Mike Maloney on Why the Ben Bernank is Inflating the Money Supply

Why the Ben Bernank is Inflating the Money Supply

ban bernankeMike Maloney of gold & silver inc goes over charts and shows how the fed stopped all deflation since 2007. Deflation would have meant that prices and wages would have gone down. The democrats fear this because they never want to hear wages going down, and the republicans don’t want to hear that prices are falling, due to lower margins.

for you the public deflation would be a godsend, because that would mean, while you might make less, milk, cheese, eggs and lettuce would cost less and less each month.

the ben bern hates deflation and loves inflation. inflation means everything goes up and up. however, if you’re poor, it virtually kills you.

The bottom line is, that the US is the world market. Other than the closed and lower class economies of China and India, the US is the largest consumer market. These manipulations of the currency and monetary supply fights against the very market forces he’s trying to curtail. It is a losing battle at best, if you believe he is actually to do anything other than to make he and his european and zionist investors money.

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Bank of America Woes (part 2)

Bank of America Woes (part 2)

We do not know the total amount of derivatives transfer to the bank and the bank will not share that information with the public.

Bank Of America Forces Depositors To Backstop Its $53 Trillion Derivative Book To Prevent A Few Clients From Departing The Bank

FDIC and Federal Reserve Bank fight over the Bank of America’s move to insure investor risky bets with customer deposits

Federal Reserve and Bank of America Initiate a Coup to Dump Billions of Dollars of Losses on the American Taxpayer.

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Chill Out on QE3, but Beware Debt Default: Sonders

Chill Out on QE3, but Beware Debt Default: Sonders

(Reuters) – The economy does not need a third round of stimulus but could convulse if lawmakers fail to raise the nation’s debt ceiling, the chief investment strategist at the largest U.S. discount brokerage operator said on Wednesday.

Liz Ann Sonders

Liz Ann Sonders, chief investment strategist at the brokerage unit of Charles Schwab Corp (SCHW.N), said a recent downdraft in stock prices in part arises from fears about the economy and government efforts to keep it growing.

Financial markets are bracing for the end this month of the Federal Reserve’s second round of quantitative easing, known as QE2, in which the central bank is buying as much as $600 billion of bonds to spur the economy.

Many investors say QE2 has boosted stock prices since late last year. But they also say the stimulus has driven commodity prices higher and depressed the dollar, and fear a third round of stimulus, QE3, might be needed for an economy that grew at just a 1.8 percent annual rate from January to March.

Sonders, however, called QE3 a bad idea, despite dampened investor sentiment that has fed a 6 percent drop in the S&P 500 index .SPX since the end of April.

“One of the biggest contributing factors to the confidence gap that we have now, not just by investors but by consumers, by businesses, is concerns about QE2 and excess stimulus and uncharted territory,” Sonders said at the Reuters 2011 Investment Outlook Summit. “It’s high time that we just chill for a little bit and let the economy move on its own.”

Sonders said it is premature to say how close the economy is to retreating into recession, two years after it emerged from a downturn that encompassed the 2008 financial crisis.

A spike in commodity prices tied to a falling dollar or Middle East unrest “would throw a real wrinkle to this being just a soft patch and not something worse,” she said.

NO MORE KICKING THE CAN ON DEFICIT

But one risk is the ability of the White House and Congress to agree how to reduce the nation’s $1.4 trillion annual budget deficit, as part of an agreement to raise the country’s $14.3 trillion borrowing limit by August 2.

Failure to raise the limit could lead the United States, which has triple-A credit ratings, into at least a technical default on some of its debt.

“Both sides are going to the outer reaches of extremes and digging their heels in,” Sonders said. “There is a very, very tiny risk of default. But as is the nature of Washington, if we do get an agreement, it will be in the 11th or 12th hour.”

Raising the debt limit has long been a political football, with Democrats and Republicans disagreeing on how to redistribute the tax burden or otherwise reduce or reallocate spending.

A Reuters/Ipsos poll released on Wednesday finds Americans divided on how to reduce the deficit. Republicans preferred spending cuts to tax hikes by a roughly 4-to-1 margin, and Democrats slightly preferred tax hikes to spending cuts. Independents emphasized spending cuts by a roughly 2-to-1 margin.

Even with the looming 2012 election, temporary or partial solutions may not now be politically viable, Sonders said.

