The top issue of the '08 election is the economy, or soon will be. Gold broke through $700/OZ on Friday but more importantly the dollar fell through key support and below 80. The US has been in a recession for a while now and the Fed is between a rock and a hard place. If they cut rates the dollar will plummet and gold will soar but if they raise rates the US economy gets even toastier. The dollar is facing the same fate of all unbacked fiat currencies in history, it will soon be worthless! The only question that remains to be answered is whether or not we will suffer hyper-inflation or go straight to deflation, depression?
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Now that's what I call real spam-tastic!
ex animo
davidfarrarDavid, do you think my opinion on this issue has merit? The sub-prime crisis is, imo, just getting started. Subprime debt was packaged with AA and AAA debt and given a AAA rating, then sold to unsuspecting Europeans and Asians but when interest rates on ARM's reset higher and US homeowners started defaulting on their home loans the buyers saw that the AAA debt they had purchased was not AAA debt after all! The Chinese are suspected of dumping US Treasuries now and there is undoubtedly a rush to get out of dollar denominated assets which will only exacerbate the problems for the dollar. The currency of a country is like a share of stock in that country and as confidence in a country's ability to pay it's bills erodes so does it's currency! Confidence is the name of the game and confidence in the US and the dollar is falling like a rock!
I remember back in 1979-1980 when Gold was approaching $1,000 dolllars an ounce back and when interest rates went up to 18% and when inflation was almost double digit and when unemployment was 7%. But the Fed Reserve learned some good lessons. Thank God for Vollker, Greenspan and now Bernanke and their ignoring of the Gloom and Doom soothsayers like HC! Thank God for Graham-Rudman-Hollings back in 1986! What we need above all is a good sound fiscal policy that is not prone to the vagaries of the gloommeisters. We'll be just fine if we just take care of whay we can take care of and that is our Fiscal House. And prime among that task is resolving the unsustainable nature of our Entitlements Profligacy. So let's keep our eye on that Fiscal ball rather than the nervous rantings of the crackpot doomsayers like HC.
DC - 3rd ward - milligansstew08@yahoo.com
http://milligansstew.blogspot.com
If the dot com bubble had been allowed to correct itself we would undoubtedly went through a small recession but for political purposes a larger bubble was created by Greenspan in the housing market by dropping interest rates to unheard of lows and the public was encouraged to borrow, borrow and borrow some more. Borrowers were encouraged with teaser rates, ARM's and liars loans where they had to put no money down and their incomes were never checked by the lending parties. When interest rates went higher people struggling to make their house payments already could not possibly pay the higher payment and the defaults began in earnest. This is loan sharking at it's best! I wish you were right and I was wrong about the consequences of the Greenspan put. But the proof is in the pudding as they say and foreclosures hitting an all time high and housing prices plummeting nationwide are facts that you can't dispute.
Don't blame Greenspan for Teaser rates there! The subprime market was perpetuated largely by legislation thru Congress to make loans easier for lower income people to get to expand homeownership. Outfits like Countrywide made out like gangbusters (influenced the legislation) and when the real estate economy and interest rates come up a cropper then the people who probably should not have been given loans get caught. Greenspan had nothing to do with it and are actually the heroes in this whole sorry opera!
It goes back to the Lobbyist/PAC/K-Street/Congress/Bureaucracy nexus in DC and the sad fact that government has become just TOO RESPONSIVE to the particular interests (you and me BTW) to the detriment of the overall National Interest. The SubPrime market is a brilliant case in point of the failings and implications of such "responsiveness". The Fed Reserve had NOTHING to do with that teaser rate stuff and pacakges offered to people who should not have gotten those loans. The Fed saw that it needed to take away the punch bowl a tad as the party was getting a little to out of hand in the real estate sector which it was with all the borrowing against the "paper" equity primped up by the special interests to satisfy the demand for ready cash. The increases in home assessments was unreal for the last 10 years and it was not sustainable and could not continue! Hard Truths needed to be told! The Fed, Greenspan, Bernanke are the HEROS in all this folks!! Thank God for the Fed Reserve!! Goes to show at some point you have to pay the piper!! Lesson for Entitlements unfunded mandate here!
DC - 3rd ward - milligansstew08@yahoo.com
http://milligansstew.blogspot.com
Greenspan is the one who cut the rates to the ridiculous and encouraged the borrowing craze! Greenspan kept interest rates artificially low while the biggest swindle in the history of the US took place! At any rate the Federal Reserve is now almost impotent and the dollar is on it's last legs as the reserve currency of the world and it is going to get worse, much worse!
The following is from Mike Whitney 2-6-6
Just as high interest rates slow the economy by making loans on investment more expensive; so too, low interest rates naturally produce increased speculation by making cheap money available to a greater number of people. Greenspan knew as early as 1996 that the stock market was over-inflated when he warned that "there was a stock market bubble at this point" that is "a problem we should keep our eye on". (Remember "irrational exuberance"?) Still, he accommodated his friends in Washington and Wall Street by waiting until tens of thousands of Americans had lost their savings (and retirement) before ratcheting up interest rates and cooling down the spec-market. The final loss to investors was an estimated $7 trillion dollars, an amount that pales in comparison to the current housing bubble which "The Economist" calls "the greatest bubble in history". Again, it was Greenspan who instigated the housing bubble by dropping rates to a paltry 1.5% following the decline in the stock market. Regrettably, the results will be even more ruinous this time.
