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>The Season of the Witch

>Clusterfuck Nation

by James Howard Kunstler

Comment on current events by the author of
The Long Emergency
(2005)

www.kunstler.com (September 28 2009)

In my father’s house are many mansions. Surely one of them has a room with no elephants in it …

Not to crunch too many metaphors right here at the top, but a consensus seems to be firming up in the animate jello of the Internet that we have entered the Season of the Witch. An odor of ripeness fills the virtual air – something between dead carp and apples baking. Whatever else appears to be going on in the upper stories and verdigris-tinged turrets of capital finance – currency rackets, gold switcheroos, interest rate arbitrage games, concealment of losses under rugs and behind curtains, Chinese fire drills performed by Spanish prisoners, executive three-card-monte set-ups, boardroom work-arounds, accounting quicksteps, Peter-to-Paul-shuffles, check kitings, pigeon drops, Ponzi schemes, hugger-muggers, bezels, shucks, jives, and enough monkeyshines to make Lord Greystroke cry for mercy – apart, in other words, from business-as-usual, such as it is these days, on Wall Street, there is a rising collective sense of anxious expectation that things are about to shake loose in the sad-ass shell of what remains of our economy. And the most perplexing part is that there hardly seems any safe place to preserve one’s savings.

The showmen over at financialsense.com have put on an excellent month-long series of interviews and debate podcasts between leading inflationistas and deflationistas – Daniel Amerman, Peter Schiff, Robert Prechter, Mark Faber, “Mish” Shedlock, Harry Dent – and after weeks of sedulous listening I still remain flummoxed as to where to stash the dwindling cash.

Harry Dent was a curious case in point this week. He has made some howlingly wrong calls before (for example in 2006, predicting a Dow 40,000 at the conclusion of the post-2001 bubble). Perhaps he missed the crack-up aspect of the most recent boom. He did not foresee the long gruesome meltdown of late 2007 to March 2009, or rather, his timing was off, since he called for the commencement of a new Great Depression in 2010. (And I hasten to insert here that my own timing of events has not been so great either.) Anyway, Dent sees a “winter” of finance and economy looming from here forward, characterized by extreme deflation, based on his view that the amount of private debt going bad (estimated $40 trillion) far outweighs government’s ability to create new “money” (a few measily trillion) and hence that there is no chance in hell we’ll find ourselves in an inflationary situation for some time ahead. The private debt workout has to be completed first.

Most curious, though, was when the interviewer, Jim Puplava, probed Dent about his views on Peak Oil. Dent said he didn’t believe in it; that when he was in college in the 1970s (remember the OPEC oil embargo of 1973), he learned to disregard any suggestions that we are “running out of oil”. He stated this, by the way, as a simple assertion, without any further explanation, and Puplava didn’t belabor him with arguments. But it was a weird moment. Of course, it hardly need be said that Peak Oil story has never been about “running out of oil” per se, but rather about declining flows, geopolitical management of flows, and the effects of depletion on industrial economies – in particular the effect on regular, expected, cyclical “growth” of the type that financial markets utterly depend on to power the trade in investment paper.

It is exceedingly odd that this does not factor into Dent’s thinking, because what Peak Oil inescapably does is introduce the very sobering idea of discontinuity – that is, that the game has changed radically, especially where all our assumptions about continued “growth” are concerned. In that brief exchange on Peak Oil, Dent seemed to take the position that the “winter” part of any historical financial cycle always produced “new technology” that invariably saves the day, putting this seemingly very smart man in the camp of so many techno-cornucopian triumphalists all wishing for the same outcome: that some mythical “they” will “come up with” a set of rescue remedies to keep all the cars circulating on the freeways, and all the WalMarts groaning with swag.

Like so many major league prognosticators, Dent arrives at his ideas by building models of reality, assembling “data” to create charts of trends in prices, interest rates, and especially demographics – what age group of people are buying a lot of what in which stage of their lives. The whole business seems very rational and reasonable except when you realize that it is just another “narrative” – to borrow one of Nassim Nicholas Taleb’s terms – girded with statistical justification. One can hardly fault it from a strictly procedural point of view – since, in our culture, conclusions ought to proceed from evidence – but one can’t escape the feeling that it amounts to little more than old-fashioned augury … that someone examining the entrails of a dead chicken, spread over the front page of The Wall Street Journal, might arrive at very similar conclusions. All that said, Dent was an appealingly confident personality on-the-air, the kind of authoritative voice you’d like to believe, if only it were possible.

Prechter was much the same a few weeks earlier, and he, too, foresees a darker American future, based on a different set of models called Elliot Wave principles. His forecasts derive from a picture of “social mood” as much as economic data flows. He, too seems to disregard the Peak Oil story and its implications as the master resource driving growth in industrial economies.

Personally, I am not at all sure that the Peak Oil story, or its associated general resource scarcity story, will shed a whole lot of light on the question of inflation-or-deflation. I say this because I think it is a short way down the road of depletion-and-scarcity before the major complex systems we depend on for daily life become so unstable that general socio-economic collapse ensues. After all, capital finance is only one of these many complex systems – some other biggies being food production, trade and manufacture, transportation, electric power distribution, infrastructure maintenance, the military, and governance. Inflation-or-deflation will only be symptomatic of larger failures and instabilities in these systems necessary for modern, civilized life.

All of it begs the question not only whether you or I will have two nickels to rub together, or two gold eagles, or a bundle of six month US Treasury bills, or a zillion shares of Apple, or a gainful vocation, or a roof over our heads, or a hot meal at the end of the day, or a safe place to sleep, or a country we can recognize. I’ve done my share of forecasting, with some episodes of notably bad timing. I don’t do it for grandstanding effect but to provide some basis for knowing what to do in the years directly ahead, so we can hope to construct lives worth living. I’m impatient with models, charts, and statistical analysis. Perhaps this is childish. I’d rather tell a story or paint a picture. So, I’m going to spend the rest of the week finishing the last chapter of World Made By Hand Two: The Witch of Hebron while the US economy wanders where it will.

_____

My new novel of the post-oil future, World Made By Hand, is available at all booksellers.

http://kunstler.com/blog/2009/09/the-season-of-the-witch.html

Bill Totten http://www.ashisuto.co.jp/english/index.html

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>The Root of the Present Crisis and Its Cure

>Who Should Create the Money Supply?

Should It Be Created as Debt or Debt-Free?

by James Robertson

jamesrobertson.com (April 06 2009)

1. Who decreed that 21st-century societies must depend for their supply of money on banks creating it for their own profit? Not God; no faith scriptures teach it. Not Nature; winds, tides, plants, trees, animals – none use money. Humans made this system work as it does. Intelligent humans can reform it.

