Thursday, October 30, 2008

The 20% Rule Will Crush Us Unless We....

Karl Denninger at Market-Ticker.com wrote one of the most telling economic columns of 2008 on America's future. He pointed out that it now takes 5 trillion dollars in new debt to create one trillion dollars in new Gross Domestic Product (GDP). GDP = C+I+G+X-M or Consumption plus Investment plus Government plus Exports minus Imports.

Take a minute to wrap your mind around what it would mean to add 5 trillion dollars to the national debt which would increase the present 10.6 trillion dollars to 15.6 trillion. The first thing you might think of is how much it would cost you to pay the interest on all that new debt. But by increasing the demand for loans by adding 5 trillion dollars to the national debt you will find yourself paying a lot more interest and not just on what you have personally borrowed but also on the 15.6 trillion dollar national debt.

And it would only add one trillion dollars in GDP to cover that increased burden.

Mr Denninger pointed out that way back in 1968 you could get a one billion dollar increase in GDP for every billion dollars in new debt. This economic fact is related to the end of Monetary Illusion. Monetary Illusion was a cornerstone of John Maynard Keynes's economic theory. But ever since 1968 inflation has been increasing faster than the money supply.

I would attribute part of the change since 1968 to the Exports minus Imports part of the GDP equation. We are importing more and making less at home.

What I am calling the 20% Rule is a temporary relationship between debt creation and growth in GDP. Forty years ago it was 100%. Now it is 20%. It will soon be 15% and then 10% if the dollar and America do not self-destruct before we get to either 15% or 10%.

Could you possibly imagine making the payments on a 25.6 trillion dollar national debt? If you know recent American economic history you would remember reading about 15% home mortgages as recently as 1980. The cost of servicing a 25.6 trillion dollar debt will crush the American government and the people who pay taxes to support this insanity.

The coming spike in interest rates and the exponential growth in public debt will transfer all wealth from average Americans to Wall Street. America will choke as a nation and cease to exist because we will no longer be able to pay the vigorish.

My regular readers know that government debt is a fiction. If the Treasury Department had bought the Federal Reserve Bank back in 1929 or we had never created it in 1913 there would be no national debt.

As it stands now, when the Treasury wants run a deficit of 100 billion dollars the Federal Reserve Bank creates a bookkeeping entry for the federal government at the New York FED which is our official depository. In exchange the Treasurer gives the FED bonds promising that American taxpayers will pay the FED 100 billion dollars plus interest for making a bookkeeping entry.

We can no longer afford to subsidize Wall Street. They will destroy us with their greed.

If it were not for Wall Street's greed, there would be no national debt about to crush us and to transfer all wealth from us to them. If you do not believe me, just contemplate the picture of Americans paying 15% interest on home mortgages and 20% on the 25.6 trillion dollars of fictional debt.

If it were not for Wall Street's greed and our lack of an effective response, they would not be stealing billions of dollars each week from unaudited federal spending. Over 4 trillion dollars has been spent since 1995 in violation of United States law which requires that we adequately audit all federal expenditures. On 9-10-2001 Donald Rumsfeld admitted at a press conference that he was unable to trace 2.3 trillion dollars in Pentagon spending. On 9-11-2001 a bomb exploded at the Pentagon 3 ½ minutes before Flight 77 was alleged to have hit the building. The bomb killed 40 military auditors who were attempting to trace that missing money. It served its purpose and has discouraged overly inquisitive accountants who suffer from excessive honesty which can be a terminal illness in these times.

Catherine Austin Fitts says the stolen money is being invested offshore so that when the dust settles, Wall Street can buy America for pennies on the dollar thus making our enslavement complete.

The end is nigh. There is not enough money in the world to satisfy Wall Street's greed. There are only two paths left for America to take.

One path is what I have called the Glorious Day when everything belongs to Wall Street, democracy is abolished, the Bill of Rights is a faint memory and Bankers rule by Divine Right.

The other path is that we reform the government, abolish the Federal Reserve Bank, replace Federal Reserve Notes with Treasury Certificates, and restore the Bill of Rights.

Now you might understand why I have been so adamant that we either will be liberated or enslaved. The dollar will soon die and the current malaise will not last. We will either be free or enslaved and soon. As for me, I was born free and will die free.

I stand by my original prediction that unless substantial reforms are made our after tax wages in real dollars will be cut in half by 12-31-2009 with January 2005 as a base.

