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ralph

Our race is the Master Race. We are divine gods on this planet. We are as different from the inferior races as they are from insects. In fact, compared to our race, other races are beasts and animals, cattle at best. Other races are considered as human excrement. Our destiny is to rule over the inferior races. Our earthly kingdom will be ruled by our leader with a rod of iron. The masses will lick our feet and serve us as our slaves."

— Menachem Begin - Israeli Prime Minister


This is the talmudic beleif that runs the world. They must be stopped. Zionists hate orthodox jews. This is all such a shame.

DrKrbyLuv

Elaine, you are right on the money as usual with your vary valuable economic analysis. However, you mentioned at the end of your article that: "This game is the real game. Not some sort of united front to fix things. This is ruthless capitalism at work."

First, I would state that what we are seeing has nothing to do with capitalism. Corporatism, fascism, socialism or cronyism - yes; but surely not capitalism.

A capitalistic economy should be free of intervention and the nationalism of of private debt. JPMorgan and Goldman Sachs were key players in the willful destruction of American capitalism through their management of the "Plunge Protection Team."

I believe that this was a planned and deliberate attack on our nations sovereignty and a successful attempt to consolidate corporate power in the hands of the few.

The quiet, illegal and treasonous sacking of America that is taking place requires a unified and co-operative effort of the federal government, the media and many others.

As for the involvement of other countries, I agree that most are not united in a common effort to "fix things." I think this can be healthy in that each country should look at their own interests first and then, the interests of other nations.

We gave up much of our financial sovereignty by going insolvent and this is what we are seeing - other nations simply protecting their interests by trying to orchestrate a soft landing as opposed to a major crash.

I agree that trying to maintain the status-quo is counter productive if you truly want to fix the problems. But, I don't think "fixing" or "rescuing" is what the elite power brokers have in mind.

Grok

Your analogy of the U.S. to the deteriorating RR system is very symbolic. Just imagine a modern and expanded RR system
that transported goods and people in vast amounts and numbers. The fuel savings and positive impact on our environment alone are mind boggling. Sadly, the automotive and oil industries have been lobbying against the RR's for decades. Self interest and short term profit rule the day. The welfare of our communities (what would be beneficial to people as a whole) are ignored or an afterthought at best. And regarding Marx, they have tried to kill and bury him for over 150 years. But his theories and analyses still can not be ignored. It's a tragedy what despots like Stalin and Mao did to his ideas. Keynes himself took Marx's theory of overproduction to a logical capitalist solution. That is to make debt (borrowing from the future) a tool to help solve the overproduction paradox.

chorddog

Hi Elaine
I have been a professional stock jockey for the past 29 years. Everything you post here about finance and economics is spot on; your forecasts have been as right as rain.
Will the Stock Market still be here 2 years from now; 5 years from now? Yes Ma'am, it surely will.

My uncle had a brokerage on Wall Street in the 1920's. In that autumn of '29, my father, just turned 20, visited my uncle. My father told me that my Uncle Larry stayed in his office for 2 weeks straight, trying to settle his clients' accounts. He didn't walk away and declare bankruptcy, like others did. It wasn't the way he and my Dad and the rest of eleven brothers and sisters were brought up in their row house on 12th Street in South Phila.; raised by the son and daughter of immigrants from Scotland and Bohemia, respectively. A family of Episcopal WASPS, some of whom were able to finish high school before they had to work to support each other, losing their father to cancer before most of them reached adulthood.

My Uncle Larry lost everything on Wall Sreet. He died from pneumonia in 1934. He was working as a nighttime park inspector#Central?#; part of FDR's WPO#Works Projects Organization#.

The NYSE et al, was founded in 1792 by twenty-four brokers under a Buttonwood tree on the corner of Broad & Wall Streets. They established an auction market for the growing number of corporate share issues trading in the infant American economy.

Since the Buttonwood Agreement was signed, the U.S. Stock Market has survived a British naval blockade war, a war with Mexico, total Civil war, a Presidential assassination, a war with Spain, another Presidential assassination, a World war, Prohibition#somehow Wall Street survived THAT#, a financial collapse, a global depression, another World war, war in Korea, another Presidential assassination, war in Vietnam, the assassination of a leading Presidential candidate, the assassination of America's greatest civil rights leader, the resignation in disgrace of the President of the United States: and all of that is not counting the past thirty years.

We're living at the time of the greatest economic upheaval in America in 80 years. It is all new to us. The stock market has lost a third of its value in less than 80 trading sessions. People are bewildered, frightened, angry, selling.

Should I go sit in a corner and whimper? Or let anger and the frustration with what has been done to my world comsume me?
Why? I still have my life, my family, and a job to do.

Okay, America is for sale.

Your posts, Elaine, can help guide your readers as to who is buying what in America. And when a Russian oligarch buys a coal company in Pennsylvania#Google Severstal#, he leave his footprints "on the tape".

So I'll keep reading and learning, and I even tore up the grass on the side of my house for a vegetable garden next spring(bought rain barrels, too).

There are, indeed, values on the Big Board. And some of the same people who are accessories to this unfolding disaster, they will be leaving footprints in their quest for even greater wealth. One thing I can always count on; there are always people, all kinds from every corner of the world, for whom more and more wealth will just never be enough.

