on, you will ruin fifty thousand families,
and that would be my sin! You are a den of vipers and thieves. I intend
to rout you out, and by the Eternal God, I will rout you out." --
Andrew Jackson
In 1835, an unemployed painter, Richard Lawrence, attempted to shoot
President Jackson twice, with both pistols failing to fire. Lawrence
gave as his reason for the attack that with the President dead, money
would be more plentiful, an obvious reference to Jackson's veto of the re-chartering
of the Second Bank of the United States. As a footnote, following the
loss of its charter, the Second Bank of the United States attempted to
continue as an ordinary bank, but went bankrupt in 1841. 6. THE PRIVATE CENTRAL BANK ECONOMY
The following diagram shows the principle difference with the central
bank system as opposed to the original economic system of the United
States.
As you can see, the main difference between the economic system
created by the Founding Fathers and the current system is that the
control of the printing presses has been given over to the private
central bank. The government no longer prints up and spends the money it
needs to operate, but BORROWS the money from the private central bank,
at interest! Then the money is spent into circulation and winds its way
through the population, and is then collected back in taxes. But here is
the problem. Taxes now have to collect back MORE money than the
government spent in order to pay the interest back to the private
central bank. Over time, relentlessly, the private central bank is
acquiring wealth from the population, in essence charging the people a
fee for doing what the government itself originally did for free. That
is the major difference between the economic system created by the
nation's founders (the reason we fought a war to be free of the Bank of
England) and the system we have today.
It is because we have been sold back into the debt slavery of a
private central bank that the history of the Currency Act and its impact
on the American Revolution is marginalized in the state-controlled
schools. We are brainwashed into believing that the Revolution was about
soggy tea!
\"If the debt which the banking companies owe be a
blessing to anybody, it is to themselves alone, who are realizing a
solid interest of eight or ten per cent on it. As to the public, these
companies have banished all our gold and silver medium, which, before
their institution, we had without interest, which never could have
perished in our hands, and would have been our salvation now in the hour
of war; instead of which they have given us two hundred million of
froth and bubble, on which we are to pay them heavy interest, until it
shall vanish into air... We are warranted, then, in affirming that this
parody on the principle of 'a public debt being a public blessing,' and
its mutation into the blessing of private instead of public debts, is as
ridiculous as the original principle itself. In both cases, the truth
is,
that capital may be produced by industry, and accumulated by economy;
but jugglers only will propose to create it by legerdemain tricks with
paper." --Thomas Jefferson
7. SILVER MONEY VERSUS PAPER MONEY
But the banks were still constrained by the Coinage Act
of 1792, which defined a dollar as 371.25 grains of pure silver,
matching the common silver currency in use around the world at the
time, or that weight of gold which would match in value 371.25 grains of
pure silver, 24.75
grains, 1/15 the weight of the silver in a silver dollar.
US Silver Dollar
US Gold Dollar (same scale)
It wasn't the coin that was the money, but the metal the coin contained.
Of course, carrying around large amounts of silver was difficult, so
paper certificates were issued, both silver and gold certificate, as a
convenience. But those paper certificates were not the money. They were
claim checks. They were accepted as items of value because you could
walk down to the banks and turn the claim checks in for the appropriate
amount of silver or gold. But the metal was the money, not the engraved
coins and not the paper.
The bankers could only loan out as much money, based on silver or
gold, as they had the silver and gold to cover in their vaults. The
adherence to gold and silver as a unit of value was a major limitation
on the banker's activities. 8. CIVIL WAR AND LINCOLN'S GREENBACK
Then in 1861, the Confederacy broke free of the United States.
Abraham Lincoln sought financing from the bankers for the war effort,
but balked at the usurious high interest rates the banks demanded.
Declaring that he would not enslave the white people to the bankers to
free the black people, Abraham Lincoln exercised his Presidential
Authority to issue a new government currency; the greenback.
However in order to make the currency work and to cover the
escalating costs of the War, Lincoln was forced to abandon
convertibility, meaning that the paper notes became the money and were
not convertible to silver or gold (despite the flood of silver from the
Comstock strike of 1857, which eventually led to Nevada's rapid
statehood and Federal taxation in 1864). While there was inflation at
the time, the government-issued currency, free of interest to a private
bank, worked well during the war years, and Abraham Lincoln declared his
intention to keep issuing the Greenbacks after the war's conclusion.
This did not please the world's bankers at all.
An 1865 London Times editorial directed against Lincoln's debt-free Greenbacks said it all:
"If that mischievous financial policy which had its
origin in the North American Republic during the late war in that
country, should become indurated down to a fixture, then that Government
will furnish its own money without cost. It will pay off its debts and
be without debt. It will become prosperous beyond precedent in the
history of the civilized governments of the world. The brains and wealth
of all countries will go to North America. That government must be
destroyed or it will destroy every monarchy on the globe."
