Thursday, December 30, 2010

Obama Care Is A Joke!

Maxine on "Obama" Care, from a doctor friend in N.C. (thanks N).

Maxine should have cited the reason for the need for the 16,000 new IRS agents: to enforce the additional 2.5% income tax on anyone who is caught without health insurance (link).

Regardless, no wonder Americans from all political parties are "Fed" up:

Let me get this straight . . . .
We're going to be "gifted" with a health care
plan we are 
forced to purchase andfined if we don't,
Which purportedly covers at leastten million more people,
without adding 
a single new doctor,
but provides for 
16,000 new IRS agents,
written by a committee whose chairman 
says he 
doesn't understand it,
passed by a Congress that didn't read it butexempted themselves from it,
and signed by a President who smokes,
with funding administered by a treasury chief whodidn't pay his taxes,
for which we'll be taxed for four years before any
benefits take effect
by a government which has already bankrupted Social Security and Medicare,
all to be overseen by a surgeon general 
who is 
and financed by a country that's broke!!!!!
'What the hell could
possibly go wrong

Let Freedom Ring,

Tuesday, December 28, 2010

The $583 Trillion Dollar Derivative Market... Is That A Real Number?

Now, before we get all crazy... let me explain.

$583 Trillion is the notional or "face" value of the derivatives market.  As discussed in the link below, this "number" is indeed 900% larger than the global GDP which is somewhere's about $65 Trillion.  However, its also substantially smaller than the number of molecules in the head of a pin... and perhaps as relevant.

What matters is "Value at Risk"... Yea yea, I know.  VaR is very tricky and fraught with danger when one considers the "True" definition of risk vs some statistical measure (I read Taleb too)...  But, its important to remember that it isn't like somebody borrowed $585T... its a number which is related to the size of the bet... but its "the movement that matters" (behave :-)

This caveat noted... DAMN... thats one big bet!!! 

I'm guessin' this doesn't end well.

Thanks G. (friend) for sending this.

Let Freedom Ring,

Saturday, December 25, 2010

How The Federal Reserve Works

A video created by Ludwig Von Mises in 1996 about the Federal Reserve. Merry Christmas & Enjoy!

Thursday, December 23, 2010

Keynesianisms: Financial, Military, Reconstruction and now "Police State"

It seems incredible to me how few have taken the red pill, and are thus unable to see it (per Subject):

"Military Keynesianism, followed by Reconstruction of propping up foreign dictators, bombing their countries into rubble, and then ladling out "cost-plus" contracts to politically connected contractors to "reconstruct" those countries. 

"Now we see the advent of Police State Keynesianism. "

Tuesday, December 21, 2010

Ron Paul & Federal Reserve Oversight

Congressman Ron Paul is now chairman of the House Subcommittee on Domestic Monetary Policy which oversees the Federal Reserve as well as the currency and the valuation of the dollar.

Ron Paul:

1. “Since the announcement that I will chair the congressional subcommittee that oversees the Federal Reserve, the media response has been overwhelming."

2. "The groundswell of opposition to Fed actions among ordinary citizens is…in the tremendous interest shown by the financial press."

3. "The demand for transparency is growing whether the political and financial establishment likes it or not."

4. "The Fed is losing its vaunted status as an institution that is somehow above politics and public scrutiny." 

5. "Fed transparency will be the cornerstone of my efforts as Subcommittee Chairman.”

But I hope Dr. Paul doesn't die soon from some mysterious cause of death - or 'the worse case of suicide' we've ever seen - as Americans are finally able to try to learn where and how their money has been spent and continues to be spent in the future.

Sunday, November 21, 2010

A Picture Is Worth A Thousand Words

Just a quick post before I get up from the computer.  Sometimes a simple visual is all that's needed

Is Gold A Bubble?

US Money Supply (Above)

Gold Price In USD (Above)

Notice any similarities.  Look at the trend.  Gold isn't simply a "hedge against inflation".  The price of gold flows with the supply of money in the market.  
Gold isn't a bubble, but simply a reflection of the USD.

So, will gold decrease? Only if our government reduces the money supply.  Look what happens to the money supply as of 1970.  It exponentially jumps.  That's when the gold standard ended completely.

Until our government drastically changes it's monetary policy, there will NOT be a long term drop in the price of gold.  

During the Roman Empire, you could purchase a new, nice toga, a new belt, and new shoes with a 1 ounce gold piece.  In the 1920s in the United States, you could walk into a nice men's store and purchase a new suit, a new shirt, and a new pair of shoes for the same price of a 1 ounce gold piece (about $20.80 at the time).

Today, with gold hovering around $1200-$1400 an ounce, you can still buy a nice suit, a shirt, and a pair of shoes for about the same price.

You tell me if gold is a bubble.

Let Freedom Ring!

P.S. Please, Allow Me Deliver My Final Knockout Punch.  Does This Look Like A "Bubble" To You...

Saturday, November 20, 2010

The President Who Told The Truth...

I'm not sure exactly what to make of this to be honest.  I do know this.  JFK was assassinated shortly after this speech.  Listen to the content and what he speaks of about secret societies and how they will be the downfall of our country.


As I've mentioned before, Kennedy not only gave this moving speech about secret societies, but was also responsible for initiating sound money (aka money backed by gold and silver).