Frederick N. Chase

Ralph,

Why don't you put in the second quote mark on that Begin quote and give us a reference (1) date&place, (2) URL if possible -- Hebrew and also translation if possible.

-Fred

blues

I have done yet MORE research on why gold (yes, a commodity) may well turn out to be crucial to having storeable and portable energy in our future. It took a lot of double-checking, but it's finally ready. It might even be important. (Sorry, but I am again too played out to do a non-HTML format for it here. But what the heck?) Please check it out at:

http://tinyurl.com/5r7mea

Paul S

The whole system is doomed. It isn't difficult to ID many of those responsible for causing this disaster. Until guys like Phil Gramm (and MANY others) start going to prison (long term, REAL prisons), the prospects for system recovery are NOT good.

DrKrbyLuv

Lindsey Williams, author of the “The Energy Non-Crisis” and the famous Alaskan pipeline preacher made some startling predictions on the Alex Jones show back in July.

http://revolutionarypolitics.com/?p=206

The startling part is that it is beginning to look like he may be right again. Basically, Lindsey said that the price of oil would drop to around $50/barrel within 12 months. This looked crazy back in July, when oil was selling for close to $140/barrel but Lindsey held firm in his assertion stating that his information came from a top insider.

He explained that this is all part of a carefully orchestrated effort by the real rulers of the world - or at least the rulers of the western world. Today, oil is approaching $70/barrel.

He predicted that two new, large oil fields would come online to flood the market. One would be in the far northern region of Russia. Coincidentally, yesterday Reuters reported "FEATURE-Russia opens up new Siberian oil frontier."

http://tinyurl.com/55uvmo

Lindsey suggests that the strategy is to destroy the economy of the US and to destabilize and destroy many countries in the middle east. Middle east countries will be forced to sell off their T-Bills in order to keep their economies going. Thus, the US dollar is destroyed.

In the past Lindsey has suggested that the US has huge oil reserves, secret ones, but that we would not bring them online. He says this will not change and that the US would, by design, continue to be dependent oh foreign oil.

Could this be the reason that the US seems to have abandoned their plans to bomb Iran? Would destabilization and economic collapse be a better alternative?

Lindsey also said that John McCain would be the next President - they will make this happen. This also looks unlikely as Obama's lead is increasing but Rolling Stone reports that the GOP have already stole the coming election.

http://tinyurl.com/5qevzn

Neon Vincent

Elaine and fellow readers:

Elaine spoke of the terrible state of the nation's rail system as a symptom of how the US's economic priorities resulted in malinvestment. She's not alone in using the dire state of our railroads as an example of what's wrong. Here are the concluding paragraphs of the latest installment of "The Archdruid Report" (yes, another pagan economic thinker--imagine that) on energybulletin.net, an excerpt I found courtesy of The Oil Drum.

The flight to abstraction

A stock market crash, it bears remembering, does not cause crop failures, labor shortages, or the destruction of industrial machinery. Its impact is purely on the fabric of economic abstractions built atop the real wealth of land, labor, and industrial plant. Yet that impact can be devastating; in the depths of the last Great Depression, the production of goods shrank to a small fraction of what it had been before the 1929 crash. There was still plenty of land, plenty of laborers, and plenty of machines, not to mention millions of families whose breadwinners would have liked nothing so much as a chance to earn money and buy products; the only thing that could not be made to work was the market where abstractions were bought and sold, and without its help, the real economy ground to a halt.

We are facing the same situation now, and official attempts to stabilize the economy are failing because they focus on the abstractions rather than the realities underlying them. The $250 billion just poured down a Wall Street rathole, for example, could have been used instead to pay for the rebuilding of America’s rail network, with dramatic positive effects that would have resonated throughout the economy. Any such project would hire hundreds of thousands of workers across the spectrum of skilled and unskilled trades; locomotives and rolling stock would have had to be built, countless miles of track laid and upgraded, stations repaired or built from scratch, and every dollar spent on all these things would ripple outward through the economy, supporting businesses of every kind and refinancing local banks with deposits rather than loans. Projects of the same kind played a large role in helping many countries in the 1930s begin to pull themselves out of the morass of the last Great Depression.

Instead, the $250 billion has been assigned the task of making up for a portion of the largely imaginary wealth that has already evaporated from the balance sheets of banks. Abstraction has triumphed over economic realities, and the multiple impacts of that failure of imagination will be with us for a long time to come.

PK Scott

Hi Elaine,

Your historical perspective is valuable, especially when the MSM is touting that this crisis began with the evil sub-prime borrower and lax lending. It's like saying the symptoms are the disease.