Following Abraham Lincoln's assassination, Congress voted to end the
Greenbacks, but did not restore convertibility. Banks could issue notes
without regard to actual bullion reserves and a period of intense
post-war inflation and speculation resulted. THE BANKERS MANIFESTO
Congressman Charles A. Lindbergh, Sr. revealed the Bankers
Manifesto of 1892 to the U.S. Congress somewhere between 1907 and 1917.
The
source was an article written by Louis Even and published in United States Bankers Magazine 1892.
We (the bankers) must proceed with caution
and guard every move made, for
the lower order of
people are already showing signs of restless
commotion. Prudence will therefore show
a policy of apparently yielding to the
popular will until our plans are so far
consummated that we
can declare our designs without fear of any
organized resistance.
Organizations in the
United States should be carefully watched by
our trusted men, and we must take immediate
steps to control these organizations in our
interest or disrupt them.
At the coming Omaha convention to be held
July 4, 1892, our men must attend and direct
its movement or else there will be set on
foot such antagonism to our designs as may
require force to overcome.
This at the present time would be premature.
We are not yet ready for such a crisis.
Capital must protect
itself in every possible manner through
combination (conspiracy) and legislation.
The courts must be called to our aid, debts
must be collected, bonds and mortgages
foreclosed as rapidly as possible.
When, through the process of law, the common
people have lost their homes,
they will be more tractable and easily
governed through the influence of the strong
arm
of the government applied to a central power
of imperial wealth under the control of the
leading financiers.
People without homes will not quarrel with
their leaders. History repeats itself in
regular cycles. This truth is well known
among our principal men who are engaged in
forming an imperialism of the world. While
they are doing this, the people must be kept
in a state of political antagonism.
The question of tariff reform must be urged
through the organization known as the
Democratic Party, and the question of
protection with the reciprocity must be
forced to view through the Republican Party.
By thus dividing
voters, we can get them to expend their
energies in fighting over questions of no
importance to us, except as teachers to
the common herd. Thus, by discrete actions,
we can secure all that has been so
generously planned and successfully
accomplished.
9. THE GOLD STANDARD
In 1900 President McKinley kept a campaign promise to bring back
convertibility by signing the Gold Standard Act, making the Gold
Standard the basis for all US currency, even though much of the coinage
issued remained silver. McKinley did this because of the public
perception that the US Banking system was weak and corrupted, and
because the gold strikes in California, Alaska, and Colorado bolstered
the US Treasury's stock of that metal.
One year later, President McKinley was assassinated by Leon Czolosz,
who explained his attack at his execution saying,"I killed the President
because he was the enemy of the good people – the good working people."
10. THE FEDERAL RESERVE
In 1910, a group of private bankers met at a private island named
Jekyll Island to plan the imposition of yet another private central bank
on the people of the United States. As part of the ruse, they abandoned
the unpopular name "Bank of the United States" and chose the name
Federal Reserve to grant themselves the illusion that this was a
government agency, when in point of fact it is just another privately
owned central bank. Pretenses to the contrary notwithstanding, the
Federal Reserve is no more "Federal" than Federal Express. It is a
privately owned bank. Three years later, in 1913, Congress voted the
Federal Reserve act and President Wilson signed it, redeeming a campaign
promise to his financial backers. Six years later, as his Presidency
came to a close, Woodrow Wilson wrote.
“I am a most unhappy man. I have unwittingly ruined my
country. A great industrial nation is now controlled by its system of
credit.We are no longer a government by free opinion, no longer a
government by conviction and the vote of the majority, but a government
by the opinion and duress of a small group of dominant men.” -- Woodrow
Wilson 1919
Because of the earlier disasters with 20 year charters, the Federal
Reserve was granted a 100 year charter due to expire in 2013. A later
Congress amended the Federal Reserve act to make the charter permanent. 11. THE CRASH OF 1929
For a while, the new Federal Reserve was still bound by the
requirements of the Gold Standard. Under the law, they were required to
have enough gold on hand to redeem 40% of the paper notes they had
issued. The Federal Reserve claimed that this requirement limited their
ability to deal with the financial crash of 1929, and after years of
lobbying, finally persuaded incoming President Franklin Roosevelt to
abandon the gold standard entirely in 1933 and to confiscate all gold
and gold certificates in order to make the gold available to the US
Government for war funding purposes.