2. Most of the money now used in the international economy is money created as debt in the currency of one country, the US dollar. In national economies most of the money now used is created by commercial banks as debt, written into their customers’ accounts as loans. (In the UK, for example, less than percent is created as coins and banknotes by public agencies, and over 95% by commercial banks.) Central banks try to use changes in interest rates to control how much money the banks create.

3. That isn’t effective. All the ninety recent credit booms and busts in various parts of the world have taken a similar form. The banks have hugely profited by creating too much money in the booms, and have then received huge bail-outs in the busts in order to reactivate their privilege of providing the money supply.

4. The conventional response to the present crisis is now combining a massive increase in future debt with new top-heavy regulation in order to reactivate the banks’ privilege once again. These features of the new “financial architecture” are crazy. They ignore what first-year students of architecture are taught: see that the foundations are sound before you construct extensions to the upper floors and overload them with heavy burdens. The foundations of “financial architecture” are, of course, money and how it is created.

5. International monetary reform has now been proposed by Brazil, Russia, India and China, to replace the US dollar with a more genuinely international currency administered by an international authority.

6. Shouldn’t national monetary reform follow that model? It would include:

* normalising “quantitative easing” by transferring responsibility to a nationalised central bank to create the debt-free additions to the national money supply which it judges to be in the public interest;

* requiring the central bank to give the money to the government to be spent into circulation under normal democratic budgetary procedures;

* making it a crime, like forging coins and counterfeiting banknotes, for anyone other than the central bank to create bank-account money; and

* denationalising recently nationalised commercial banks to compete unsubsidised in the market for borrowing and lending existing money.

7. For practical details, including safeguards against governments misusing the central bank’s new function for their own political purposes, see:

* The American Monetary Institute’s website – www.monetary.org

* My Newsletter 22 and the accompanying links – www.jamesrobertson.com/news-mar09-3.htm

The contents of this Note may, but need not, be attributed to its author.

_____

After studying classics, history and philosophy at Oxford University, James Robertson worked in government in London. He was on Prime Minister Harold Macmillan’s staff for his “Wind of Change” tour of Africa in 1960, and then spent three years in the Cabinet Office. Then he became director of inter-bank research for the big British banks. Since the 1970s he has been an independent writer and speaker. In the mid-1980s he was a prominent co-founder of The Other Economic Summit (TOES) and the New Economics Foundation. His best known book is probably The Sane Alternative (1978, 1983). Recent books and reports include:

Transforming Economic Life (for UK Schumacher Society, 1998);

The New Economics of Sustainable Development: A briefing for policy-makers (for the European Commission, 1999) –
a) Kogan Page, London,
b) Editions Apogée, Paris (as Changer d’Economie: ou la Nouvelle Economie du Développement Durable),
c) Office for Official Publications of the European Communities, Luxembourg.

Creating New Money: A Monetary Reform for the Information Age, with Professor Joseph Huber (for New Economics Foundation, 2000).

In October 2003, at the XXIX annual conference of the Pio Manzu Research Centre, Rimini, Italy (closely associated with the UN), he was awarded a gold medal for his “remarkable contribution to the promotion of a new economics grounded in social and spiritual values” over the past 25 years. In a session on “Sharing Limited Resources And A Change Of Course” he gave a paper on “The Role of Money and Finance: Changing a Central Part of the Problem into a Central Part of the Solution”.

E-mail: james@jamesrobertson.com
Web: www.jamesrobertson.com

http://www.jamesrobertson.com/presentcrisisroot.htm

Bill Totten http://www.ashisuto.co.jp/english/index.html

Categories: Uncategorized

>Why Economists Fail

2009/09/28 1 comment

>by John Michael Greer

The Archdruid Report (September 23 2009)

Druid perspectives on nature, culture, and the future of industrial society

The last two posts here on The Archdruid Report, while they dealt with issues that are becoming increasingly hard to avoid as industrial society begins its long slide down the slopes of Hubbert’s peak, were something of a distraction from the theme I’ve been trying to pursue for the last few months, the theme of deindustrial economics. I want to return to that theme here, and continue exploring the possibilities and risks of economic life in an age of decline.

Mind you, it may have occurred to many of my readers – and it has certainly occurred to me – that there’s something distinctly odd about an archdruid setting aside his white robe and oaken staff for the chalk and blackboard of the economics classroom. I am not an economist; I don’t even play one on television, and my background in economics consists mostly of extensive reading and study in what nowadays would be considered the fringes of the subject – most notably the writings of the late E F Schumacher, which set this sequence of posts in motion.

Yet there’s a case to be made for discussing economics from a standpoint distinct from that of today’s economists – in fact, from nearly any imaginable standpoint other than that of today’s economists. That case could draw its initial arguments from many points, but the most obvious one just now has to be the near-total failure of contemporary economic thought to provide meaningful guidance to the macroeconomic challenges of our time.

This may seem like an extreme statement, but the facts back it up. Consider the way that economists responded – or, rather, failed to respond – to the late housing boom. This was as close to a perfect textbook example of a speculative bubble as you’ll find in recent history. The very extensive literature on speculative bubbles, going back all the way to Mackay’s Extraordinary Popular Delusions and the Madness of Crowds (1841), made recognizing another example of the species easy enough. All the signs were there: the dizzying price increases, the huge influx of amateur investors, the giddy rhetoric insisting that prices could and would keep on rising forever, the soaring rate of speculation using borrowed money, and the rest of it.

By 2005, accordingly, a good many people outside the economics profession were commenting on parallels between the housing bubble and other speculative binges; by 2006 the blogosphere was abuzz with accurate predictions of the approaching crash; by 2007 the final plunge into mass insolvency and depression was treated in many circles as a foregone conclusion – as indeed it was by then. Yet it’s a matter of public record that among those who issued these warnings, economists – who should have caught onto the bubble faster than anyone – could very nearly be counted on the fingers of one foot. On the contrary, the vast majority of the economists who expressed a public opinion on the subject insisted that the delirious rise in real estate prices was justified and that the exotic financial innovations that drove the bubble would keep banks and mortgage companies safe from harm.

These comforting announcements were wrong. Those who made them had every reason to know at the time that they were wrong. No less an economic luminary than John Kenneth Galbraith pointed out decades ago that in the financial world, the term “innovation” usually refers to the rediscovery of the same limited set of bad ideas that always, without exception, lead to economic disaster. Galbraith’s books The Great Crash 1929 (1954) and A Short History of Financial Panics (1994), which chronicle the carnage caused by the same gimmicks in the past, can be found on the library shelves in every school of economics in North America, and anyone who reads either one can find every rhetorical excess and fiscal idiocy of the housing bubble faithfully duplicated in the great speculative binges of the past.

