Federal and State governments insolvent

**For those readers that are my regular readers, I apologize for not posting regularly. I've been working long and hard on this current article. Please spread the word**



If you watched 60 minutes this weekend, you've been informed of what's going on. There's a bigger story here which leads to politicians, corruption, and banks. All of these different entities have played a big part in our impending collapse. If the States are bailed out next year when they collapse, then I would expect by the end of 2012 we'll have a complete financial collapse of the whole US which includes debt, currency, and the economy.


Politicians


Our political leaders only job is to get re elected. After August 1971 President Nixon put a stop to the mass liquidation of our gold by telling the nations of the world that they could accept the dollar in exchange for paying our debt. This took the US fully off of the gold standard, which was what FDR wanted during the Great Depression, and also put us as the global exchange currency. I think Nixon did this with good intentions, but the very entities that were supposed to keep watch over our currency were corrupted along with the politicians.


Have you ever noticed that politicians, when trying to be elected, make all these campaign promises. These promises are made so that they can get votes. They end up making deals with Unions and promise gold standard pensions. Unions weren't the only ones, the corporations bought the politicians as well so they could have influence the create legislation to stamp out their competition. After the Campaign finance reform, this allowed special interest groups, which tend to be to one extreme or another, to buy politicians as well.


Glenn Beck asked a great question before the November elections. He asked how long does a politician campaign. He was told that they start campaigning 2 years in advance. The next question he asked was how much money do these politicians have to raise and how many people do they owe favors to by the time they get elected. Those were two great questions, this gives us the complete insight into why we have so much corruption inside Washington D.C.


Currency


All this talk about currency collapsing, what exactly are they talking about? Think of things based upon supply and demand. If the supply is up, the demand is down which gives it less value, if supply is down then it's more expensive. The US used to be on the gold standard, this means that every ounce of gold represented 1 dollar, you could take your dollar to the Treasury Department and exchange it for 1 ounce of gold. Based upon the diversity of metals that the Treasury department has allowed that specific amount of paper money to be printed. This put limits on the amount of money that can be printed. This is also what made our currency so strong and so stable.


After Nixon took us completely off of the gold standard, this took the ceiling off of the amount of currency being able to be printed. This is actually where inflation comes from. The more money that is printed, the less your dollar can buy, this is where prices actually rise and they call it inflation. During President Reagan's campaigning he made a big deal about having a 1 trillion dollar deficit, but by the end of his presidency he had allowed it to increase 3.4 trillion dollars. Before G. W. Bush left office his biggest deficit was 587 billion dollars, now we're running a starting year deficit of 1 trillion dollars. Remember, every time we run a deficit the Federal Reserve prints money in exchange for Treasury bonds of different denominations.


Banks


In my opinion, this is where history will lay the blame. Banking was invented early in history, but really took off when capitalism was implemented here in the US. There was nothing wrong with the banks until the implementation of the Federal Reserve in 1913. The Federal Reserve loaned our currency to us at an interest rate and also created the fractional reserve system. During the Great Depression some people thought that the Federal Reserve didn't print enough money to help bail everyone out, this is why FDR wanted to get away from the gold standard. After getting away from the gold standard in 1971, this opened the flood gates to put us on the path we're on now.


As much as I want to blame the banks, this also has a lot to do with how corrupt our system has become. Remember, politicians owe favors, some favors are deals with the devil. With Wall Street being based off of profitability and growth, banks wanted to make even more money. With credit being given away so readily, this padded the banks books. Eventually so much credit would be given away that there came a point when no one could get any more credit and the banks became insolvent which was part of the credit bubble that crashed starting in 2007.

Don't forget the creation of Fannie and Freddie really took off in the 1980's. Fannie was originally a New Deal program created by the government to promise loans to people with little to no credit or just bad credit. The federal government let Fannie go private in 1968 and then created Freddie to counter balance Fannie. This allowed a private company to put loans together for those who couldn't get a loan, but the government backed these mortgages. This is what lead to the housing bubble that crashed starting in 2007.

Once these banks became insolvent because of government regulation, the government bailed them out. Remember what I said earlier about currency, the more you have, the less it's worth. The Bush and Obama administration both authorized and signed the bailout bills. The bailouts were a 3 phase operation. Phase 1, give banks money to cover their bad debt, phase 2 and 3, the Federal Reserve drove down interest rates to keep people in their homes along with buying government bonds to artificially create a demand and drive bond rates extremely low.


Economy


For years since the Great Depression our countries economy has been built on spending and manufacturing. After 1971 with the US being the global exchange currency, the US exports and manufacturing declined with the last trade surplus being in 1976. From that period on, we've been building upon debt with more debt because we don't make anything. Once the housing and credit bubbles burst in 2007, our economy made a change, but the politicians didn't figure it out. Have you ever noticed how our politicians are telling you to go out and spend so you can start the economy with their different forms of stimulus? How can you spend when you're so broke paying minimum payments and you can't get credit.


I believe the economy is going to shrink, this might lead to mass starvation and even mass exodus to other countries. If you're economy is strictly based upon offering services, there's only so many people you can employ. We have two choices at this point, either reduce wages to bring manufacturing jobs back or devalue our currency so that its is not only no longer the reserve currency, but so that it's cheaper to do business here than anywhere else. What made America the industrial might it used to be was because of the cost of doing business, resources, and manufacturing. Now that we don't do this, we either need to get back to that, or realize that there's only so much room we can maneuver inside a non export economy because our only export, the US dollar, is about to cease to exist.


