A very VERY modest proposal: For preventing the middle class of America from being a burden to the Banks and Federal Government

It is indeed melancholy to drive our economically sensible SUVs down the main street of modern America and see foreclosure signs, beggars on the streets who at one point in time may have held highly esteemed occupations, senseless violence, over 40 million+ Americans on food stamps, and indeed very long breadlines as people scramble to make daily ends meet.

I think it is agreed by all parties that the unsustainable amount of debt, insolvent banks, and bankrupt federal government is the root cause of the strife and daily despair experienced by Americans all over this great nation. It should, without a doubt, be the common goal of the people to find an inexpensive and sustainably sound solution to this crisis. I believe that I have found a simple solution that would transform all citizens into preservers of this great nation.

My solution is far from only providing ease to the bankers, financial elite, and federal government. As we can see now, according to statements recently released by the Federal Reserve, our economy is on a path for modest growth thanks to the unprecedented intervention and stimulus in the markets by said central bank. Quantitative easing has worked wonders, as newly non industrial and non productive jobs have started reemerging and are now available to the general public. The reality is, this is truly not enough to ease the despair and hopelessness many American's are experiencing.

My mind has wondered for many year in how to deal with this grossly outrageous situation that we the citizens have put ourselves in. But this morning, I woke up and was enlightened by an idea that was available to any and all citizens that have a pulse, the credit card!

In the past, the credit card was only used to buy things that the citizens could not afford but really wanted. As real wages have steadily decreased, consumers turned to debt instead to continue down the road of a very high standard of completely sustainable living. When the prices of commodities and assets went up, while wages decreased and only decreased, it only made sense to continue the consumption binge with this debt. How can a person live without Ipads and not watching dancing with the stars on a 50 inch flat screen TV in high definition when it was completely out of their budget?

However, it is with a very melancholy tone that I announce that this completely sustainable lifestyle has hit a brick wall, because for some reason, people are losing their jobs and houses. It is in the job of the citizen to not question why this has hit a brick wall, but listen to our political demagogues and mainstream media that to get out of this crisis, we must spend our way out.

However, my new brilliant scheme is much more productive that just buying these much needed and extremely necessary assets with debt to grow our economy. Instead, we the people can use our credit cards to directly pay the Treasury Department through this website generously provided by the Federal Government. https://www.pay.gov/paygov/forms/formInstance.html?agencyFormId=23779454. Notice that on this website, there is a function in which you can pay off the national debt with your credit card! According to my research and analysis, the average American has roughly 10 credit cards. If we all band together, and in no due time, the national debt can be paid off if we all max our credit card simultaneously! No more talk of raising the debt ceiling, no more foreclosures, no more unemployment, only the continuation of our highly sustainable standard of living is the result!

note: please make sure you use a credit card that is attached to a too big to fail bank or financial entity to avoid any issues. As a last result we can always ask China for help.

QE binge and its affects

The whole world is playing a game of financial fiat musical chairs on a tilt-oh-whirl that is spinning to fast it gives it a sense of stability, artificial gravity if you will, but the bolts and structure are eroding exponentially. It's a perfect storm of government failure and banking greed about to change the face of the earth...what might have been a worldwide systematic crash due to fraud and misallocated resources has now been exasperated by Benocide Bernanke's monetary polices, coupled with wallstreets symbiotic relationship with the federal government, which is bringing the world wide foundations of civilization to its knees

The whole US monetary system is a ponzi scheme in which money is created out of debt. There is always more debt in the system than there is money to pay off the debt. New money must always be created to pay off the old debts, which are compounding. This means that money creation in itself, is exponentially increasing, as is the debt. It is inherently inflationary and punishes savers, which in turn undermines capital investment and promotes speculation which leads to even more inflation. This system is clearly unsustainable, and will inevitably reach a tipping point in which even if the citizens are taxed 100% of their income, it is not enough to even pay the interest on the new money creation. With National debt at $14 trillion, social security and medicare at $77+ trillion, and fannie mae and freddy mac debt (which is kept off US balance sheets, along with medicare, medicaid, and social security) the total debt balloons to multiple times the US GDP.

