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Targeting the Tea Party Isn’t the IRS’s Most Egregious Abuse of Power
Michael F. Cannon
As Jonathan Adler and I explain in this law journal article, and as I explain somewhat more accessibly in this Cato paper, the IRS is trying to tax, borrow, and spend $800 billion in clear violation of federal law and congressional intent.
Yes, you read that right: $800 billion.
View full post on Cato @ Liberty
Gold and Silver • Gold Crashes Most in 30 Years … What Does It Really Mean?
Gold Crashes Most in 30 Years … What Does It Really Mean?
http://www.zerohedge.com/contributed/20 … d-crashing
Gold has fallen off a cliff. It has fallen faster than at any time in the last 30 years.
Zero Hedge notes:
Adding insult to injury, the Shanghai Gold Exchange overnight announced that following the tumbling precious metal prices and limit down drop in early trading, it may raise trading margins for its gold and silver forward contracts.
(Margin calls tend to trigger further selling.)
Some Say It Is a Good Time to Buy
While most financial advisers are screaming “sell!”, there are some well-known contrarians.
For example, Bill Gross still recommends buying gold.
Marc Faber says:
“I love the fact that gold is finally breaking down because that will offer an excellent buying opportunity” …. “The bull market in gold is not completed.”
John Hathaway of Tocqueville Funds (with $10 billion under management) says that the selloff in gold is “a contrarian’s dream scenario”:
The evidence shows strong macro fundamentals for gold, investor sentiment at a negative extreme and compelling valuations in the mining shares. It seems like a contrarian’s dream scenario to us.
And Zero Hedge notes that – from the perspective of technical analysis – gold is the most oversold it has been in 14 years.
The Bearish Explanation
But why has gold crashed?
Bloomberg blames:
•“Optimism that a U.S. recovery will curb the need for stimulus”; and
•“The prospect that beleaguered members of the euro zone might be forced to sell gold to raise part of the funding, and there are much bigger holders in that category than Cyprus.”
Citigroup opines:
Gold decline may have been related to some break in technical levels and the general improvement in global risk appetite.
Business Insider argues:
[Gold's price collapse] vindicates the economic ideas of the economic elites.
***
To respond to the economic crisis, economists and mainstream policy makers have favored highly unusual policy measures (massive Fed balance sheet expansion, massive stimulus, etc.). These ideas are usually based on years of traditional economic research (Keynesianism, monetarism, etc.).
All of these ideas have been slammed by heterodox types like Austrian economists, who have warned of hyperinflation, and gold going to $10,000.
So the collapse in gold is not about gold, but about vindication for a large corpus of belief and economic research, which has largely panned out. It’s great that our economic elites know what they’re talking about, and have the tools at their disposal to address crises without creating some new catastrophe.
Things aren’t great in the economy, but the collapse/hyperinflation fears haven’t panned out, and the decline in gold is a manifestation of that.
Barry Ritholtz writes:
History shows Gold trades differently than equities. Why? It comes back to those fundamentals.
It has are none.
This is not to say gold is not affected by Macro issues. But that is very different than saying Gld has a fundamental value, an intrinsic worth. It does not. That led to this heretical advice: Gold is not, and can never be, an investment. It has no true intrinsic value, no cash flow, no earnings, no coupon. no yield. What people call fundamentals are nothing more than broad macro analysis (and how have your macro funds done lately?). Gold is the ultimate greater fool trade, with many of its owners part of a collective belief theory rife with cognitive errors and bias.
I do not want to engage in Goldenfreude — the delight in gold bugs’ collective pain — but I am compelled to point out how basic flaws in their belief system has led them to this place where they are today.
Gold does trade technically, and is especially driven by the collective belief system of the crowd. When that falter, well, you know what happens . . .
The Gold Bugs View
Gold bugs, on the other hand, see things quite differently.
Andrew Maguire says that the crash is solely in the paper gold market … and that there is actually a shortage of physical gold. Many other sources make the same claim.
Egon von Greyerz – founder and managing partner at Matterhorn Asset Management – argues:
They shouldn’t be concerned about the temporary pressure on gold. This decline has nothing to do with the physical market because enormous demand for gold continues.
The paper market in gold is not a real market, and at some point in the near future paper gold holders will wake up and realize they are holding are worthless pieces of paper. This is when the world will witness one of the greatest short squeezes in history as investors panic in to physical and the price of gold explodes to the upside.”