The Ultimate Collapse


We have so many factors playing into our current economic situation. There are also so many organizations pulling at every free spot of fabric of our nation, there's no way that we can keep the gravy train going. There are many extreme organizations inside of the US that want to pull us in their direction, there are different countries that we've made enemies out of, and there are those who are so bent on power that they'll sell a whole country down the river just to have it.


The biggest threat to our way of life would be a tie between debt and politicians, but they go hand in hand. Our politicians for so long have been telling us that they will give us this and that and expand services for the majority of voters in their area, but my question is, did anyone stop to think about how we're going to pay for that? The thing I was told growing up, especially during the 90's, is that America is rich, so we can afford it. If you have a million dollars, would you ever stop to think about paying a thousand dollars for something you want, the answer would probably be no for a poor person and yes for a rich person. I think that the farther we got away from the Great Depression, the easier it was to forget what hard times were and how to be responsible.


According to 60 minutes between 50-100 states and cities will be bankrupt and are currently unable to pay their basic bills because previous politicians made sweetheart deals with special interest groups and unions that they knew they wouldn't be responsible for. One of two things will happen, either the Fed will bail out the States and stave off destruction for one more year(After a year of bailouts by the IMF the Euro is expected to be dead by the end of 2011) or they will let the States declare bankruptcy and this will cause a domino effect and the US will collapse by the end of 2011.

The Future


Although I can't predict the future, I can look at recent events and get an idea. In Europe a country that represented 2% of the Euro economy, Greece, was bailed out because they thought that it would cause a domino effect and collapse the whole European Union. Once Greece fell other countries such as Ireland fell and Spain and Portugal are expected to be next. In exchange for these countries being bailed out, pretty much the banks not the government, the IMF came in and offered to bail these countries out, but they had to do Austerity programs. This caused the civil unrest we've seen on the news coming from Greece.


If you compare the EU to the US, you'll the same similarities between states and a centralized power. So, if the States go bankrupt as expected next year, the Fed will take the place of the IMF and bail them out. In exchange for bailing them out though, I'm willing to bet that they'll merge the states into one super state or something similar. The thing is though, unlike the EU where everyone's currency fails, the US Dollar will collapse and the IMF will come in with the same Austerity programs for the whole country, if we haven't had a civil war.


This is probably the scariest part, I believe the IMF is acting as the instigator for the new world order. With everyone being bailed out by the IMF, you get a new currency, a world currency. In order to have a world currency, you'll need a world government. Think UN with actual power to govern. I think this is most suitable under Obama because if there is enough civil unrest, he can suspend elections or even appoint who he wants as Reps. and Senators. Considering he's a one worlder, he's going to want to merge the US into this global government. This will ultimately be the end of the US as we know it and if anyone resists, they'll be squashed because at this point the US will be outnumbered. This will be like the movie Serenity where the country no longer exists, so the resisters will be labeled as rebels and allow the State to eradicate them.
 
Sources:
 
http://www.youtube.com/watch?v=KsdUpzSjaEA
http://www.reuters.com/article/idUSTRE66I05U20100719
http://news.bbc.co.uk/2/hi/2817995.stm
http://www.youtube.com/watch?v=nBNm3AWF_qE
http://www.chinatranslated.com/?p=993
http://www.cardeapartners.com/aoi/fincad-derivatives-market-could-be-worth-700-trillion-by-year-end/
http://hubpages.com/hub/Survive-Total-Economic-Collapse
http://www.ehow.com/how_4546748_survive-sudden-economic-collapse.html
http://www.marketoracle.co.uk/Article7171.html
http://www.youtube.com/watch?v=KAT__cgdoPs
http://www.benzinga.com/10/08/443492/faber-and-schiff-the-american-bond-bubble
http://www.youtube.com/watch?v=ktEiN2zXZbo
http://beforeitsnews.com/story/314/416/Buying_Gold:_Why_Are_The_Chinese_Gobbling_Up_Gold_Like_There_Is_No_Tomorrow.html
http://bobchapman.blogspot.com/
http://beforeitsnews.com/story/314/416/Buying_Gold:_Why_Are_The_Chinese_Gobbling_Up_Gold_Like_There_Is_No_Tomorrow.html
http://www.trutv.com/video/conspiracy-theory/full-episodes/wall-street.html
http://www.stansberryresearch.com/pro/1011PSIENDVD/MPSILC22/PR?o=230927&s=233550&u=51973801&l=197794&g=156&r=Milo
http://business.financialpost.com/2010/07/26/michigan-residents-turn-to-alternative-currency/
http://libertymaven.com/2010/07/19/competing-currency-being-accepted-across-mid-michigan/10234/
http://www.sandiego6.com/news/local/story/Tijuana-Airport-to-Stop-Accepting-U-S-Dollars/3KGwK6NUaEyuA52yquO91g.cspx
http://www.washingtonpost.com/wp-dyn/content/article/2010/12/19/AR2010121903022.html?wpisrc=nl_pmopinions
http://bobchapman.blogspot.com/2010/12/bank-bailout-boondoggle-of-billions.html
http://online.wsj.com/article/SB10001424052748703886904576031401310024990.html?mod=WSJ_Bonds_LEFTTopNews
http://peterschiffblog.blogspot.com/2010/12/three-investment-themes-for-2011.html
http://jimrogers-investments.blogspot.com/2010/12/things-are-happening-with-dollar-that.html
http://bobchapman.blogspot.com/2010/12/bob-chapman-hyperinflation-end-of.html
http://en.wikipedia.org/wiki/History_of_banking
http://en.wikipedia.org/wiki/Fannie_Mae
http://projects.washingtonpost.com/top-secret-america/articles/monitoring-america/1/