We have reached that tipping point after 40+ years of this fiat system. The only choices are a US default on the debt, or a slow inflationary default on the debt. The Fed Reserve has chosen the latter with its QE policies. A slow inflationary default on US debt by printing money and saying "here is the money we owe you!"

With QE the federal reserve is trying to get rid of banking debt and national debt via printing money and buying treasuries from dealer banks (such as JPM, Morgan Stanley, Goldman Sachs, etc.) The Federal Reserve is now the largest single owner of US debt, surpassing China this last fall. These banks are investing excess liquidity into the equities market, which is a huge reason why stocks have been rallying despite 3 years straight of mutual funds pulling out of the stock market. The powers that be have manipulated the economy in a way that the only way markets can function is ever increasing deficit spending, since the government must always borrow more and more because expansionary monetary system requires it.

The thing about QE is that excess liquidity that the banks got from dealing treasuries to the Fed are pouring into commoditties, causing inflation. Inflation fears are causing long term treasury yields to rise, meaning people are starting to dump them. It's a two sided coin as Ben must impose QE to keep the ponzi scheme together, however the money printing he is creating is pouring into commodities and adversely affecting the bubble he has blown in treasuries.

Inflation hasn't been felt too bad here yet, minus food inflation and commodities. This is because with world reserve currency status, the US can print, monetize debt, then export the inflation to the rest of the world. US monetary policy is the number one driving force behind these food inflation riots world wide, despite Paul Krugman insisting to his readers that it is global warming and not his own monetary policies he supports.

There is no end in site for QE, no exit strategy at all, with exponentially increasing money and debt, we have passed the point of no return. Who is the Fed going to unload these treasuries to at the rate of $15B per day? Ben Bernanke, in his hubris and desperation to keep the ponzi going, has blown the last bubble he can, the treasury bubble. This is the most dangerous bubble as when it bursts, it won't be an asset like housing, or equities like in the nasdaq bubble, thats get affected, but the currency itself. The dollar becoming toilet paper.

The problem Bernanke faces is that he might have to sacrifice the equities market, hoping people pour their liquidity into treasuries (the standard fall back) to keep the bubble alive, or they could pour it into commodities, which would spur a treasury dump and massive inflation.

It is possible that this system can go on for years, as the world has no alternative to the dollar and the US military industrial complex protects the system in which the world must accumulate dollars because all OPEC nations require oil be purchased in dollars. They are trying all they can to get out of the US dollar ponzi scheme run by our overlords..

When QE2 ends in June, I expect there to be plans for QE3, which will buy state and muni bonds, and QE will go on forever until the treasury bubble bursts or the dollar loses its reserve currency status as it is inflated away to toilet paper.

Money and Debt Creation

For any stable economy to function, there must be a sound monetary system. A consistent store of value in the currency is necessary to promote saving, which in turn promotes capital investment. I, however, have major concerns with the monetary system in the United States, and hopefully after reading this short blurb you will share and voice these concerns with me.

The United States (along with the rest of the world) has a fiat monetary system. Fiat in Latin means "Let it be down". A fiat currency means that the currency is paper with no intrinsic value in it. It is not based on another commodity, such as gold. The system runs on the people's faith in the currency. This has been the case since 1932 domestically when FDR took the dollar off gold, and since 1971 internationally when Richard Nixon defaulted on gold payments to the rest of the world. Although I have my concerns about having a paper currency backed by literally nothing, my major concern comes from how money is actually created in this system.

Money is created in a number of different ways. One way money is created in the United States is through The Federal Reserve. Now, before I get into exactly how money is created, I think it is important to talk about what exactly the Federal Reserve is.

