A Credit Crisis
By Nick Testaccio
On October 3rd, the Congress passed what has been labeled as a Bailout for the financial sector. It is exactly what we did not need for so many reasons, some of which should have been obvious to every member of Congress.
Ron Paul rose in opposition to the bill and stated his case. “The beneficiaries of the corrupt monetary system of the last three decades are now desperately looking for victims to stick with the bill after they have reaped decades of profit and privilege.”
For whatever reasons we have chosen to move in our current direction, we as a people must stand up for our mistakes. We must understand the road we are on, and how we came to these dire times. We will remember our course of action, and certainly our posterity will question our wisdom, or lack thereof.
I’m not going to lay the blame on one particular person, although the current president certainly deserves his share of the blame. I can certainly point the finger in many directions, but that would be almost pointless because we display a lack of willingness to prosecute the bankers, legislators, governors, and anyone else who brought us to this point. Instead we will gnash our teeth, and plead with the same criminals to save us from this coming fiasco.
The inevitable in upon us! Some men like Dr. Paul Craig Roberts, believe that it is sheer stupidity on the part of the administration, and the congress, that led us to this point. Others, like myself, believe that this much incompetence is simply not possible within the human species at any given time in the entire universe. Perhaps there are others on distant planets that could have fallen into this, but I would tend to think that they would lack a connection between the head and the rest of the body.
Maybe one celled species that float about could have fallen into this mess, but even that seems unlikely to me. I believe this was engineered to a certain extent, but I’m going to guess that most would agree with Dr. Roberts, and my conclusions would be disregarded.
As I go along I may have to throw in some facts, and we all know how that is hated, because they imply that we might have to use some logic. For instance during the Clinton administration there was an increase in the debt of 1.5 Trillion dollars, but most of the people seem to believe that there were surpluses during that administration. The debt went from around 4 Trillion to over 5 Trillion.
Of course one should never believe facts and figures when we want to feel good and present an image of affluence, which has led us to the sub-prime mortgage debacle. Bill Clinton was a man of the people, and there needed to be the perception that us common folk were prospering under his leadership.
One of the avenues taken to insure his legacy was to force lending institutions to approve mortgages for unqualified lenders that inflated housing prices, and then unfortunately a collapse when the fiction of over-extended credit came to be realized. While owning a home appears to be every Americans dream, it is not always possible. However, in the world of high finance where banks can bundle off their mortgage responsibility, and create money out of thin air, we can all live in the lap of luxury. That is until someone downstream realizes he’s not getting his money, and prices are rising on the wave of inflation caused by the constant infusion of fiat paper into the system.
There are probably a number of us out there that remember that grandma and grandpa never bought anything on credit unless they were in dire straits. The local tradesman and the local grocer were confident that the credit they extended would be met with an honest attempt at repayment. That was just the way things were. There were no credit cards, and little in the way of financing. The yardstick for renting an apartment or buying a house with a mortgage was based on a week’s salary. If you couldn’t afford it, you stayed where you were.
I have been chastised for my lack of concern for my fellow citizen. I am an uncaring lout who begrudges the fact that there are people out there who bought million-dollar homes, and now need to be bailed out. I am a dastardly scoundrel who cares little for the children of the parents who over extended themselves by buying into the ridiculous notion that there is only one way for the price of homes to go, and that way is up.
And the answer to your question is yes; I have actually been accused of being uncaring even after the many attempts that I have made, to the same people, over the last few years to explain our monetary system, and what was on the horizon.
Now to the questions of who is responsible, and whether this was engineered, or simply a sum of colossal mistakes made by just about everyone.
When we look at the monetary system, and understand its inner workings it’s not that difficult to conclude that those in control of the printing presses may have engineered all this for some end. "The few who understand the system, will either be so interested from it's profits or so dependant on it's favors, that there will be no opposition from that class." This quote is attributed to the Rothschild’s. It was made around 1863, but is totally appropriate to apply to today’s crisis.
Mayor of New York, Michael Bloomberg, recently came out and stated that the city would have to raise taxes because of the current financial situation.
Governor of New Jersey, John Corzine, is struggling with the budget of his state, is attempting to sell off public property, and raise taxes.
Treasury Secretary, Henry Paulson, asked for, and received a bailout package for all the financial institutions, including some foreign, in order to stem the tide of a financial tsunami. The bailout comes with some ominous powers extended to the banking cartel, and other quasi agencies.
Federal Reserve Chairman, Ben Bernake, is having money printed at an alarming rate to pump into the markets to prevent a collapse. Hundreds of billions, probably trillions, have been thrown into the system in order to maintain a look of some stability. Most of that placed in the hands of a small cadre of people.
Former FED Chairman, Alan Greenspan, helped to create the credit bubble by extending open arms to the derivatives market, the place where phony money is created for the benefit of the big-ticket holders.
All of these men have something in common. We, well at least I don’t, think of them as some sort of financial guru. These are the brilliant people that we are depending upon to resolve an issue that they did not see coming? Or perhaps they knew it was coming, and are simply reaping the profits from it, which is probably how they came to their massive fortunes in the first place.