Headline news

Today a site where I posted a lot of my articles decided to ban me from posting because of the subjects of my blogs. When I wrote the administrator of the site, he was just as just as rude and unprofessional as I've ever seen. I tell you here and now, I'm not an Alex Jones supporter, nor have I ever supported him. He does have some good points, but I don't trust his sourcing. A few months ago Glenn Beck did a segment on the Chinese not purchasing anymore US bonds and 15 days to the New World Order. Thinking he was crazy, I decided to research it on my own. Glenn Beck was right to a point, but I don't think anyone really knows what's going to happen. I do know that if we make it to 2012, it will be a miracle and I might just start believing in God again, but I don't see that happening.

Today on "Freedom Watch" Judge Napaletanno talked about European civil unrest coming here to America and its possibilities. The following show "Follow the Money" not only did Eric Bolling talk about European civil unrest coming to America, but also an economic collapse happening as well. Peter Schiff who predicted the housing and credit bubbles bursting also tonight predicted the bond bubble bursting which I wrote about on Monday. What's starting to concern me is that this is starting to be talked about more and more by the mainstream media and they're accepting it. This isn't just one kook talking about it, heads of companies and reporters are starting to tell people, hey this is coming.

Anyone who knows me knows I only deal in facts although my wife says facts are subjective. The fact is the military does war game simulations of martial law frequently, what's different this time is they're actually moving food around which tells me they know its coming. Fact is, the Federal Reserve can't buy bonds quick enough to keep rates from raising. The Federal Reserves QE1 started out at $600 billion and turned into $1.8 trillion. Fact  is, if interest rates rise, more and more people will not only lose their homes due to high payments, but unemployment will go higher for those industries that rely on the housing market. Fact is, our economy will never be what it was because our economy was based upon borrowing money we didn't have, that's what got us here in the first place. Fact is, not only is the House talking about passing a $1.2 trillion spending bill, but they've already agreed to pass a $900 billion stimulus 2 which includes extending unemployment for 13 months and retaining the Bush-era tax cuts. Fact is, even with the new Republicans coming into the House next year, spending will continue to soar. Fact is, China is buying shorter term bonds and starting to diversify in Gold and Commodities.

Call me crazy if you want. Call me a fear monger even, but facts are facts and you can't run from them, just ignore them. If you haven't prepared, start preparing, you don't have much time. If you don't know how to survive an economic collapse, research it or read my older blogs. If you don't know how to survive martial law, research it or read my older blogs. Anything you don't know, check my older blogs first, then research it if I haven't covered it. Get out of money, buy Gold and Silver. One thing I'm doing that my grandfather told me is going to the bank and looking for pre 1970 coins. Anything before 1970 has 40% silver and anything before 1964 has 90% silver. Do what you have to do, but make sure you're prepared, because if you aren't, it's no one's fault but your own. If I'm wrong, hey, you just got rich accidentally, but if I'm not, you're prepared.

Sources:

http://www.tomdispatch.com/post/175113/Michael_Klare_the_great_superpower_meltdown
http://peterschiffblog.blogspot.com/2010/12/market-update-commodities-us-dollar.html
http://online.wsj.com/article/SB10001424052748704828104576021413142892094.html?mod=WSJ_Bonds_LEFTTopNews
http://pragcap.com/northern-trust-qe1-failed-why-will-qe2-work
http://www.sooperarticles.com/finance-articles/investing-articles/federal-reserve-launches-qe15-157842.html
http://en.wikipedia.org/wiki/Quantitative_easing
http://www.businessinsider.com/why-quantitative-easing-is-bad-for-the-economy-2010-11#
http://online.wsj.com/mdc/public/npage/2_3051.html?mod=2_3002&sid=1224040&page=bond

Bond bubble about to burst

Today the Fed bought up 9.7 billion in US Treasury bonds. From what I understand of the bond market is that the Treasury issues bonds at a specific starting interest rate and gives them to the Fed and the Federal Reserve sends over cash in exchange. If there are high demands on bonds then the rate will go lower, if there are low demands on the bonds the rate goes up. Last week after the Obama tax cut deal with the Republicans, the bond market had a huge sell off which rose interest rates almost .5%. This is a big deal because people's mortgage payments go up based upon these interest rates. Today the Fed bought up bonds which dropped interest rates a little lower.



The speculation is that without keeping interest rates lower it will allow people to borrow more and keep those people who can afford their homes in there without putting extra pressure with rising interest rates which raise their mortgage payments. The thing the people are denying is that by creating this cheap money it's driving bond investors away for a couple of reasons. One reason is that we're devaluing our currency by monetizing our debt which is growing bigger by the day. Another would be that bond investors see how much debt we currently have and realize that our spending habits aren't changing which will ultimately cause us to either default or even worse monetize our debt even more.