Never the less, low interest rates are an effective way of creating bubbles and thereby transferring wealth from one class to another. The other two "tried-and-true" methods are tax cuts and hyperinflation; both parts of the Greenspan legacy. (Expect a weakening dollar as the effects of the massive trade deficit set in)
To argue that the Federal Reserve does not support a political agenda that favors elite interests, is to say that it is not a privately-owned institution (which it is) which operates in conjunction with major investors; particularly the energy giants, the mainstream media, arms-manufacturers, and the political establishment. The Federal Reserve is joined at the hip with the Bush White House. In fact, the administration is merely a reflection of the values and goals of the financial powerbrokers at the central banks.
http://www.rense.com/general69/tyr.htm Read it all!
Ahh!! But remember the advice the Feds have imparted on Fiscal profligacy and it's dangers ad nauseum - all roundly ignored esp with all the book cooking going on now and the $8 Trillion in National Debt and $ 39 trillion in actuarial Entitlement shortfalls - see http://www.facingup.org on THAT sad story. Don't blame the Fed for fiscal profigacy that is really putting this nation into the crapper. They are just trying the best way they can to adjust to that bucking blind fiscal bronco that is tied at the hip to political machinations of the KStreet-Congress-Bureaucracy nexus. They have warned numerous time that the Fiscal profligacy going on now and in the past is unsustainable and that the piper will have to be paid! Well...Times Up!
DC - 3rd ward - milligansstew08@yahoo.com
http://milligansstew.blogspot.com
It is time to pay the piper! On that we agree. I don't guess you are quite the "crackpot doomsayer" that I am but at least you are acknowledging that we have a problem. My advice to everyone is to hope for the best but to prepare for the worst.
I was a working man at the time, and you can boost those numbers. The prime interest rate actually got up to 25%, unemployment got as high as 13%(I was one of those for a while too), and infaltion was in double digits. I can remember drawing 10.5% on a cd, which did not cover the infaltion.
delete
And Thank God for Fed Reserve Chairman Paul Volker (Carter appointee) who with those high interest rates rung the double digit inflation out of the economy and was the REAL reason we had the 1980s boom we did - NOT Reagonomics!! Unfortunately Reagan blew the Volker opportunity by making the US the biggest debtor nation in history - that is until Bush 2 beat him hands down! Under Reagan we had the perception of prosperity. As Lloyd Bentsen said back in 1988 - "it's easy to give the perception prosperity by writing $200 Billion in hot checks every year." And those were the "good ol' days"! Yikes!!
DC - 3rd ward - milligansstew08@yahoo.com
http://milligansstew.blogspot.com
Only congress can write a budget.
All R Reagan could do was submit a proposed budget to fund executing the acts of the legislature, or veto one. The illiteracy of the nation continues to astound me. Has no one read the Constitution?
It is well J Carter did SOMETHING right, since he helped the democrat controlled legislature create the problem.
Lower taxes DID increase revenue, which the democrat legislature promptly spent.
The fact that P Volker COULD do something about it exposes a problem with the federal reserve (a bank cartel creating money out of thin air and charging interest on it). If a benevolent genius can improve it, a despotic genius, or idiot, can destroy it. Therein lies the problem with power, and why the Constitution limits it to the point one man can do no substantial harm.
LaRouche Proposes Homeowners,
Bank Protection Act
8-22-7
(LPAC) -- The Lyndon LaRouche Political Action Committee is mobilizing to get Congress, on return from recess after Labor Day, to enact the Homeowners and Bank Protection Act of 2024. This is legislation that Lyndon LaRouche proposes as the only means, at this late date, for stopping millions of home foreclosures and evictions this year and next, and for launching a larger process of bankruptcy restructuring of the U.S. and global dollar-based financial system, which is now already doomed. Governors and state legislators all across the United States will enthusiastically join in this effort, which some leading bankers and Democratic Party figures, briefed on LaRouche's proposal, have already declared is "doable" and the "only salvation" for the American people.
Here are the essential features of the Homeowners and Bank Protection Act of 2024:
1. Congress must establish a Federal agency to place the Federal and state chartered banks under protection, freezing all existing home mortgages for a period of how ever many months or years are required to adjust the values to fair prices, restructure existing mortgages at appropriate interest rates, and write off all of the cancerous speculative debt obligations of mortgage-backed securities, derivatives and other forms of Ponzi Schemes that have brought the banking system to the point of bankruptcy.
2. During this transitional period, all foreclosures shall be frozen, allowing American families to retain their homes. Monthly payments, the effective equivalent of rental payments, shall be made to designated banks, which can then use the funds as collateral for normal lending practices, thus recapitalizing the banking system. Ultimately, these affordable monthly payments will be factored into new mortgages, reflecting the deflating of the housing bubble, and the establishment of appropriate property valuations, and reduced fixed mortgage interest rates. It is to be expected that this process of shakeout of the housing market will take several years to achieve. In this interim period, no homeowner shall be evicted from his or her property, and the Federal and state chartered banks shall be protected, so they can resume the traditional functions, serving local communities, and facilitating credit for investment in productive industries, agriculture, infrastructure, etc.