“In the past there was no political downside to kicking the can down the road,” Sonders said. “But never has the concern about debt and the desire to see something be done about it be as high up on the list of things that voters care most about.

“The only credible plan in terms of long-term success and public agreement has to be a true compromise,” she added. “The only way to keep from it being a much bigger problem (is) to make some hugely unpopular decisions.”

(Editing by Padraic Cassidy)

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Central Banking America: A Review

Do We Need Central Banking

The constitution provides ample ways for the federal government to make money, it’s called tariffs, i.e. taxing imports and exports.  But, big business has such a stranglehold on congress that they gave China most favored nation status, so that stores like Wal-Mart and Target could sell plastic much cheaper than our very own American made products.

There was never a need for an income tax.  As it stands now, the only reason we have an income tax is to pay off the money we borrow form the federal reserve.

Without the federal reserve bank, who creates money out of thin air, the u.s. government could go back to doing what it should have been doing, printing it’s own money and putting the full faith and credit in U.S. backed currency, instead of federal reserve notes.  Income tax, as they stand now, simply pays off the interest of the federal reserve. At every session of congress, the house and senate then turn around and borrow more money from the federal reserve bank.

Without the federal reserve there would be no need for a national deficit.  The only reason we have one now, is that we are borrowing our own money from a private bank.  Everyone is under the delusion that the federal reserve is a centralized bank, i.e. a government bank.  It is neither a federal government owned entity, nor does it have the full faith and credit of the U.S. department of treasury behind it. It is very possible for it to go under.

Do We Need Central Banking?

Ask any fine upstanding citizen and they will say we NEED central banking.  Then if you dig deeper, you’ll see that they are fully indoctrinated by their own education.  The study of economics has been completely arrested and captured by Wall Street.  Want a job on Wall Street?  Make sure you’re educated exactly as everyone else is and believe that Keynesian Economics is your mantra.  Above all else, make sure that you, not only, not know anything about the Austrian School of economics, but that you mark it down as untenable and barbaric.

Keynesian economics assures mutually assured destruction of the U.S. and the rest of the world.  So the question is do we need a central bank?

The reasons put forth as to why we need a central bank:

  • 1)it issues coins and currency to commercial banks and other financial institutions.
  • 2)it provides short term loans for commercial banks.
  • 3)it controls the credit creation powers of commercial banks(for controlling inflation and deflation in the economy).
  • 4)it acts as a banker to the government(it keeps all of the government’s deposits and makes payments on it’s behalf).
  • 5)it acts as an adviser to the government(it advises the government as to what kind of economic policy it should adopt).
  • 6)it has major role to play in the money market of an economy(where short term loans are borrowed and lent).
  • 7)it re-discounts bills of exchange for commercial banks.

However, this is where the confusion comes in.  We have a department of treasury that can do all of that, that is completely limited by the constitution.  The federal reserve bank act of 1913 essentially circumvented the constitution.  What the real federal reserve now does is:

It’s primary function is to defraud the population for the benefit of the government, and the government’s pet favorites, such as the military industrial complex, the bankers themselves (in exchange for giving government a share of the money stolen), and whoever the government thinks it can bribe for votes. It’s literally that corrupt. The reason it can go on under our very noses is because most people don’t understand it.

What a central bank does is inflate the supply of money or money substitutes, in other words, it dilutes the existing stock of money by printing more pieces of paper and calling it money. This causes a number of serious negative side-effects.

The first one is that it causes a drop in the value of money. Your money is worth less. That’s why the dollar has lost 94 percent of its value since the Federal Reserve was started in 1913. Considering one of the main purposes of the federal reserve is to stabilize prices, we must conclude that it has been a complete failure, compared to the absence of a central bank.

The second negative effect is that inflation is government’s main means of funding wars which apart from being supremely immoral, are also extremely destructive of wealth. The USA has become a nation of perpetual war in case you haven’t noticed.

The third negative effect is that all the central bank is doing is re-distributing wealth. It’s not creating wealth – if it was, we would have found a way to create wealth by stamping pieces of paper. We haven’t. All it does is take property from people who own it, and give it entire industries who live at the expense of the productive classes. Basically the central bank enables governments to loot the savings of the entire population without having to bother rifling their pockets to do it.