This is all part of a chain reaction. In 2006-07 the housing bubble burst which caused the credit bubble to burst which will lead to the bond market bubble bursting. Bubbles are defined as exceptionally high demand artificially driving up prices or in a bond market, driving down prices. When the housing bubble burst, people had to choose between paying a credit card or mortgage payments. Most people chose to pay their mortgage. With some people defaulting on their mortgage and even more on their credit cards the banks started requesting bailouts. With the Fed printing money to pay for these bailouts it caused accelerated devaluing of our currency which in turn started a bond sell off because of loss of market confidence. With this happening the fed started the QE program. This is what will ultimately be linked to the bond bubble bursting and collapse of the US economy.


The Federal Reserve has put itself between a rock and a hard place with these QE's. Either Bernanke wants to collapse the US economy and currency or he just doesn't have basic common sense that an IT guy with a computer and the internet can figure out. Because of the credit bubble bursting the economy will not be back to the way it was during the 80's and 90's because we no longer make things. Our wealth has been borrowed away for the last 25 our of 30 year. The only reason that America's economy was so robust is because we could use our credit to borrow to pay for that new car, house, or trinket that we want. The thing is until we start making things here and manufacturing, we're going to be at this rate of prosperity for a very long period of time because we need to pay off our debt so that we can go back to borrowing. Bernanke is trying to artificially keep interest rates lower so the whole country including the government can borrow money at low rates, but if everyone is in so much debt, you can't load them up with more otherwise it's robbery.


People are complaining because the banks are holding onto an estimated $2+ trillion dollars including businesses. The question I ask you, why wouldn't banks hold onto their money? I think they're seeing the bond market crashing while the Fed is artificially propping it up through QE's that they're preparing for bank runs and possibly worse case scenarios than that. This is their only hope of staying alive once everything goes belly up. The only thing they have on their side, from what I hear, is that they're not being required to give high risk loans anymore. With the economy almost in shambles and just barely plugging along, no one has good enough credit to get any loans. I know people who have over 750 beacon scores who can't even get a good car loan and they've even had their job for years. Before my mother's boyfriend passed away from cancer his credit score was so high he could get a million dollar loan on just a signature, he only made about $35k a year.

There's two things you should take away from this article. First, the economy is going to remain in its current state as long as we're not manufacturing goods, a service based economy is no longer sustainable. Secondly, the bond market is about to crash, but when? As long as people keep getting out of the US bond market we're going to have to keep doing QE's. Every time we do a QE, we're going to have to make it bigger and bigger. Sooner or later, within next couple of years, we're going to be the Wiemar Republic. People will start burning money because it will be cheaper than firewood.
 
Sources:
 
http://online.wsj.com/article/BT-CO-20101213-712553.html?mod=rss_Bonds
http://online.wsj.com/public/page/news-fixed-income-bonds.html?mod=WSJ_topnav_markets
http://www.treasurydirect.gov/govt/govt.htm

Future of America

I have been hearing from many different news sources and reporters about the imminent collapse of the US dollar, some have even talked about this being the gateway to global governance. Through listening to people like Peter Schiff and Bob Chapman, I think I've figured out how this will all take place. Please take into account the current news of the day. To start off, let's get an idea of who is involved.


Peter Schiff has been on record on MSNBC, FNC, and many other accredited news organizations stating that he believes the dollars collapse is inevitable because of our high debt and weak economy. Peter Schiff has been credited with predicting the housing crash and also the Wall-Street crash. He's even written books on how to survive the collapse of the dollar. He's also been on record stating that hyperinflation is on its way and we need to start getting prepared.

Bob Chapman has been on record saying that he has friends who attend the Federal Reserve Board meetings. It is said that the Federal Reserve has come to the point where they are going to devalue the dollar into oblivion and bring about a new dollar backed by gold. He has also said that the US could very well still remain the global exchange currency as long as we still have the gold reserves we say we do. The only bad part is that anyone holding onto the current US dollar will be left with worthless pieces of paper.

The UN was originally set up as a debating society, but has known aspirations to become a one world government. Although the UN is just a debating society according to its charters and not allowed to have a military arm, but if you look at the NATO charter it states that NATO can only perform military operations under the direction of the UN. The IMF, which is also another arm of the UN, has called for a new global currency, not to mention the top 3 exchange currencies in order are the US dollar, Euro, and the Chinese Yuan.

For years Congress has regulated business and created laws for citizens to abide by. What first started out as good intentions ended up eventually being hijacked by some of the most crooked and powerful people. Through regulation corporate lobbyists are able to slip things into legislation in order to stamp out their competition. Some companies have even gone as far, like with the TSA scanners, to take advantage of situations in order to enrich themselves through association with members of Congress. This has eventually led the US down the road to becoming a police state, although the original intention was good in nature.

This last weekend the Irish accepted a bailout from other participating Euro countries. Right now the Euro is in trouble with Greece, Irish, Spain, and Portugal being bailed out or on the verge of being bailed out, the Euro risks collapse which would move the Chinese Yuan to the number 2 spot in the IMF. Along with the imminent financial collapse of the Euro, the UK, Greece, and France are experiencing riots and civil unrest.

So, what happens and how does this all fit together and what does this mean? Once the Euro and US dollar collapses, there is a small window of opportunity. During this time I would expect there to be a lot of civil unrest. A lot of this will be because of the tightening of the deficit belt around the world, but there will be a lot of this type of activity on the news.


I would believe that the civil unrest would have an effect on commerce because, if big enough, it could halt businesses from functioning. This in turn will cause a deeper recession or spark a new recession on the country if it is in recovery mode. The countries with civil unrest will then collapse which will open the door to a global currency.