I think most people are economic illiterates. We have little to no education or training and too much of what passes for economic education in this country is really education in the bizarre theory that true posterity can be built out of a MOUNTAIN of debt. I call it Ponzi Economics. The fact that it defies reasom or logic is obscured by a lot of smoke and mirrors and guys with PHD's saying "trust me I know best".
I read A LOT and have read the phrases "fiduciary responsibility" and "due dillegence" ONCE. My husband is in the Water Utilities Industry. He is licensed and regulated by a state agency. The standard for his performance is not what did he know, but what he SHOULD have known and if he screws up his ass is grass. No more licenses, no more livelyhood, and a possible jail sentence.
Some people have the audacity to call the sub-prime debacle a Black Swan or outlier event. That is an absolute crock. Too many people, like yourself, have been shouting from the rooftops that we were headed for a train wreck. Every one of them was marginalized as a nut job and ignored.
Do we as individuals share part of the responsibility for this mess? Some, yes, for participating in an orgy of personal debt. Some, yes, for trusting too much in people who held themselves out as experts and not informing themselves and thinking for themselves. But some of us were cautious, paid our bills, lived within our means and took the time and energy to try to understand what was going on.
Like I said, common sense alone was enough to see that the financial system was unsustainable. I am not rich, nor is my family. I have modest savings, investments, and property. I looked in vain for a way to protect myself and my family.
All the tools available for really adequate "wealth protection" were only viable and available for the truely wealthy. For example, I tried like crazy to set up some kind of foreign bank account. It was a piece of cake if you hade a spare quarter million lying around. Even that has become virtually immposible because of "anti terrorism" actions that have foreign banks refusing to open accounts for ANY US citizen out of hand.
Storing value in precious metals has it's own pitfalls. Either you hold physical gold and risk theft, or you hold some kind of share or certificate that may or may not have counterparty risk and could be subject to repatriation and confiscation.
I do have a "last plane account" set up now outside the US. It's not foolproof, but it is the best that I can do.
You say that we will not starve because we have food in this country. But much of it is controlled by agribusiness corporations that are absolutely dependant on petroleum for both production and distribution. Most of the food is raised far,far from the urban population centers and the local farmers market is not going to feed a city of any size. The amount of food actually on the shelves in any city is about a 3 day supply. If the transportation system breaks down, that's it. I have seen first hand how fast the stores are stripped in an emergency. First in Marble Falls, TX in 2007 and recently in east Texas in the aftermath of Ike.
Our population in the 1930's was much less concentrated in urban areas and LOTS of people still had the ability and means to produce their own food. People still starved, not from lack of food, but for lack of money.
I am not saying that any of this WILL happen, only that it COULD.
Governments going bankrupt is no joke. A lot of things that are taken for granted could very well cease to function. Remeber that my husband is in the utilites industry. A lot of these are owned and operated by municipalities. Police protection? We had an ENTIRE police department resign last month because the local government had a financial "shortfall" and cut municipal employees hours across the board.
Does this mean we will have civil unrest and chaos? A lot of people who aren't wearing tin foil hats think it is a very real possibility. One of the best financial advisors I know just published an article on how to sight in a rifle. Yikes!
My point here (even if I went around the barn to get here) is that dull old dry economics are very important and can effect you individually in very profound ways that go way beyond the fate of your 401k or how much equity you have left in your house. We may be past the point of no return now, but knowledge and understanding are our only real tools to building any kind of viable future.

Noob

Hi blues!

You know, Michael Crichton wrote about gold as used in energy in his book "Lost World," the sequel to Jurassic Park. In "Lost World," Site B ran on geothermal energy, and the turbine blades had to be covered in gold because of the corrosive effect of the sulfur and other gas emissions. Site B was located on an old volcanic island.

There was no big explanation about the use of gold--just a mention of its use in an energy application.

Hm.

ziff house

$50 oil would help the US. Alex Jones isn't that the prison planet nutbar site?

ziff house

''ALL the huge, gigantic FOREX reserves of all our trade partners is being drained out so the dollar can strengthen.''

maybe my brain is too slow this morning but this makes no sense to me, though i know you are right. What does 'drained' mean. Someone has to be buying dollars now.

Grok

Neon's reference to "The flight to abstraction" is a good illustration of capitalism during one of its busts (cyclical booms and busts being the historical norm). The means, modes, and desire to produce are in plain sight and, with the exceptions of a few natural resources, are plentiful. As the article alludes to, it is the abstract financial mechanism of manufacturing, producing, and distributing the wealth that is the problem. I'm sure that I am in a minority with this opinion, but I don't think there is a solution to the contradiction, unless "value" or "wealth" is somehow reflective and represented by the force that creates it. That is mental and physical labor.

capastorm

Confession of a hedge fund manager: http://tinyurl.com/6q39re

DrKrbyLuv

blues -

Thanks for the link and your research into an interesting energy alternative. No doubt gold is the most non-reactive metal and is benign in all environments and I think it is the best, or one of the best electrical conductors.

If your application requires superior corrosion resistance, wouldn't an engineered plastic/polymer be suitable? I'm not sure of your temperature/pressure requirements but I do know that many formulations are available.

If your application requires the material to be have both superior corrosion resistance and excellent electrical conduction, then maybe gold is a good fit. Engineered plastics and resins may be more expensive than gold plated surfaces.

I look forward to seeing a more complete description of how your idea works and why gold is required but feel compelled to remind you that intellectual capital should be protected with a patent or copyrighted.

I work as a full time inventor (my wife tells me that I am not a professional inventor until I make money at it) and have some experience with patents (I use a specialized patent attorney and would caution you to do the same).

My expertise lies in HVAC applications (heating, ventilating and air conditioning) and I suspect that your application may have merit there as well as transportation.