In looking back at the crash of 1929 it became obvious that reckless
speculation had created the over-valued market bubble, while easy credit
for buying stocks on margin drew in working-class people; people who
did not have risk capital to play with, to form each succeeding layer of
a rapidly-building pyramid doomed to eventual collapse. In the wake of
the melt-down, Congress passed the Banking Act of 1933, otherwise known
as the Glass-Steagall Act, which created the FDIC to restore public
confidence in the banks and stop the runs. Glass-Steagall also included a
ban on bank holding companies from owning other financial institutions,
which was seen as a major contributing factor to the reckless
speculation which precipitated the crash. 12. JOHN F. KENNEDY
The Federal Reserve completed their plan for the economic subjugation
of the American people in 1964, one year after the assassination of
President John F. Kennedy. Silver coin and certificates were still in
general use; money that came from the government and was used free of
interest. Since the money was something of value and owned by whoever
held it, the banks made no profit off of the use of that money and more
to the point, could not manipulate its value.
Then President John F. Kennedy signed Executive Order 11110 on June
4th, 1963. This order authorized the Treasury to issue a new government
currency, the US Note,
based on silver in Fort Knox, recycled from the huge magnets used in
early Uranium enrichment at Oak Ridge. This allowed the Kennedy
administration to
purchase four billion dollars worth of goods and services without having
to borrow the money from the Federal Reserve, and signaled Kennedy's
intention to restore the nations' economic system to the model used by
the Founding Fathers.
John F. Kennedy's United States Note.
Five months later, John Kennedy was assassinated and his US Notes
withdrawn from circulation. The Warren Commission, now widely
acknowledged to have been a cover-up, included as a member John J.
McCloy, President of Chase Manhattan Bank and President of the World
Bank. 13. THE END OF SILVER MONEY.
The following year, all silver coins and silver certificates were
withdrawn from circulation. The media proclaimed the new clad coinage
and the Federal Reserve Notes to be just as good as the silver money,
and the entrapment of the American people was complete. From then on,
all currency in circulation was worth what the private central bank said
it was worth, and over time, it has been declared worth less and less.
Just see how many "dollar" notes it takes to buy an original US Silver
Dollar today! 14. THE TRAP OF THE FEDERAL RESERVE
Unlike the economic system of value instituted by the Founding
Fathers, the Federal Reserve System is a debt-based economy. All money,
whether issued through the government, or by member banks to the public,
is the result of a loan from that Private Central Bank. And therein
lies the trap, because the moment that first Federal Reserve Note went
into circulation, more money is owed to the banking system than actually exists! The debt can never be paid off.
The system perpetuates only so long as an ever-larger group of new
borrowers can be found to create new money to pay the interest on the
old money. That is what makes it a pyramid.
More money is created out of thin air in response to a loan, but the
total debt still exceeds the total money supply. That is why the
government and media always talk about the “growth” of the economy.
“Growth” may sound like a good thing to the unenlightened, but in a
debt-based economy, “growth” means “nation and its people deeper in
debt-slavery". And because it is a pyramid, if the economy does not
grow, that is, if more new debt cannot be created to service the
interest on the old debt, the pyramid collapses, which is what is
happening now.
The Federal Reserve System is designed to suck the real wealth out of
the nation and put it in the pockets of the bankers, and now that they
have succeeded, the system is breaking down, too cash-poor to operate
efficiently, just as it did in the colonies in the early 1770s under the
Bank of England. The system is broken because the bankers have all the
wealth, and absent a new source of wealth to pay the bankers’ interest
charges and fees, the system is locking up.
Of course, it is all paper debts and make-believe obligations. The
money owed to the bankers by the government never existed in the first
place. It’s just part of the scam by which the bankers enslave the
world, which is the real essence of banking; to hold nations and people
perpetually in debt-servitude or indentured service, with the government
bribed to not take action to ameliorate the situation!
"This is the very essence of the banking industry; to make us all, whether we be nations or individuals, slaves to debt!"
15. DEREGULATION AS THE DOORWAY TO DISASTER
In 1999, the
Gramm-Leach-Blily repealed the provision of the Glass-Steagall act that
prohibited bank holding companies from owning other financial
institutions, and dropped the barrier that separated banks and
investment houses, allowing them to engage in each others business. This
created a repeat of the exact same financial environment that had led
to the crash of 1929. Those politicians who had championed deregulation,
like Senator John McCain (a veteran of the Keating S&L Scandal of
the 1980s), avoided keeping any oversight over the recently unchained
financial system to ensure that past crimes were not being repeated. As a
result, almost immediately after the repeal of Glass-Steagall, the
banks and investment houses began to acquire and "flip" homes, to drive
the prices up.
The reason for the flipping should be obvious. Banks
make their money off of interest on loans. The more people are forced to
borrow, the more they have to work to pay the banks back. From a bank's
point of view, a house that sells for only a few thousand dollars is
useless. The ideal is that same house costing so much that a borrower
will spend 30 years working off that paper debt, often paying the banks
many times more in interest than the house itself originally cost.
From 1999 through 2006 housing prices soared.
Adjustable-rate mortgages became the norm, with low lead-in teaser rates
to draw in new borrowers. Aiding the process was the US Government
itself, which baited the trap with an $8000 tax credit for first-time
home buyers.