Once a global currency is introduced by the IMF or UN, or even the US depending on who's in power, there will be a call for a global government in order to ensure stability. I would hope that many here in the US would oppose it. If the US would oppose it, certain global corperations would encourage Congress under the table to accept a global currency even if it brings a global government because it would be in the corperations best interest. I think the most important thing to highlight here is that every country has its own regulations and currencies. With all these differences it would be either in their best interest to have 1 set of rules or at least it would be an appealing idea. Good intentions will be met with dire consequences.



Depending on how bad the civil unrest the global currency might be a little farther out if there are wars caused over the rioting. This would actually be in the best interest of at least the US if not the world because as long as the world is in war, we could possibly rebuild ourselves during this which would prevent a global currency. The thing that could happen though is during the civil unrest in the US it could lead to a civil war which would take us away from any participation in any global war. Think along the lines of Russia during WWI.

If there is no global war before a global currency is instituted, there would also be an opportunity to still have a global war, but it would be more like a civil war. The chances of those fighting against a global government and winning would be slim to none. I would think the worst part is that NATO will be the one used to enforce the new global government which is comprised mainly of US troops.

The worst part of this whole scenario is that it is so far along that there is really no stopping it. I hope this isn't what happens, but from a logical point of view, it's the only thing that makes sense. There have been many people being out in the open about their intentions and we've either ignored them or thought they were just kidding. Considering even the experts who aren't afraid of telling people what they see are the only ones being ignored while we wander aimlessly through our lives. As President Obama says, “We as American's need to get used to living with less”.

Sources:

http://www.guardian.co.uk/world/2010/nov/20/eric-cantona-bank-protest-campaign
http://www.dailymail.co.uk/news/article-1331518/William-Hague-doubts-euro-survive-Irish-debt-crisis.html
http://dailybail.com/home/real-ira-threatens-to-blow-up-bankers-explosive.html?ref=nf
http://www.youtube.com/watch?v=IHadp7GXSdk&feature=related
http://www.youtube.com/watch?v=IHadp7GXSdk
http://theinternationalforecaster.com/bob_chapman
http://theinternationalforecaster.com/International_Forecaster_Weekly/Keynsianism_Fallen_Upon_Hard_Times
http://www.govtrack.us/congress/bill.xpd?bill=h111-3808
http://www.bloomberg.com/news/2010-11-18/dollar-to-become-world-s-weakest-currency-drop-to-75-yen-jpmorgan-says.html
http://www.bloomberg.com/video/64550434/

Foreign Policy Vs. response to aggression

Introduction:


Our “National Debt” is a crisis and is putting our troops in situations that aren’t especially healthy for them or us. I recently talked to someone who was on a U.S. warship. I was told how a Chinese submarine made it past the outer perimeter, surfaced, and opened its torpedo bay doors. The big question is what is our response to a nation that does something like this when we owe them so much money? What other types of incidents like this are happening without the “American Public” knowing about this. I contacted the Whitehouse press office to get a response. I was told to send an email. I still haven’t received a response in over 3 days. I also sent an email to my Senator, Senator Wyden, to ask him the same question. I still haven’t received a response. Since I watch Glenn Beck and I trust him as someone who speaks truth, I also contacted Senator DeMint. I haven’t received a response from him either, but since I’m not represented by him specifically I really don’t expect a response. I will not speak negatively about these people, but I will relay the course of events.

While on Yahoo I was able to talk to a couple of sailors, who’s screen names I will not mention, and they are just as concerned about the danger that our troops are being put in because of our “National Debt”. I happened to stumble on someone who claimed to be a military intelligence officer and I tried to ask questions. I think that since I’m new I kind of botched the whole talk, but I think there is something to be said about our conversation. When I asked about our response to nations like this I was refused comments by this individual. I will not relay the whole conversation, but I will say that the person seemed shook up and went from just having an open conversation with me to clamming up really quick.

Since I am not getting a response from any government official that I’ve tried contacting, I will assume that I am on the right path due to the conversations that I have had. I want to make sure that what I write and what I say are as accurate as I can possibly make them because credibility is very important to me, especially since most of you have never met me or seen me.



The Story:

Fact, I talked to a U.S. Sailor who claimed to be on a U.S. warship in international waters. Fact, the Sailor stated that he witnessed aggression by a Chinese submarine. Questions, what is our response and how do we handle actions like this with nations that we owe money to? Question, are the entitlement programs such as Social Security, Medicare, Obama Care, Welfare, Food Stamps, and other programs worth putting our soldiers at risk? You may say how does this put us at risk? I say to you, based upon what I was told by this Sailor we did nothing. How can we be a world power and when necessary show strength when other nations show acts of aggression to us if we owe them money which means that have to sit on our hands.

Let’s use an analogy. We’re the kid on the school yard that protects others from the bully of the school yard. When the bully comes up to mess with you, you’re supposed to show him that you’re not going to take what he’s trying to dish out. If you back down, let’s say you owe him $20, when he comes after you, what are all the rest of the kids going to say and think? The rest of the kids are going to have less faith that you can protect them plus the bully might just leave the other kids alone and just pick on you to show the other kids that he’s the real power and not to cross him. Although you have strong moral character, you won’t fight back because if you do the bully might go to the principle and say you stole $20 from him. Even though you’re strong enough and willing to stand up and protect the rest of the kids of the school yard, you have to back down to protect yourself. So, I’m sure you’re thinking “man, I should have never taken that $20 because now I don’t have the money and I’m being humiliated in public”.