The fourth negative effect is that the newly printed money creates a bubble in the sector where it enters the economy. That’s why there was a bubble in the housing sector – because that’s where government was injecting the money. The bubble draws capital away from actual productive activity, such as growing food, or making medicine, and channels it into wasteful activity like making condominiums with gold faucets and five bathrooms. This is because the bubble makes activity appear profitable that, absent the manipulation of the money supply, would be seen to be loss-making (think, for example, investing in real estate during the bubble. The profits made by the speculators and financiers come from skimming the wages of millions of people too poor to own their own house, all courtesy of the central bank).

The fifth negative effect is it distorts the capital structure, in other words, it causes massive dislocation between where people *are* and where people would be productively employed. The boom collapses into the bust with its bankruptcies, unemployment, homelessness, family breakdown, suicide, hardship, depression and ruined lives – all while the privileged continue slurping at the trough.

The sixth negative effect is moral. The policy of credit expansion corrupts the entire value system of society. It punishes work, savings, individual responsibility and building a future. It rewards debt, consumption, instant gratification, speculation and political favoritism.

The declared purpose of the Fed is full employment. In the time since the Fed has been on the job, we have had the two biggest depressions and highest unemployment in the history of the world.

The justifications given for the central bank – that it is necessary for government to “manage” the economy, presupposes that government has a competence to manage the economy in the first place. There is neither evidence nor reason to support this supposition.

The reason economists have the gall to try to justify this institutionalized fraud is because most of them rely, directly or indirectly, on the Federal Reserve or the federal government for their privileged existence. They are like the high priests of old preaching to the masses that Pharaoh can do no wrong even while he and his acolytes live at their expense.

Our central bank has not acted in good conscious toward the people of the U.S..  Time and again they have been asked if what they are doing are for the people and to do something about it, to which they unequivocally say “no”.

Interest rates on a savings account nationally is now at 0.01%  The highest yields are boasting a whopping 1.0% APR.

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Who Oversees the Federal Reserve Bank

Who Regulates the Fed

In a word, noone.  Officially, we have the propaganda that the federal reserve system is a quasi-governmental entity, but with semi-private privileges.  The explanation however goes in loops and tries to circumnavigate a very concise explanation. No one in government oversees the Fed.  No one in government can overrule the Fed.  No one can hold accountable the Fed.  No one in government can bring to justice the Fed.  In fact, the Fed is untouchable.  In fact, the Fed is above the law.  In fact, the Fed operates with impunity.

The Official Explanation of Who Regulates the Federal Reserve Banks

The Federal Reserve is a unique legal entity that can be described as an independent government agency with member bank participation. It is organized with a 100% government agency at the top (the Board of Governors), and branches beneath them that are organized like corporations with member banks as shareholders.(Ref: http://www.federalreserveeducation.org/fed101/structure/ , http://www.federalreserve.gov/generalinfo/faq/faqfrs.htm#4 )

The Board of Governors are all appointed for 14-year terms by the president and confirmed by congress. It operates per it’s charter and laws set by congress. it is overseen by congress. There is no structure or mechanism for private ownership at this level; it is a government agency. You can confirm this from a number of government sites that list it as a government agency (e.g. http://www.whitehouse.gov/government/independent-agencies.html) Board members are forbidden by law to have any economic interest in a private bank. (Ref: Title 12 chapter 3 of the U.S. Legal Code). The Board determines monetary policy and provides high level oversight of the branches.

The 12 branches can be considered highly regulated private corporations. Member banks are required to buy shares in their branch. Each bank has one vote. They can vote for 6 of their 9 board members, the other 3 are appointed by the Board of Governors. Though the branches are called non-profit, the member banks get a standard 6% dividend on their shares. The remaining ‘profit’ is turned over to the Treasury at the end of the year.

For confirmation on this, check out how Hoovers classifies them:
http://www.hoovers.com/free/search/simple/xmillion/index.xhtml?query_string=Federal+Reserve&which=company&page=1&x=91&y=2# HooversCompanyNameMatchesH2

And those shares that the member banks own? Some say there are so many restrictions that it falls short of true ownership

From Edward Griffin, noted anti-fed intellect (http://www.bigeye.com/griffin.htm)

“It’s a hybrid, part corporation and part government, part private, part government.
..
Every bank that’s in the system is an owner of the Federal Reserve… But that’s as far as it goes because those stock certificates do not carry with them any of the attributes of private ownership. For example, the holders of these certificates cannot sell them. If you can’t sell something then you don’t really own it, that’s one of the tests of ownership, your ability to dispose of it. You cannot sell it. Furthermore the larger banks put up more money than the smaller banks, it’s a ratio to their assets, so the larger banks have more stock certificates in the system than the small ones and yet regardless of the number that they hold, every bank has just one vote. There’s another violation of the principle of private ownership. Furthermore that vote doesn’t buy them anything. They can’t vote for anything of substance; they cannot vote for their national management which is the most important thing, isn’t it? The board of directors and chairman of the Federal Reserve System are appointed by the President, they’re not elected by the banks that are part of the system, the President does that.”