If this were an isolated instance of failure, it might be pardonable, but the same pattern repeats itself as regularly as speculative bubbles themselves. Identical assurances were offered – in some cases, by the identical economists – during the last great speculative binge in American economic life, the tech-stock bubble of 1996-2000. They have been offered by professional economists during every other speculative binge since the profession of economics came into being. Take a wider view, and you’ll find that whenever a professional economist assures the public that some apparently risky course of action is perfectly safe, he is usually wrong.

A colorful recent example was the self-destruction of Long Term Capital Management (LTCM) in the early 1990s. One of the two Nobel laureates in economics on LTCM’s staff announced publicly that the computer models the company used for its hugely leveraged trades were so good that they could not lose money in the lifetime of the universe. Have you ever noticed that villains in bad movies very often get blown to smithereens a few seconds after saying “I am invincible”? Apparently the same principle applies to economists, though the time lag is longer; it was, as I recall, some five years after this announcement that LTCM got blindsided by a Russian foreign-loan default that many other people saw coming, and failed catastrophically. The US government had to arrange a hurried rescue package to keep the implosion from causing a general financial panic.

Economists are not, by and large, stupid people. Those who work in some of the less glamorous subsets of the field have worked out a great many useful tools for businesses and individuals, and the level of mathematical skill to be found among today’s “quants” rivals that of many university physics departments. Yet the profession seems to have become incapable of learning from its most glaring and highly publicized mistakes. This is all the more troubling in that you’ll find many economists among the pundits who insist that industrial economies need not trouble themselves about the impact of limitless economic growth on the biosphere that supports all our lives. If they’re as wrong about that as so many other economists were about the housing bubble, they’ve made a fateful leap from risking billions of dollars to risking billions of lives.

What lies behind this startling blindness to the evidence of history and the reality of the downside? Plenty of factors doubtless play a part, but three seem most important to me.

First of all, for professional economists, being wrong is much more lucrative than being right. During the runup to a speculative binge, and even more so during the binge itself, a great many people are willing to pay handsomely to be told that throwing their money into the speculation du jour is the right thing to do. Very few people are willing to pay to be told that they might as well flush it down the toilet, even – indeed, especially – when this is the case. During and after the crash, by contrast, most people have enough calls on their remaining money that paying economists to say anything at all is low on the priority list.

The same rule applies to professorships at universities, positions at brokerages, and many of the other sources of income open to economists. When markets are rising, those who encourage people to indulge their fantasies of overnight wealth will be far more popular, and thus more employable, than those who warn them of the inevitable outcome of pursuing such fantasies; when markets are plunging, and the reverse might be true, nobody’s hiring. Apply the same logic to the fate of industrial society and the results are much the same; those who promote policies that allow people to get rich and live extravagantly today can count on an enthusiastic response, even if those same policies condemn industrial society to a death spiral in the decades ahead. Posterity, it’s worth remembering, pays nobody’s salaries today.

Second, like many contemporary fields of study, economics suffers from a bad case of premature scientification. The dazzling achievements of science have encouraged scholars in a great many fields to ape science’s methods in the hope of duplicating its successes, or at least cashing in on its prestige. Before Isaac Newton could make sense of the planets in their courses, though, thousands of observational astronomers had to amass the raw data with which he worked. The same thing is true of any successful science: what used to be called “natural history”, the systematic recording of what nature actually does, builds the foundation on which science erects structures of hypothesis and experiment.

A great many fields of study have attempted to skip the preliminaries and fling themselves straight into scientific research. The results are not good, because there’s a boobytrap hidden inside the scientific method. The fact that you can get some fraction of nature to behave in a certain way under arbitrary conditions in the artificial setting of a laboratory does not mean that nature behaves that way left to herself. If all you want to know is what you can force a given fraction of nature to do, this is well and good, but if you want to understand how the world works, the fact that you can often force nature to conform to your theory is not exactly helpful.

Economics is particularly vulnerable to this sort of malign feedback because its raw material – human beings making economic decisions – is so complex that the only way to control all the variables is to impose conditions so arbitrary and rigid that the results have only the most distant relation to the real world. The logical way out of this trap is to concentrate on the equivalent of natural history, which is economic history: the record of what has actually happened in human communities under different economic conditions. This is exactly what those who predicted the housing crash did: they noted that a set of conditions in the past (a bubble) consistently led to a common result (a crash) and used that knowledge to make accurate predictions about the future.

Yet this is not, on the whole, what successful economists do nowadays. Instead, a great many of them spend their careers generating elaborate theories and quantitative models that are rarely tested against the evidence of economic history. The result is that when those theories are tested against the evidence of today’s economic realities, they often fail.

The Nobel laureates whose computer models brought LTCM crashing down in flames, for example, created what amounted to extremely complex hypotheses about economic behavior, and put those hypotheses to a very expensive test, which they failed. If they had taken the time to study economic history first, they might well have noticed that politically unstable countries tolerably often default on their debts, that moneymaking schemes involving huge amounts of other people’s money usually end up imploding messily, and that every previous attempt to profit by modeling the market’s vagaries had come to grief when confronted by the sheer cussedness of human beings making decisions about their money. They did not notice these things, and so they and their investors ended up losing astronomical amounts of money.

The third factor driving the economic profession’s blindness to its own mistakes is more complex, and will demand a post of its own. Few things seem less related than the abstractions of metaphysics and the gritty realities of money, but there’s a crucial connection. Underlying today’s economic thought is a specific set of metaphysical assumptions, and those assumptions form the foundation of sand underneath the proud and unsteady towers of today’s economic theories. In next week’s post I plan on taking a hard look at the metaphysics of money, in the hope of finding a less problematic basis for economic life in the approaching deindustrial age.