Most of the developed world is running into a new problem, aside from energy costs and pollution. That is that the electrical power grids that distribute electricity are in need of repair/updating. The eastern power grid of the US for example will continue to experience more and more failures and brown-outs. The cost of replacing - updating these power grids will be in the trillions of dollars.

I share this with you because an emerging market exists for CHPs (combined heating and power) as an alternative. A CHP could provide electricity, heating, hot domestic water and air conditioning for homes or buildings.

If you owned a CHP, you could operate the building off the power grid. Or, connect to the grid for back-up and to sell any excessive electricity that you may generate.

Anyways, look forward to seeing more of your idea.

Grok

PK Scott...FYI....have you looked into Perth Mint? No personal experience but have heard good things. Maybe some of the "Aussie's" could comment?

Jojo

The fearful flight of abstraction amongst the marginalized tin hatted nutcases clamoring for a complete destruction of the Ponsi debt system, while the coffered CNBC cheerleaders shouting "Drill and Buy Baby" pumped on the prognostications from the Oracle of Omaha, as these two opposing combatants of the "calamity of deleveraging" from what was once orgiastic greed packaged and bundled into abstractions of wealth, and now overnight this wealth has been transformed into dog poop.
As these bags of flaimin' dog poop sit in world bank accounts and is now not-so-delicately being placed in Western Central Banks, while still aflame - one has to wonder in these obsessively interesting times what will transpire next.
Will the flames of the present chaos mummify and preserve the poop (possibly for as long as a couple of years or more)- or will the stench of putrefying excretions of greed continue to decompose into the compost that will grow the next financial system whereby international mercantile transactions can be conducted with confidence, and not the confidence of clowns that we are experiencing today, or the rigid Fascist controls of confidence, then we can resume consuming our way back to paradise.
Place your Casino bets now or hold your cards is the question.

Elaine Meinel Supkis

Blues, my father tried using gold the way you described...back in the early 1970's. Gold was going for only $38 an ounce.

I helped him coat the energy systems with gold leaf as we did experiments. IT WORKED.

Problem was, the price of gold shot through the roof! So it became...UNECONOMICAL. This is the restrictions of reality: if anything is 'dear' then if it is used to generate energy, it becomes even more expensive. Oil, being the industrial output of Mother Nature for millions of years, is 'cheap' but only temporarily.

We just rode a major inflation wave associated with energy systems. Each wave is more destructive than the last. Each one cripples world systems more and the only way we can survive the FINAL wave is to change, now.

Back in 1974, I said in a speech in New York at the Princeton Club, 'This oil crisis is political. It is caused by wars. But after 2,000, the window of opportunity to re-engineer our society for the Hubbert Oil Peak will begin to close!'

The window is definitely closing now. It starts out very,very slow. More oil is put into the system due to high price enabling the exploration and exploitation of the harder to reach oil resources. Thanks to people losing the ability to buy oil, the market shrinks as the price rises.

This leads to sudden price collapses! As soon as the price falls far down, consumption increases even faster and the price shoots up even higher and the wars over the oil heat up even worse.

Each wave turns from temporary falls to a horrible mess when the global Hubbert Peak is reached. We are terribly close to this geological event. We can't see it until we are well on the other side of this monster peak.

And it is final.

There is a gold Hubbert Peak, indeed, all planetary resources are involved.

THIS IS WHY THE CHINESE ARE ALREADY AIMING FOR THE MOON! The mineral wealth there is probably staggering. The moon formed the same time as the earth. The mining base there can take in asteroids, too.


I explained this to the Chinese long, long ago. After NASA decided it was stupid. We should go into the gravity trap of Mars. Mars and Venus is even worse: the energy to leave either place far overwhelms any mineral wealth these planets contain. The moon has little gravity and the asteroids, virtually none. And since the moon is in the gravity pool of the earth, sending materials DOWN is easy as pie.

PK Scott

Nicely put, Jojo.

i wrote about the pools of money waiting to pounce on natural resources and means of production, as in those that have them are first to crawl out from the rubble and are the new masters of the universe.

Try this article.

business.timesonline.co.uk/tol/business/industry-sectors/natural-resources/article4960358.ece

Seems like Japan and Korea are pouncing.

PK Scott

Hey Grok,

Yes I did. Perth Mint certificates have a government guarantee. They are pretty darned "safe." However...
If you read the gold confiscation act you will see that then, at least, even gold certificates held outside of the US were confiscated or you could sell them BEFORE the government repriced the gold higher. It is called REPATRIATION of assets, and any asset can be subjected to it and taxed or confiscated if the government so chooses. You might also google "exchange controls" and "capital controls". It will make some interesting reading.

Simon

Lahde Quits Hedge Funds, Thanks `Idiots' for Success.
Hilarious expose of the 'elites' and their attitude towards investment:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aVUE96d.HKyw&refer=home

DeVaul

Look what I found on the China news site:

"The EU decided on Wednesday to ease its accounting rules so as to help its banks and financial institutions cope better with the financial crisis.

Under the changes, financial institutions in the EU would no longer have to reflect market fluctuation in their financial statements for those toxic assets which were at the root of the financial crisis as from the third quarter of 2008."