But, let’s go over a couple of things in this explanation.  Bear in mind what I said earlier, that noone can oversee them.

The Board of Governors are all appointed for 14-year terms by the president and confirmed by congress

This is a red herring.  It assumes that because of some appointment power, that the government has some authority over the bank.  On print that looks great.  In practice, this is nothing more than Napoleon making the Pope crown him.  The “appointees” are hand picked and given to the president and congress.  They wouldn’t dare choose anyone but those who they were told to choose.

  It operates per it’s charter and laws set by congress. it is overseen by congress.

Again, this looks great on paper, but in practice it is just not done.  No congressman can sit in on any federal reserve meeting.  Congress is not advised of the goings on of the meetings.  In fact, congress is told, quite frequently, to shut-up asking about the meetings.  Not only that, but should congress hand the Fed something, congress is well aware that they cannot then ask about the very object they handed to the Fed.

Board members are forbidden by law to have any economic interest in a private bank. (Ref: Title 12 chapter 3 of the U.S. Legal Code). The Board determines monetary policy and provides high level oversight of the branches.

If I sent a simpleton to your house to borrow your sugar, and then fed the simpleton cookies, made from the very sugar I had him borrow, can it be said that the simpleton has not profited from the sugar?  Much is made of this clause that the Fed members cannot have interest in a private bank.  But, what is not said that there are many “non-private” banks.  In fact, as we’ll see, the board holds interest in the Federal Reserve Banks.

Member banks are required to buy shares in their branch. Each bank has one vote. They can vote for 6 of their 9 board members, the other 3 are appointed by the Board of Governors. Though the branches are called non-profit, the member banks get a standard 6% dividend on their shares.

 This might look standard until you valuate how much profit the Fed makes each year.  And, again the board does in fact hold interest in a bank, just not a private one.  Where do the Fed profits come from?  The Federal Reserve Bank makes profits off of the taxpayers of America.

And those shares that the member banks own? Some say there are so many restrictions that it falls short of true ownership

Who cares about the restrictions of ownership if you have 6% of every dollar ever printed in America.  This is just another red herring.  The “restrictions” in question forbid the holder of the shares from being able to sell them.  But, correct me if I am wrong but, who on the planet would be insane enough to sell a share in the monetary system of America?  It is literally like having a share in God, with a restriction that you cannot sell a share in God.  What exactly would you trade a share in God for?  It is literally, by definition, the logical fallacy of false dilemma. This line of “reasoning” is fallacious because if both claims could be false, then it cannot be inferred that one is true because the other is false.

  • I have shares in the Federal Reserve Bank
  • I cannot have a conflict of interest when dealing with taxpayer money, which the bank makes profits off of
  • I cannot trade my shares
  • therefore I must be trustworthy and have absolutely no conflict of interest

This was literally drafted into the article creating the Fed, to confuse people and give a sense of propriety to an organization that is literally pillaging the entire country.

We literally have a private bank that is funneling money through it’s coffers and then doling it out to its friends, its own banks.

If it can be believed, the bank has had people killed that came against it.  Some even say Lincoln and Kennedy were shot by the bank.

Bankers killed Lincoln: In this conspiracy scenario, John Wilkes Booth was the “hit man,” the “hired gun” for the powerful British bankers, the Rothschilds. According to this assassination theory, the Rothschilds had offered loans to the Lincoln administration at very high interest, assuming that the Union had no choice other than to accept their outrageous terms. The frugal and resourceful frontiersman spirit in Lincoln caused him to refuse the Rothschilds’ offer and to acquire the necessary funds elsewhere. Although his refusal only stung their sense of pride and greed, the true reason for their planning his assassination was their knowledge that after the war Lincoln’s policies indicated a mild Reconstruction of the South that would encourage a resumption of agriculture rather than industry. Additional post-war policies destroyed the Rothschilds’ commodity speculations. With Lincoln out of the way, the Rothschilds planned to exploit the weaknesses of the United States and take over its economy.