Money backed 100% by gold and silver cannot be manipulated and printed on a whim like the money we now have today.  The beauty is not in the fact that gold and silver itself are "valuable" (although they are).  But, the real value of gold/silver backed money is that it cannot be manipulated by governments to overspend and print for bailouts, unnecessary wars etc etc.

I believe Kennedy was the last US President to support the people and not the bankers.  And, look what happened to him.

Let Freedom Ring,

SPOILER ALERT: I May Not Know Who, But WHY JFK Was Assassinated...

Yea, I know.  Just for even bringing up the subject, I'm now going to be labeled a "conspiracy theorist".  It's inevitable.  One mention of a reason or idea behind this automatically gets you thrown into the pot of "crazies".

Well, I'm going to share some interesting information anyways.  It seems that you learn something new everyday.  I don't claim to know everything, and I certainly do NOT claim this information to be absolute truth, but, it does have some interesting connections.  Most of the information around his death focuses on "Who" shot him and "How" was it done and other information.  But, the real mystery lies in WHY.  That's the real question.

I'll be the first to admit that there were most likely overlapping reasons as to why many would want JFK dead.  But, let's just entertain this one idea for now.

Prior to his assassination, Kennedy enacted an executive order called E.O. 11,110.  The subject of the executive order was very simple.  Kennedy believed in the "Gold Standard" or simply a check on the Federal Reserve that prevented them from printing money at their own discretion.  So, instead of allowing the Federal Reserve to continue down the path of printing money with no checks or balances, he decided to take matters into his own hands.  Executive Order 11,110 is a little know order, and it goes as follows...

In practice, this bill was going to put the Federal Reserve out of business.  It was a very strong first step to completely eliminate the need for the Federal Reserve.  It did not completely eliminate the Federal Reserve, but it DID give the government (not the federal reserve) the right to print its own money backed by silver.

If this money were allowed to begin circulating, the results would be obvious.  No longer would the American people trust the currency issued by the Federal Reserve, because it was not backed by anything.  Kennedy's new money would be backed by silver 100%. Therefore, it would be superior, and thus, create no practical need for the Federal Reserve and its printing press.

5 months later, Kennedy was assassinated.  Shortly after, his new "Silver Notes" were repossessed from the market.

Allow me to reference  The Final Call, Vol. 15, No.6, On January 17, 1996

"On June 4, 1963, a little known attempt was made to strip the Federal Reserve Bank of its power to loan money to the government at interest. On that day President John F. Kennedy signed Executive Order No. 11110 that returned to the U.S. government the power to issue currency, without going through the Federal Reserve. Mr. Kennedy's order gave the Treasury the power "to issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury." This meant that for every ounce of silver in the U.S. Treasury's vault, the government could introduce new money into circulation. In all, Kennedy brought nearly $4.3 billion in U.S. notes into circulation. The ramifications of this bill are enormous.

With the stroke of a pen, Mr. Kennedy was on his way to putting the Federal Reserve Bank of New York out of business. If enough of these silver certificates were to come into circulation they would have eliminated the demand for Federal Reserve notes. This is because the silver certificates are backed by silver and the Federal Reserve notes are not backed by anything. Executive Order 11,110 could have prevented the national debt from reaching its current level, because it would have given the government the ability to repay its debt without going to the Federal Reserve and being charged interest in order to create the new money. Executive Order 11110 gave the U.S. the ability to create its own money backed by silver. 

After Mr. Kennedy was assassinated just five months later, no more silver certificates were issued. The Final Call has learned that the Executive Order was never repealed by any U.S. President through an Executive Order and is still valid."

It makes you wonder, did the following presidents get the message that the money was not to be messed with? 
Where it gets MORE interesting...



One point I'd like to make is that the video references that Kennedy was about to circulate $4 Billion dollars into the money supply of new dollars backed by silver.  Well, by today's standards that would barely be a drop in the bucket. 

But, let's take a look at how much money was in circulation at the time of this move.  As you can see by the chart below, injecting $4 Billion dollars into the money supply would have a HUGE effect on money in circulation.  My best guess, and this is by only looking at this chart (which by the way is from the Federal Reserve website) is that only $10-$30 billion of money even existed when Kennedy attempted to back the money by silver again.  So, $4 billion would be a very large amount of silver backed funds to inject into the economy.

Despite the evidence, there is evidence to refute this theory.  Other evidence suggests that McCloy was a seasoned, trusted government official thus it "made sense" that he be on the Warren Commission (commission setup to investigate JFK's assassination).  In addition, some say that JFK's act wouldn't have had that much of an impact on the monetary system.  What still eerks me is that when you look up the members of the "Warren Commission" and google their names, most of them, if any, were truly investigators of any type.  Most were lawyers, bankers, government officials etc etc.  Where are all the specialized, skilled investigators trying to get to the bottom of the assassination?

You be the judge and decide what happened.  Research the matter for yourself, and draw your own conclusions.

That's it for now,

Friday, November 19, 2010

Stricter Gun Control? Here's why that is totally pointless...

Gun control is a huge issue in the United States (worldwide for that matter).  However, the United States has the most guns per capita for its public citizens than any other place.