The Federal Reserve was created in 1913 as a response to a number of bank panics by a group of bankers, and passed into law by congress. It was signed into law by Woodrow Wilson. The Federal Reserve is the central banking system in the United States; the mother bank. It controls monetary policy, the value of the currency, interest rates, and the reserve ratio for all the other banks to follow. It is also important to note that the Federal Reserve is a private bank that has a monopoly on printing money. It has zero oversight by congress, and does not have an audit. No one really knows who is on the banking board of the Federal Reserve. The only check over the system is that the President appoints the chairman of the Federal Reserve, however the President must pick from a group of people that the Federal Reserve Board selects. It should also be noted that in the Constitution, the power to print and money is explicitly delegated to congress. Therefore the Federal Reserve can be viewed as an unconstitutional entity. It is a private corporation that prints the currency for a whole country.

Now let's get into money creation. There are a few ways money is created in America. One way is that congress decides it needs a little bit of money for some spending plan they have. The congress calls up the treasury, and the treasury calls up the Federal Reserve. The treasury then prints up a US treasury note, and the Federal Reserve prints up money out of thin air. The treasury and the federal reserve exchange their pieces of paper, and the money is then delegated to congress. The big important point here is that the Federal Reserve loans money to the government AT INTEREST! Now the second big way money is created is through the fractional reserve system. Fractional Reserve banking works like this. A bank is required to keep a certain amount of cash on hand, usually around 10%. Let's say I deposit a check at the bank for $10,000. The bank legally has to keep $1,000 of that as reserve in hard cash. The bank then lends out the other $9,000 to make money off the interest payments. Let's says someone takes a $9,000 loan from the bank, and then deposits it into their own bank account. 10% of $9,000 must stay in the bank. The bank must then keep $900 in its reserve, and lends out the other $8,100....This keep perpetuating until the orignal $10,000 turns many tens of thousands.

The important thing to recognize here is that all money is created by loaning, which means money is created out of debt. This means that there is always more debt in the system than there is money to pay off the debts. Then were does the money come from to pay the debt off? It can only come through this system again. So new money must always be created to pay off the old debts, but the new money being created creates more debt itself. The system is inherently inflationary, as new money must always be created for the system to work. I'm not saying this is a good or a bad thing, it just is what it is.

So people wonder, why is there so much debt nowadays? if you looks at a graph of the value of money since the creation of the federal reserve, the dollar has lost 98% of its value, and at the same time the money supply has grown at an exponetial rate. This also means that debt has grown at an exponential rate as well. Now you think about all the government stimulus, the trillions of new dollars created by the federal reserve, the 2 expensive wars we are fighting, and the fact that all this new money was loaned into existence, its no wonder there is so much debt. Milton Friedman was screaming about this for years, and was adamently against the debt based financial system, but he always said since it exists, it is essential to keep inflation as low as possible to promote savings and to keep the debt overhead from becoming too high.

The Revolutionary War that founded this country was a direct result from central banking. England was fresh off its 7 years war with France, and funded the war from borrowing from central banking. This left them when a huge debt overhead to pay off. Their answer was to tax the colonies to pay off the debt. At the time, the colonies were printing their own currency, but not out of debt. England then passed laws to outlaw the domestic currency, and forced the colonies to to borrow from their central bank, immediately throwing the colonies into debt. The founding fathers were very aware of how private banking printing a currency for a country could destroy it, so they wrote in the constitution that the power to print and coin money will be delegated to congress. This of course, has not been the case since 1913.

"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

Since A private for profit banking system has control over the value and regulation of our money in this country, I think it is very important the American people open their eyes and see what is actually happening in this country, before it is too late.

P.S.

And I might add that since the money supply has to keep growing, that is why the government has kept growing and gotten bigger....Look at the spending habits of the last couple of presidents....each has spent more and more than the last...Bush, to Clinton, To Bush, to Obama now blowing everyone away with the spending....and it's all to keep this system functioning and in check, one reason why I think when it comes to spending, there is no difference between democrats and republicans (look at Bush, the fake conservative), McCain would be spending just as much if he was President too, because they are owned by the system and keep it perpetuating.....