The Eurozone just openly endorsed wholesale fraud. After this statement, the rest of the article is nothing but numerous photos of all the European Finance Ministers smiling, joking around, and patting each other on the back.

I think China View, instead of commenting on this itself, basically just held up a mirror showing our leaders to make its point. Very clever.

Elaine Meinel Supkis

Chordog, Thanks for the thumbnail sketch of the stock market.

It can be a bloody affair. Sometimes, the losers kill themselves and their families.

But we all can survive if we keep our wits and focus on REFORMING and FIXING the system. This means it is open season for talking about history, ethics and philosophy! Karl Marx began as a reporter who witnessed a great depression/collapse of the 1840s, for example.

This latest collapse is an excellent opportunity for all of us to figure out not the surface ills but the greater systems at work. This is a good lesson learning period we are in!

It may sound bizarre, but the debate over 'how did this happen' and 'what should be the replacement' is a vital conversation. And often, violent.

Reactionaries are very busy telling people, we need to become fundamentalist believers who hate all other believers, this is the cure!

Then there are international fascists who support the idea of corporations paying vicious military overlords to run things their way.

Then there is the communist/socialist approach with the state buying up the banks...HAHAHA. We have that coupled with the 'vicious military dictator' fascist parts. Nationalsocializm.

Elaine Meinel Supkis

I quoted from that article in China News, Devaul. They didn't need to comment because it is painfully obvious so I commented on this. Gah! Making up values is what started this whole mess. This is why the title of this posting today is, 'Status Quo Is HELL for US Future'.

DeVaul

Oh sorry, I didn't see where you quoted from it. I just wandered over there to see what they might be serving up today and there it was. Pretty sickening watching our leaders laugh and joke around while fleecing every man, woman, and child.

OC

DeVaul,

Those who are old China hand note that Chinese tend to imply and read between the lines very well. This is a big hint to Chinese readers about how callous and useless G7 leaders are to their people and to the world. It might be trying to lead their readers (the Chinese)to conclude that the stage is set for them to replace these 'world leaders'.

PLovering

The world has already achieved peak world oil production

The world is using oil faster than it is discovered. China alone uses 8% more oil each year.

Supplies of oil have nowhere to go but down.

We could mfg. ethanol from hemp and be energy independent here in the United States. Unfortunately, we are locked in the embrace of idiots.

DrKrbyLuv

Perth Mint Certificates

I have read a number of times that "allocated" gold remains your asset while "paper gold" and "gold certificates" become an others "liability" through counter party risk.

I have also read that the Perth Mint leases their holdings. An interesting topic for sure.

Zulu

"It may sound bizarre, but the debate over 'how did this happen' and 'what should be the replacement' is a vital conversation." EMS

That's what I'm talking about. Isn't that why we're all here looking in? We want answers. I am sincerely convinced we can't fix the system. It MUST be replaced. It would almost certainly be through violent means. Are the Elites going to go peacefully? Not if they can help it.

Someone commented that we have no philosophers, no statesmen. We do, but they are marginalized. The sure sign of a society in decline. The one and only way I see a peaceful resolution to all this, is if the vast majority of people unite as a whole to demand change. I don't see that as even a remote possibility unless there arises a true leader.

Hitler epitomized this type of leader. Charismatic, idealistic, forceful. A nobody who rose to ultimate power. Why is the last century filled with examples of this type of bloodthirsty leader? Mussolini, Stalin, Mao, Pol Pot, etc. Ghandi being the one exception I can think of. I've lived quite a few years on this planet and never ever heard of The Constitution Party until this year. Has anyone else heard of it? They actually believe in the principles of the Constitution. Why isn't their candidate on the ballot?

I fear that before the Elites will allow any semblance of freedom here, they will start another foreign war.

PLovering

Chordog: You make a good case for a future stock market.

The Elders of Zion think differently. If events go as planned, Wall Street will become a museum.

Conspiracy

OK, why is all of this news? It was written 30 years ago that USA was designed to go down. You guys are slow to catch on. Also Ms Supkis mentioning evil mofo's like Hegel and Kant is suspicious. Hegelian Dialectics is how the elite control us today. Thesis->Antithese=Synthese.........Ms Supkis is not one of the lower elites how?!!?!?

The top of the pyramid elite families, the true rulers (like Rothschild) are moving their money to Asia, they have sucked the West dry, time for a new host.

Only this new host aint as dumb as the west.

Long Live China!

igneous

Hi Elaine
Thank you for a great blog. You make the occassional comment in your writings about Carl Marx being a great economist and capitalism failing while also seeming to take a very classical (Austrian maybe view). Just what are your views about how an economy should be run and what is it about Marx that you admire. As somebody who grew up with the cultural Marxism of the 70s (multiculturism(as opposed to pluralism), feminism (radical)) rammed down my throat I hate anything marxist although perhaps its what its become that I hate.

GK

Alright I am going to take a stab at the:

"how did this happen' and 'what should be the replacement" challenge.

Let me summarize:

HOW? Private Banks have power to create money via issuing debt and created too much.

WHAT? The power to create money must be returned to Citizens.

HOW DID THIS HAPPEN?