I'm not going to get into some philosophical discussion and debate whether gun control eliminates violence from countries and all of that because there's plenty of websites with this data that will show various numbers and statistics.  You can research this topic and decide for yourself.

I'm going to present this one piece of information...

Ask yourself this question...

Do you believe that these guys, and the criminals in the US would change anything about whether they possess firearms or not based on a law enacted by our government? Do they look like they're ready to hand them over for the good of the country?

My guess is no.  Instead of trying to create stricter gun laws and prevent law abiding citizens from protecting themselves, their families, and their personal property, let's continue to give law abiding citizens a fighting chance and let them keep their guns.  Why?  Because I think these gentlemen plan on doing the same.

Let Freedom Ring,

Saturday, November 13, 2010


Please wait until he goes to the library.  This is priceless.  Even if you don't believe what he's saying, it's worth watching.

Friday, November 12, 2010

Afghan War Exposed

Every once in awhile, I'll break away from my posts on finance and monetary policy.  So, here it is.

I don't know about you, but I'm getting sick of hearing on CNN about the US and trying to "preserve" democracy in Afghanistan.  All you hear about is how we "need to maintain a presence" in order to protect ourselves from Al-Quaeda.



In my opinion, these videos are complete propaganda.  As you'll see below, I'm going to post a link to an article that discusses the real issue of the Afghan war.  We aren't there anymore to "preserve" new democracy, fight "war on terror" or to monitor Al-Qaeda (if we were ever doing any of these things).
There are two real reasons why we stay in Afghanistan:

1. It's a strategic position geo-politically and as you will notice, there's plans to build more military bases in Afghanistan.

2. Protect the US position in the Opium drug trade.  If we really wanted to "eliminate Opium" don't you think the US military would wipe out the crops? Instead, US military troops patrol opium fields in Afghanistan as if they're more on security duty to protect the Opium.  There's countless pictures online.  If you don't believe me, Google it to find more pictures....

Fast Forward To 3 Minutes On This One...

Also, here's an article that's an absolute must read detailing the situation.

Another case of the American Public being spoon fed the propaganda of a "threat of national security" when really, there's a whole separate reason.  It's all smoke and mirrors.  But, with our falling economic and monetary system, what choice do we have but to prop up our financial system and government with drug money? You've just received a dose of the hard truth. Take it or leave it.

Let Freedom Ring!

Thursday, November 11, 2010

Tuesday, November 9, 2010

Wealthy Elite Flee To Physical Gold By The Ton

It's interesting to me that something like this actually appeared on Lamestream media.  The context is that the wealthy have fled from paper assets like ETFs for gold, and want the real thing in physical form.  If gold isn't the true currency, then why the panic?

Saturday, November 6, 2010

"Gladiator Games" & The Ignorance Of The American Public

I'd like to share a video from one of the most brilliant investing minds of our time.  If there's any doubt, allow me to share his documented track record.  The following predictions can be found on his The Underground Investor blog.  J.S. possesses an extremely deep understanding of real world economics, and I follow his information religiously.  Here are his past predictions.

June 2006: “The dollar has to weaken not a little, but considerably, for the massive U.S. trade deficit to close considerably. And a stronger U.S. dollar of course makes this less likely to happen (a stronger dollar means that U.S. goods become more expensive for foreign countries, so U.S. exports would be likely to decline). However, because American individuals are burdened with debt as well, Bernanke’s hands are tied as to the number of times he can continue to raise interest rates without causing an economic recession. In the early 2000’s many American’s overextended their credit, taking advantage of historically low interest rates to buy huge houses with low mortgage payments that were really over their budget.” 

Outcome: The sub-prime mortgage fiasco and currency fiasco that we warned about became a reality. Within just one year, the U.S. dollar lost 15% against the NZ dollar, 5% against the Sing, and 16% against the Thai baht not to mention huge losses against major currencies like the Euro and Pound Sterling.

August 16, 2006: “Over seven and a half years, if your portfolio has tracked the S&P 500’s index as some 97% of U.S. professional money managers aim to do, you have about the same amount of money you had seven and a half years ago – only with the rapid devaluation of the dollar, your same amount of dollars buys much less today, so in all actuality, tracking the index has lost you money. That’s a whole lot of waiting for a whole lot of nothing. And that’s the good news. The bad news is, as of 2006, the U.S. stock market’s performance will likely become even worse for the rest of this decade.”

Outcome: When I made this prediction, every single one of my former colleagues in the investment industry with whom I discussed this prediction laughed (and some quite literally, laughed out loud) at this prediction. In fact I remember one investment industry professional stating that the probability of the S&P 500 closing lower than its August 16th, 2006 level at the end of the decade was ZERO, even if one took the effects of inflation into account. Today, at the near end of this decade, four years after
my prediction, the nominal S&P 500 level stands at 1,183.08, down from its nominal level of 1,295.43 on August 16, 2006. Factor in real inflation rates of 10% to 13% between 2006 and 2008 and more recent inflation rates of 8% to 9% (as calculated by and the REAL losses in the S&P 500 in the past four years become quite substantial.