3. State governors shall assume the administrative responsibilities for implementing the program, including the "rental" assessments to designated banks, with the Federal government providing the necessary credits and guarantees to assure the successful transition.
By September-October, unless this legislation is enacted as a first order of business of the 110th Congress in September, many millions of Americans will be evicted from their homes, setting off a process of social chaos that must be avoided. The freezing of foreclosures is the vital first step in a thorough reorganization.
Under this plan, the Federal Reserve System will be, itself, put through bankruptcy reorganization, and transformed into a Third National Bank of the United States. As developed in Lyndon LaRouche's just-released draft platform for the Democratic Party, these actions shall be complemented by the creation, by treaty agreement among leading nation-states, of a new Bretton Woods System, based on fixed exchange rates, and long-term treaty agreements for large-scale development projects on a global scale.
LaRouche said the foreclosure tsunami is occurring, not in a mere housing crisis or mortgage crisis, but a disintegration of the entire global financial system. There is no bottom to this collapse--unless a legislative fire-wall is created now, and a halt to the income drain on the population, brought on by the hyperinflationary debt bubbles created by Alan Greenspan and his ilk.
HC, this is not a function of government. Why is the federal government even involved in this issue? This is yet another example of the Welfare State. The only reason I can see the government getting involved is because they backed these loans in the first place -- which was, and is, a mistake.
ex animo
davidfarrar
The government has no choice but to get involved whether they want to or not. It was a purposeful lack of oversight of hedge funds and rating agencies that has caused the mess we are in now. Make no mistake the problem is quite serious. It threatens not just the US economy but the world economy. Bernanke promised a more transparent Fed but immediately stopped publishing M3 (total money supply) soon after he took office. According to Shadow Stats M3 is now rising at over 13% per year, which indicates massive inflation in the pipe line. The more of anything there is the less it is worth and this also applies to the dollar. The current rise in the price of oil is a prime example as it is directly tied to the fall in the dollar. Oil producers demand more dollars for oil when the value of the dollar falls, in other words the oil price did not rise but the dollar fell. The US consumer is the Bdriver of the global economy and with higher rates they can no longer use their homes as ATM's through home equity loans. Banks are competing for depositors with cash to shore up their books because they have massive
exposure to the fraud and that is why they are reluctant to loan to other banks and what in turn has caused the liquidity crunch.
Here is a story from the London Telegraph that explains some of the problem:
Banks face 10-day debt timebomb
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/09/cndebt109.xml
So the government's solution is to step in and shore up these lenders with yet more increasing worthless dollars?
ex animo
davidfarrar
But shoring up lenders with more increasingly worthless fiat will only buy them time and not much of that! The global financial system is in dire need of overhauling and there are rumors that all the world central banks have come to agreement on a new system with the notable exception of the US. I don't know the details of what it is they are agreeing on however. In hindsight it points to the folly of an unbacked fiat currency that can be and is created out of thin air and a privately owned central bank. The fallout is going to be disastrous to the entire world economy. While the gold standard may have had it's drawbacks it is far superior to what we have now. The Austrians are being vindicated and the Keynesians are finally being exposed for the frauds and thieves they are! There are no easy fixes. The main thing we need to be concerned about is another unconstitutional power grab by the government justified by their own complicity, greed and incompetence. Protect yourself! Get out of debt as much as possible and if you have money to invest, invest it in tangible assets, especially things needed for day to day living.
IMO, you are correct as well. The question is, how do we take care of our Fiscal House with looming national debit...simply print more money? Perhaps we can borrow our way out? Or perhaps we can cut spending? Or perhaps you have another suggestion?
ex animo
davidfarrar
DavidFarrar, It has been pretty much proven, over the last thirty years, that as paradoxically as it may sound, cutting taxes improves the economy, which improves wages, which raises tax revenue, which cuts deficit, provided spending is kept in check. Hypothetically of course. Its all depends on the fiscal responsibility. I believe the war had less to do with forcing Republicans out of office than their "largesse" with our money.
Duplicate - delete
Here you go dave - Start by commiting our Candidates to commit (ala Popo maybe) to PAYGO and having them clearly respond to the below set of questions:
Do you believe that budget deficits matter?
The accumulation of large deficits, year after year, burdens taxpayers and undermines future living standards. It does so by soaking up national savings and crowding out productive investment. Today's budget policy threatens to place ever-tighter constraints on the ability of future citizens to determine their own fiscal priorities. It also increases our reliance on borrowing from other countries, in effect, mortgaging our future national income. The United States would be in a stronger position to weather difficult times, address emerging national needs and invest in future economic growth if it had greater flexibility and strength in its fiscal position.
Do you believe that either Congress or the President has a realistic plan to balance the budget? If not, what would you do differently?