How did we get in debt? Who owns our debt? Are we really still a world power?

We all know that during WWII that our “National Debt” raised to 120% of GDP (that’s the Gross Domestic Product or how much the country produces each year). During WWII the government issued war bonds to be paid back to the public. When this was done this allowed the country to spend more money and with the war going on it allowed the government to continue to buy military hardware and send troops overseas to fight the war (http://zfacts.com/p/318.html ). Any graph that you look at or any site that you research on will tell you that we were paying off the “National Debt” under Truman, Eisenhower, Kennedy, LBJ, Nixon, Ford, and Carter (http://en.wikipedia.org/wiki/United_States_public_debt ) . When President Reagan came in with our “National Debt” totaling 1 Trillion dollars, he instituted something called “Reaganomics” which cut taxes and increased government spending. This is where our problems started for our current day in age. President Reagan was attributed with the most prosperous time in America. People had jobs, Wall Street was making money, and everyone was happy. The problem lies in the fact that he raised our debt over 3.2 Trillion under Reagan, 1.74 Trillion under H.W. Bush, and 3.75 Trillion under W. Bush totaling 9.2 Trillion Dollars and we haven’t even received the grand total bill from Obama. Some people will argue that Supply-side Economics is what sent us spiraling out of debt, but since I’m not an economist I can’t make a statement one way or another. I can look at the numbers and see how we got into debt. Another interesting state is the projection of Debt to GDP that shows in 2007 we are at 62% and by 2011 we’re expected to be at 100% of GDP. Don’t worry though Japan is still doing well at 130% of their GDP. In order to pay your bills at home you are required to keep the total of your bills below the total income of the household. Our government expects us to follow these principles or we pay the consequences of seizure of our property. What happens when the government can no longer pay its bills?

Ok, so we know how we got to where we are, now who owns the debt? As of July 2010 according to http://en.wikipedia.org/wiki/United_States_public_debt#Foreign_ownership China is now our largest buyer of our national debt at 20.8% or almost 1 trillion dollars, Japan at 20.2% with 821 Billion, then the UK at 9.2% 374 Billion, and our friends labeled as “Oil Exporters” including Saudi Arabia, UAE and other countries that we buy our oil from at 5.5% or 223.8 Billion dollars. That’s just our foreign debt though, what about the Federal Reserve, which I’d like to remind the readers, is not a Federal Agency. The Federal Reserve owns 49.37% of our “National Debt”. The tricky part is how we get our money from the Federal Reserve anyways. It works like this. The Federal Government doesn’t have enough money to pay for everything so they go to the Federal Reserve and take out a loan to print more cash. In exchange for getting money from the Federal Reserve we issue bonds at an interest rate that we give in exchange for the money that directly to the Federal Reserve. When the bond matures the Federal Reserve gets its money back plus a percentage of interest that was tied to that bond (So, every dollar you have has interest attached to it). So the real question is, how much of that 49% debt to the Federal Reserve is interest for bonds? That will be a question I’ll answer another time.

Are we still a “World Power”? I think the answer is no. Do we think we still are a “World Power”? Yes! When a nation allows itself to fall into debt to other nations they allow the other nation to have say in their policies or they run the risk of being asked for their money back. I think the answer to the original question of what do we do when a nation that we owe money to shows aggression towards us as a nation is, we do nothing. What can we do? If we decided to take action, that nation will retaliate with a request for all their money due immediately. Do we have the money? The answer is no, our current year’s deficit is in the trillion dollar range. So, when a country that we owe money to shows an act of aggression all we can do is submit a petition for them to cease while they laugh in our face. I think the reason the military intelligence officer clammed up so quick is because if we are doing something, it’d be so covert that if we got caught, it might jeopardize our nation in ways that we can’t fathom at the moment. So, because of our debt, our entitlement programs, and our politicians who tax and spend more than what we have, our troops are being put in situations that are unsafe and unnecessary.

Conclusion:

The fact of the matter is we’re putting our soldiers in unnecessary harm by being in debt. What are the solutions? We’re going to have to cut back government, keep tax rates at the level they’re at, and realize that we’re not as rich as we thought we were. I think the biggest problem is that we act as poor people who just won the lottery and then are in a homeless shelter 5 years later. We also need to realize the government creates waste and red tape. I was homeless for about 5 years due to a workman’s comp. injury. I traveled from city to city and would work when and where I could, I even traveled with a magazine crew for a few months and got the opportunity to go to Mexico on a vacation. While I was homeless I got to see how the government really works. The facts are if you want to remain homeless and in the system they’ll help you, but if you want a job and to get on your feet, sorry we can’t help you. In some cities there weren’t even any services for the homeless, so if you went to a place like the United Way to get help or the Salvation Army they wouldn’t help you unless you were a drug addict. The success rate of a drug addict is 10%, so you always have 90% coming back and our drug use rate is going up. Those agencies get government grants to keep them open to help people, but you only get help if you want to continue to suck the system dry. I recently was laid off. While my wife and I were in the food stamp office. Because I was out of work we were able to get over $500 in food stamps when while I was working we barely had $150 to support 3 people including at that time a 9 month old baby. Also, in our school districts we force them to spend all their money that they get and if they don’t then they get less money the next year. This is irresponsible money management because we’re penalizing our schools for being fiscally responsible. This is our problem. We create these entitlement programs that make us dependent on them, everyone uses entitlement programs if they know it or not, and we’re like drug addicts who need to be weaned off our drug of choice.