September 6, 2007: “Increased volatility in stock markets will occur as $370 billion in sub prime mortgages re-set to higher rates, starting with $50 billion in September and $30 billion every month thereafter for the next 18 months to 2 years. Triple-digit losses in the Dow during single day trading sessions will become commonplace…2007, and possibly into very early 2008, will present the last opportunity to buy gold at less than $700 an ounce, but not without some volatility in between….We will see a strong rebound in the U.S. markets after a deepening and scary correction. The rebound will be manufactured again by the U.S. Treasury with the help of the U.S. Federal Reserve.”

Outcome: Although it’s hard to think back this far, on September 6, 2007, gold was trading at $685 an ounce. I presented the above opinions at the Pan Pacific Hotel in Asia at an investment forum, after which several investment professionals approached me and told me they believed that gold was too expensive and that they would wait until gold dropped below $600 an ounce again before they would consider buying. These professionals may still be waiting to buy. Gold rose from the $680 level in September to over $1,000 a troy ounce by March of 2008. The London PM fix never closed below $700 an ounce since then, even when the Fed Reserve engineered its now infamous attack against gold prices in October of 2008. Triple-digit losses in the DJIA happened almost daily or several times a week to open January of 2008 just as I had predicted.

November 16, 2007: “With financial and housing stocks slumping and big corrections in many major global stock markets, much of the easy money shorting markets has already been made, though more will come in the future. I think mutual fund companies are the next best bet for now. As the crisis widens, I expect outflows from mutual funds to occur. There have been some funds whose share price has defied current trends and those would be the best bet, Janus Capital among them (JNS). Janus has a trailing 12-month P/E of more than 40 versus the 29 of its peers. But there are others as well.”
Outcome: During the next four months, Janus Capital’s share price plummeted more than 38%.

January 2008: “We can be assured that in 2008, that the destruction of monetary value in both Europe and the United States will occur…when smart investors finally realize that no fiat currency is safe, I believe that investors (at least the savvy one) will begin to dump the Euro and the Pound as well.”

Outcome: In August and October of 2008, both the Euro and Pound plummeted in value, both losing about 25% in value in a very short time period.

July 22, 2008: “The global financial crisis is not under control and becoming better as [bankers and gov’t officials] continually publicly state. My downside target for Fannie Mae right now would be $4 a share.”

Outcome: Though U.S. Treasury Secretary Henry Paulson stated that “[Fannie Mae’s] regulator has made clear that they are adequately capitalized,” Fannie Mae dropped from $19 a share at the time I made my statement to near nothing (turned out my $4 a share prediction was too optimistic!). On September 10, 2007, the US Gov’t nationalized Fannie Mae.

March 11, 2008: “If you are an “old-school” person that believes in the sacredness of and credibility of banking institutions and view Money Market Funds as “safe”, I urge you to re-assess that belief right now. Many Short-Term MMFs invest heavily in Asset Backed Commercial Paper (ABCPs), many of which are backed by these very shady Mortgage Backed Securities.  If the MBS’s go belly up, so does the ABCP, and your MMF, which everyone believes can never lose value, WILL lose value.”

Outcome: It took a little bit longer for this prediction to come to fruition, which of course, opened the doors for people to state I was crazy once again. On September 16, 2008, one of the first and largest US money market funds put a seven-day freeze on investor redemptions after the net asset value of its shares fell below $1. Shortly thereafter, two more money market funds also announced their inability to redeem the fund at a net asset value of $1.

March 6, 2009: I stated to my Platinum clientsnow is a good time” to add MORE to physical silver holdings. I further emphasized that this was a long-term play and that while “it is always impossible to determine the timeframe for exactly when these great leaps higher in price will occur, [this] is always why I seek what I feel are low-risk, high-reward entry prices.” 

Outcome: Since then, silver has risen 78% from $13.12 an ounce to $23.31 an ounce
May 31, 2009: I stated to my clients “It’s time to be very cautious with your precious metal stocks”. I explained the reasons why I believed danger was imminent (reasons that have to do with gold price suppression schemes) and why the time was ripe to apply tight trailing stop losses on PM stocks.
Outcome: The AMEX gold bugs index (HUI) plummeted from 398.06 on the first day after I issued the bulletin to 318.27 in the next 15 trading days, a 20% rapid fall.

Later, I'll post Bernake's predictions.  Not surprisingly, they're laughable.

Anyways, without further adieu, J.S. Kim's recent video post.

Thursday, November 4, 2010

Monopoly Money vs. US Dollar- What's The Difference?


One of my favorite economists, J.S. Kim, refers to our US dollar as "monopoly money".  Is it?

Let me ask you a question.  What makes our US dollar different than monopoly money?  It's slightly different colors.  The US paper currency is made of cotton while monopoly money is made of paper only.

Here's a better question.  As a thought provoking exercise, let's say one day everyone substituted the US bills in their pockets, and exchanged them for Monopoly money of the same currency. So, now, ZERO US dollars as we know them exist, and everyone used the paper monopoly money.

What would change? Think about it? What would really change?

In my opinion, nothing would happen.  Why? Because if everyone else has the same paper currency, and accept it as currency, then life would continue as usual.

So, what's really going on here? 