1. US Colonialist issue Script.

2. British crown invades to stop it.

3. US wins and writes Constitution granting CONGRESS the power to create money.

4. Money is ANYTHING that everyone agrees is money and is LEGALLY defined as money.

5. Money was legally defined in terms of silver.

Article I, Section 8.

"To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures."

The measure of the Dollar or unit was "fixed" at 371.25 Grains of pure silver.

6. Andrew Jackson killed the Second Bank of the US in 1833 by not renewing its charter and removing US Government funds.

7. In 1913 the right to coin money was given to the Federal Reserve Bank.

8. Federal Reserve has power to create NEW money to purchase US Treasury bills.

9. Income Tax is instituted in 1913 to pay the interest on these TBills that the Fed purchased with money created with accounting entries.

10. The Federal Reserve is owned by member banks who practice Fractional Reserve Lending.

11. A Bank can deposit its regulatory capital at the Federal Reserve (say $1 billion in cash, T Bills, gold or whatever the Fed allows).

12. A Bank can then create 10 times that regulatory capital in new loans which generates new money or $10 billion.

13. If they charge 5% interest on that new money, they earn $500 million per year, or 50% interest on their original regulatory capital.

14. Banks saturate the market with corporate, household and personal loans that the market can rationally payback.

15. They begin creating lower and lower quality loans. To get rid of these they sell them on the open market and begin writing more loans.

16. They and investment banks and insurance companies begin writing Credit Default Options (CDOs) that are completely unregulated to sell along with the above bundles of loans to make them more 'safe'.

17. Investment banks convince Christopher Cox to increase their allowable leverage from 10:1 to 30 to 1.

18. Investment banks begin borrowing enormous amounts of virtually free money from Japan to buy up all these loans along with CDO's.

19. At 30:1 gearing, they are able to take $1 Billion in capital and borrow $3 trillion Yen, sell those Yen, purchase $30 Billion US Dollars on Open currency markets and invest those in $30 Billion of the above loans from banks.

20. Investment banks then package up those loans in to Structured Investment Vehicles (SIVS) that they count as assets and leverage some more.

21. The above Yen loans and subsequent Yen sales depress the Yen, artificially strengthen the US Dollar and provide almost unlimited Loans/Liquidity to the US speculators.

22. US investors and speculators put all these created money to work speculating in Oil, Gold, Silver, Land, and Stocks. Especially investment banking stocks that were spurting all this 'liquidity'.

23. Banks earned enormous fees writing all these loans and investment banks earned enormous fees buying and selling unregulated CDO's, debt, stocks and received huge stock options due to increases in there stock price as noted above.

24. Japan used their depressed Yen to create massive trade deficits with the US and accumulated huge piles of USD from exports.

25. The US government spent $5 trillion more than their Tax income over the last 8 years (due to wars etc) and so they sold $5 trillion in US Treasury notes which are backed by future US taxpayer tax payment.

26. The Federal Reserve purchased many of these with newly created money, and the rest were purchased by anyone wishing to keep exporting to the US, like Saudi Arabia and the EU.

27. As the loans start to go back the gearing starts to work in reverse, destroying $30 of money for every $1 dollar of loans to go back at Investment banks, and $10 of money of commercial banks.

28. Federal Reserve start lending banks money to make up for vanishing money. Then US Treasury start lending almost infinite money to the banks to replace lost cash.

29. Investors who used loans to buy stocks have to sell stocks to pay back loans. As stocks go down, margin calls force others to sell stock to pay back loans. Stocks go down.

30. People who borrowed Yen heavily using the Carry Trade have to sell USD and Purchase Yen making the USD go down and the Yen rise. This crashes the Japanese stock market as Japanese exports to the US become more expensive.

WHAT SHOULD BE THE REPLACEMENT?

1. Whoever controls the money controls the country. Currently this means the Banks.

2. The ability to create money must be switched from Banks to Citizens.

3. The Citizens, represented by Congress, can authorize the creation of new money by a 2/3 super-majority.

4. These funds are deposited into each US Citizens account created for them at the US Treasury. These pay Zero interest.

5. Commercial Banks may borrow the citizens money at an interest rates set by the FREE MARKET. If Banks want more money to loan, they can offer higher interest rates.

6. Banks can then loan the money to viable ventures at a higher rate and collect the difference as profit. They cannot create new money anymore, they must enter into a contract with a Citizen to use their property.

7. If the US government needs funds for Education, Roads, Wars, CIA etc they must raise tariffs on imports, borrow money from Citizens at a rate set by the free market, or they can convince the citizens that it is in their interest to allow their Congress to remove funds equally from every account in the US treasury.

8. For example, in the last 8 years, the money supply has increased by about $10 trillion dollars. Divided equally by 300 million people would show up as about $33,000 in everyone's treasury account.

9. If the Government wanted $1 trillion for some wars, Congress would represent the Citizens and disapprove or approve and if approved, a -$3,300 WAR line item would show up on your US Treasury Account.

10. When a Citizen labored as a Farmer, Doctor and earned money in a FREE ENTERPRISE system, they would keep 100% of their money. They could deposit it for 0% interest in their US Treasury account for interest at a commercial bank.

11. If the US Government wanted to spend $1 Trillion on education, the people could indicate to their congress person if they wanted -$3,300 EDUCATION on their US Treasury account, and if they did, they would have to transfer their property from their chosen Account.