Currently a large chunk of the American public doesn’t even pay any Federal Income Tax. I would say either take their right to vote away or create a flat tax. Every American has the responsibility to pay for their government no matter what party you associate with (Many years I’ve refused to file my taxes even though I knew I would get it all back). I have had the opportunity to talk to voters over the years and I always hear from home owners, “why do the people who don’t even pay taxes get to vote on whether or not I have to pay taxes, it doesn’t affect them?” and that makes sense. I think that so much of our problem lies with the fact that those who don’t pay any tax are the ones who have the biggest say. Just like the politicians, those who don’t pay tax say “I’m not paying for it, so why not” or “it’s my money anyways”. The truth be told, if you don’t pay taxes, you shouldn’t get any access to any government program because you haven’t even paid into the system. Let’s just be honest.

While talking to my Dad we had a discussion about how much debt we’re in and how it’s really depressing. I made an analogy that our nation act’s like poor people who just won the lottery. I’m sure you could look up many stories about this too. These people win millions of dollars; they lose their friends, family, and end up with only the shirt on their back after 5 years. Those people that they thought were friends decided to make themselves million dollar buddies and their families figured they were entitled to the money. Very few success stories come out of people who win the lottery, but those are only the ones who decided to be smart or knew how to deal with money in the first place. In order to be rich, you must first be responsible and part of being responsible is saving money.

Finally, if we don’t stop this spiral, we’ll never get anywhere. If you would prefer to live under the rule of another country, move there. If the nations that we’re in debt to decide to call in their loans, they own us. If we decide to fight them, we risk WWIII. We’re in a catch 22 here and if we don’t get out from under this brick soon, we’ll be squished.

Up Next:

If we don’t have the money what happens? Could we declare bankruptcy? What would happen if we declare bankruptcy? These are questions that I will answer in my next article.

Research conclusion on beginning thoughts

I never expected to find what I found when I researched this topic. This subject could get very big and very ugly quick. I've always thought of myself as a conservative capitalist, but the more I research the more I find myself being more liberal and anti-colonial if I were to put a label on myself. I believe that we need a balance of power and that there should be less government, but I think our current system is broken. When I say broken I really mean it's been mangled by a Doberman pincher and spit out.

So, here's what I found out. Our original ancestors were hunter gatherer's. They had tribal leaders and they lived the life of nomads. The average family was no more than 2 children because of the life style of being on a constant move. At this point in time there was no real land ownership. Then society evolved into an agrarian society "Now, where a family of hunter-gatherers might be able to support one or two children at best, farmers could produce several children. The increased fertility also meant increased available laborers." This led to a more, in my opinion, barbaric society where the biggest club won and became the leader. This is kind of where we are as a society at this moment in time, but we're slowly evolving from an agrarian society to a more centralized society.

In an agrarian society "This system of labor-for-protection developed into two separate systems in most countries: taxes and tenancy. Royal families spread their wealth to friends, signing away titles and deeds to lands that allowed the holders to collect the revenues (rent) produced by the peasants living there. On top of this rent, all the people within a ruler's realm were generally required to pay a tax. Many other demands were made by ruling leader, such as military service, and they were grudgingly met because these rulers owned the land not only by birthright, but by military might as well. Rulers could be overthrown by other rulers, and sometimes by peasants, but a new ruler would sit on the throne and the average peasant would rarely notice a difference.". This starts to explain why we are paying rent or a mortgage payment. Because here in the U.S.A. our ancestors came from Europe, we've adopted this system because turning this system upside down could possibly create chaos. When the U.S. had its Civil/Revolutionary war with England we were able to break this up a little bit as far as who owned the land "Many aristocracies were eventually displaced - usually by displacing an aristocrat's head from the body - with supposed meritocracies - a system where the best and brightest lead a nation for the good of all....Title lands were broken into smaller parcels and sold on a free market of sorts, but the people with the money to buy the deeds were either merchants or former aristocrats who managed to escape being shortened by revolutionary fervor." The article I'm quoting goes farther to say "The industrial revolution was one of the great equalizers in human history, perhaps only matched by the invention of firearms....The use of machines for manual labor freed many peasants for different tasks, and allowed a privileged few time for education and specialization into new fields of labor opened up by the mechanization of industry".

With the evolution of man and money man was able to evolve into the current system of mortgage's and the common man having land ownership "The invention of mortgages belongs to no particular country. Mortgages existed for a long time as an exclusive loan given only to nobility. After the industrial revolution, however, the wealth of the world increased to the point where banks opened themselves to "higher-risk" mortgage loans to common people. This allowed individuals to own their own homes and, if they so desired, to become landlords themselves. It took 30,000 years, but home ownership is now open to many people. In fact, it has reached the point where people often buy too much or take out too much of a mortgage"...."English real estate law (or 'Estate Law' as it was known back then) was imported, through colonization, into the earlier forms of law in the U.S.A., Canada, Australia and New Zealand. Many of these states, or their territories, have since modified this historical law, to varying degrees. A study of the old feudal land system of England provides us with an invaluable glimpse of legal history regulating the most valuable asset of them all: land. In medieval times, land was the sole form of wealth and it depended primarily on possession.....All this changed with the Norman conquest of England in 1066. William decreed that he owned all of the land in England by right of conquest. Not one acre of England was to be exempted from this massive expropriation. This sudden vacuum of privately-held land was promptly filled by a variety of huge land grants given by the new King to either his Norman officers or to those of the English who were ready to recognize him as king. The device used by the King to control and administer his land was that of tenure. Tenure was the key component of the feudal system.....Tenures were of a variety of duration known as "estates" and the Fee Simple Estate was the most extensive and allowed the Tenant to sell or to convey by will or be transferred to the Tenant's heir if he died. In modern law, almost all land is held in fee simple and this is as close as one can get to absolute ownership in common law. It was in this context that the British began their dominion over the seas and their explorations which led to the modern nations of Australia, Canada, New Zealand and the United States of America. The concept of developing an informal association of local real estate agents originated in the United States in the 1880s, and by the turn of the century about 15 Real Estate Boards had been established."