This thought exercise reveals to me that really the only thing that makes the dollar worth anything at all is confidence.  Confidence that the dollar is an accepted store of value.  It doesn't matter if you replaced the picture of Benjamin Franklin with a picture of Michael Jackson, it's still a US treasury note, and it still holds the same value because of confidence.
On to my next point.  What do you think happens to the confidence in the dollar bill during inflation?  When the currency is inflated and debased as much as it has during the last 3-5 years, confidence goes down!  When confidence goes down, people don't trust it, including foreign investors. 

A currency is based on confidence, and quite frankly, with this much printing and money creation going on, I'm losing my confidence, and fast.  How are we supposed to save money, when the currency is printed at a rate like this?

Let Freedom Ring!

Tuesday, November 2, 2010

They Call Our Gen Y Generation... The Boomerangers

Boomerang Kids: 85% of College Graduates Move Back Home

That's what they're calling our generation.  We go to college, and come right back home.  As you will find out, this isn't true for everyone.  Many of the top students will go on and get great jobs out of college, and that's great!  But, if you aren't at the top of the class, or at a prestigious university, is it always the right decision?

Let me give you a few excerpts from this article...

"nearly 15% for those ages 20-24 -- has made finding a job nearly impossible. And without a job, there's nowhere for these young adults to go but back to their old bedrooms, curfews and chore charts. Meet the boomerangers. "

" hard that a whopping 85% of college seniors planned to move back home with their parents after graduation last May, according to a poll by Twentysomething Inc., a marketing and research firm based in Philadelphia. That rate has steadily risen from 67% in 2006."

"..."It's peaking at levels we have not seen before," said David Morrison, managing director and founder of Twentysomething."

 I'm HAPPY with my decision to go to college, but, I'm starting to believe it's not for everyone.  There's only a finite number of jobs that actually need the skills of a college degree. So, with millions and millions of fellow students flocking to college in hopes that it's the ticket to success with a high-paying job, and a happy life, maybe we should think again.  The decision becomes even more clouded when you consider tacking on $10,000, $20,000, $50,000, or even $100,000+ in debt.  For some students, that's not an issue.  But, what about for the ones that it IS an issue?

Trust me, I also understand and can relate to the pressure.  If you come from a middle-class, fairly well-to-do family, it's almost expected that you go to college, quite frankly.  People think of you as a "slacker" or someone with "no ambition" should you even think about not going to college.

I'd like to share with you a video on a short news segment.  It's John Stossel and, if I may say, he's awesome.  For the most part, he tells it like it is, and gives some really thought provoking stories.

So, who should go to college, and how to benefit the most from it?

Personally, after watching this video, and pondering on the subject, I think those that are either:

a. Exceptionally Gifted Intellectually
b. Can go to college without much debt

other than that, you may be wasting your time.  In addition, I'd like to add that I believe college is just as much about making connections and friends, and developing yourself in areas outside of school, as it is the school books. At the end of the 4 years, does it really matter whether or not you have a 3.15 GPA or a 3.55?

Again, if you have a high GPA (like top 10%) from a semi prestigious school, then yes GPA does matter. This video is great!


Let Freedom Ring!

Sunday, October 31, 2010

Consumer Confidence In Wall Street Is WAY Down

This is pretty amazing.  Despite the fact that markets are increasing in price, there's a total disconnect.  I saw this graph and absolutely had to share this.

This goes back to the 'ole inflation principle.  There's so much money in circulation in the money supply, who cares how high the markets go? If there's trillions of extra dollars in the money supply, and inflation is up to 8%-9% a year does it really matter that the markets are on the rise?

Well, apparently the public is waking up to some degree. 

Let Freedom Ring!

Saturday, October 30, 2010

Econ 101 (Part 5) Cont'd: The Federal Reserve Scam

After reviewing the last 4 or 5 lessons of the Econ 101 series, it should be becoming quite obvious as to why we are in this awful financial recession/depression.

Here's a short 9 minute video that sums up the root of the problem.

P.S. Are there any basic concepts that you would like to read about or discuss? Let me know!

Let Freedom Ring!

Thursday, October 28, 2010

7 Banks Fail Across The Nation... Oh Goodie

If you think things are getting better, think again.. 2010 is on pace to be worse for bank failures than 2008 and 2009.

Here are a few excerpts from the article...

WASHINGTON (AP) -- Regulators on Friday shut down a total of seven banks in Florida, Georgia, Illinois, Kansas and Arizona, lifting to 139 the number of U.S. banks that have fallen this year as soured loans have mounted and the economy has sputtered.

Also shuttered were First Bank of Jacksonville in Jacksonville, Fla., with $81 million in assets; Progress Bank of Florida, based in Tampa, with $110.7 million in assets; First National Bank of Barnesville in Barnesville, Ga., with $131.4 million in assets; Gordon Bank of Gordon, Ga., with $29.4 million in assets; First Suburban National Bank in Maywood, Ill., with $148.7 million in assets; and First Arizona Savings, based in Scottsdale, Ariz., with assets of $272.2 million.

Ameris Bank, based in Moultrie, Ga., agreed to assume the assets and deposits of First Bank of Jacksonville. Bay Cities Bank, based in Tampa, is buying the assets and deposits of Progress Bank.
United Bank, based in Zebulon, Ga., is assuming the assets and deposits of First National Bank of Barnesville, while Morris Bank of Dublin, Ga., is assuming the deposits and $11.5 million of the assets of Gordon Bank. The FDIC will retain the rest for eventual sale. Seaway Bank and Trust Co., based in Chicago, is assuming the assets and deposits of First Suburban National Bank.