Disregard the amount of wealth these men have because some of the richest people in history were thieves, and murders. I’m not making any connections here, but the fact of the matter is that there are many intelligent and honest people who live from paycheck the paycheck, while the reverse is true.
Another fact is that those who are placed in a position to take advantage of the monetary system are more likely to garner wealth than the rest of us. Senator Barry Goldwater stated that, “Most Americans have no real understanding of the operation of the international money lenders. The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and manipulates the credit of the United States”
The Federal Reserve is a mystery to most Americans. In simplest terms it is seen as a part of the Treasury that has the responsibility to expand and contract the money supply, and therefore stabilize the currency. This characterization of the FED is at best a half-truth. It leads to a misconception that has allowed this bank to take control of the monetary system, and our lives.
The FED is neither federal, nor does it have any constitutional authority to control the money supply. The control of money rests strictly in the hands of congress who are responsible to “regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures.” – U.S. Constitution
Since the standard currency for years had been gold and silver, congress would from time to time fix a value to the price of an ounce of gold. At the outset an ounce was worth twenty-dollars, and the corresponding value to an ounce of silver was established at one-twentieth the value. It was straightforward, and gave us a stable currency to live by.
Once we allowed the banks to take control of the monetary system, they used it to secure their wealth by expanding and contracting the supply, lending paper money that is created out of thin air, while allowing the value to work to the banks best advantage.
Gold disappeared from the American financial structure through an executive order by FDR, and the redemption of paper currency for silver was eventually abandoned.
Today the value of precious metals moves about in wild swings as the markets appear to be manipulated by the same scurrilous institutions, while the gap between paper prices and physical widens.
You might want to ask our financial guru’s how this all works, but about all you will get is gibberish. Why? Either they don’t know, or a thorough explanation would expose the fraud, and highlight how it is they have come to such magnificent fortunes.
The short explanation is that, as you expand the money supply you also create inflation until it reaches critical mass, and then hyper-inflates.
In order to have a controlled expansion we need to expand monetary supply that is proportionate with production and consumption. There is a correlation between the three that should remain fairly stable. It clearly does not work as we have been led to believe. The economy is always moving with some sort of fictitious number being published.
The primary driver to the three-part equation is demand. This in and of itself must be tempered with need. We need to build homes as the population expands, which provides a basis for growing business that is leveraged by the necessity to cloth, house, and feed the new members to society.
Those equations have been blown way out of proportion by the fact that the purchase of totally unnecessary goods and services has been made much easier through the accrual of debt. Items that would be beyond our reach are made easier by extending debt. What has happened is that, Americans in particular, have been led to believe that the more debt you are extended is an indication of how well you are doing.
Why sell the idea of debt? More debt requires more currency by way of interest payments. That equation moves all the way up the line to those who can manipulate the system to bloat their wealth as more paper creates an imbalance.
As the paper flows, and inflation ensues, it promulgates a higher tax burden by way of highly bloated government intervention. How do we handle all our services and new agencies that popup like daffodils in an open field.
We need more people to work for government to run the agencies, and of course with our war on drugs and terrorism, we need more police, and military hardware. Money flows out of our coffers, and taxes accrue upon manufacture and service in order to defer the newer tax burdens. It’s a runaway freight train all caused by a financial system that manipulated us into a frenzy of illogical spending.
Andrew Jackson fought the bankers, and closed the second central bank. He understood what the consequences would be in a fiat monetary system, a system that promotes debt, and subsequent recessions and depressions. “The paper-money system and its natural associations--monopoly and exclusive privileges--have already struck their roots too deep in the soil, and it will require all your efforts to check its further growth and to eradicate the evil. The men who profit by the abuses and desire to perpetuate them will continue to besiege the halls of legislation in the General Government as well as in the States, and will seek by every artifice to mislead and deceive the public servants. It is to yourselves that you must look for safety and the means of guarding and perpetuating your free institutions. In your hands is rightfully placed the sovereignty of the country, and to you everyone placed in authority is ultimately responsible.”
On his deathbed, Jackson is reported to have declared that his greatest achievement was defeating the bankers, but they are here using the same schemes that they have for decades. Still we follow, head clouded with phony numbers, and creative accounting principles that do nothing more than drain our 401K’s, and make the trip to the supermarket a nightmare as each day passes.
Credits and debits are nothing more than figures on some form of accounting sheet. What makes an economy run is all accomplished by the toil of good men, and women. The people who lost their jobs as the textile industry faded from our shores; The people who are loosing their jobs as our automobile industry dies; The independent farmers who lost their farms, and the clerk on Wall Street who is the first to suffer in this crisis.
What did we get for our multi-billion dollar bailout? We got a sell-off in the stock market with wildly vacillating swings in prices? More power for the financial guru’s, and more layoffs for the grunts.
Is there a light at the end of the tunnel? Only if we choose to understand what has taken place, and what we need to do to correct it.
Editor’s Note: The US~Observer’s answer is simple; Find a way to get through to the majority of the American people who are stuck-on-stupid…