“…Predictably Lincoln, needing money to finance his war effort, went with his secretary of the treasury to New York to apply for the necessary loans. The money changers wishing the Union to fail offered loans at 24% to 36%. Lincoln declined the offer. An old friend of Lincoln’s, Colonel Dick Taylor of Chicago was put in charge of solving the problem of how to finance the war. His solution is recorded as this. ‘Just get Congress to pass a bill authorising the printing of full legal tender treasury notes… and pay your soldiers with them and go ahead and win your war with them also.’

When Lincoln asked if the people of America would accept the notes Taylor said. ‘The people or anyone else will not have any choice in the matter, if you make them full legal tender. They will have the full sanction of the government and be just as good as any money; as Congress is given that express right by the Constitution.’

Lincoln agreed to try this solution and printed 450 million dollars worth of the new bills using green ink on the back to distinguish them from other notes. “The government should create, issue and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of consumers….. The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the Government’s greatest creative opportunity. By the adoption of these principles, the long-felt want for a uniform medium will be satisfied. The taxpayers will be saved immense sums of interest, discounts and exchanges. The financing of all public enterprises, the maintenance of stable government and ordered progress, and the conduct of the Treasury will become matters of practical administration. The people can and will be furnished with a currency as safe as their own government. Money will cease to be the master and become the servant of humanity. Democracy will rise superior to the money power. The solution worked so well Lincoln was seriously considering adopting this emergency measure as a permanent policy. This would have been great for everyone except the money changers who quickly realised how dangerous this policy would be for them….”

On Kennedy:

On June 4, 1963, a virtually unknown Presidential decree, Executive Order 11110, was signed with the authority to basically strip the Federal Reserve Bank of its power to loan money to the United States Federal Government at interest. With the stroke of a pen, President Kennedy declared that the privately owned Federal Reserve Bank would soon be out of business. The Christian Law Fellowship has exhaustively researched this matter through the Federal Register and Library of Congress. We can now safely conclude that this Executive Order has never been repealed, amended, or superceded by any subsequent Executive Order. In simple terms, it is still valid.

When President John Fitzgerald Kennedy – the author of Profiles in Courage -signed this Order, it returned to the federal government, specifically the Treasury Department, the Constitutional power to create and issue currency -money – without going through the privately owned Federal Reserve Bank. President Kennedy’s Executive Order 11110 [the full text is displayed further below] gave the Treasury Department the explicit authority: “to issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury.” This means that for every ounce of silver in the U.S. Treasury’s vault, the government could introduce new money into circulation based on the silver bullion physically held there. As a result, more than $4 billion in United States Notes were brought into circulation in $2 and $5 denominations. $10 and $20 United States Notes were never circulated but were being printed by the Treasury Department when Kennedy was assassinated. It appears obvious that President Kennedy knew the Federal Reserve Notes being used as the purported legal currency were contrary to the Constitution of the United States of America.

“United States Notes” were issued as an interest-free and debt-free currency backed by silver reserves in the U.S. Treasury. We compared a “Federal Reserve Note” issued from the private central bank of the United States (the Federal Reserve Bank a/k/a Federal Reserve System), with a “United States Note” from the U.S. Treasury issued by President Kennedy’s Executive Order. They almost look alike, except one says “Federal Reserve Note” on the top while the other says “United States Note”. Also, the Federal Reserve Note has a green seal and serial number while the United States Note has a red seal and serial number.

President Kennedy was assassinated on November 22, 1963 and the United States Notes he had issued were immediately taken out of circulation. Federal Reserve Notes continued to serve as the legal currency of the nation. According to the United States Secret Service, 99% of all U.S. paper “currency” circulating in 1999 are Federal Reserve Notes.

Kennedy knew that if the silver-backed United States Notes were widely circulated, they would have eliminated the demand for Federal Reserve Notes. This is a very simple matter of economics. The USN was backed by silver and the FRN was not backed by anything of intrinsic value. Executive Order 11110 should have prevented the national debt from reaching its current level (virtually all of the nearly $9 trillion in federal debt has been created since 1963) if LBJ or any subsequent President were to enforce it. It would have almost immediately given the U.S. Government the ability to repay its debt without going to the private Federal Reserve Banks and being charged interest to create new “money”. Executive Order 11110 gave the U.S.A. the ability to, once again, create its own money backed by silver and realm value worth something.