16. MORTGAGES AS INVESTMENT DEVICES
Let us start by looking at how Mortgage companies worked up into the mid 2000s.
In a normal mortgage, the lender, who is a member bank of the Federal
Reserve system, prints up a bunch of cash (or enters the amount of the
loan into a computerized bank account) to loan to the mortgage
applicant. This is not a joke; the money the bank hands to you to buy a
house, or car, or iPod, is created out of thin air the moment you sign
the loan agreement, credit card slip, or mortgage papers.
Admit it; you thought the money for loans
came from the bank's depositors, didn't you! Because after all, that's
what you were taught in the state-controlled schools as a child! And
they would never lie to you, would they?
"If the people understood the rank injustice of our money and banking system, there would be a revolution before morning" -- President Andrew Jackson
The mortgage lender, who is allowed to print up the money they loan
out (up to a legally defined limit), makes their profit from the
borrower, who is not allowed to print up the money he or she
hands back to the bank, but must trade their labor for money with which
to pay the banker. Because of compound interest, the mortgage borrower
actually repays the banker many times the original cost of the home!
Let us say that you take out a $100,000 mortgage over 30 years
at 8% interest. That works out to $733.76 per month, which does not seem
too bad (until you start adding in insurance and property taxes, but
that is another story). $733.76 per month is $8,805.12 per year. Over 30
years that comes out to $264,153.60 paid out to the banker! In other
words, while the builder of the house earns $100,000 after buying the
land. buying materials. and building the house, the banker earns
$164,153.60 purely for having the right, granted by the US Government,
to run a printing press! If you or I created money the same way, we
would be thrown in jail for counterfeiting!
Remember that from an investor's point of view, the value of a home is not the home itself, but the debt the home creates
and shackled the homeowner to, worth many times the cost of the actual house!
That debt, which is pure profit, is sold to Americans as the "American
Dream"; to work 30 years to pay the
bankers many times what the house actually cost! (Some dream).
Fortunes were being made and the politicians were neck deep in the
greed.
Starting in 2006, Wall Street operators got the ideas of taking debt
obligations, and collecting them together to sell to other investors.
The mortgage lenders would take their mortgages and "bundle" them, then
sell the entire bundle for a flat fee. The advantage was that the
mortgage lender recovered his money in a single large lump, while the
investor buying the bundled mortgages would accept their return on
investment over the lifetime of the mortgages. For long-term investors
such as investment banks and pension funds, this was an ideal investment
so long as all the mortgages were paid on time every month.
The investment looked sound as long as real-estate prices kept
soaring, and nobody was taking too close a look at the individual
mortgages. Because the banks and mortgage companies were passing the
mortgages onto outside parties, there was little incentive to look too
closely at the borrowers, while financial incentives encouraged the
mortgage writers to over-inflate earnings and home values on the
applications to push the deals through.
The mortgage bundlers, drunk on the instant profits
falling like manna from heaven, started taking some reckless steps.
Mortgage analysis companies like Clayton Holdings were reporting to the
clients at the big banks that many of the so-called sub prime mortgages
did not meet basic underwriting requirements, either for the private
banks or for the three "F"s, Fannie Mae, Freddie Mac, and FHA. But the
mortgage bundlers blended the sub prime with prime mortgages and sold
off the bundles as "Mortgage Backed Securities" or "Collateralized Debt
Obligations".
In other words, the mortgage bundlers knew many of the mortgages in those bundles were not going to perform well, but did not tell the investors who bought them, then invested in "derivatives", basically
betting those MBS and CDOs would fail!
17. IT ISN'T THE FORECLOSURES, IT'S THE FRAUD!
"I suddenly realized I had joined the wrong mob." -- Lucky Luciano, comparing Wall Street to the Mafia
The problem is that some of the mortgage bundlers were greedy! They
needed more mortgages to feed the giant mortgage-backed-security bubble
they were inflating. So they started luring in borrowers with borderline
credit into "sub-prime" mortgages. Since members of the US Congress
were invested in the very companies that were reaping giant profits on
those mortgage-backed-securities, Congress voted through an $8000 tax
credit for first-time home buyers to bait them into the scheme! But
still there were not enough new mortgages. Investors were clamoring for
more mortgage-backed-securities to buy. Then the bankers had an
inspiration. They realized that while you can only sell a house to one
owner at a time, you can in theory sell the mortgage over and over,
since it is a piece of easily copied paper or more likely a computer
record in MERS, the Mortgage Electronic Registration System, a computer
system created to
evade title transfer fees and to speed up the churning of the
mortgages as they shuffled from one investment company to another! MERS
initially helped conceal the over-selling of mortgages, but eventually
the scam became known, and
numerous major banks have been exposed for selling the same mortgage into multiple mortgage-backed securities, generating vast profits for the bundlers.