_____

John Michael Greer, The Grand Archdruid of the Ancient Order of Druids in America (AODA), has been active in the alternative spirituality movement for more than 25 years, and is the author of more than twenty books, including The Druidry Handbook (Weiser, 2006) and The Long Descent: A User’s Guide to the End of the Industrial Age (New Society, 2008). He lives in Cumberland, Maryland.

http://thearchdruidreport.blogspot.com/2009/09/why-economists-fail.html

Bill Totten http://www.ashisuto.co.jp/english/index.html

Categories: Uncategorized

>Dollar Deception

>How Banks Secretly Create Money

by Ellen Brown

webofdebt.com (July 03 2007)

It has been called “the most astounding piece of sleight of hand ever invented”. The creation of money has been privatized, usurped from Congress by a private banking cartel. Most people think money is issued by fiat by the government, but that is not the case. Except for coins, which compose only about one one-thousandth of the total US money supply, all of our money is now created by banks. Federal Reserve Notes (dollar bills) are issued by the Federal Reserve, a private banking corporation, and lent to the government. {1} Moreover, Federal Reserve Notes and coins together compose less than three percent of the money supply. The other 97 percent is created by commercial banks as loans. {2}

Don’t believe banks create the money they lend? Neither did the jury in a landmark Minnesota case, until they heard the evidence. First National Bank of Montgomery vs Daly (1969) was a courtroom drama worthy of a movie script. {3} Defendant Jerome Daly opposed the bank’s foreclosure on his $14,000 home mortgage loan on the ground that there was no consideration for the loan. “Consideration” (“the thing exchanged”) is an essential element of a contract. Daly, an attorney representing himself, argued that the bank had put up no real money for his loan. The courtroom proceedings were recorded by Associate Justice Bill Drexler, whose chief role, he said, was to keep order in a highly charged courtroom where the attorneys were threatening a fist fight. Drexler hadn’t given much credence to the theory of the defense, until Mr Morgan, the bank’s president, took the stand. To everyone’s surprise, Morgan admitted that the bank routinely created money “out of thin air” for its loans, and that this was standard banking practice. “It sounds like fraud to me”, intoned Presiding Justice Martin Mahoney amid nods from the jurors. In his court memorandum, Justice Mahoney stated:

“Plaintiff admitted that it, in combination with the Federal Reserve Bank of Minneapolis … did create the entire $14,000 in money and credit upon its own books by bookkeeping entry. That this was the consideration used to support the Note dated May 8 1964 and the Mortgage of the same date. The money and credit first came into existence when they created it. Mr Morgan admitted that no United States Law or Statute existed which gave him the right to do this. A lawful consideration must exist and be tendered to support the Note.”

The court rejected the bank’s claim for foreclosure, and the defendant kept his house. To Daly, the implications were enormous. If bankers were indeed extending credit without consideration – without backing their loans with money they actually had in their vaults and were entitled to lend – a decision declaring their loans void could topple the power base of the world. He wrote in a local news article:

“This decision, which is legally sound, has the effect of declaring all private mortgages on real and personal property, and all US and State bonds held by the Federal Reserve, National and State banks to be null and void. This amounts to an emancipation of this Nation from personal, national and state debt purportedly owed to this banking system. Every American owes it to himself … to study this decision very carefully … for upon it hangs the question of freedom or slavery.”

Needless to say, however, the decision failed to change prevailing practice, although it was never overruled. It was heard in a Justice of the Peace Court, an autonomous court system dating back to those frontier days when defendants had trouble traveling to big cities to respond to summonses. In that system (which has now been phased out), judges and courts were pretty much on their own. Justice Mahoney, who was not dependent on campaign financing or hamstrung by precedent, went so far as to threaten to prosecute and expose the bank. He died less than six months after the trial, in a mysterious accident that appeared to involve poisoning. {4} Since that time, a number of defendants have attempted to avoid loan defaults using the defense Daly raised; but they have met with only limited success. As one judge said off the record:

“If I let you do that – you and everyone else – it would bring the whole system down … I cannot let you go behind the bar of the bank … We are not going behind that curtain!” {5}

From time to time, however, the curtain has been lifted long enough for us to see behind it. A number of reputable authorities have attested to what is going on, including Sir Josiah Stamp, president of the Bank of England and the second richest man in Britain in the 1920s. He declared in an address at the University of Texas in 1927:

“The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in inequity and born in sin … Bankers own the earth. Take it away from them but leave them the power to create money, and, with a flick of a pen, they will create enough money to buy it back again … Take this great power away from them and all great fortunes like mine will disappear, for then this would be a better and happier world to live in … But, if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit.”

Robert H Hemphill, Credit Manager of the Federal Reserve Bank of Atlanta in the Great Depression, wrote in 1934:

“We are completely dependent on the commercial Banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the Banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon.” {6}

Graham Towers, Governor of the Bank of Canada from 1935 to 1955, acknowledged:

“Banks create money. That is what they are for … The manufacturing process to make money consists of making an entry in a book. That is all … Each and every time a Bank makes a loan … new Bank credit is created – brand new money.” {7}

Robert B Anderson, Secretary of the Treasury under Eisenhower, said in an interview reported in the August 31 1959 issue of US News and World Report:

“When a bank makes a loan, it simply adds to the borrower’s deposit account in the bank by the amount of the loan. The money is not taken from anyone else’s deposit; it was not previously paid in to the bank by anyone. It’s new money, created by the bank for the use of the borrower.”

How did this scheme originate, and how has it been concealed for so many years? To answer those questions, we need to go back to the seventeenth century.

The Shell Game of the Goldsmiths

In seventeenth century Europe, trade was conducted primarily in gold and silver coins. Coins were durable and had value in themselves, but they were hard to transport in bulk and could be stolen if not kept under lock and key. Many people therefore deposited their coins with the goldsmiths, who had the strongest safes in town. The goldsmiths issued convenient paper receipts that could be traded in place of the bulkier coins they represented. These receipts were also used when people who needed coins came to the goldsmiths for loans.

The mischief began when the goldsmiths noticed that only about ten to twenty percent of their receipts came back to be redeemed in gold at any one time. They could safely “lend” the gold in their strongboxes at interest several times over, as long as they kept ten to twenty percent of the value of their outstanding loans in gold to meet the demand. They thus created “paper money” (receipts for loans of gold) worth several times the gold they actually held. They typically issued notes and made loans in amounts that were four to five times their actual supply of gold. At an interest rate of twenty percent, the same gold lent five times over produced a hundred percent return every year, on gold the goldsmiths did not actually own and could not legally lend at all. If they were careful not to overextend this “credit”, the goldsmiths could thus become quite wealthy without producing anything of value themselves. Since only the principal was lent into the money supply, more money was eventually owed back in principal and interest than the townspeople as a whole possessed. They had to continually take out loans of new paper money to cover the shortfall, causing the wealth of the town and eventually of the country to be siphoned into the vaults of the goldsmiths-turned-bankers, while the people fell progressively into their debt. {8}

Following this model, in nineteenth century America, private banks issued their own banknotes in sums up to ten times their actual reserves in gold. This was called “fractional reserve” banking, meaning that only a fraction of the total deposits managed by a bank were kept in “reserve” to meet the demands of depositors. But periodic runs on the banks when the customers all got suspicious and demanded their gold at the same time caused banks to go bankrupt and made the system unstable. In 1913, the private banknote system was therefore consolidated into a national banknote system under the Federal Reserve (or “Fed”), a privately-owned corporation given the right to issue Federal Reserve Notes and lend them to the US government. These notes, which were issued by the Fed basically for the cost of printing them, came to form the basis of the national money supply.