In the intelligence community, there is a saying,  “In the business of covert ops, there are no such things as coincidences.”.  Putting forward a very easy scapegoat for the public to see is the “birdie” the photographer uses to placate the public.  Keep your eyes on the conveniently placed presidential assassin that suddenly appeared on the doorsteps of the FBI.  Pay no attention to the man behind the curtain.  It could not possibly be that these presidents sought to overthrow the banking power houses and ended up dead by their hands.

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The Case Against Propping Up Housing Prices (video)

Wharton School of Business is Wrong

Susan Wachter

It is painful to see an interview of a tenured professor from the Wharton School of Business, completely display ignorance of the economy and get the issue of the federal government’s continued interference with the housing market wrong.  This “professor”, proposes that we should keep the housing bubble propped up as long as we possibly can.  And, if you read into her responses in a certain light, you’ll come away with the notion that she does not think the federal government IS involved with propping up the housing bubble.  There is no way to argue for or against the federal government’s continuous meddling in, what should be, a personal market, if you have no idea that the basis, home prices, of the market is systemically flawed, a bubble.  Susan Wachter, a professor of real estate at the Wharton School of Business, got every point wrong.  Her smarmy and sarchastics remarks served only to show her complete ignorance of the issue at hand, the housing bubble.

But, don’t think I relied on this single interview to determine if this person is aware or not aware of the egregious errors in the housing system.  I perused about 20 of her own personal writings, and interviews.  I think 20 is a sufficient number to understand a person’s point of view and to understand whether or not they are aware of basic facts.  Sarcasm aside, it is my contention that Susan Watcher has no idea what the federal government has been doing for the past 97 years.  [for those who can do simple math, I leave that number there to separate the truly ignorant from those who are awakened to the fiasco we find ourselves in 97 years later]

The basic premise of power is that, the one with the power has the capability to execute such power.  But, that is not the whole of the actuality.  The true basis of power is not that you have capabilities to execute your abilities, but that you have those who come to you seeking for you to exert a power that they themselves do not have and that you can execute those abilities over and above those who have given you the authority of such power.

The federal government continuously usurps power from people.  Particular to this housing issue, we had the policy, ostensibly benevolent, and there’s a saying somewhere about the road to hell being paved with good intentions, that all Americans should own a home.

Let’s look at that notion for one, realistic, moment.

All Americans Should Own a Home

If all Americans should own a home, then by definition, all Americans should be able to afford a home.  But, wait, if all Americans can afford a home, then the notion of a cheap labor pool should be nonexistant OR … OR… housing should be so cheap that everyone can afford it.  You cannot have it both ways.  You cannot have a cheap labor pool AND have housing everyone can personally, without government intervention, outside of this being a socialistic government, afford.  Unless America is willing to suddenly change to pure socialism, everyone cannot afford housing.

So, if everyone cannot afford housing, and I’m sure President Clinton knew this, then something else must be up when the government suddenly puts forth the policy of “all Americans should own a home.”  Let’s look at what they did to “make it so.”

  • exploded the quasi-governmental agencies like fannie and freddie
  • government backed guaranteed loans [ yes that means tax dollars would guarantee to the BANK that no matter what, they’d get their money ]
  • completely reduced the strictures under which those government backed guarantees were handed out [ yes, “we’ll take NINJA (no income no job apparent) loans”
  • the non-quasi-governmental agency, A.K.A. private bank, the federal reserve bank, reduced interest rates from 5.25% to 0.00%
  • a plethora of system practice of the S.E.C. not prosecuting nor even investigating any real estate industry cogs, i.e. banks on down to appraisers
  • FDIC steadily increasing its deposit guarantee
  • bank reserve requirements being reduced, such that they could then lend out millions instead of thousands of dollars, backed by government guarantees on payment
  • explosion in the rise of exotic loan terms, such as interest only loans and ARM loans among others

With this list, one can easily see that this cheap labor pool doesn’t need socialism to get into a home, they simply apply for a home loan without consequence nor care, since they could go to a bank, pay nothing down, not show any income, and pay half of what they would pay in rent for the first 1-3 years.

With houses selling like hot cakes then, who cares what the price of a house was.  You have a perfect storm brewing.  You have the maid, being able to buy the mansion, money no object.

