Breakdown of Our Economic System

Will the current financial system survive? At the moment the dollar is holding value, and we are even suffering from deflation. However, too many bailouts could eventually result in massive inflation. If the dollar were to suffer massive inflation, the US government would lose the ability to keep printing up new money, and finance the US government.

If financial means failed, the US would have to revert to cruder military mains to maintain the government. This would likely involve the imposition of marshal law. Likely, the government might take military control over vital pieces of the economy, and then institute a new currency or rations system. For example the military could control food supplies, and issue people rations for working in government jobs.

Without a stable currency, the government would likely be forced to institute a more communistic economy. Quick and sudden transition to such an economy would likely result in much hardship. Much of the existing economy might not easily be transformed.

Our current economy is inherently unstable. The rich have most of the wealth, but they really only want so many material things. Most of the economy is driven by middle class consumer demand and military, but wages have not been increasing. Meanwhile, the rich have profited by squeezing everyone else with lower wages, and financial speculation.

Most of the financial speculation has been driven by various forms of Ponzi schemes. One of the most blatant Ponzi schemes was undertaken by Madoff. The way a ponzi scheme works is that you claim to pay high returns, and hope people don't come asking to withdraw their money. For example, suppose you 10%/year returns. Say, you start with $200. Now, the first person deposits $100. In a year, you tell you have returned 10%. So, you have $300 in the bank, and can conceivably pay out $110. Next, lots of people give you money so you have maybe $100000. Now, after a year you tell everyone you went by 10%, but you still only have $100000 from those investors, but more investors join so you can pay back the initial investors if they ask for their money. In a more complicated scenario, you can put all the money into buying some high-flying stock, which you sold in an IPO. The stock price goes up and up, so people think they are richer and richer. Finally, lots of people decide to sell, and the price collapses.

When the rich invest in a scheme like this, and it collapse, they can take their loses, or beg the government to help them out. To some extent the government has stepped in take care of some of the losses.

In terms of jobs. Jobs have been created through consumer financed debt, and the specuative activity. With the collapse of both (speculative investment often provided the debt, which acted as the bubble assets), the economy is headed for trouble. The government is left as the only ones who can spur demand. However, it is not clear if the governent will do so effectively. Alternatively, they can waste money bailing out bad investments, and run up inflation without really spurring new demand.

We can pull ourselves out of this crisis... all conspiracy theories aside, PLAN B will work!

Time for..... Plan B!

This is Plan A
OK, This is the course of action we are currently taking:

Let's assume that they will do what they have said and that is "7.4 to 7.78 trillion will be printed / created for the bailout and or credit revival and given to banks" the banks who currently refuse to loan money and extend lines of credit to business.

www.bearmarketinvestments.com...

www.huffingtonpost.com...

digg.com...

kenthink7.blogspot.com...

((Nov. 24 (Bloomberg) -- The U.S. government is prepared to provide more than $7.76 trillion on behalf of American taxpayers after guaranteeing $306 billion of Citigroup Inc. debt yesterday. The pledges, amounting to half the value of everything produced in the nation last year, are intended to rescue the financial system after the credit markets seized up 15 months ago))

Then businesses go "out of business" or if they are big enough they go to the government for money because the banks are terminating lines of credit and no longer loan money though they are getting trillions at 0% to 0.25% from the Fed.

Now we want even MORE money printed / created (estimated to be over another trillion) for a stimulus package for consumers because we need consumer spending to revive the economy.

Now Throw in another trillion or Two: Barack Obama reveals stimulus package that could exceed $1 trillion

www.timesonline.co.uk...

So in essence, we are trying tickle down economics and it isn't working because the banks are keeping the money, investing it overseas, using it to buy out each other and giving themselves massive bonus & payouts. Well everyone, guess what... it isn't working.

Another 1 or 2 Trillion for another "stimulus" package to get money moving in the consumer markets is nothing compared to "Plan B".

PLAN B

My plan is for mortgage holders / consumers to borrow mortgage money from the Fed directly at 0.5 % which is double the amount of interest the banks are being charged but a fraction of the interest that we are currently being charged by the banks.