Now, from the point of view of the mortgage bundlers, they might
not have seen this as a fraud. Nobody wants to see themselves as a
villain, and the bundlers may have decided they were simply following
the reserve system of banking to the next level.
Under the reserve system of banking, for every real dollar in
deposits you have in the vaults, you can create and loan out 8, or 10,
or 30, depending on the current reserve requirement imposed by the top
bank, the Federal Reserve System. The mortgage bundlers may have decided
that for every real mortgage they held, they could create 3, or 4 , or
in one case 20 out of thin air with which to collateralize the
investment package. As long as everyone does not come in to get the
actual mortgages at the same time, the system would work the way the
reserve money supply does in the banks, in which only enough real money
is on hand to cover expected transactions with customers, and the rest
for the bankers to play with out in investment land.
While this "reserve" approach to mortgages may have
looked okay to the bankers, who saw the world through money-colored
glasses, it is in fact a crime! In February 2009 CNBC broke the story
that many of the mortgage bundlers had pledged individual mortgages as
collateral over and over into different CDOs, when legally, they can be
pledged as collateral only once.
Chris Whalen tells CNBC's Larry Kudlow that Bear
Stearns will be exposed as having sold the same loan to different
investors on numerous occasions.
This is why many homes are being foreclosed on by more than one bank at a time.
But there is another problem with over-selling mortgages. For every
copy of a mortgage bundled into an investment, there is an investor
expecting a mortgage payment every month. Obviously the home buyer, who
has signed only one mortgage, is making only one mortgage payment. For
the extra copies of that mortgage there are no monthly payments coming
in. As long as only a few mortgages in the bundle are underperforming,
nobody noticed, but as the jobs left America and more and more home
buyers started to fall behind, the risk that the over-selling scheme
would be exposed to public scrutiny and condemnation (not to mention
arrest and prosecution) began to be apparent!
18. MERS
Because mortgages were changing hands so many times, the
regulatory fees for a transfer became a major cost factor for the
mortgage bundlers. To get around the fees and generally speed up the
process, a system was created called the Mortgage Electronic
Registration System, or MERS. All notes were transferred into MERS legal
ownership and then could be assigned and reassigned willy-nilly all
over the financial system without the usual paperwork and fees.
By mid 2008 the wheels were starting to come off the
boom times. The automatic interest rate increases on those
adjustable-rate mortgages started kicking in, and due to the high
prime-rate at the time, those increases in monthly payments were
enormous, with no increases in salaries and wages to cover them! The US
Government, at the same time it had taken the chains off of Wall Street
had continued a policy of tax credits that encouraged American
corporations to offshore high-paying manufacturing jobs. Caught between a
rock and a hard place, between higher mortgage payments and declining
wages and salaries, Americans started defaulting and the banks started
foreclosing.
Those mortgage-backed securities with multiply-assigned
mortgages ARE the "Toxic Assets" Congress was screaming about when they
forced the Troubled
Asset Relief Program through Congress in the fall of 2008, despite
overwhelming public opposition.
The mortgage bundlers had stuck key financial institutions with fraudulent mortgage-backed securities,
and Congress voted to loot the public
to purchase the useless paper and hide it from public scrutiny. Why?
Because the members of the US Congress had their own fortunes invested
in those
fraudulent mortgage-backed securities. Had the institutions collapsed,
members of Congress would have been ruined as well. So they saved their
own investments
by dropping the losses on the American people!
This is why, even though the public opposed TARP,
members of Congress were so happy when the bill finally was forced
through the Congress.
Commercial real estate was caught up in the mortgage-backed securities mania, and eventually the US Government used
$3 trillion in taxpayer funds to deal with that growing catastrophe!
In other cases, the Federal Government has been exposed as intentionally concealing the scale of the losses from the American taxpayer, even to the point of
hiding billions in bailout payments, further fueling speculation that the major "Too Big To Fail" banks have indeed already failed and are technically insolvent.
We are not talking about a few crooked bankers, but a
system-wide culture of criminality that makes Bernie
Madoff-with-the-loot, the NASDAQ founder who swindled his own investors
for $65 billion, look like a choir boy!
This brings us to the interesting sidebar of John McCain's
candidacy for President. All seemed to be going well for him until in a
move that surprised many political observes, McCain chose as his
Vice President Alaska Governor Sarah Palin. McCain's claim that he
needed a female Vice President seemed reasonable, but there were far
more qualified women out there such as Hawaii's Governor Linda Lingle,
who was not even contacted by McCain's campaign. In hindsight, it almost
seemed McCain was intentionally destroying the credibility of his own
campaign, and now a possible motive surfaces.