Money No Object

With poor people being able to afford million dollar price tags, and I’ve personally heard this story many times in the past 2 years, home prices going up by 19% raised absolutely no red flags.  In fact huge housing developers would be so brazen as to put in their brochures that your home price would double in 6 months after sale from the developer.  I personally had a friend who’s parents bought one of those homes, and indeed cashed in a year later, doubling the initial price, but then not being able to afford a home of their home because the market was so inflated.  They had to take a condo 1/3rd of the size.

And, we come to home prices, obviously it was inflated, obviously it is inflated, obviously people were in, and are in homes they could not afford or shouldn’t be in a home at all.  So if the market is trying to correct itself, you have to do some big math here.  If home prices are inflated, how should it be corrected?  This is where Professor Wachter completely fails.

  • given that a huge percentage of the population should not have even been in a home at all, what would home prices be if they had never even bought a home
  • given that there would not have been that much exchange of homes and the population would not have been trading homes anywhere near as much, what would home prices be if this exchange had not gone on
  • if we come to the realization that the government was a huge player in people that could not afford homes, getting into home, what would home prices be if all of those policies and guarantees were eradicated
  • the federal reserve needs to recuse itself from usurping the power of the congress of the united states, in that it sets interest rates, which ultimately led to people who could not afford houses via a realistic market interest rate, get into a home.  What would home prices be if the interest rate were set by the market, without interference by the federal reserve

This is why those who are for home prices falling are correct and those who are not, do not realize that home prices are NOT natural.  Home prices should be nowhere near their current value.  What investment do you know of that earns 19%, for over 10 years, and is not investigated by the SEC?   A 19% annual gain is not an organic gain and should send out red flags to anyone caring to pay a modicum of attention.  Any idiot knows that if you get 20 cents on the dollar over above your investment, that something is wrong, normally illegal activity is a sure bet.

So if we have housing prices going up by 19% every year for at least 10 years, why would you argue against, in a depression, housing prices falling.  This argument, of course, can be put exactly to the fed for not letting the zombie banks fail, or interest rates to rise naturally or the overall correction that is necessary at this time, i.e. prices to fall in every market.  Unless Susan Wachter is in an investment home that she is thinking she is going to get out of in the next year, she is arguing a point in favor of artificially highly inflated home prices.

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Obama Won’t Appoint Elizabeth Warren Why?

We Already Have Appointed a Woman, What More Do You Want?

Professor Elizabeth Warren

I have to admit truth to truth, Elizabeth Warren would set the consumer raping industry [banks] on its ear, were she appointed as Chair of the Consumer Financial Protection Bureau, IF AND ONLY IF, she actually had any power in the position.  As it stands now, the Consumer Financial Protection Bureau, is under the thumb of the Federal Reserve, which is like putting the fox in charge of the chickens.  Give it 6 months and there will be no Consumer Financial Protection Bureau to speak of.  It’s already starting to happen as we speak.

Enter Robert Gibbs, White House spokesman, on Elizabeth Warren’s potential to be a candidate: “I don’t think any criticism, in any way, by anybody would disqualify her.”  Yet Obama has not nominated her at all.  Gee I wonder why this is?  Could it be the very people, whom he stole money from taxpayers, to bail out, would have a cow?  The powers that be are showing their muscle by Obama not appointing Elizabeth Warren to the position. 

According to the National Journal, the banking industry “privately grumbles that Warren would be their least favorite candidate to head the agency.” Or, as Floyd Norris put it in the New York Times, “whether or not she is named to run the bureau may depend on how willing the president is to anger the banks.”

Warren is one of the best people for the position. Picking her is a no-brainer. Rarely does a president have the opportunity for such a plethora of best people for the job, when it comes to appointing someone to a position.  This position, at this time, being filled by Elizabeth Warren is one of those rare opportunities.  Change huh?

Not only is she one of the country’s foremost experts on bankruptcy law and the multiple ways in which banks trick and trap consumers, she’s been the leading advocate for the creation of the agency, which the banking industry worked night and day to kill. In fact, it was Warren who came up with the idea for the agency in the first place, in a paper she wrote in 2007.