The FDIC was unable to find a buyer for First Arizona Savings, and it approved the payout of the bank's insured deposits. The agency said it will mail checks to depositors for their insured funds on Monday.
In addition, the FDIC and Ameris Bank agreed to share losses on $60 million of First Bank of Jacksonville's loans and other assets. The FDIC and Bay Cities Bank are sharing losses on $82.6 million of Progress Bank of Florida's assets, while the agency and United Bank are sharing losses on $107.3 million of First National Bank of Barnesville's assets.

Florida, Georgia and Illinois are among the states hardest hit by bank collapses, stemming from the meltdown in the real estate market that brought an avalanche of soured mortgage loans. The shutdowns Friday brought the number of bank failures in Florida this year to 27, and to 16 each for Georgia and Illinois.
With 139 closures nationwide so far this year, the pace of bank failures exceeds that of 2009, which was already a brisk year for shutdowns with a total of 140. By this time last year, regulators had closed 106 banks.

The pace has accelerated as banks' losses mount on loans made for commercial property and development. Many companies have shut down in the recession, vacating shopping malls and office buildings financed by the loans. That has brought delinquent loan payments and defaults by commercial developers.
The 2009 total of bank failures was the highest annual tally since 1992, at the height of the savings and loan crisis. The 2009 failures cost the insurance fund more than $30 billion. Twenty-five banks failed in 2008, the year the financial crisis struck with force; only three succumbed in 2007.

The growing bank failures have sapped billions of dollars out of the deposit insurance fund. It fell into the red last year, and its deficit stood at $15.2 billion as of June 30.

Econ 101 (Part 5): What Is Inflation & Why Is It The Key To The US Economy & Recession?

This piece of the puzzle is huge, and I can't stress it enough.

Inflation is simply the increase of the price of goods and services that we, as the American people, purchase on a day to day basis.  So, let's say that you buy a gallon of milk, eggs, toilet paper, fruit, and a lawn chair.  Well, if those same items go up in price the next year, that's inflation.

Why is Inflation Important?

That's an easy one.  Let's say that you make $50,000 a year before taxes. If inflation is measured at 3%, then that means that goods and services you buy during the year are 3% more expensive than they were last year.  So, as a whole, eggs, butter, milk, rent, insurance etc etc are all increased on average of 3%.  Essentially, that $50,000 will buy you 3% less than it would the year before.

That's not so bad, right?  We'll get into that more in a second.  But, if inflation goes up 3% every year for 5 years, then that's 15%.  That means after 5 years, if you're income didn't increase, then your salary of $50,000 now buys 15% less than it did.  That's a hefty amount if you ask me.

Our banking system, as previously discussed, is a central bank.  Meaning, all of our money comes from one source.  All other banks get the money, either directly or indirectly, from the central bank, and you and I get our money from the central bank.  It all originates from the source.  In addition, the central bank, also called the federal reserve, charges interest to banks in order to get money from them.  So, since this money is dealt out at interest there's only one thing that can happen, they money supply as a whole will constantly increase.

For example, let's say the federal reserve is loaning money to Bank of America (because Bank of America only has one source to get the money).  It loans it to Bank of America at 2% interest.  Then, Bank of America will loan it to you, me, or another business at 4% for a home loan, car loan, or whatever the case may be.  Now, the Bank has made a profit off the money, and so has the federal reserve.  Please review previous parts of the Econ 101 if this does not make sense.

Well, the main problem with this is that interest is owed to an entity, the federal reserve, that CREATES money in the first place!  Let me say this again.  In the above example, Bank of America would be paying interest to an entity, the Federal Reserve, the one and only creator of money.

Does this make sense? What does an organization that creates money as it's primary job, need interest payments for?  Well, the result is that it simply creates inflation.  The system is designed to cause inflation.  In theory, the idea is to control the inflation and make it manageable.  But, does it work?  Well, let's investigate this further.

What's the message?  The distorted message is that inflation is moderate and well under control.

The message that inflation is under control is delivered in several ways.  The lamestream media will tell you this, politicians may say it, but the most commonly quoted method for measuring inflation is the Consumer Price Index (CPI).  Let's take a look at how this works.

The CPI takes a basket of goods that the US Bureau of Labor & Statistics deems "typical" for all Americans (I believe it's 87% of Americans according to them). 

But, here's the problem.  The CPI leaves out two key elements in it's measurements... food & energy.  I don't know about you, but in a year's time, a huge, huge portion of my spending goes to food and energy.  How much gas do you put in your car each month?  Or, what about your electric bill?  How much of your income goes to food and groceries?

"Numbers Don't Lie, People Lie"

As a culture, we're conditioned to "trust the numbers".  In reality, numbers are nowhere near as objective.  Numbers, such as the CPI, can easily hide the computations or assumptions of whoever did the calculations.