References:

Karl Denninger's Market Ticker article can be found here:

http://market-ticker.denninger.net/archives/618-Congress-What-Bernanke-and-Hank-Arent-Telling-You.html

Catherine Austin Fitts collection of articles on the missing money which includes the Donald Rumsfeld video admitting he was unable to trace 2.3 trillion dollars in Pentagon funds can be found here: http://solari.com/archive/missing_money/

If you have friends who still believe 19 Arabs hijacked 4 airplanes on 9-11-2001 even though they had neither tickets nor boarding passes and were never filmed on any surveillance tapes, please ask them to go here:

http://www.cnn.com/SPECIALS/2001/trade.center/victims/AA77.victims.html

If you have friends who believe that World Trade Center Tower 7 could collapse at nearly free fall speed even though it was never hit by a plane and only had fires on a few of its 47 stories, please ask them to go here: www.WTC7.net

To read about that bomb blast at the Pentagon that the news media never reported please go here: http://johnmccarthy90066.tripod.com/id206.html

Thursday, October 23, 2008

Canceling American And Third World Debt

The 700 billion dollar Bailout has galvanized American attitudes toward Wall Street. For the first time since 1929-1939 the majority of white Americans have been convinced that New York bankers are treating them as if they were colonial subjects of a foreign empire ruled by the Divine Right of Kings.

One observer said the 700 billion dollar Bailout has transformed the Treasury Secretary into the fourth branch of government. He can spend 700 billion dollars without either congressional oversight or judicial review. I would rephrase that to say Goldman Sachs has become our Fourth and highest branch of government. Our Treasury Secretary Henry Paulson was the CEO of Goldman Sachs and was said to have beenrewarded with a 512 million dollar bonus for his good work. Now he is the head of the Fourth Branch of government which is above the reach of the President, the Congress, the Senate and the Judiciary. He has even been issuing contracts under the Bailout with the terms blacked out. No one in the controlled press has dared question him about the details that he is keeping from us.

Since 1995 four trillion dollars in federal government appropriations have been spent without adequate auditing and are untraceable. That is four trillion dollars not billion. And like all federal money it was deposited in the New York Federal Reserve Bank. The New York Fed and its bigger member banks are responsible to the taxpayers to assure that our money was not stolen. That they have co-operated in the looting of unaudited federal spending is a criminal act. But then Goldman Sachs, the Treasury Secretary and the Federal Reserve Bank are above the law.

To understand the true nature of politics you need to know that what Asia Times said. The biggest 300 banks launder 500 billion dollars in bribes for the politicians of this world. You need to understand what it means when we have proof that billions of dollars each week of your money is being stolen. That money was stolen under Democrat and Republican administrations. That money was stolen under Democrat and Republican Congresses. That money was stolen under the “watchful eye” of the news media.

Now both political parties have joined together to bail out the very people who have been robbing us blind. And the Congress even voted to exempt the perpetrators from criminal prosecution. And the Congress and President Bush gave them 700 billion dollars to cover any trail that could lead to the New York bankers doing jail time. That is why I have decided to call Goldman Sachs our Fourth and Highest Branch of government. And that is democracy as it is practiced in America.

Now even the whitest of white persons should be convinced that New York bankers regard them as no different than the darkest colonial subject. And so I would hope that mainstream Americans would now be willing to openly and fairly consider debt cancellation for the Third World and for America as we both are victims of Wall Street.

But then Americans should have already known what the bankers held nothing but contempt for them when they saw the banks launder more than a trillion dollars a year in drug money. That children in their towns are dying from overdoses and that drug related crime is systematically destroying American cities block by block is well known even though none dare speak the truth.

Americans and Third Worlders have both found themselves in a hole. It is a truism that the first rule of getting out of a hole is to stop digging. We find ourselves drowning in an ocean of debt and the solution offered by Goldman Sachs, the Federal Reserve Bank and their wholly owned subsidiaries, the Republican and Democratic parties, is borrowing 700 billion dollars to solve our current economic crisis.

There is an alternative. We could issue Treasury Certificates to replace all Federal Reserve Notes as President Kennedy did before his assassination ended the program. JFK's Treasury Certificates were issued by the Treasury Department as legal tender and minted by the Bureau of the Mint. Federal Reserve Notes are also printed by the Bureau of the Mint and are also legal tender.

The difference between the two is that if President's Lincoln and Kennedy had not been assassinated we would not have 9.3 trillion dollars in national debt soon to become 14.3 trillion dollars. Look at what happens when the Federal Reserve Bank creates a billion dollars in Federal Reserve Notes. The FED calls the Bureau of the Mint and asks them to print up one billion dollars in Federal Reserve Notes. The FED pays the Mint 3 ½ cents on average for every dollar printed. Then the FED delivers one billion dollars in Reserve Notes to the Treasurer in exchange for Treasury bonds totaling one billion dollars in value obligating the taxpayers to pay the Federal Reserve Bank one billion dollars plus interest in exchange for what the Mint printed for 3 ½ million dollars.

Most of our money supply is in the form of checking account deposits rather than actual cash. Checking account money is created by Federal Reserve member banks when they loan us money. Suppose you borrow $10,000 from a local bank. They do not loan you Mrs. Smith's savings. What they do is to increase the money supply by $10,000 when thet make an entry into their computers. You begin writing checks which will clear the bank assuming they do not lend out a higher percentage than than their share of depositors in the community.