By taking the 0.5% Mortgage "Recapitalization" from the Fed directly, we pay off our mortgages in full to the banks and the banks now have the capital of millions of "paid in full" mortgages and cannot complain about mortgage write-offs and defaults (if you haven't looked, go to a mortgage calculator and put in 6% or whatever your mortgage rate is... now try it with 0.5%).

At 0.5 % our monthly mortgage payments are half or less of what they were. (STIMULUS PACKAGE DONE) Now the Fed gets twice the interest that they were getting back from the banks at a 0.25%. "win/win"

Now, The banks get these Mortgage pay offs from millions of mortgages and have all the money they claim they need to alleviate their shortage.

This is not a refinance and does not require surveys and assessments, this is strictly a "mortgage recapitalization" with a hard $200.00 "origination fee".

$50 goes to a bank who is providing the paperwork / processing.
$100 goes to your city / municipality / county
$50 goes to State you live in.
(This helps local / state governments that are in a pinch)
(could go either way, $50 to local, $100 to state)


So another 1 or 2 Trillion on another stimulus won't be needed because we are getting a stimulus every month by halving our own mortgages.

Now - Throw in REGULATION to prevent this from happening again and going forward, the banks can pick up mortgage origination again.

Win / Win / Win .... this isn't "trickle up, it is stream up"

OK, Put current plan against "Plan B" side by side. We print less money and get the stimulus needed with Plan B. It is the common sense solution of our "current" problem. Yes, our fiat & debt system is another matter entirely but for our current situation, this buys us a few years.

I daresay that we could do this with student loans & current car loans as well but allot of people seem to be against that.


Plan C consists of a massive work program in the desert Southwest, Plan C in itself will take a whole page but to be quick about it.... Algae Oil Farms.

Check out Algae Oil on Google or Youtube.... 10-20k gallons per year per acre... 100s of times more than corn or soy fuels.

Over-land salt water pipeline built from the ocean to the Desert... some used for Algae oil, the rest "desalinated" via Solar mirror technology and piped back to cities.

Point blank... energy independence, no hazardous waste, and carbon neutral for those who care about that.... I will stick with screaming about "Plan B" for now.

[edit on 25-12-2008 by infolurker]

reply to post by crontab


No wonder the USDA sent out Farm Census Forms on an off year. This is a several page booklet and wants a list of EVERYTHING down to the toilet paper in the bathroom. It was sent to everyone who subscribed to a horse or livestock magazine...everyone they could think of.

Then in September the USDA required NAIS premises registration for various disease program activities. Veterinary Services Memorandum No. 575.19" was sent out to get vets to register their customers in the government data base. nonais.org...

The USDA has now rushed to enforce NAIS. In the Supreme Court nonais.org...

And in a state court fourwinds10.com...

NAIS is not about food safety, no matter how many food scares they can "cook" up and no matter their fall-back threat of "bio-terrorism." The USDA is an agency created to help farmers. The penalties the USDA is imposing for not complying are enough to destroy a farmer in a blink

. (i) $50,000 in the case of any individual, except that the civil penalty may not exceed $1000 in the case of an initial violation of this chapter by an individual moving regulated articles not for monetary gain;

(ii) $250,000 in the case of any other person for each violation; and

(iii) $500,000 for all violations adjudicated in a single proceeding

There are over 2.2 million farms in the USA not counting the millions of Americans with backyard chickens or equines. Fines could generate a lot of revenue. And if a farmer can not pay they scarf up the land and other assets. On the other side of the coin Family farms generate a lot of revenue where every Farm dollar multiplies by five as it passes through the community. Big Ag farms generate little or no revenue for the community.
Sources:

Short pew report: www.pewtrusts.org...

Full (125 pg) Pew report: www.pewtrusts.org...

Agriculture and Monopoly capital: findarticles.com...




The USDA point of view?

...I even attended, at my own expense, NIAA's ID Expo in 2006 to learn firsthand about the program [NAIS].  It was there that Dr. John Weimers told me personally that he would drive every back road to find every backyard flock and tag each chicken.... (Sharon Zecchinelli)

www.naissucks.com...