Usually I absolute hate mainstream media (CNN, CBS, NBC, ABC, WSJ, NY Times etc etc) but in May 2005 CNBC did a news story on government statisticians.  The story revealed that the statistics produced aren't nearly as concrete as you would assume.  In fact, they're quite arbitrary. discussed the Consumer Price Index, the top U.S. inflation indicator. After reviewing all the facts, CNBC concluded that the CPI is rigged, and not representative of the true rising cost of living that is widely reported. CNBC discovered that government statisticians arbitrarily evaluate an item, like a computer, by comparing the cost of the same computer last year, but since this year's model has more features, they calculate that the net price has dropped by 29 percent. No joke! 

If that isn't bad enough, not only are the numbers arbitrarily given in many cases, but the CPI is changed year to year.  The same goods are not included in it each year! So, if they good can be changed, then how can we get a reasonable estimate of inflation?
Stamp Price Index reveals "real world" inflation
Here's another way to judge the true rate of inflation using the U.S. Postal Service stamp price statistics. According to the government, the cost of a postage stamp reflects only true cost-of-living increases, since the USPS is not-for-profit, right?
USAToday reports, "The price for a first-class stamp jumped by 517 percent between 1970 to 2004, compared to the official CPI inflation gauge which has only registered a 293 percent increase." That means in 1970 a $10,000 car now costs $51,700, instead of $29,300. That's a whopping 76 percent discrepancy!
If we use the price of a postage stamp index as a "real world" inflation gauge, we've had substantially rising inflation during a time the government has reported that inflation is almost nil. And in 2005, the U.S. Postal Service is proposing another increase in the price of a first-class stamp from 37 cents to 39 cents a 5.4 percent rate increase. 

In whose numbers can you trust?
It was a British economist who first said, "I never trust anything the government says until they officially deny it!" 

A sad statement, but apparently true regarding government statistics.

The numbers that you can trust are not as easily found. Finding "real world" statistics involves stripping out the political-financial spin by cross-checking the numbers with multiple sources.
For example, if a financial broker reports a certain rate of return over a period of time for a particular investment, don't just accept it, do an Internet search to see if the numbers quoted have really panned out over the long term. 

Financial research takes time and energy, but the alternative is to passively take a loss year after year. My fear is that when consumers finally wake up, they'll suddenly find themselves so far behind the curve that it will be too late to do anything about it. 

Next time you hear that the CPI figure is this, or the GDP figure is that, keep in mind that these numbers are calculated with a hidden purpose to help bolster public confidence in government and Wall Street. The fabric of U.S. confidence is badly torn and now the whole system is in jeopardy of exposure  including your money.

A great website to find out the real numbers like unemployment, CPI, and other information is Shadow Stats.  It's a great resource and I highly recommend checking it out.  I've included their inflation chart below.
As you can see, if inflation is calculated using commodities like food and energy, things that we purchase everyday, then inflation is much more rampant. In fact, it's hovering in the 8%-10% range as I write this.

So, what's it matter to me?

Back to my original example, if you make $50,000 a year, and inflation is reported at 3%, you lose 3% of your money because it now purchases less than it did the year before. Many times, if you're on a fixed salary, you're income will increase to reflect the increase in cost of living.  So, your employer may increase your salary 3% next year due to the "cost of living" increasing aka inflation.
If your employer increases your salary 3% and real, true inflation is 8%, then you just lost 5% of your purchasing power for that year!  Do you see the sobering reality of this?

What about if this trend continues for 5 years?! After 5 years you would have lost 25% of your purchasing power! That's 1/4 of your income and your real wealth just decreased 25% in 5 years! After 10 years you would lose 50%!!! Granted, it may not be 5% each year, but it could be 3% or 2% difference, but that's a BIG deal when added up!

This should make you angry!  Or, let's say you're among the more educated on this subject.  You decide that in order to curb your loss of wealth due to inflation, you go out and buy an investment that returns 7% annually.  If you can find one with that high of a return, you will still lose 1-2% a year! 

How many people do you know that think a 7%-8% return on their investments is a great return?  How many investment banks boast of their great and consistent returns of 7%-9% a year?

Congratulations On Covering Inflation, Because That's All You Did!

Later posts will focus on what you can do to protect and grow your wealth and how the government, the federal reserve, and the wealth bankers benefit from this awful injustice against you and I.

Let Freedom Ring!


Monday, October 25, 2010

Economics 101 (Part 4): Understanding the Federal Reserve

Economics 101 (Part 4): Understanding the Federal Reserve

The absolute keys to understanding the Economy and the foundation on which it operates lies in understanding:

1. Where money comes from?
2. How it's created?
3. Who's in charge of its creation?

This information isn't simply here to encourage you to be a johnny-doogooder.  I'm not here to harp on some charity cause that you should be involved in or some political agenda of an interest group.  This information affects your pocket book... directly whether you realize it or not. If you have $500 in the bank or $5,000,000 this effects YOUR money in a BIG way.  And, the best part, all hope is not lost.  You can learn how you can not only preserve your wealth, but also benefit from the Federal Reserve shenanigans.

For now let's stick to the facts.  This video is an absolute must see.  It explains the history of the federal reserve without all the fluff, but I'm going to highlight the undisputed facts of the video as well as the history of the federal reserve.

FACT #1: A central bank has absolute control over a money supply (how much money is created), therefore the inherent inflation that occurs.