If it was already known that the mortgage-back securities had become
toxic assets, and that the taxpayer was going to be made to foot the
bill, what better plan for the Republicans that had created the mess to
drop
the task of screwing the American people onto the Democrats, including
a man willing to do anything to be America's first black
President! And it appears to have worked as the same Republicans that
created this financial mess appear poised for a mid-term return to
control of the White House. 21. FORECLOSURE-GATE
The problem was that nobody was checking to see if the
documents were actually correct or accurate, or if the people being
foreclosed were actually behind in their payments.Even worse,
lawyers were walking into court with foreclosure documents they knew were forged!
The rush was on to file as quickly as possible ahead of the expected
backlog of cases hitting the courts. In at least two known cases,
foreclosure proceedings were started against home owners who did not
even have mortgages! Companies that contracted to serve the legal papers
on the homeowners never delivered those papers and many people were
unaware they had been foreclosed on until the Sheriff showed up to
change the locks!
MERS itself has come under scrutiny, both because it is
clearly a device to evade government fees and regulation, and secondly
because no legislative body approved
its creation and implementation into the home mortgage system. There
has been no review of the system by any outside party.
That
massive fraud did take place is beyond doubt, and the US
Government in connivance with the bankers, conspired both to conceal the
true nature of the
cause of the economic crash and to dump trillions in dollars in losses
on the American taxpayer. And behind it all remains the core problem
that lenders and home-owners often do not
know where the notes and titles are to be found!
But with individual mortgages being sold out as many as
20 different times, the mortgage bundlers faced a huge problem. Every
home payment made has to be
repaid to the investor in the MBS for every time that mortgage was
resold, that is to say for every dollar paid by the home-owner, the
mortgage bundler is on the hook for up to $20 owed to the holders of the
mortgage backed securities.
In that context, the banks have a huge motive to foreclose on homes to
limit the losses on those oversubscribed mortgage backed securities!
Once the home is foreclosed, payments on those over-subscribed
mortgage backed securities stop and the criminals who over-sold those
mortgages are off the hook. It is not unlike the Mel Brooks movie "The
Producers" in which the producers intentionally
choose what they think is a terrible script, "Springtime for Hitler",
which they hope will close the first night. The producers then
over-subscribe the investment in the play by 1000%. 100% is spent
producing the show, with the other 900% to be pocketed
after the show fails and the investors, unaware of the extra shares in
the show, accept their losses and leave.
In the film, the play is a surprise hit and the producers go to
jail. Hopefully, the same thing will happen
to the financial companies who played the same game. If the
over-selling of mortgages into mortgage backed securities was
intentional, and given how many different financial companies did it,
this seems certain, then
the same financial institutions that profited from the selling of
mortgage backed securities intended to crash the housing market
to cover their escape.
They took mortgages and sold them as mortgage-backed securities over
and over again, then foreclosed the properties to end their obligations
to the over-subscribed mortgage backed securities. This is why nobody
cared whether
home buyers were actually qualified for the mortgages, as the mortgages
were never intended to be repaid, only foreclosed on!
However, the investors and especially the foreign banks that bought
those over-subscribed mortgage-backed-securities are not quietly
accepting their losses! Bank of America is being sued by PIMCO, the New
York Fed, and
several European banks. Two class-action suits have been filed
against the owners of MERS. Sooner or later the fraudulent
over-selling of those bundled mortgages must come out. And the bankers
will stand exposed as the criminals they really are.
The only solution I can think of (short of armed
rebellion and guillotining the culprits) is rather drastic, and not even
original with me. In Tom Clancy's book
"Debt of Honor"
a stock market crash is exacerbated when the computer systems used to
track transactions are sabotaged. That seems a good metaphor for the
runaway mortgage-backed Securities market compounded by MERS allowing
(or fraudulent bankers causing) mortgages to be placed in multiple
investment bundles. The inspiration in the book is a phrase heard often
in science;"If you didn't write it down, it did not happen!" And in the
book, the solution is to simply discard everything that happened after
the last good record and restart the machinery at that point. The stock
market re-opens with the last good trade before the computers were
sabotaged and everybody goes home happy, eventually.
Of course, real life will not be that simple. The
mortgage bundlers have made fortunes off of these deals. If they can
claim innocent victim of a computer error, then they will not be willing
to surrender the fortunes they made; they will resist any solution that
involves losing their profits, no matter how ill-gotten they may be.
They are quite happy with the world as it is now.
That the relentless looting of the public treasury to
cover-up this disaster has harmed the nation is beyond doubt. Trillions
that might have paid for new schools and roads and hospitals has
vanished into the black hole of Wall Street, to buy up bad paper and
feed it to the shredder before the public finds out that once again, as
is typical of a fascist economy, the poor are made to pay for all!
People without mortgages, people who have never bought a home, are all
harmed by this disaster. We are all victims of the rampant and reckless
greed that consumes the money addicts in the halls of power. 43 million
Americans are on food Stamps, and according to Barron's Magazine(October 11, 2010),
unemployment is at 22%, which is depression levels. Meanwhile, Wall
Street executives will collect bonuses this year totaling 8% of all the
US cash in circulation!