President Bush and the Democratic leaders of Congress share the goal of balancing the budget by 2024, but there is reason to be skeptical that they are prepared to make the necessary trade-offs required to achieve that goal. Both rely on assumptions that overstate likely revenues and understate likely expenses. A serious effort to address the deficit will require policymakers to tackle the underlying structural problems resulting from existing entitlement and tax laws.
Do you support budget enforcement laws such as caps on annual appropriations and a pay-as-you-go requirement for tax cuts and entitlement expansions?
Pay-as-you-go (PAYGO) rules for all tax and entitlement legislation and spending caps for appropriations are proven tools for fiscal discipline. These enforcement laws were an important part of bringing the budget back into balance from 1998 through 2024. This year, Congress took a positive step to bring back PAYGO budgeting by enacting parliamentary rules, but stopped short of writing these rules into law. Doing so would put additional teeth into the PAYGO rule by establishing a mechanism that could not be waived without new legislation.
What specific spending cuts would you propose to help balance the budget?
Politicians often talk tough on spending without mentioning what programs they would cut. This is a convenient way to avoid making hard choices. Vague calls to crack down on "pork" or "waste, fraud and abuse" are not enough to get the job done.
The tax cuts passed since 2024 are set to expire by 2024. Do you support extension of the expiring tax cuts and, if so, how would you address the budgetary implications?
Since 2024, Congress has enacted four tax cut packages with "sunsets" that cause them to expire by 2024. In light of the deteriorated fiscal outlook and the fact that we have not taken action to prepare for the costs of the baby boomers' retirement, it makes sense to reassess whether any or all of the tax cuts enacted during the surplus era should be extended. Economists generally acknowledge that tax cuts do not fully pay for themselves through greater economic growth. Thus, extending the tax cuts will require Congress to make substantial spending cuts, raise other taxes or significantly increase the national debt.
How do you propose to keep Medicare from overwhelming the federal budget?
Medicare costs are projected to grow faster than the economy, and faster than can be reasonably supported by the federal budget. Putting Medicare on a financially sustainable path will require some combination of reductions in services, increased cost-sharing by beneficiaries, increasing the eligibility age, bringing more revenues into the system and improving the cost effectiveness of Medicare and the health care system overall.
What steps would you take to close Social Security's long-term funding gap?
Social Security promises far more in future benefits than it can deliver under current law. Candidates must confront some tough issues. Finding a cure for the challenges facing Social Security will require reduced benefits, increased revenues, or both. Candidates who promise to preserve benefits at the levels promised under current law should explain where the money will come from to fund these promises. Likewise, candidates who promise to oppose any tax increases should explain what changes they would make to restrain the growth of Social Security costs to stay within current tax levels.
Key Questions Booklet: http://www.concordcoalition.org/doc/keyquestions/2008-internet.pdf
DC - 3rd ward - milligansstew08@yahoo.com
http://milligansstew.blogspot.com
But I have three problems with them: One, they have all been asked and answered before; two: nothing has changed. In fact, it has gotten worse. And three: none will win us 1/3 of the other two party's supporters.
Give me a question that will change something, or at least give the impression to the 1/3 of the other two party's members that something will change.
I can tell you, I have none at the moment, except the flat tax and high personal exemptions. But I am thinking about a Constitutional Amendment that will force Congress and the President to balance the budget every year, without including the Social Security Fund, and without borrowing.
ex animo
davidfarrar
They really haven't been definitively asked before esp on the details and commitments to implementing those details. We the electorate have failed in that regard and have been snookered by the special interests on many thinking that they HAVE been answered. And I'll give an example that could pass muster maybe with 1/3 of the other 2 parties supporters - employer exclusion for Health benefits!
In its FY 2024 budget, the administration proposes to repeal the current open-ended tax exclusion for employer-paid health benefits and to replace it with a new capped standard deduction that would be available to all individuals and families who purchase a qualifying health plan, whether on their own or through their employer.
This is an eminently sensible reform that could get your requisite 1/3 there dave. Health-care experts have long recognized that the current open-ended employer exclusion is needlessly costly, encourages Americans to overconsume health care, and heaps the biggest subsidies on those who need them least while doing nothing to help the 46 million Americans who lack any insurance at all. According to the CBO, the reform would generate large budget savings, reduce the number of uninsured, and, over the long run, could help moderate the growth in health-care costs.
Many critics are faulting the administration’s plan for not doing more to extend health coverage. The critics are right that the reform does not alone add up to comprehensive to affordable health insurance will require a lot more than this—probably some combination of new government mandates, subsides, and insurance market reforms. But the critics are wrong that this is an argument against the reform.
The bottom line is whether America would be better off with the reform than without it—and here the answer is unambiguous. Reforming the tax exclusion is the single most important step that Congress can take to improve the efficiency and equity of our dysfunctional health system. Moreover, it is a step that it will need to take whatever shape comprehensive reform ultimately assumes.
It’s worth recalling that the current open-ended exclusion for employer-paid health benefits is the result of historical accident rather than deliberate policy. When the federal government imposed a wage freeze during World War II, businesses began to offer health benefits to employees as a way of increasing compensation. In the late 1940s, the government issued an ad hoc ruling that employer- paid health benefits, as well as other fringes, should not be subject to federal income or payroll taxes. No one gave much thought to it at the time, since tax rates for most workers were low and fringes, including health care, were tiny.