FACT #2: A country loans itself money at interest.  Every single dollar produced is loaned out to banks with interest with immediate debt attached to it, therefore, the debt created and now owed to the central bank must come from the central bank itself.

FACT #3: It is absolutely IMPOSSIBLE to avoid inflation in a system that produces money with interest attached  when only one group (the central bank) is in charge of creating the currency.

FACT #4: Thomas Jefferson is quoted as saying, "I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

FACT #5: Between 1791-1913 three attempts were made to create a "central bank" of the United States. The first two attempts had charters created, but were eventually struck down headed by Thomas Jefferson, James Madison, and other founding fathers.

FACT #6: After the 1909 panic, a federal investigation was launched, headed by Nelson Aldrich.  Aldrich later married into the Rockefeller family through marriage.

FACT #7: December 23, 1913, when OVER HALF of the members of congress were home with their families, Senator Aldrich along with supporters of the Federal Reserve, acted in order to vote in the Federal Reserve Act of 1914 which ultimately created the central bank of the United States.

FACT#8: Today, are money, digital, paper, or coin, is backed by absolutely nothing other than the "good faith and credit" of the United States government.

Enjoy the 10 minute video...It's a must watch.

Let Freedom Ring!

Economics 101 (Part 3): Where Does Our Money Come From?

Economics 101 (Part 3): Where Does Our Money Come From?

This may be basic to some people, while others it will be new information. Either way, it's a great refresher.  Again, in order to understand the problems of our economy, you must go the the root of the issue.  The issue is not unemployment, it's not imports, and it's not exports, it simply comes down to the fundamentals of how our system actually works.  It amazes me that this information does not sink in to the population, especially my generation, Generation Y.

As discussed earlier, at one point in time, our money was backed by a hard commodity, something that cannot be faked or easily produced, and therefore the integrity of the United States dollar was very difficult to fake.  The price of the dollar versus the price of gold fluctuated only $0.73 for almost 100 years.  Literally, our money was "as good as gold".

Today, our money can be printed freely by the "Federal Reserve".  The Federal Reserve was established in 1913 through an act of congress (although the details are very skeptical- more on that later).  The "Federal Reserve" as it's called, is the "Central Bank" of the United States.  Essentially, it's a branch of the Federal Government that controls anything and everything related to money and currency including how much money is produced etc etc.

Central banking in the United States

The first paper money issued in the United States was by the Massachusetts Bay Colony in 1690. Soon other colonies began printing their own money as well. The demand for currency in the colonies was due to the scarcity of coins, which had been the primary means of trade at the time. A colony's currency was used to pay for its expenses, as well as a means to loan money to the colony's citizens. The bills quickly became the primary means of exchange within the colonies, and were even used in financial transactions with other colonies.  However, some currencies were not redeemable in gold and silver, which caused their value to depreciate quickly.  The first attempt at a national currency was during the Revolutionary war. In 1775 the Continental Congress issued paper currency, and called their bills "Continentals". But the money was not backed by gold or silver and its value depreciated quickly.  In 1791, which was after the U.S. Constitution was ratified, the government granted the First Bank of the United States a charter to operate as the U.S.'s central bank until 1811. Unlike the prior attempt at a centralized currency, the increase in the federal government's power—granted to it by the constitution—allowed national central banks to possess a monopoly on the minting of U.S currency. Nonetheless, The First Bank of the United States came to an end when President Madison refused to renew its charter. The Second Bank of the United States met a similar fate under President Jackson. Both banks were based upon the Bank of England. Ultimately, a third national bank—known as the Federal Reserve—was established in 1913 and still exists to this day.

Officially, the duties and the job of the Federal Reserve are as follows:
  • To address the problem of banking panics
  • To serve as the central bank for the United States
  • To strike a balance between private interests of banks and the centralized responsibility of government
    • To supervise and regulate banking institutions
    • To protect the credit rights of consumers
  • To manage the nation's money supply through monetary policy to achieve the sometimes-conflicting goals of
    • maximum employment
    • stable prices, including prevention of either inflation or deflation
    • moderate long-term interest rates
  • To maintain the stability of the financial system and contain systemic risk in financial markets
  • To provide financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation's payments system
    • To facilitate the exchange of payments among regions
    • To respond to local liquidity needs
  • To strengthen U.S. standing in the world economy

Now that all the official and formal aspects are out of the way, what's important to focus on is that the Federal Reserve, America's central bank, possesses the sole ability to create money whenever it likes, as well as loan money to the United States Government.  Yes, it LOANS money and charges interest on the money it creates.

As we've discussed earlier, there is nothing stopping the Federal Reserve from printing money whenever it desires.  In addition, the Federal Reserve is it's own regulator, and has very little regulation imposed on it.  So, relating back the the history of money and it's true purpose, you must ask yourself this question.  If one person, or a group of people have the power to produce the medium of exchange whenever they'd like, what happens to the medium of exchange when it's produced out of thin air as is our U.S. Dollar?  It becomes worth less, and less, and less as a medium of exchange.  The consequence is inevitable.  It's simple supply and demand.  If there's more and more money, then the inherent value becomes less and less.

Check out this video for a short explanation.

More To Come,