Ultimately, the homes taken by MERS must be restored to
their rightful owners. The people who bought what they thought were
honestly foreclosed homes in good faith must of course be compensated
and provided with equivalent properties. Beyond that, it is time to take
a close look at the true nature of banks, especially the Federal
Reserve, and to understand that banks do not serve the public, they
serve only themselves!
"I believe that banking institutions are more dangerous to our
liberties than standing armies. If the American people ever allow
private banks to control the issue of their currency, first by
inflation, then by deflation, the banks and corporations that will grow
up around [the banks] will deprive the people of all property until
their children wake-up homeless on the continent their fathers
conquered. The issuing power should be taken from the banks and restored
to the people, to whom it properly belongs."
Thomas Jefferson, (Attributed) 3rd president of US (1743 - 1826)
THE US GOVERNMENT TOOK YOUR JOBS SO THE BANKS COULD TAKE YOUR HOMES TO COVER THE COSTS OF THEIR MORTGAGE-BACKED SECURITY FRAUD
In this recent hard-hitting interview with Financial Sense Newshour,
successful entrepreneur and twice presidential candidate Steve Forbes
likens Fed Chairman Ben Bernanke to a blind astronomer, says quantitative easings,
or “QE’s”, should be called “Titanics,” while also warning listeners of
impending wealth taxes now used in France and elsewhere. http://www.financialsense.com/steve-forbes/fed-sinking-real-economy-quantitative-easing-titanic
“There’s never been a time when the [Fed] has positively guided the
economy. It’s always a disaster when they try to guide the economy, and
we see it here,” he explained.
“QE, or Titanic, whatever you want to call it, is contracting the economy,” he added.
“You know of price controls? When you artificially lower the price of
something, you get less of it. The same is true of credit,” he said.
“By artificially lowering the price of credit, the government never
has a problem, big companies never have a problem, but small businesses —
very uncertain line of credit. Only now are they beginning to get a
little more credit.”
Over the past month there has been a statistically improbable
concurrence of events that can only be explained as a conspiracy to
protect the dollar from the Federal Reserve’s policy of Quantitative
Easing (QE).
Quantitative Easing is the term given to the Federal Reserve’s policy of
printing 1,000 billion new dollars annually in order to finance the US
budget deficit by purchasing US Treasury bonds and to keep the prices
high of debt-related derivatives on the “banks too big to fail” (BTBF)
balance sheets by purchasing mortgage-backed derivatives. Without QE,
interest rates would be much higher, and values on the banks’ balance
sheets would be much lower.
Quantitative Easing has been underway since December 2008. During these
54 months, the Federal Reserve has created several trillion new dollars
with which the Fed has monetized the same amount of debt.
One result of this policy is that most real US interest rates are
negative. Another result is that the supply of dollars has outstripped
the world’s demand for dollars.
These two results are the reason that the Federal Reserve’s policy of
printing money with which to purchase Treasury bonds and mortgage backed
derivatives threatens the dollar’s exchange value and, thus, the
dollar’s role as world reserve currency.
To be the world reserve currency means that the
dollar can be used to pay any and every country’s oil bills and trade
deficit. The dollar is the medium of international payment.
This is very helpful to the US and is the main source of US power.
Because the dollar is the reserve currency, the US can cover its import
costs and pay for its cost of operation simply by creating its own paper
money.
If the dollar were not the reserve currency, Washington would not be
able to finance its wars or continue to run large trade and budget
deficits. Therefore, protecting the exchange value of the dollar is
Washington’s prime concern if it is to remain a superpower.
The threats to the dollar are alternative monies–currencies that are not
being created in enormous quantities, gold and silver, and Bitcoins, a
digital currency.
The Bitcoin threat was eliminated on May 17 when the Gestapo Department
of Homeland Security seized Bitcoin’s accounts. The excuse was that
Bitcoin had failed to register in keeping with the US Treasury’s
anti-money laundering requirements.
Washington has stifled the threat from other currencies by convincing
other large currencies to out-print the dollar. Japan has complied, and
the European Central Bank, though somewhat constrained by Germany, has
entered the printing mode in order to bail out the private banks
endangered by the “sovereign debt crisis.”
That leaves gold and silver. The enormous increase in the prices of gold
and silver over the last decade convinced Washington that there are a
number of miscreants who do not trust the dollar and whose numbers must
not be permitted to increase.
The price of gold rose from $272 an ounce in December 2000 to $1,917.50
on August 23, 2011. The financial gangsters who own and run America
panicked. With the price of the dollar collapsing in relation to
historical real money, how could the dollar’s exchange rate to other
currencies be valid? If the dollar’s exchange value came under attack,
the Federal Reserve would have to stop printing and would lose control
over interest rates.