Senators and Congressmen alike are lining up to laud Warren as the best possible choice:

  • Sen. Al Franken: “In my consideration, I think Elizabeth would be the best.”
  • Rep. Barney Frank (chair of the House committee that drafted the financial reform bill): “She’s far and away the best candidate.”
  • Sen. Bernie Sanders: “No one in our nation could do a better job.”
  • Rep. Rosa DeLauro: “In my living room with many members of congress, she predicted what was going to happen several years ago. As she put it in 2007, consumers cannot buy a toaster that has a one in five chance of bursting into flames but they can enter into a mortgage that has the same one in five chance of putting them out onto the street…Professor Warren we cannot, Ma’am, do it without you.”
  • Sen. Jeff Merkley: “I support Elizabeth Warren…She has both the clarity of the need for an agency that has as its top mission protecting citizens against tricks, traps and scams, and she has the ability to articulate that vision. She has the leadership skills and the knowledge of the financial world. She has the full set of requirements to be an effective leader.”
  • Sen. Tom Udall: “Should [the president] decide to nominate her to lead the Bureau, it will be a clear sign that the Bureau will be a champion for the American consumer, will stand up to unscrupulous actors and will not shrink from…fulfilling its mission under pressure.”

Secretary Tim Geithner:

She is an enormously effective advocate for reform. Probably the most effective advocate for consumer protection in the country. She has huge credibility and she played a decisive role in helping make the public case for reform and she was early on this, way ahead of everybody else. – Sunday on ABC’s This Week

If you know about Goldman Sachs Geithner  you know why he has stopped short of endorsing Warren (and, indeed, privately argued against her)?

Critics like Senetor Chris Dodd told NPR’s Diane Rehm:

“The question is, ‘is she confirmable?’ And there’s a serious question about it.” And today he challenged Robert Gibbs’ assertion that Warren is “very confirmable”: “How does he know that?”

With mid-term elections on our doorstep, it’s rather easy to be bold:

“Are the Republicans, when we bring her name up, going to argue that she shouldn’t be confirmed because she’s too tough on the big banks and too tough on the financial industry?” asked Senetor Tom Harkin. “Boy, that’ll get them a lot of votes in November!”

Unfortunately there is a provision in the financial reform bill the president signed into law last week that allows the Treasury Secretary to name someone to head the Consumer Bureau until the Senate confirms a presidential nominee.  There is no way Goldman Sachs Geithner will appoint Warren in the interim.

“The statute gives the Treasury Secretary the obligation to get it done, but doesn’t tell him how to get it done,” says Gail Hillebrand of the Consumers Union. “Consumers have been waiting a long time. The sooner we can get it off the ground the better.”

Media outlets would have you think this is a Republican Democrat thing, however if you’ve been paying attention to this blog, you know it isn’t.  The democrats are no more beholden to the banks than the Republicans are.  They are all bought and paid for.

Elizabeth Warren vs Tim Geithner

Opposition marketing spin currently being test-marketed is that because Warren is such a zealous advocate for consumers she would somehow be bad for “innovation.” The same innovation that brought us credit default swaps, teaser rates, 600 percent payday loan rates, and that led to widespread foreclosures and bankruptcies. This line of reasoning is akin to saying that we don’t want our police force to be very vigilant, lest it diminish criminal innovation. Warren herself addressed this ludicrous claim in a paper in 2008:

Innovation in financial products has produced incomprehensible terms and sharp practices that have left families at the mercy of those who write the contracts.  This is exactly why the Consumer Financial Protection Bureau was created in the first place. If someone with Warren’s skill set and perspective isn’t named to head it, why even bother creating it? Just so another banking industry shill has a place to cool his heels before adding a few zeros to his salary when he quits and joins the companies he was ostensibly regulating? Given that this is the usual M.O. of how regulatory agencies in Washington work, it’s all the more important to name Warren so she can start the Consumer Bureau off on the right foot — as a true voice for the people.

So which way will Obama go? If he makes his decision on the merits, Elizabeth Warren will be the first head of the Consumer Bureau. If he makes his decision out of fear, she won’t be. For guidance, he should listen carefully to his own words:

All too often — our government made decisions based upon fear rather than foresight, and all too often trimmed facts and evidence to fit ideological predispositions. Instead of strategically applying our power and our principles, we too often set those principles aside as luxuries that we could no longer afford. And in this season of fear, too many of us — Democrats and Republicans; politicians, journalists and citizens — fell silent… if we continue to make decisions from within a climate of fear, we will make more mistakes.

That was Barack Obama in May of last year, talking about the Bush administration’s approach to national security in the wake of 9/11. As he finds himself in a different kind of “season of fear,” will he use his insights as a guide to his decision?

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