Twenty years later, the country faced massive depression. The money supply shrank, as banks closed their doors and gold fled to Europe. Dollars at that time had to be forty percent backed by gold, so for every dollar’s worth of gold that left the country, 2.5 dollars in credit money also disappeared. To prevent this alarming deflationary spiral from collapsing the money supply completely, in 1933 President Franklin Roosevelt took the dollar off the gold standard. Today the Federal Reserve still operates on the “fractional reserve” system, but its “reserves” consist of nothing but government bonds (IOUs or debts). The government issues bonds, the Federal Reserve issues Federal Reserve Notes, and they basically swap stacks, leaving the government in debt to a private banking corporation for money the government could have issued itself, debt-free.

Theft by Inflation

M3, the broadest measure of the US money supply, shot up from $3.7 trillion in February 1988 to $10.3 trillion fourteen years later, when the Fed quit reporting it. Why the Fed quit reporting it in March 2006 is suggested by John Williams in a website called “Shadow Government Statistics” (shadowstats.com), which shows that by the spring of 2007, M3 was growing at the astounding rate of 11.8 percent per year. Best not to publicize such figures too widely! The question posed here, however, is this: where did all this new money come from? The government did not step up its output of coins, and no gold was added to the national money supply, since the government went off the gold standard in 1933. This new money could only have been created privately as “bank credit” advanced as loans.

The problem with inflating the money supply in this way, of course, is that it inflates prices. More money competing for the same goods drives prices up. The dollar buys less, robbing people of the value of their money. This rampant inflation is usually blamed on the government, which is accused of running the dollar printing presses in order to spend and spend without resorting to the politically unpopular expedient of raising taxes. But as noted earlier, the only money the US government actually issues are coins. In countries in which the central bank has been nationalized, paper money may be issued by the government along with coins, but paper money still composes only a very small percentage of the money supply. In England, where the Bank of England was nationalized after World War Two, private banks continue to create 97 percent of the money supply as loans. {9}

Price inflation is only one problem with this system of private money creation. Another is that banks create only the principal but not the interest necessary to pay back their loans. Since virtually the entire money supply is created by banks themselves, new money must continually be borrowed into existence just to pay the interest owed to the bankers. A dollar lent at five percent interest becomes two dollars in fourteen years. That means the money supply has to double every fourteen years just to cover the interest owed on the money existing at the beginning of this fourteen year cycle. The Federal Reserve’s own figures confirm that M3 has doubled or more every fourteen years since 1959, when the Fed began reporting it. {10} That means that every fourteen years, banks siphon off as much money in interest as there was in the entire economy fourteen years earlier. This tribute is paid for lending something the banks never actually had to lend, making it perhaps the greatest scam ever perpetrated, since it now affects the entire global economy. The privatization of money is the underlying cause of poverty, economic slavery, underfunded government, and an oligarchical ruling class that thwarts every attempt to shake it loose from the reins of power.

This problem can only be set right by reversing the process that created it. Congress needs to take back the Constitutional power to issue the nation’s money. “Fractional reserve” banking needs to be eliminated, limiting banks to lending only pre-existing funds. If the power to create money were returned to the government, the federal debt could be paid off, taxes could be slashed, and needed government programs could be expanded. Contrary to popular belief, paying off the federal debt with new US Notes would not be dangerously inflationary, because government securities are already included in the widest measure of the money supply. The dollars would just replace the bonds, leaving the total unchanged. If the US federal debt had been paid off in fiscal year 2006, the savings to the government from no longer having to pay interest would have been $406 billion, enough to eliminate the $390 billion budget deficit that year with money to spare. The budget could have been met with taxes, without creating money out of nothing either on a government print press or as accounting entry bank loans. However, some money created on a government printing press could actually be good for the economy. It would be good if it were used for the productive purpose of creating new goods and services, rather than for the non-productive purpose of paying interest on loans. When supply (goods and services) goes up along with demand (money), they remain in balance and prices remain stable. New money could be added without creating price inflation up to the point of full employment. In this way Congress could fund much-needed programs, such as the development of alternative energy sources and the expansion of health coverage, while actually reducing taxes.

Notes:

1 Wright Patman, A Primer on Money (Government Printing Office, prepared for the Sub-committee on Domestic Finance, House of Representatives, Committee on Banking and Currency, 88th Congress, 2nd session, 1964).

2 See Federal Reserve Statistical Release H6, “Money Stock Measures”, www.federalreserve.gov/releases/H6/20060223 (February 23 2006); “United States Mint 2004 Annual Report”, www.usmint.gov; Ellen Brown, Web of Debt, www.webofdebt.com (2007), chapter 2.

3 “A Landmark Decision”, The Daily Eagle (Montgomery, Minnesota: February 07 1969), reprinted in part in P Cook, “What Banks Don’t Want You to Know”, www9.pair.com/xpoez/money/cook (June 03 1993).

4 See Bill Drexler, “The Mahoney Credit River Decision”, www.worldnewsstand.net/money/mahoney-introduction.html.

5 G Edward Griffin, “Debt-cancellation Programs”, www.freedomforceinternational.org (December 18 2003).

6 In the Foreword to Irving Fisher, 100% Money (1935), reprinted by Pickering and Chatto Ltd. (1996).

7 Quoted in “Someone Has to Print the Nation’s Money … So Why Not Our Government?”, Monetary Reform Online, reprinted from Victoria Times Colonist (October 16 1996).

8 Chicago Federal Reserve, Modern Money Mechanics (1963), originally produced and distributed free by the Public Information Center of the Federal Reserve Bank of Chicago, Chicago, Illinois, now available on the Internet at http://landru.i-link-2.net/monques/mmm2.html; Patrick Carmack, Bill Still, The Money Masters: How International Bankers Gained Control of America (video, 1998), text at http://users.cyberone.com.au/myers/money-masters.html.

9 James Robertson, John Bunzl, Monetary Reform: Making It Happen (2003), www.jamesrobertson.com, page 26.

10 Board of Governors of the Federal Reserve, “M3 Money Stock (discontinued series)”, http://research.stlouisfed.org/fred2/data/M3SL.txt.