12. If the Citizens decided they did not want to, they could elect instead to send their funds to their state government. Each state could have different policies and Citizens would be free to move between states to enjoy the choice between State Funded or Unfunded education.

13. The Central Bank would become like an insurance company for which Banks would pay a fee.

14. Banks would able to borrow as much money as they wanted from Citizens, but if the loans went bad, they could make insurance claims to the central bank, but if that did not work, the Bank would close and the investor would lose their money.

15. Insurance companies could sell insurance on the free market, with full disclosure of their risk portfolio and with their reserves clearly stated. For example, they could insure your $100,000 home for $1000 per year if they believe there is a 1 in 100 chance of your home burning down in a given year.

Every policy would be published as above for the free market to review and analyze for risk and they would be priced appropriately.

16. If the Japanese government wanted to loan their money to a US Citizen, that person must find someone willing to sell their property in exchange for Yen.

============
Government wants to control money so they can Tax and Create empires.

Banks want to control money so the can determine which businesses and citizens expand or die.

Banks always seek to control the government to regulate the citizens to protect their selected investments, like residential real estate and military contractors.

Citizens must control the money so they can participate in a FREE MARKET with a trusted currency they share with their fellow citizens of the nation.


capastorm

Even if a revolution would take place, you'd need something better than the constitution or you'll wind up with the same corruption again. The only solution is a society without money so profit is not the main goal for individuals/countries. Something else will have to become the "main goal"...

carli

If the Status Quo is Hell for the US, check out this Status Quo:

Wall Street banks in $70bn staff payout
Pay and bonus deals equivalent to 10% of US government bail-out package
http://tinyurl.com/6kp3vw


don

Carli: just read your post on the benefit
packages for those crooks. Disgusting !!!!!
thank you. Elaine as always, excellent......

carli

Don, that's not all that's disgusting, check this out, the English banks are nationalized (of course at taxpayers expense), this while they repossess the taxpayers that bailed out the bank!

So it is absolutely imperative to bailout the irresponsible twits that caused the problem, but not the people they scammed. Brilliant! Talk about stupid, no, absolutely evil.

Northern Rock accused over rising repossessions
http://tinyurl.com/5o9285

carli

It's getting interesting in Europe. Talk about beneath contempt, check this out:

Luxembourg Finance Minister Jean- Claude Juncker told German newspaper Rheinischer Merkur the U.K. will consider adopting the euro once the credit crisis abates.

["The British prime minister had to beg to be let into the room in which the euro group was meeting," Juncker told the newspaper in an interview published today. "I'm sure that when the storm is over, the British will think about whether they shouldn't become an equal in all decision-making bodies."] - from the article:

EU's Juncker Says U.K. Will Consider Adopting Euro After Crisis
http://tinyurl.com/628xqb

The Empire is folding fast. Even the Queen is bending over:

Queen to open gardens of Buckingham Palace to the public (first time in 200 years)
http://tinyurl.com/634bys

Could she be dreaming Marie-Antoinette dreams?

don

carli-let me rephrase that...
the top executives getting 70 billion/digusting................
the article is excellent, ooops...........

Elaine Meinel Supkis

About philosophers and economists in the past: ALL have something to say! Just like all religions and all myths and all folk tales and all everything human!

Anyone who rejects any sector of human history, human belief systems will be hopelessly unable to understand what is going on here!

This is of course, a deeper problem: we are rapidly entering a new system whereby all the previous images and thought systems of the Pisces era is ending.


The last stars that are part of this system are the original stars of Pegasus which used to stretch from the Evil Eye star of Medusa's head across all the way across to surround all of the two fishes.


This epic moment when even the dimmest wits will go crazy trying to keep the religions born in the chaos of the Pisces change when Ares, the sheep, fell below the horizon at sunrise at dawn of the spring equinox: this is now happening again!

So if we want to understand the real future revolution in thinking, it is everything connected with this next change as our dear planet wobbles through each of the Houses of the Zodiac on this huge 24,000 year cycle!


To try to understand all this is interesting, I would suggest. And very important. There is a great deal of hysteria attached to this business and it is easy to find online. Many millions and millions of people think that LITERALLY the world will 'end' and they will go to 'heaven'.


And these lunatics have nuclear bombs. The guys guarding our nuclear systems are mostly end of times Christians. They, not the Jews or Muslims, are the real danger to all life on earth! Palin is one of them! And the GOP is dependent on them to vote for greed is good policies.

And I hope readers here understand that there is no one who can save us dramatically. Only we can save ourselves and we have to grapple with this business about the end of times. Reagan put into high office, a host of end of timers who openly said, 'Why protect anything since god is doing to destroy it all anyway?'

These people have latched onto Jewish desires to control the planet so they can control the Holy Land. The plan is for the Holy Land to be blasted to hell when the end of times comes and Jesus turns into the biggest demon to hit this planet since the comet slammed into the earth 64 million years ago!

And this, dear readers, fills me with tremendous ire and fear! I do NOT want WWIII. And we are tempted by this power for the US is one of the few entities outside of Mother Nature who is capable of killing all living things if we go insane and decide to do this.