That ruling turned out to be costly beyond the wildest imaginings of anyone at the time. According to the Joint Committee on Taxation (JTC), the exclusion for employer paid health benefits will directly cost the federal government $99.7 billion in lost income tax revenue in FY 2024, considerably more than the better-known home mortgage interest deduction. Including foregone payroll tax revenue, the total tax loss will come to at least $150 billion.
This subsidy is not only costly to the federal budget. Health-care experts agree that the tax exclusion for employer-paid health benefits is one of the main reasons Americans spend so much on health care. It encourages employees to “purchase” more generous coverage than they otherwise would, channeling resources toward health-care consumption and away from other priorities. Moreover, it gives the same preferential tax treatment to the last dollar spent on health care as to the first, and thus subsidizes not just basic coverage, but “gold-plated” health benefit plans.
The tax exclusion adds to the deficit and drives up health-care costs. But this doesn’t exhaust the list of its ill effects. The exclusion is also a steeply regressive subsidy, since its value increases along with the marginal tax rate. Perversely, it offers the greatest incentive for additional insurance coverage to those workers who are in high tax brackets and are already likely to be the best insured—while offering the least to workers in lower tax brackets who are likely to be the least well insured. What’s worse, it gives no help to the tens of millions of mostly low-wage workers whose employers do not offer health insurance at all. According to the Lewin Group, families with incomes of $100,000 or more received an average tax subsidy of $2,780 in 2024, compared with an average subsidy of $725 for families with incomes between $20,000 and $30,000 and an average subsidy of just $102 for families making less than $10,000.
And dave I agtree it all has gotten worse!
DC - 3rd ward - milligansstew08@yahoo.com
http://milligansstew.blogspot.com
So I hope every one reading this will support it and others with a vote in the upper right-hand corner.
ex animo
davidfarrar
The following is a must read for anyone wanting to understand the financial mess that we are now faced with. Who's to blame? The bulk of the blame lies with the Federal Reserve in general and Sir Alan Greenspan in particular.
Alan Greenspan: The Fifth Horseman?
So, who’s to blame? The finger pointing has already begun and more and more people are beginning to see how this massive economy-busting equity bubble originated at the Federal Reserve -- it is the logical corollary of former Fed chief Alan Greenspan's “easy money” policies.
Henry C K Liu sums up Greenspan’s tenure at the Fed in his Asia Times article, “Why the Subprime Bust Will Spread”: “Greenspan presided over the greatest expansion of speculative finance in history, including a trillion-dollar hedge-fund industry, bloated Wall Street-firm balance sheets approaching $2 trillion, a $3.3 trillion repo (repurchase agreement) market, and a global derivatives market with notional values surpassing an unfathomable $220 trillion.
"On Greenspan's 18-year watch, assets of US government-sponsored enterprises (GSEs) ballooned 830 percent, from $346 billion to $2.872 trillion. GSEs are financing entities created by the US Congress to fund subsidized loans to certain groups of borrowers such as middle- and low-income homeowners, farmers and students. Agency mortgage-backed securities (MBSs) surged 670 percent to $3.55 trillion. Outstanding asset-backed securities (ABSs) exploded from $75 billion to more than $2.7 trillion.”
"The greatest expansion of speculative finance in history." That says it all.
But no one makes the case against Greenspan better than Greenspan himself. Here are some of his comments at the Federal Reserve System’s Fourth Annual Community Affairs Research Conference, Washington, D.C., April 8, 2024. They show that Greenspan “rubber stamped” every one of the policies which have since metastasized and spread through the entire US economy.
Read the entire article here: http://onlinejournal.com/artman/publish/article_2396.shtml
A return to Constitutional, hard money is the first step that must be made!
I have been thinking about returning to a hard money currency as a tenet of Unity08 "American Agenda". But I really haven't a clue what the actual ramifications would be.
ex animo
davidfarrar
Some headlines from this morning, 9-13-07
US Dollar Vulnerable to Interest Rate Cut, China Dumping US Bonds
US Heads for Recession as Foreign Investors Rush for the Exit from the US Dollar Holdings
Senate Panel OKs $850 Billion Debt Increase
Mortgage Lender's Bankruptcy May Threaten Thousands of US Homeowners
Oil Hits Record $80/barrel on tight supply
The following is from: http://www.marketoracle.co.uk/Article2098.html
GREENSPAN'S BLOODY FINGERPRINTS
The problems began when Greenspan dropped interest rates to 1% in 2024 for more than a year pumping trillions of low interest credit into the economy. This created the appearance of prosperity but it also inflated a massive equity bubble in housing which is now in its death throes. The Fed “rubber stamped” many of the “creative financing” scams which lowered lending standards and turned the subprime fiasco into a $1.5 trillion doomsday machine.