The Petrodollar

Near the end of WW2, countries and leaders from all over the world assembled in New Hampshire to discuss a new global monetary system to be put in place after the war. The monetary system consisted of global trade dominated by the US dollar. The dollar was pegged to gold, but only for international payments between countries. The dollar had already been taken off the gold standard in 1932 by Roosevelt domestically to fight deflation. Because of the immense economic power of the United States following WW2, the dollar became the de facto world currency as we were the largest exporter of goods. Many currencies were pegged to the dollar. However, in 1971, Richard Nixon and the US decided to default on redeeming dollar reserves for gold. Since there were so many dollars out there with no intristic value except faith, the US had to find a way to put some commodity or resource pegged to the dollar to keep reserve demands high. The answer was oil.

in 1978-1979, the United States reached a deal with OPEC nations that all oil had to be dealt in dollars and dollars alone. This forced countries to accumulate mass amounts of dollars in order to buy oil so that their countries could function. Since only the US could print dollars at will, it forced these countries to open their markets and become exporting based economies. It is no coincidence that this occurred at nearly the same time the US switched from an industrial economy where we actually made things, to a service economy. The world economy became a system in which the US printed money out of nowhere, and the rest of the world made goods that dollars could buy. As long as American's could keep consuming and working, and countries needed oil for their economies and country's to function, the system worked.

The system, however, was extremely exploitative and imperialistic. Dollars were printed out of thin air to buy goods, real tangible assets, or wealth, at very cheap prices. Countries were competing to export as cheaply as they could to the US for dollars. Most of these countries had dollar reserves in a certain ratio with their own domestic currency to devalue it, so that they could compete for exporting. This meant that after a country purchased oil, and had the correct reserve ratio, they had an issue with what to do with excess dollars. Too high or too low of a ratio would either deflate or inflate the local currency. These countries had to spend their dollars, and what else can be bought with USD besides oil? US treasury notes of course. So these countries would spend their excess dollars on UST. This is one factor that helps explain how the United States was able to having a growing economy, despite the fact that we imported more than we exported. Essentially they were funding their own exploitation. Adam Smith taught in The Wealth of Nations that the wealth of a nation is determined by how much it produces and exports. The US found a way around this through dollar hegemony, petro dollar and reserve demands globally all around the world. As long as America, 4% of the world's population, consumed as much as they could, and oil was dealt in dollars, the system would work.

in 2000 Saddam Hussein, trying to break away from this dollar imperialism, announced that he wanted to deal his oil in other currencies, namely the euro and yen. The US would not have this, and invaded Iraq on the premise of "weapons of mass destruction". The oil fields were reclaimed, and were put back on the dollar. in 2006 Iran announced it was opening the Iranian Oil Bourse, and would deal oil in other currencies other than dollars.....catch my drift?

If the dollar is decoupled from oil, and with the amount of dollars out there, the dollar would hyperinflate to points never experienced in human history. Countries would no longer need to hold dollar reserves, and could simply dump their dollars and free themselves from dollar imperialism. This is the biggest and scariest bubble that faces America today, and no one EVER talks about it, at least in main stream media. It puts all of us in such an unimaginably vulnerable state. I just laugh when I hear the media saying China is artificially devaluing its currency and it is hurting America. Of course they are devauling their currency to compete in the global system America created, to compete with exporting to the US.

When you hear about China owning so much US debt, it's because they bought UST with their excess USD like I explained earlier. China and the USA are like two legos stuck together right now. China needs us to consume their exports while they are domesticating and internalizing their economy like crazy, hence them buying our debt, and the US needs to consume Chinese goods to keep petrodollar demand high. Recently, however, China has surpassed the US as the largest consumer of energy and oil....it will be interesting to see what China does, if they get strong enough domestically, and simply dump their US dollars and free themselves from dollar imperialism....it will be interesting to see what happens.......