If you were the Treasury Secretary and wanted to borrow one billion dollars in Federal Reserve Notes from the FED, they would give you a checking account deposit of one billion dollars most likely at the NY FED which is the official depository of the United States government. In exchange for the billion dollar entry into the Treasury's checking account, which costs the NY FED no more than one employee making a computer entry, we the taxpayers are on the hook for another billion dollars in debt plus the interest. That is why government debt has been called a “fiction.”

It should be emphasized that the NY FED is the official depository of the Treasury Department. That means that all of the 4 trillion plus dollars in federal spending that was illegally spent since 1995 without proper auditing as required by federal law was done with their co-operation. Billions of dollars a week are being stolen from unaudited federal government contracts and the NY FED has a fiduciary responsibility to the taxpayers to reimburse us for the losses we suffered from their complicity in the theft. If we had a functioning democracy, we could sue and recover that stolen money.

The Bailout money is being used to cover the trail of the culprits. Catherine Austin Fitts noted that Wall Street has been shorting gold to convince the world that things are better than they seem. She believes one purpose of the Bailout is to cover their losses for all those short gold sales.

Now you understand why I can truthfully say that both political parties and the mainstream press are fronts for Goldman Sachs, Wall Street and the Federal Reserve. Now you know why the Bailout can never work. They are creating more debts to get certain select people out of debt while simultaneously increasing the total amount of the debt exponentially.

Ms. Fitts has estimated that between the Bailout and the Housing Recovery Act of 2008that we have agreed to add another 5 trillion dollars to the national debt. She did say that we taxpayers might opt out of the Bailout after a few trillion dollars in debt are added and the average voter discovers just how much inflation all these Bailouts will cost them personally.

One cost of the Bailout is the service charge on the fictional national debt. If we add 5 trillion dollars to the national debt over the next 12 to 24 months, we can expect interest rates to increase sufficiently to cover the cost of the loss in purchasing power due to inflation. At 10% interest the cost to service the “national debt” would be 1.43 trillion dollars a year. At 20% the cost would be 2.86 trillion dollars. We could not pay that much money to the banks even if we canceled Social Security, Medicare, Food Stamps and all military spending.

Another cost would be inflation. As you print more dollars, each one becomes less valuable. My original prediction made several years ago was that the average wage in America would be cut 50% in real after tax dollars by 12-31-2009. Since Social Security is a wage based tax system, a 50% cut in wages will mean that recipients will also see their benefits by half. Of course if the unemployment rate approaches 17 or even 20%, the cut to the elderly will be even greater. I also have noticed that even though the Baby Boomers born after WW II are not old enough to qualify for Social Security the number of recipients has increased by more than 5 million in the past few years. It would seem to me that the real economy is so depressed from Wall Street's thievery that men and women over 50 are opting for Social Security disability because they can find no work.

The Bailout cannot work, will not work and was never intended to work. It was designed to complete the transfer of all wealth from those of us who work to Wall Streeters who have the license to print our money for us.

There is a better solution. Middle Class Americans can unite with the people of the Third World and demand non-interest bearing Treasury Certificates replace all Federal Reserve Notes. By issuing new non-interest bearing currencies globally people in Africa, Asia and Latin America can use the increase in the money supply to pay off fictional debts created under the old system. President Lincoln did a similar thing to finance the Civil War.

Prices are a ratio of the commodity called money to all commodities, goods and services for sale. If we have a ten trillion dollar money supply and a 4% growth in GNP, then we can safely increase the money supply by 4% without fear of inflation. The federal government could spend that 4% or 400 billion dollars into circulation without creating either a debt or an inflation. The United States could use the money to secure pension funds plundered by Wall Street's greed and incompetence. The Third World could use the money to get out of debt.

Some ideologues have demanded we go to a gold standard. There is no gold left in Fort Knox. Almost all of it was stolen by the same people on Wall Street who are benefiting from the Bailout and have been allowed to steal billions of dollars from inadequately audited government contracts. Additionally, we are importing 4.4 billion barrels of oil every year. If we were on a gold standard, OPEC would get what little gold we had left in Fort Knox before noon on Day One of ths issuance of the first Gold Certificates. Going on the gold standard is a distraction and will not work though buying gold or silver might work for some in the short run in these perilous times. Do not construe what I have said as investment advice.

As of October 2008 I can say without any possible refutation that Americans are colonial subjects of Wall Street. It remains to be seen if they can ever regain the freedoms they have been gradually losing since long before I was born. I can absolutely guarantee you that the collapse of the dollar will give us our last best chance to energize the populace and to take America back from those who created ten trillion dollars in fictional debt and are behind the rise of the National Security State. Wall Street hopes the repeal the Bill of Rights will immunize them from the wrath of the taxpayers and others whom they have severely abused.