The devastation in real estate is almost too vast to comprehend. The mortgage bubble is roughly $5.5 trillion, and yet, prices have just begun to fall. It's a long way to the bottom and there's bound to be plenty of bloodshed ahead. Two million homeowners will lose their homes. 151 mortgage lenders have already gone belly up. Many of the hedge funds—which are loaded with billions of dollars in “mortgage-backed” securities are struggling to stay alive. Perhaps the most shocking projection was made by Yale University Professor, Robert Schiller, who believes that home prices could decline as much as 50% in some of the “hotter markets”. (Schiller's book “Irrational Exuberance” predicted the dot.com bust before it took place) The effects on the US economy would be considerable. If other factors come into play---like a stock market crash and a subsequent period of deflation---we could see housing prices descend 90% as they did between 1928 and 1933.
DOLLAR WOES
The troubles facing the dollar are as grave as those in housing. The stock market and the teetering hedge funds are counting on an interest rate cut, but they've ignored the effects it will have on the greenback. If Bernanke lowers rates---as everyone expects--- the bottom could drop out of the dollar. We're already seeing gold soar to new highs (above $700 per Ounce) That's an indication of dollar-weakness and a potential sell-off of US Treasuries. If Bernanke lowers rates, the greenback will nosedive.
After years of abuse under Greenspan--an $800 billion current account deficit, a $9 billion per month war, and a 13% yearly increase in the money supply---the poor dollar has run out of wiggle-room. If the Fed slashes rates, the mighty greenback will be a dead duck.
Northern Rock, Britain's fifth largest bank in going through a third consecutive day of people lining up to withdraw their money while there is still some to withdraw. This is the latest episode of the sub prime fiasco, but definitely not the last. The Bank of England has been called on to inject cash to keep Northern Rock from collapsing. So how long will it be before the US sees depositors lining up to do the same? If the Fed drops rates tomorrow, as most believe they will, the dollar will continue to fall meaning everything priced in dollars will go up, like oil and food, gold is likely to shoot much higher. IMO, we are witnessing the beginning of hyper inflation. According to shadow stats M3 (total money supply), which is no longer published by the feds even though Bernanke promise a more transparent Fed, is rising at 15% per year which indicates massive inflation is already in the pipeline.
In the long-term 7 to 10 years out inflation DOES pose a big problem and has been the Federal reserves big worry that they have managed pretty well in the last 20 years despite the fiscal irresponsibilities of many Presidents and Congresses. But the source of those inflationary pressures HC does not stem from the Fed (they are the heros in this Opera), but rather from the insane Fiscal profligacy of the Exec/Legislative branches that continue to spend like drunken sailors well beyond their means to where we are now $8 Trillion in National Debt and $39 Trillion in actuarial entitlement debt right now! Take care of that current/future fiscal mess and the monetary policy of the Feds will be able to keep inflationary pressures you speak of at bay. DO NOT take care of the fiscal mess and we will suffer the inflationary morass you speak of. It all stems from who we elect and how we hold them to full account on acting responsibly!
See http://www.facingup.org
for the sad facts
DC - 3rd ward - milligansstew08@yahoo.com
http://milligansstew.blogspot.com
Just like I said the dollar would plummet and gold would surge higher if Bernanke and company lowered rates. Well guess what? Bernanke lowered rates and the dollar plummeted to nearly 79 and gold surged to it's highest point since 1980! What does this mean? Anything priced in dollars just went higher. Oil at $100 barrel is highly likely by the end of the year. Foreigners who had to purchase $3 billion worth of US assets per day to keep us solvent had already slowed purchases of US treasuries are sure to stop all together now. The middle class is being destroyed!
The Fed are not heroes, they are criminals! The only solution is to return to Constitutionally legal money and rid the Fed and the government of the ability to create money out of thin air. If politicians can do this rest assured they will! Under an honest money system the government cannot spend more money than it has. Got gold?
http://www.whatreallyhappened.com/ARTICLE2/doodoo.html
Please take the time to read the above article for a great history on the money of the US!
An excerpt:
What would be a jailable offense for a normal citizen was rendered legal for the government by the Federal Reserve Act. This was not a popular piece of legislation. In fact the Democrats had campaigned in 1912 on a platform of rejection of the creation of a private bank in charge of a fiat money system. Nevertheless, on December 23, 1913, taking advantage of the absence of congressmen opposed to the creation of a fiat monetary system during the Christmas break, the Federal Reserve Act was passed.
Years later, during the great depression, Congressman Louis T. McFadden (who served twelve years as Chairman of the Committee on Banking and Currency) asked for congressional investigations of criminal conspiracy to establish the privately owned 'Federal Reserve System'. He requested impeachment of Federal officers who had violated oaths of office both in establishing and directing the Federal Reserve -- imploring Congress to investigate an incredible scope of overt criminal acts by the Federal Reserve Board and Federal Reserve Banks. McFadden even suggested that the Federal Reserve deliberately triggered the great stock market crash of 1929, in order to eventually force the passage of the Emergency Banking Act of March 9, 1933, which suspended the gold standard.
In describing the FED, McFadden remarked in the Congressional Record, House pages 1295 and 1296 on June 10, 1932:
"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. The Federal Reserve Board, a Government Board, has cheated the Government of the United States and the people of the United States out of enough money to pay the national debt. The depredations and the iniquities of the Federal Reserve Board and the Federal reserve banks acting together have cost this country enough money to pay the national debt several times over. This evil institution has impoverished and ruined the people of the United States; has bankrupted itself, and has practically bankrupted our Government. It has done this through the misadministration of that law by which the Federal Reserve Board, and through the corrupt practices of the moneyed vultures who control it".