_____

Ellen Brown, JD, developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt (2007), her latest book, she turns those skills to an analysis of the Federal Reserve and “the money trust”. She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Brown’s eleven books include the bestselling Nature’s Pharmacy (1998), co-authored with Dr Lynne Walker, which has sold 285,000 copies.

(c) Copyright 2007 Ellen Brown. All Rights Reserved.

http://www.webofdebt.com/articles/dollar-deception.php

Bill Totten http://www.ashisuto.co.jp/english/index.html

Categories: Uncategorized

>Magic of Compound Interest

>by Theodore Hansson

The Rule of 72

Have you always wanted to be able to do compound interest problems in your head? Well, let’s be honest – probably not.

However, it’s a very useful skill to have because it gives you a lightning fast benchmark to determine how good (or not so good) a potential mortgage note (or any investment) is likely to be. And it’s surprisingly easy to do in your head … once you know how.

The rule says, that to find the number of years required to double your money at a given interest rate, you simply divide the interest rate into 72. That’s why it’s called the “Rule of 72”!

For example, if you want to know how long it will take to double your money at eight percent interest, you would simply divide eight into 72 and you’ll get nine years. This is assuming the interest is compounded annually.

As you can see, the “rule” is remarkably accurate, as long as the interest rate is less than about twenty percent. At higher interest rates the error starts to become significant.

Of course, you can also run it backwards. For example if you want to double your money in six years, just divide six into 72 to find that it will require an interest rate of about twelve percent.

Quite easy! You don’t need to be a “math-whiz” to do it. Now, let’s continue this fascination subject with some fun exercises.

Famous Compounding History

The history of compounding computation goes back thousands of years, at least to the Babylonians.

However, the most famous compounding exercise of the all has to be the sale of the Island of Manhattan in New York in 1626.

It was May 24 1626 when Peter Minuit, a director of the Dutch West India Trading Company, bartered sixty guilders (about $24) worth of beads and trinkets to local Lenape Indians in exchange for the island of Manhattan. There is some doubt that actual beads were involved in the transaction, but that’s another story.

It’s too bad, but no deed or official document of the island’s sale to the Dutch from the Lenape Indians exists today.

Now, an interesting investment question arises …

Was this a good deal for Minuit or not?

Let’s look at the deal. What would be the value of $24 if Minuit had invested it instead at eight percent interest, compounded annually for 374 years? (1626 to 2000)?

At first sight, this seems like the deal of the century. Given today’s real estate values in New York, this appears to be a great deal for Minuit. But not so fast … remember, you always have to do the numbers!

Also, keep in mind that Minuit bought undeveloped land … not buildable lots with sewer, water, streets et cetera.

Now, if you run the numbers, you’ll discover that the original $24 would have grown to a staggering …

$76 Trillion!

Yes, you read it right, not million, not billion, but trillion.

This is actually more that the estimated value in today’s dollars of all the real estate on this 31 square mile island.

So which would have been the better investment?

The Magic of Compound Interest

Let’s continue for some more fun. Imagine that back in 1930 your grandparents scrimped and saved and placed $100 in a trust fund where the money would accumulate for their grandchild (you).

And imagine that the $100 remained in this fund for some seventy years, until the year 2000, earning the average rate of twelve percent. How much money would you think you would have today from that initial $100 investment?

The answer, incredible as it may sound, is …

$278,780!

Remember, we’re only talking about a single $100 investment, not $100 added per month or per year!

Of course it might have been hard to get twelve percent year-after-year, some years would have been a lot less. But then again, remember the early 1980s, when it was not uncommon to get fifteen to eighteen percent interest on your money.

Just imagine if your grandparents and your parents had also added just small amounts of money every year to your fund, how much money you would now have!

If you’re interested in playing around with compound interest, there’s a nifty compound interest calculator at: http://www.1728.com/compint.htm

Here’s How Compounding Works

Compound interest pays interest not only on the principal, but on the interest as well, increasing the rate at which your money grows.

For example if the interest was compounded yearly and you started with a $100 investment at a ten percent interest rate, you’d have earned $10 interest the first year, and would now have $110 at the end of the first year.

In the second year, you would earn interest on $110, giving you $11 in interest in the second year, so at the end of the second year you would now have $121, and so on. So after twenty years you’d end up with $672.75!

Add Payments for Even Greater Growth

Now, if you’d added additional money to your savings every year your money would of course grow even faster.

For example, if you save $2,000 a year at ten percent interest, you’ll have more than $35,000 after ten years.

Not bad, but … if you keep at it another ten years, (double the initial period) you’ll have far more than $70,000, (double the $35,000).

In fact you’ll have $126,000!

Go for another ten years and you’ll accumulate about $362,000. Another ten – that would be forty years or a typical “working” lifetime – and you’ll be … are you ready for this …

Almost a Millionaire – with $973,703.62!

Generally, any series of regular or steady payments is called an annuity .

You can play around with annuities at: http://www.1728.com/annuity.htm

Now, you might wonder what does all this have to do with mortgage notes?

Well, you have to wait until next time, when I’ll show you how you can actually lower the interest rate on a note or a loan and still come out ahead …

Way Ahead!

Remember …

“You Don’t Have To Get It Perfect …

You Just Have To Get It going!”

_____

Article by Theodore Hansson of Theodore Hansson Company. Theodore has helped thousands of ordinary people succeed in their own home-based business, brokering loans. Visit him at http://www.thansson.com for free “how-to” information as well as a free subscription to his newsletter “Loan Brokering Tips & Tricks”.

http://www.howtoadvice.com/CompoundInterest

Bill Totten http://www.ashisuto.co.jp/english/index.html

Categories: Uncategorized

>Beg Like a Pirate

>by Dmitry Orlov

ClubOrlov (September 21 2009)

On a calm and sunny autumn Monday, the old pirate awoke in his berth on his anchored derelict vessel with the usual fierce rum-induced hangover. He rowed himself ashore in his little dink, pirated a spot for it at a private dock, took the bus downtown to the Social Security office, hobbled up to the counter on his peg leg, thrust forward his arm-hook, glared at the clerk with his remaining eyeball, and said: “Arr! I want my disability compensation!”

To which you might say, “What?! Why should we devote scarce public resources to the support of, of all people, a pirate? Sure, he lacks stereoscopic vision and is missing the odd appendage, but he could still sober up long enough to do some pillaging, and, with the help of a certain blue pill, even some raping. Even if that proves to be too much for him, he can still stuff ships into bottles for the tourist souvenir shops.”