The bond and stock market bubbles would pop, and the interest payments
on the federal debt would explode, leaving Washington even more indebted
and unable to finance its wars, police state, and bankster bailouts.
Something had to be done about the rising price of gold and silver.
There
are two bullion markets. One is a paper market in New York, Comex,
where paper claims to gold are traded. The other is the physical market
where personal possession is taken of the metal–coin shops, bullion
dealers, jewelry stores.
The way the banksters have it set up, the price of bullion is not set in
the markets in which people actually take possession of the metals. The
price is set in the paper market where speculators gamble.
This bifurcated market gave the Federal Reserve the ability to protect the dollar from its printing press.
On Friday, April 12, 2013, short sales of gold hit the New York market
in an amount estimated to have been somewhere between 124 and 400 tons
of gold. This enormous and unprecedented sale implies an illegal
conspiracy of sellers intent on rigging the market or action by the
Federal Reserve through its agents, the BTBF that are the bullion banks.
The enormous sales of naked shorts drove down the gold price, triggering
stop-loss orders and margin calls. The attack continued on Monday,
April 15, and has continued since.
Before going further, note that there are position limits imposed on the
number of contracts that traders can sell at one time. The 124 tons
figure would have required 14 traders with no open interest on the
exchange to sell all together in the same few minutes 40,000 futures
contracts. The likelihood of so many traders deciding to short at the
same moment at the maximum permitted is not believable. This was an
attack ordered by the Federal Reserve, which is why there is no
investigation of the illegality.
Note also that no seller that wanted out of a position would give
himself a low price by dumping an enormous amount all at once unless the
goal was not profit but to smash the bullion price.
Since the April 12-15 attack on the gold price, subsequent attacks have
occurred at 2pm Hong Kong time and 2 am New York time. At this time
activity is light, waiting on London to begin operating. As William
S.Kaye has observed, no entity concerned about profits would choose this
time to sell 20,000 to 30,000 futures contracts, but this is what has
been happening.
Who can be unconcerned with losing money in this way? Only a central bank that can print it.
Now we come to the physical market where people take possession of bullion instead of betting on paper instruments. Look at this chart from ZeroHedge.
The demand for physical possession is high, despite the assault on gold
that began in 2011, but as the price is set in the non-real paper
market, orchestrated short sales, as in the current quarter of 2013, can
drive down the price regardless of the fact that the actual demand for
gold and silver cannot be met.
While
the corrupt Western financial press urges people to abandon bullion,
everyone is trying to purchase more, and the premiums above the spot
price have risen. Around the world there is a shortage of gold and
silver in the forms, such as one-ounce coins and ten-ounce bars, that
individuals demand.
That the decline in gold and silver prices is an orchestration is
apparent from the fact that the demand for bullion in the physical
market has increased while naked short sales in the paper market imply a
flight from bullion.
What does this illegal manipulation of markets by the Federal Reserve
tell us? It tells us that the Federal Reserve sees no way out of
printing money in order to support the federal deficit and the insolvent
banks. If the dollar came under attack and the Federal Reserve had to
stop printing dollars, interest rates would rise. The bond and stock
markets would collapse. The dollar would be abandoned as reserve
currency. Washington would no longer be able to pay its bills and would
lose its hegemony. The world of hubristic Washington would collapse.
It remains to be seen whether Washington can prevail over the world
demand for gold and silver. Can the dollar remain supreme when
offshoring has deprived the US of the ability to cover its imports with
exports? Can the dollar remain supreme when the Federal reserve is
creating 1,000 billion new ones each year, while the BRICS, China and
Japan, China and Australia, and China and Russia are making deals to
settle their trade balances without the use of the dollar?
If the consumption-based US economy deprived of consumer income by jobs
offshoring takes a further dip down in the third or fourth quarter–a
downturn that cannot be masked by phony statistical releases–the federal
deficit will rise. What will be the effect on the dollar if the Federal
Reserve has to increase its Quantitative Easing?
A perfect storm has been prepared for America. Real interest rates are
negative, but debt and money are being created hand over foot. The
dollar’s demise awaits the world’s decision how to get out of it. The
Federal Reserve can print dollars with which to keep the bond and stock
markets high, but the Federal Reserve cannot print foreign currencies
with which to keep the dollar afloat.
When the dollar goes, Washington’s power goes, which is why the bullion
market is rigged. Protect the power. That is the agenda. Is it another
Washington over-reach?
This article first appeared at Paul Craig Roberts' new website Institute For Political Economy.
Paul Craig Roberts was Assistant Secretary of the Treasury for Economic
Policy and associate editor of the Wall Street Journal. He was
columnist for Business Week, Scripps Howard News Service, and Creators
Syndicate. He has had many university appointments. His Internet
columns have attracted a worldwide following.