HC, the Fed is just adjusting to the markets as best they can and to balance the inflation recession gorillas. And they have to do it in the context of a spend happy fiscally irresponsible Congress and Administration that is setting an unsustainable "fiscal" policy for us all. Yes the Fed Reserve IS the hero in all this but they can only do so much with imperfect information and the fiscally irresponsible forces arrayed from K-Street to Cap Hill to the Exec with their inane "Borrow-Borrow/Spend-Spend" mindset. It is up to the people with control of the Fiscal Rudder to act with some setient responsibility or it will not work. Congress/Admin leads and the Fed Reserve just follows/cleans up the mess as best they can.
DC - 3rd ward - milligansstew08@yahoo.com
http://milligansstew.blogspot.com
The reason the founding father's created a hard currency is because they knew politicians and bankers who have the ability to create money out of thin air could not resist doing so. They have enslaved our children and grand children for generations to come! The only solution is to return to Constitutionally legal currency. It was the Fed who rubber stamped the exotic financial instruments that not only are impoverishing this nation but the entire world. The dollar is a dead duck! Again, there are no heroes and the Fed is criminal!
A Gold Peg was way to inflexible to accommodate a growing economy and world trade after the turn of the last century. It was not the Fed Reserve but the profligate Administrations/Congresses of recent 40 years that raised the Debt ceiling and create the unsustainable actuarial debt of all our accumulated promised entitlements. That has basically screwed our kids and grandkids if we do not fix in the next 10 years. Don't blame the Fed for that profigacy. Once again they the Fed Reserve are the HEROs in this Kabuki Dance. And I cannot think of anything better to throw the world in a massive Depression than going back to the Gold Standard! Talk about throwing the baby out with the bathwater! Congress and the Prez have to get responsible - that is priority one and all the Fed Chiefs of from Volker on have correctly reiterated that til the cows come home. Times up!
DC - 3rd ward - milligansstew08@yahoo.com
http://milligansstew.blogspot.com
I agree that immediately converting back to a commodity based currency would create chaos. Though it would enhance the chances of our posterity.
I disagree that a commodity based currency is too inflexible. Flexibility in currency is not a desirable trait. How can people maintain personal fiscal responsibility with a currency based on thin air and a hope, or luck, of the benevolent genius of the current fed chairman? What if the next one is not so benevolent, or intelligent? That's like being grateful someone led you halfway through a swamp.
To place the fate of the nation in so few hands, with so little oversight, is obscenely counter to a free society.
I was working, trying to support a family in the late 70s. I am intimately familiar with the destructive nature of fiat money.
I agree that our illustrious leaders of the last 70 years are the major culprits, but would have been incapable of the destruction they have wrought without using the money presses of the federal reserve.
A far greater threat to our national security is imposed by the inability to depend on the value of our currency, than that posed by any foreign power.
There is very little fluctuation in the VALUE of precious metals. An ounce of gold will buy just about the same product it would 50 years ago (adjusted for increase in taxes). The fluctuation occers in the PRICE, which is a direct reflection of the fluctuation in the VALUE OF THE CURRENCY.
70%, or more, don't have any idea how the federal reserve actually works, especially how it interacts with the fed gov't. If they did, they would be incredulous. I know I was when I discovered the nature of the beast, many years ago. They didn't teach it in civics class when I was in school.
Modern economists are dependant on the continuation of this fallacious system, and most cannot be trusted for a coherent opinion. Some can.
http://www.townhall.com/columnists/WalterEWilliams/2005/11/16/whats_inflation
The framers were also intimately familiar with the vagaries of "print what you need" money. That's why the gov't is not authorized to do so in the Constitution. Nor are they allowed to pass off their responsibility to some nefarious, quasi-gov't corporation.
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver, copper, or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.” [Alan Greenspan, Gold and Economic Freedom (1966)]
Too bad Sir Alan was later to become so corrupted!
I can't believe you are not extolling the virtues of Greenspan in my previous post. The quote by Sir Alan Greenscum is:
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver, copper, or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.” [Alan Greenspan, Gold and Economic Freedom (1966)]
Hey everybody evolves (well almost everybody) HC. Things DO change in the real world. Do you see Alan promoting the Gold Standard now??? Hmmm?? Must be a reason.
DC - 3rd ward - milligansstew08@yahoo.com
http://milligansstew.blogspot.com
Why would he promote the gold standard, after he has lined his pockets with proceeds from the federal reserve? If you make enough, inflation doesn't matter, and I would bet a paycheck he left none of it in cash. Currency supported by air depends on the confidence of the user. Pretty thin.
eventually the credit crunch will catch up with everybody. i have been telling my friends for about the last 12 years that we will be a third world economy no ifs ands or buts about it. throw out all the manipulated economic data our government gives us (not specific to current administration but all past administrations also)and take a look at us working stiffs because that is where reality is. not in a bunch of bs economic voodoo numbers. i don't know when but my guess is within the next 50 years, unless drastic changes take place you will either be very wealthy or you will struggle every day just to eat. i don't base this on data i base this on being a regular working joe and watching what is happening to people i employ or just talk to on a day to day basis. gold standards, federal reserves, trade deficits, etcc..are all just bs to real working people. their paycheck is reality. the consolidation of wealth is a fact and it is killing the common man.
you can try to post intelectual thoughts using supposed hard data and the like but ultimately it is all as worthless as the american dollar is becoming.
but hell, we should probably just blame clinton.