Traditionally, mutinous dogs who espouse such notions would be lashed to the mainmast and given fifty strokes with the cat o’ nine tails. However, in the prevailing sadomasochistic political climate, neither the physical pain nor the public humiliation of corporal punishment can be guaranteed to have the expected salutary effect on morale. In fact, the scurvy perverts might find the experience enriching, blogging about it, posting tantalizingly fuzzy cell phone videos of their flogging on YouTube, and auctioning their bloodied shirts on Ebay. No, they would have to be made to walk the plank, or, if the sea is calm, swing from the yard-arm, thus saving a bullet.

The pirate’s claim for disability compensation rests on a clinical diagnosis of chronic pain. The idea of honest work can be observed to make his phantom limbs twitch. Also, he suffers from a possibly false but nevertheless emotionally distressing memory of being sexually assaulted by his parrot. The Social Security check would be helpful, of course, but, beyond that, he craves recognition. He would like to regularly see a neurologist, a psychiatrist and an acupuncturist. He feels that there must be a popular syndrome that accounts his unique condition perfectly. He has correctly surmised that pain and suffering are this society’s most important form of social capital, more important than wealth or achievement.

When Bill Clinton, in 1992, spoke the words “People are hurting all over this country. You can see the pain in their faces, the hurt in their voices”, which he later synthesized into the memorable and mantra-like “I feel your pain”, he tapped into something rather powerful that had been gestating in the popular subconscious for some time. In effect, he put into circulation a new coin of the realm. It is wonderful to have a leader who feels your pain! Of course, you had to have pain for him to feel, so you went out and got yourself some. How you got it didn’t much matter. Hard work and heroic self-sacrifice were the best, but in the end it didn’t matter whether it was through overwork, overexercise, substance abuse, overeating, self-abuse – almost any sort of abuse gained you admission to a nationwide orgy of shameless public blubbering about one’s pain.

Beyond a superficial sense of physical well-being, how we feel about ourselves and the world is mediated and conditioned by our culture. In the richer cultures, the feelings are highly refined, and their expressions are couched in complex, culturally specific terms. This creates a problem for an inclusive, multicultural society, because refined feelings, between two mutually unintelligible cultures, seem idiosyncratic and subjective, and serve to alienate rather than to create common ground. So why not leave the complex feelings of love, sympathy, pride, respect, honor and shame and so forth behind, as so much cultural baggage, and standardize on the simpler feeling of pain? Unlike these other feelings, pain can be made objective, because it is subject to pharmacological effects.

At the National Cathedral of Pain, you confess to pain, you are absolved, and you receive communion in pill form. And so we have a nation that gobbles painkillers. The hardest workers have the biggest bottles of Ibuprofen or Acetaminophen displayed proudly on their desks, and may be abusing oxycodone in private. People as disparate as Rush Limbaugh and Michael Jackson share a predilection for painkillers. The rich have access to prescription medications, while the poor self-medicate with illegal drugs and alcohol.

The interesting thing about pain is that it is not objective it all. There is a fine line between pain and pleasure, and it seems to have a lot to do with whether we sense that physical harm is being caused. That is, pain is really not so bad provided you know that there is nothing wrong with you. On the other hand, if you think that you have caused yourself irreparable harm, then your brain will furnish you with undeniable symptoms of it. For instance, a herniated disk is often benign physically (like a bit of toothpaste pushing against a garden hose), but if you disagree with that, then your brain will cut the blood flow to the surrounding tissues, giving you chronic pain (but still no physiological damage). It is often sufficient to convince yourself that there is nothing physically wrong with you for the pain to subside. This psychological mechanism could very well be behind the strangely increased incidence of chronic back pain in a society that does less back-breaking work than ever before.

A good question to ask, then, is whether people who suffer pain because of their need to be recognized for their suffering, and to feel included, should be compensated for it financially. Perhaps they should be. Doing so might cause us all some additional financial pain. But then Dr Geithner at the US Treasury Clinic seems perfectly happy to oblige with a script for financial morphine whenever anyone asks for one, and Doctor of Pharmacy Bernanke at the Federal Reserve Pharmacy always fills Mr Geithner’s scripts no questions asked. Nobody knows how much financial morphine Dr Bernanke has left in stock, but let’s not ask him any questions about that either. For an economy in hospice care, that is far too painful a question to even think about.

And now for the really hard question: Are you ready and willing to do the backbreaking work that’s needed to bring this country around? To make it easier, let’s make it multiple-choice: A. Yes; B. No; C. Ouch!

http://cluborlov.blogspot.com/2009/09/beg-like-pirate.html

Bill Totten http://www.ashisuto.co.jp/english/index.html

Categories: Uncategorized

>Landmark Decision Promises Massive Relief …

>… for Homeowners and Trouble for Banks

by Ellen Brown

www.webofdebt.com (September 19 2009)

A landmark ruling in a recent Kansas Supreme Court case may have given millions of distressed homeowners the legal wedge they need to avoid foreclosure. In Landmark National Bank vs Kesler {1}, 2009 Kan. LEXIS 834, the Kansas Supreme Court held that a nominee company called MERS has no right or standing to bring an action for foreclosure. MERS is an acronym for Mortgage Electronic Registration Systems, a private company that registers mortgages electronically and tracks changes in ownership. The significance of the holding is that if MERS has no standing to foreclose, then nobody has standing to foreclose – on sixty million mortgages {2}. That is the number of American mortgages currently reported to be held by MERS. Over half of all new US residential mortgage loans are registered with MERS and recorded in its name. Holdings of the Kansas Supreme Court are not binding on the rest of the country, but they are dicta of which other courts take note; and the reasoning behind the decision is sound.

Eliminating the “Straw Man” Shielding Lenders and Investors from Liability

The development of “electronic” mortgages managed by MERS went hand in hand with the “securitization” of mortgage loans – chopping them into pieces and selling them off to investors. In the heyday of mortgage securitizations, before investors got wise to their risks, lenders would slice up loans, bundle them into “financial products” called “collateralized debt obligations” (CDOs), ostensibly insure them against default by wrapping them in derivatives called “credit default swaps”, and sell them to pension funds, municipal funds, foreign investment funds, and so forth. There were many secured parties, and the pieces kept changing hands; but MERS supposedly kept track of all these changes electronically. MERS would register and record mortgage loans in its name, and it would bring foreclosure actions in its name. MERS not only facilitated the rapid turnover of mortgages and mortgage-backed securities, but it has served as a sort of “corporate shield” that protects investors from claims by borrowers concerning predatory lending practices. California attorney Timothy McCandless {3} describes the problem like this:

“[MERS] has reduced transparency in the mortgage market in two ways. First, consumers and their counsel can no longer turn to the public recording systems to learn the identity of the holder of their note. Today, county recording systems are increasingly full of one meaningless name, MERS, repeated over and over again. But more importantly, all across the country, MERS now brings foreclosure proceedings in its own name – even though it is not the financial party in interest. This is problematic because MERS is not prepared for or equipped to provide responses to consumers’ discovery requests with respect to predatory lending claims and defenses. In effect, the securitization conduit attempts to use a faceless and seemingly innocent proxy with no knowledge of predatory origination or servicing behavior to do the dirty work of seizing the consumer’s home … So imposing is this opaque corporate wall, that in a “vast” number of foreclosures, MERS actually succeeds in foreclosing without producing the original note – the legal sine qua non of foreclosure – much less documentation that could support predatory lending defenses.”