What is Wall Street's take on this?

Barton Briggs, one of Wall Street's most legendary investment strategists, is advising the rich and powerful to buy up farms and stock them with "seed, fertiliser, canned food. wine, medicine. clothes etc." (and the "etc" would seem to mean guns to keep away the rest of us...)

www.bloomberg.com...

SO maybe Derry Brownfield's conspiracy theory is correct and the international banks are calling in the loans.

The SCAM behind NAIS~~~ "Our Land: Collateral for the National Debt" by Derry Brownfield Dec. 3,2008

I consider Wayne Hage one of the most intelligent men I ever met. On our very first visit he was explaining the World Bank, the International Monetary fund and how the world bankers planned on collateralizing the world debt with land. Not just the U.S. national debt, but also the "WORLD" debt.

A listener sent me a copy of a report of the FOURTH WORLD WILDERNESS CONGRESS, which was held in Denver in 1987. Over 1500 people from sixty countries were told that wilderness lands were to protect the reindeer, the spotted owl and other endangered species. Ninety percent of the group consisted of conservationists, ecologists, government and United Nations bureaucrats. The other ten percent were world banking heavyweights, such as David Rockefeller of Chase Manhattan Bank, London banker Edmund de Rothschild and the Secretary of the U.S. Treasury, James Baker, who gave the keynote address. George W. Hunt, an investment councilor, served as official host and sat in on all the meetings. It was George Hunt that wrote the report from which I have gleaned much of my information. henwhisperer.blogspot.com...

Even if there is no "conspiracy" tough regs on the growing of food is just plain bad news for anyone who wants independence and freedom.

your 'Plan B', although innovative--- should not even be needed !!


because the Freddie/Frannie nationalization already has over $2Trillion
dedicated to restructuring bad mortgages and allowing the many 'under-water' mortgage holders to re-structure/re-finance the 90% of mortgages held or serviced by the Freddie/Fannie cartel.


The mortgage tar-baby, is a distraction and false boogy-man, to divert our attention
from the actual Crisis starter which is the Bankster ponzi scams that created more than $500-600 Trillion in Derivatives/CDSs/CDOs/IRSs which are all forms of default swaps...
'Swaps' which the banks have No-, Absolutely No- collateral to back up the debt paper they issued at a profit (& then spent & got bonuses for already)


As far as your citing a current 'Plan A' ...which is still in progress..
Or will continue to be busy in distributing some $7.4 - $7.78 Trillion...
Well!... sources tell us that more than that ammount has already been given out) :
see: www.asianews.it...

According to new figures published by Bloomberg in recent days (Nov. 25, 2008 [1]), the American government has employed a total of 8.549 trillion dollars to stop the financial crisis. This means a total of about 24-25.4 trillion dollars of direct or indirect public debt weighing on American taxpayers. The complete tally must also include the debt - about 5-6 trillion dollars - of Fannie Mae and Freddie Mac, which are now quasi-public companies, because 79.9% of their capital is controlled by a public entity, the Federal Housing Finance Agency, which manages them as a public conservatorship.

Keep on disclosing more stuff...
when we collectively strip all the lies & false information from the lips of the Fed & Treas. (Bernanke & Paulson) we will be able to discern the real problem for the crisis... and retool the financial system & the resulting breakdown of the economy...
but not until the supposed 'mortgage crises' is allowed to be seen as a tiny aspect of the monetary/financial system collapse of trust & confidence
will we be able to tackle the crisis of the economy



thanks

You don't get it.....

Go to a mortgage calculator and see the difference.... Were talking about continuing to pay the principle at 0.5%

The stimulus would be massive. Jobs, spending, investment would go through the roof.... and we would print less money to devalue are currency... this isn't about some mortgage defaults.. this is a complete revival of our economic system.

reply to post by infolurker


I love your plan it makes a lot of sense. That is why the politicos will not go for it. Besides it does not put money in their pockets or their masters pockets.