Once I was able to find out how mortgages were brought about I thought about money and where it came from, how do you pay a mortgage without money? Below are the stages of money:

• Barter--This kind of exchange started at the beginning of humankind and is still used today. From 9,000-6,000 B.C.,  
• Shells--At about 1200 B.C. in China, cowry shells became the first medium of exchange, or money.
• Metal Currency--China, in 1,000 B.C., produced mock cowry shells at the end of the Stone Age. They can be thought of as the original development of metal currency.
• Silver--At about 500 B.C., pieces of silver were the earliest coins. Eventually in time they took the appearance of today and were imprinted with numerous gods and emperors to mark their value. These coins were first shown in Lydia, or Turkey, during this time, but the methods were used over and over again, and further improved upon by the Greek, Persian, Macedonian, and Roman empires. Not like Chinese coins, which relied on base metals, these new coins were composed from scarce metals such as bronze, gold, and silver, which had a lot of intrinsic value.
• Leather currency--In 118 B.C., banknotes in the form of leather money were used in China. Thought of as first paper money
• Paper money--From the ninth century to the fifteenth century A.D., in China, the first actual paper currency was used as money. Through this period the amount of currency skyrocketed causing severe inflation. Unfortunately, in 1455 the use of the currency vanished from China. European civilization still would not have paper currency for many years.
• Gold Standard--In 1816, England made gold a benchmark of value. This meant that the value of currency was pegged to a certain number of ounces of gold. This would help to prevent inflation of currency. The U.S. went on the gold standard in 1900.
• Depression--Because of the depression of the 1930's, the U.S. began a world wide movement to end tying currency to gold. Today, few nations tie the value of their currency to the price of gold. Other government and financial institutions now try to control inflation.
• Electronic money--Tomorrow is already here. Electronic money (or digital cash) is already being exchanged over the Internet.

Conclusion:

After looking at the evolution of man from nomads to a centralized society I see where the problem resides. In the beginning man had no need to own land, but evolving into an agrarian society changed that. I would say it's proven that when you own something you take better care of it than if you were just leasing or borrowing it because it's yours. I think that man had to declare ownership to give himself the confidence and power to wield the land how he saw fit such as growing corn or grain instead of doing what someone else wants you to do. I think ownership would then be classified as a state of mind, not an actual possession when it comes to land. Due to the "Dark Ages" and the fall of Rome, I think, set us back as a Western Society up to 1,000 years when it comes to evolution. Because the "Dark Ages" was a time when the West was ruled by barbarians and despots. We have taken the same traits our rulers had and applied themselves to ourselves. When I say traits I would like you to think "Keeping up with the Jones'" or "The child who tries to emulate its parent". Because our barbaric leaders decided that the land was theirs and the serfs were just there to work it for them because they were conquered by the King of the land we wanted to own the land just like they did. With the U.S. declaring it's independence and instituting capitalism this has brought land ownership to new heights. With the invention of the mortgage, banks, and capitalism, I think that we may have let things get a little out of control. Land is not to be owned by anyone.

Our founding father's wanted to remove us from the aristocracy of Europe because they saw how it destroyed and/or held back their citizens from being able to have the freedom to evolve, hence the "American Dream". When our country was first being born and growing we had homesteading. If the person stayed on the land for 5 years they could claim that land as their own. Once the local governments gained more and more power to zone cities for the development of the city the land was purchased by a developer from the city, a home built on that land. and then sold back to the citizen is when too much power was taken from the people. The government is supposed to be ran by the people to represent the people. Why would the people want to have land sold back to them that was already theirs to begin with?

Without the education of the public of their government and their responsibilities as a naturalized citizen this allows the government the ability to lie, cheat, and manipulate its people do rob them blind and take complete control. Every man has the right to a place to live, food to eat and grow, and water to drink. No other man has the power to take that from you. We give people power to govern us because we want them to handle the basic details of how things are to be run with our best interest in mind. It has turned into us being swindled out of what was ours to begin with. Man has evolved enough to where we no longer need a sword to take control because government can be used to do the same thing that the sword used to do without any blood being shed. I will believe until the day that I die that I should not have to pay for any land within the U.S. because politicians, money, and capitalism all overstepped their boundaries and have been perverted to make us slaves instead of independent citizens with the right to live our dreams without having to worry about where we sleep, our next meal comes from, or how much we have to pay for water.

Sources:

• http://library.thinkquest.org/28718/history.html
• http://ezinearticles.com/?A-Brief-History-of-Real-Estate:-The-Fee-Simple-Ownership&id=83980
• http://wwwrealestatechronicle.blogspot.com/
• http://www.investopedia.com/articles/07/history-real-estate.asp
• http://en.wikipedia.org/wiki/Currency