The real parties in interest concealed behind MERS have been made so faceless, however, that there is now no party with standing to foreclose. The Kansas Supreme Court stated that MERS’ relationship “is more akin to that of a straw man than to a party possessing all the rights given a buyer”. The court opined:

“By statute, assignment of the mortgage carries with it the assignment of the debt … Indeed, in the event that a mortgage loan somehow separates interests of the note and the deed of trust, with the deed of trust lying with some independent entity, the mortgage may become unenforceable. The practical effect of splitting the deed of trust from the promissory note is to make it impossible for the holder of the note to foreclose, unless the holder of the deed of trust is the agent of the holder of the note. Without the agency relationship, the person holding only the note lacks the power to foreclose in the event of default. The person holding only the deed of trust will never experience default because only the holder of the note is entitled to payment of the underlying obligation. The mortgage loan becomes ineffectual when the note holder did not also hold the deed of trust.” [Citations omitted; emphasis added.]

MERS as straw man lacks standing to foreclose, but so does original lender, although it was a signatory to the deal. The lender lacks standing because title had to pass to the secured parties for the arrangement to legally qualify as a “security”. The lender has been paid in full and has no further legal interest in the claim. Only the securities holders have skin in the game; but they have no standing to foreclose, because they were not signatories to the original agreement. They cannot satisfy the basic requirement of contract law that a plaintiff suing on a written contract must produce a signed contract proving he is entitled to relief.

The Potential Impact of Sixty Million Fatally Flawed Mortgages

The banks arranging these mortgage-backed securities have typically served as trustees for the investors. When the trustees could not present timely written proof of ownership entitling them to foreclose, they would in the past file “lost-note affidavits” with the court; and judges usually let these foreclosures proceed without objection. But in October 2007, an intrepid federal judge in Cleveland put a halt to the practice. US District Court Judge Christopher Boyko {4} ruled that Deutsche Bank had not filed the proper paperwork to establish its right to foreclose on fourteen homes it was suing to repossess as trustee. Judges in many other states then came out with similar rulings.

Following the Boyko decision, in December 2007 attorney Sean Olender {5} suggested in an article in The San Francisco Chronicle that the real reason for the bailout schemes being proposed by then-Treasury Secretary Henry Paulson was not to keep strapped borrowers in their homes so much as to stave off a spate of lawsuits against the banks. Olender wrote:

“The sole goal of the [bailout schemes] is to prevent owners of mortgage-backed securities, many of them foreigners, from suing US banks and forcing them to buy back worthless mortgage securities at face value – right now almost ten times their market worth. The ticking time bomb in the US banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process.

“… The catastrophic consequences of bond investors forcing originators to buy back loans at face value are beyond the current media discussion. The loans at issue dwarf the capital available at the largest US banks combined, and investor lawsuits would raise stunning liability sufficient to cause even the largest US banks to fail, resulting in massive taxpayer-funded bailouts of Fannie and Freddie, and even FDIC …

“What would be prudent and logical is for the banks that sold this toxic waste to buy it back and for a lot of people to go to prison. If they knew about the fraud, they should have to buy the bonds back.”

Needless to say, however, the banks did not buy back their toxic waste, and no bank officials went to jail. As Olender predicted, in the fall of 2008, massive taxpayer-funded bailouts of Fannie and Freddie were pushed through by Henry Paulson, whose former firm Goldman Sachs was an active player in creating CDOs when he was at its helm as CEO. Paulson also hastily engineered the $85 billion bailout of insurer American International Group (AIG), a major counterparty to Goldmans’ massive holdings of CDOs. The insolvency of AIG was a huge crisis for Goldman, a principal beneficiary of the AIG bailout {6}.

In a December 2007 New York Times article titled “The Long and Short of It at Goldman Sachs”, Ben Stein {7} wrote:

“For decades now … I have been receiving letters [warning] me about the dangers of a secret government running the world … [T]he closest I have recently seen to such a world-running body would have to be a certain large investment bank, whose alums are routinely Treasury secretaries, high advisers to presidents, and occasionally a governor or United States senator”.

The pirates seem to have captured the ship, and until now there has been no one to stop them. But sixty million mortgages with fatal defects in title could give aggrieved homeowners and securities holders the crowbar they need to exert some serious leverage on Congress – serious enough perhaps even to pry the legislature loose from the powerful banking lobbies that now hold it in thrall.

Links:

{1} http://livinglies.wordpress.com/2009/09/16/kansas-supreme-court-sets-precedent-key-decision-confirming-livinglies-strategies/

{2} http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1458064

{3} http://timothymccandless.wordpress.com/the-problem-with-mers-mortgage-electronic-registration-systems/

{4} http://commercialforeclosureblog.typepad.com/indiana_commercial_forecl/files/BoykoOpinion.pdf

{5} http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/12/09/IN5BTNJ2V.DTL

{6} http://www.bloomberg.com/apps/news?pid=20601087&sid=aTzTYtlNHSG8

{7} http://www.nytimes.com/2007/12/02/business/02every.html

_____

Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt (2007), her latest book, she turns those skills to an analysis of the Federal Reserve and “the money trust”. She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her earlier books focused on the pharmaceutical cartel that gets its power from “the money trust.” Her eleven books include Forbidden Medicine (1998), Nature’s Pharmacy (1998), co-authored with Dr Lynne Walker, and The Key to Ultimate Health (2000), co-authored with Dr Richard Hansen. Her websites are www.webofdebt.com and www.ellenbrown.com.

(c) Copyright 2007 Ellen Brown. All Rights Reserved.

http://webofdebt.wordpress.com/2009/09/21/landmark-decision-promises-massive-relief-for-homeowners-and-trouble-for-banks/

Bill Totten http://www.ashisuto.co.jp/english/index.html

Categories: Uncategorized