Gary W

I'm in Autralia :-) I don't know anything first hand about the Perth Mint, but I do know Perth is over 4000km from here; Perth is the world's most remote capital.

You can check the Mint's Web site of course (I look there quite often as they have the prices of precious metals in $A), but readers might be more interested in this link:
http://goldchat.blogspot.com/
from a long-term employye of the Perth Mint. Blogger's view leaves the obsolete media for dead :-)
"Speaking to the Perth Mint's Depository and Shop staff about the reasons why people were buying gold and silver and how they were doing it leads me to believe that Australian banks were seeing the beginnings of a bank run developing. Stories of people not wanting to wait for cheques to clear and going to the bank to withdraw cash so they can get immediate delivery of metal may be reflective of wider cash withdrawals from Australian banks."

GK

“We learn from history that we do not learn from history.” -Hegel

http://www.augustreview.com/news_commentary/global_banking/bailout%3a_america%92s_financial_ruin_20081005101/

German philosopher Georg Hegel wrote, “We learn from history that we do not learn from history.”

Rep. Louis McFadden, who had served as Chairman of the Banking and Currency Committee for over 10 years, was hopping mad about the Federal Reserve and its shameless abuse of the U.S. government and its citizens.

In a speech to the House of Representatives, McFadden stated:

"Mr. Chairman, we have in this Country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve Banks, hereinafter called the Fed. The Fed has cheated the Government of these United States and the people of the United States out of enough money to pay the Nation's debt. The depredations and iniquities of the Fed have cost enough money to pay the National debt several times over.

"This evil institution has impoverished and ruined the people of these United States, has bankrupted itself, and has practically bankrupted our Government. It has done this through the defects of the law under which it operates, through the maladministration of that law by the Fed and through the corrupt practices of the moneyed vultures who control it.

"Some people who think that the Federal Reserve Banks are United States Government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lender. In that dark crew of financial pirates there are those who would cut a man's throat to get a dollar out of his pocket; there are those who send money into states to buy votes to control our legislatures; there are those who maintain International propaganda for the purpose of deceiving us into granting of new concessions which will permit them to cover up their past misdeeds and set again in motion their gigantic train of crime."

Ouch.

Duski

Well. Paulson is asking for another rescue package? Last time, executives only stole 10% (70 billion) for their future bonuses. And congress approved it all, everyone must have known this would happen. So, calling to your congressmen did not help at the end. I bet most of them got their fair share of the deal anyway.

You, the people of the USA, have only justice branch left. It is a distant dream, but well, all the executives behind this mess needs to be arrested. Including those corrupt congressmen who decided to vote for the rescue. Charge is simple: Treason. Giving all that money away with no accountability? It's OBVIOUS TREASON! Talking about trust... it is the greatest cheaters in planet earth that are yelling "There is no trust! We need MORE MONEY to return the TRUST!". HAHAHAHAHA. Arrest them all.

GK

HAHA! You know you are getting somewhere when we start talking about biblical Egypt, from whence the Babylonian Market economy evolved.


http://www.financialpost.com/news/story.html?id=907099

VANCOUVER - One of Canada's best-known billionaires had an ancient history lesson filled with bad news for investors yesterday. If biblical Egypt is anything to go by, Stephen Jarislowsky said, the current global tough times are nowhere near done.

"The only times that I find that compare with the times that we have date back to the time Joseph was in Egypt, on the one hand, and, on the other hand, the Great Depression," Mr. Jarislowsky said in an address to the Institute for Corporate Directors at Vancouver's Terminal City Club.

The book of Genesis documents a period of seven years of great harvest followed by seven years of famine and hardship. "It's very odd that the Great Depression had seven fat years and seven lean years, too," said the Montreal investor and corporate-governance champion. "I think that this is extremely important for you to have a look at."

Duski

Bible has certain wisdom in it: Save when you can, the lean years will come. Instead, gnomes told everyone that by wasting all savings the bad times would never come. And when economic laws tried to enforce balance, only way to avoid it was to take debt...

When economy finally has too much debt, it cannot create another bubble, but the way down is much longer. And instead of savings to support the economy, there is endless pit of debt.

This is clear as day, and has been repeated over and over in history! When I was at school and about 15 years old, I was taught that government has to SLOW DOWN growth to gather savings and to avoid forming bubbles, and then SPEED UP with investments (from savings) during recessions. I burst at laughter when I realized that at that age, I COULD HAVE LEAD MY COUNTRYS FINANCES BETTER than our politicians had done. Some things never change.

Finland had released it's financial markets during 80's (for banks to get, guess what, more debt!) or so, and well, what do you know, no one saved at all and we suffered very bad recession from the start of 1990s to the 1993. And in our school books we were taught not to do it this way! HAHAHA!

Duski

Well, for Finland our final save was that our politicians eventually ADMITTED their errors. Then we did what we had to do, economy contracted, and we had to take debt to keep things running. And while it was bad, politicians admitted it in time so we could still make things work and still could get more money from creditors. We did not run in the red too long.

In USA, on the other hand, no one in congress is talking about deficits. Not even now. Can you get more debt to get over bad times? We had little debt in relation to GDP when we went into recession, but we had huge debt at the end of it...

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