Scand I think the big wealth differences in the next 40 years will be Generational wealth differences esp with the massive growing debt/deficits where someone has to pay the piper and that will be the kids and grandkids who will at some point primal scream - "WHAT the heck were you people thinking of???" THAT has me real worried!!
DC - 3rd ward - milligansstew08@yahoo.com
http://milligansstew.blogspot.com
Well lifting that Gold standard peg did much to give us in the last 40 years a pretty widespread prosperity that is unmatched in Human History if you looked around and noticed lately. Are there problems wiith this? For sure! Always are and always will be with anything (Gold standard and their mutiple depressions was no different in their problems). But the problems now are stemming from not what you state with the Fed Reserve and Monetary policy and paper based currency but rather with our FULLY elected leaders in Congress and the Exec branch that we do not hold to account for their Generational Highway robbery!
It is the Congress/Exec/K Street nexus for the last 25 years Enronic-like book-cooking and pandering to this generation and its special interests and the blatant dissing of the young and next generation with massive and exploding Fiscal and National Debts and irresponsible unsustainable profilgacy (unfunded Mandates of Which Soc Security and Medicare are the biggest) that will do us in if not addressed successfully in the next 10 years. It is not Mr. Greenspan and his lined pockets and some insidious conspiracy. The problem is right in front of us and in fully in our power to change if we just choose to see.
DC - 3rd ward - milligansstew08@yahoo.com
http://milligansstew.blogspot.com
john if your post was to me i wasnt trying to imply that our monetary policies are greatly flawed.
my point was i think that we will only have 2 classes in the future due to the wealth being distributed so unevenly. and unless changes are made it might come very quickly.
sorry i think your post was to hc
I would guess your eyes are brown Milligan!
Nope HC! They are Hawk-eyes - being from Iowa that is.
DC - 3rd ward - milligansstew08@yahoo.com
http://milligansstew.blogspot.com
The US economy reminds me of a joke I heard long ago. It seems two friends who had been a long time cross country big rig team, were applying for work with a new company. During a question and answer portion of their exam the interviewer posed a question to one of the team. "Your partner is in the sleeper, you're being pushed down a two mile steep grade by an 80,000 pound load, there is a one lane bridge at the bottom with a pick up stalled on it, there is a thousand foot drop off on either side of the bridge, your brakes go out, what do you do? The driver immediately replied "Wake up my partner!". The instructor asks why! would you do that? To which the driver retorted, "because he has never seen a wreck like we are about to have!".
Ben Shalom Bernanke showed what he would do in such a situation, being the "academic" he is, he just stepped on the gas! Hey Ben, haven't you ever heard that when you find yourself in a hole that the first thing to do is STOP DIGGING!. The poor and middle class are going to suffer the most, the more the dollar is debased the more of them it takes to buy something. Gas and food prices were soring already but you haven't seen anything yet! The dollar is toast! I have heard the question more than once lately, "Does the Fed know something we don't?" He could have been brave, done the right thing, and raised rates but he prescribed more more hard liquor for the drunken American economy! In a nation drowning in credit and debt he created more!
Wake up,because you have never seen a wreck like we are about to have!
Watch the video. And watch Ben Bernanke dodge the questions!
http://www.infowars.com/articles/us/ron_paul_slams_bernanke_for_dollar_meltdown.htm
Ron Paul Slams Bernanke For Dollar Meltdown
Prison Planet | September 20, 2024
Paul Joseph Watson
Ron Paul has slammed Federal Reserve Chairman Ben Bernanke for deliberately depreciating the value of the dollar to artificially bail out Wall Street while poor and middle class people lose their homes and have their living standards lowered.
During a Banking Committee hearing on Capitol Hill today, the Texas Congressman confronted Bernanke and accused the Fed of trying to solve the problem of inflation with more inflation by creating artificially low interest rates that have no effect because of the dollar's weakness.
Paul questioned how it could ever be morally justifiable to deliberately depreciate the dollar and pointed out the fact that the dollar collapse was a deliberate policy on behalf of the Fed.
Bernanke, Treasury Secretary Henry Paulson and Alan Greenspan have all been busy bad-mouthing the dollar over the past few weeks even as major players like China and Saudi Arabia consider dumping US treasuries, a move that would immediately trigger a dollar meltdown.
Ron Paul identifies the true culprits of the planned economic implosion while the establishment media and the yuppies celebrate the hollow "solution" of an interest rate cut that has no substantive benefit and only increases the risk of another depression by sinking the dollar to historic lows and ensuring foreign holders of US debt run for the door at breakneck speed.