Without a stable currency, the government would likely be forced to institute a more communistic economy. Quick and sudden transition to such an economy would likely result in much hardship. Much of the existing economy might not easily be transformed.

I don't know what anyone thinks about Gerald Celente, a very popular and surprisingly accurate trend forecaster, but I completely agree with something he said recently:

"Whether we live in a Socialist, Communist or Fascist economy, I am not sure, but I am sure we no longer live in a democratic, free enterprise economy."

The transformation is in process as we speak, and it's going much easier than any of us realize as they have no worries of resistance. Under their breath about peaking economy and higher DJIA's propaganda, we have been robbed for awhile now and we will continue to be robbed until either the dollar collapses completely and the Amero (and the North American Union) comes to pass or we are forced into full-scale Revolution.

It is painfully clear that no matter how many companies get bailed out, We the People aren't seeing a dime back of what we are being forced to pay, and it seems it's not yet been enough for people to realize it. I'll give it a few more months before I start screaming at the top of my lungs and get put into the loony bin - as that would seem to be a better place to be than most.

Side Note:
Now, GMAC has bank status, eh? I wonder how that's going to work. Will GM employees still lose their jobs while GM uses the bailout money to move the REST of their corrupt operation overseas where they can pay little to no workforce overhead and finally make a profit off their underdeveloped vehicles that no one wants or can afford to buy? Or will they finally get their heads out of their bleeps and use it to do the truly humanitarian thing and keep their employees on the job, working on vehicles Americans will want and be able to buy with the little money we have left after paying them to do it.

See there, I told myself I wasn't going here today.

Oh well...Merry Christmas
Better enjoy it while it lasts.

The mortgage tar-baby, is a distraction and false boogy-man, to divert our attention
from the actual Crisis starter which is the Bankster ponzi scams that created more than $500-600 Trillion in Derivatives/CDSs/CDOs/IRSs which are all forms of default swaps...

Many of the derivatives were related to mortgages. Although, there are other derivatives as well. However, derivative are hard to value. For default swaps, you basically have to predict the probability of default, which is low in a good economy, and can be real high in a bad economy.

Since they are hard to value, banks can arbitrarily account these derivatives at whatever they want. So they could have $50b in derivatives, and claim they are worth $100b. Next, the banks can borrow money against their supposed assets. For example if the bank supposedly has $100b in derivatives, it should be a low risk to loan them $75b. Next, their models show the derivatives have gone up in value to say $110b, and the wall street bankers can all get bonuses from the $75b they borrowed. Basically, it is just a ponzi scheme, but the banks can hide it with their derivative valuation models.

The banks all know their sister institutions are running this racket. So, the banks stopped lending to each other. Next, the fed stepped in to lend to these banks. Before much of the bank wealth was probably financed by sovereign wealth funds, hedge funds, etc. The sovereign wealth funds represent the assets of the Saudis and the Chinese. Basically, the assets have gotten sucked into a big ponzi scheme.

It is probably too costly to bail out the whole scheme. Someone has to pay for it. With our dependence on oil and Chinese imports, it is probably a bit tricky to get the to pay for it. The bankers are elite, and politically connected. Thus, the elites probably prefer to put it on the back of the American middle class, but they have already been looting the American middle class for a long time, and so that is tough. They can try to just print up money, but to prevent inflation, somebody's money probably has to be disappeared. Somebody has to eat the loss, and the loss is big.

I presume the elites prefer to somehow tweak their way out of the financial conundrum. I don't think anyone really wants totalitarian martial law, but the elites also recognize other options may fail. Furthermore, other options may involve forcing the rich, the Chinese, and/or the Arabs to lose big. This can create problems. I think they are trying to find a way out of the crisis.

I think the NAIS would be a way for the government to directly tax agriculture. If they can track the animals, it would make it a lot easier for the government to demand x% of the herd. Were the monetary system to collapse, this tax would be essential. The continuity of government would likely be dependent on control of the food supply. If the currency collapsed and the food supply eluded governmental control, the US government could collapse. We could speculate on what sort of society would take its place, but preservation of the US government would likely be a top priority of government planners.