The next 24 months will be our last best chance to say “No.” After that Americans will be as impoverished and enslaved as the darkest skinned African of any 19th century colony. All dissenters could be legally sent to prison and tortured for saying “No” to anything Wall Street demands. This is your last chance to get off the bus to hell.

Sunday, October 12, 2008

No Sale Or Russia Bows To Israel

The disgraced ex-Israeli Prime Minister Ehud Olmert went to Moscow and told Russian President Dmitry Medvedev that he was not allowed to sell the advanced S-300 anti-aircraft missile system to Iran which would have protected it from a long expected Israeli air attack.

No doubt the Israelis offered the Russians something of value in exchange. After all Israel did help Red China develop and explode its first nuclear bomb within months of the assassination of President Kennedy who had been denied permission to inspect the Israeli nuclear works at Dimona. So we know that Israel does not care what advanced military technology it sells to American adversaries. More recently Israel has sold laser technolgy which could be used to blind American soldiers in combat.

But we should not neglect the power of the Jewish lobby within Russia. After the Soviet Union collapsed the New York Federal Reserve Bank, a few of its key member banks and the Harvard Endowment Fund sacked and looted Soviet industries and pension funds of 240 billion dollars. The Russian people were left as destitute as their American counterparts will soon be after the Bailout is complete. But the New York FED and President Bush I also turned over the newly privatized Russian economy over to nine men. Of these 9 men only eight happened to be Jewish. It is true that former President Putin did have a row with one of the eight Jews for which he was branded an anti-Semite.

The ability of Israel to tell Russia to cancel a proposed sale to Iran puts into proper perspective just who runs the world.

I would like to make a few other observations.

We are one third of the way through October and we have not had our “October Surprise” yet for election 2008. I do not expect that “Surprise” to be an Israeli attack on Iran. The Israelis are still forming a government and would not attack Iran until after our elections. I do expect a “Surprise” but I do not think it will be anything overseas but will be definitely either an event or series of “domestic events” designed to make John McCain America's Invalid-in-Chief with his wife Cindy as Caretaker of her rapidly aging older husband. Sarah Palin will be our first woman president and might even be the last President of the United States. My views on the design by Wall Street to end American sovereignty are well known to my regular readers.

I have a few other observations based on the Iranian press release announcing the cancellation of the sale of the S-300.

The Iranians noted the recent US sale of 1,000 GBU-39 bunker buster bombs to Israel. These bombs are not deeply penetrating and are not capable of attacking Iran's deeply underground nuclear program. They are however more than adequate on the drawing board to take out Hezbollah's network of underground shelters which humiliated the Israeli military in 2006. It looks like the Israelis want another go at Lebanon. And Israel is running dangerously low on water so a military expert mike look at maps of water tables, lakes and rivers to get an idea of just which country besides Lebanon the Zionist state will invade next.

That press release from Iran also mentioned for the second time that Iran has an anti-ship weapon the C-802 with a 300 kilometer (185 mile) range that can be fired from land I think that is just an Iranian version of Russia's SS-N27 Sizzler, the fastest anti-ship missile in the world. With the Sizzler the Iranians could sink our ships in port at Bahrain as well as any ship 185 miles off the coast of southern Iran. The Iranians also have the Russian made SS-N22 Sunburn and the SS-N26X Onyx (Yakhonts). They also have rocket artillery with ranges of 92 and 65 miles capable of sinking all Persian Gulf shipping. An Iranian spokesman said they would fire 11,00missiles and artillery shells in the first 60 seconds of an attack by either Israel or the United States.

The Pentagon has refused to sell two thongss the Israelis need to atatck Iran. One is the GBU-28 which they would need to more deeply penetrate Iranian underground facilities. The other is refueling tanker jets capable of allowing Israeli jets to make a roun trip to Iran.

The United States Central Command has American troops stationed on the soil of 25 majority Muslim nations. The US military has said that there will be no assault on Iran by America or Israel until our soldiers have been relocated out of Iraq/ They are not willing to commit suicide for Israel. That is a good sign. Itis the first time in history that the military has said no to dying for the Zionist entity. And that is significant.

The good news of an end to the Iraqi occupation might be just the bad news that Israel will get a Green Light to attack Iran and launch World War III.

The supposed good news that the surge is working is a lie. The United States has only been fighting the Sunnis of Iraq. Over a million Iraqis have been killed and millions have been displaced and forced to flee overseas to be safe from death squads. The long expected American troop withdrawal will turn Iraq into an Iranian client state.

That will be the Green Light to launch World War III. And I expect that might have beenthe plan from the beginning.

You can read that Iranian pres release here:

http://english.farsnews.com/newstext.php?nn=8707190446