London bullion dealer Sharps Pixley thinks that the crash was largely initiated by a single entity:
The gold futures markets opened in New York on Friday 12th April to a monumental 3.4 million ounces (100 tonnes) of gold selling of the June futures contract in what proved to be only an opening shot. The selling took gold to the technically very important level of $1540 which was not only the low of 2012, it was also seen by many as the level which confirmed the ongoing bull run which dates back to 2000. In many traders minds it stood as a formidable support level… the line in the sand.
Two hours later the initial selling, rumoured to have been routed through Merrill Lynch’s floor team, by a rather more significant blast when the floor was hit by a further 10 million ounces of selling (300 tonnes) over the following 30 minutes of trading. This was clearly not a case of disappointed longs leaving the market – it had the hallmarks of a concerted ‘short sale’, which by driving prices sharply lower in a display of ‘shock & awe’ – would seek to gain further momentum by prompting others to also sell as their positions as they hit their maximum acceptable losses or so-called ‘stopped-out’ in market parlance – probably hidden the unimpeachable (?) $1540 level.
The selling was timed for optimal impact with New York at its most liquid, while key overseas gold markets including London were open and able feel the impact. The estimated 400 tonne of gold futures selling in total equates to 15% of annual gold mine production – too much for the market to readily absorb, especially with sentiment weak following gold’s non performance in the wake of Japanese QE, a nuclear threat from North Korea and weakening US economic data.
***
By forcing the market lower the Fund sought to prompt a cascade or avalanche of additional selling, proving the lie \; predictably some newswires were premature in announcing the death of the gold bull run doing, in effect, the dirty work of the shorters in driving the market lower still.
Gold Core’s Mark O’Byrne agrees.
James Rickards thinks the Fed is manipulating the gold market (and every other market).
Former assistant Treasury Secretary Paul Craig Roberts says:
Rapidly rising bullion prices were an indication of loss of confidence in the dollar and were signaling a drop in the dollar’s exchange rate. The Fed used naked shorts in the paper gold market to offset the price effect of a rising demand for bullion possession. Short sales that drive down the price trigger stop-loss orders that automatically lead to individual sales of bullion holdings once their loss limits are reached.
***
According to Andrew Maguire, on Friday, April 12, the Fed’s agents hit the market with 500 tons of naked shorts. Normally, a short is when an investor thinks the price of a stock or commodity is going to fall. He wants to sell the item in advance of the fall, pocket the money, and then buy the item back after it falls in price, thus making money on the short sale. If he doesn’t have the item, he borrows it from someone who does, putting up cash collateral equal to the current market price. Then he sells the item, waits for it to fall in price, buys it back at the lower price and returns it to the owner who returns his collateral. If enough shorts are sold, the result can be to drive down the market price.
***
Bullion dealer Bill Haynes told kingworldnews.com that last Friday bullion purchasers among the public outpaced sellers by 50 to 1, and that the premiums over the spot price on gold and silver coins are the highest in decades. I myself checked with Gainesville Coins and was told that far more buyers than sellers had responded to the price drop.
***
In addition to short selling that is clearly intended to drive down the gold price, orchestration is also indicated by the advance announcements this month first from brokerage houses and then from Goldman Sachs that hedge funds and institutional investors would be selling their gold positions.
***
I see the orchestrated effort to suppress the price of gold and silver as a sign that the authorities are frightened that trouble is brewing that they cannot control unless there is strong confidence in the dollar.
Roberts also says:
This is an orchestration (the smash in gold). It’s been going on now from the beginning of April. Brokerage houses told their individual clients the word was out that hedge funds and institutional investors were going to be dumping gold and that they should get out in advance. Then, a couple of days ago, Goldman Sachs announced there would be further departures from gold. So what they are trying to do is scare the individual investor out of bullion. Clearly there is something desperate going on….
Indeed, this may tie into the Federal Reserve leak of insider information. Specifically, Roberts writes:
The Federal Reserve began its April Fool’s assault on gold by sending the word to brokerage houses, which quickly went out to clients, that hedge funds and other large investors were going to unload their gold positions and that clients should get out of the precious metal market prior to these sales. As this inside information was the government’s own strategy, individuals cannot be prosecuted for acting on it. By this operation, the Federal Reserve, a totally corrupt entity, was able to combine individual flight with institutional flight. Bullion prices took a big hit, and bullishness departed from the gold and silver markets. The flow of dollars into bullion, which threatened to become a torrent, was stopped.
As Congressman Grayson pointed out in a recent letter, right after the Federal Reserve’s Open Market Committee leaked valuable inside information to big banks, Goldman told its clients:
We recommend initiating a short COMEX gold position ….
Statistics: Posted by DIGGER DAN — Mon Apr 15, 2013 6:59 pm
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To Whom Does the U.S. Government Owe the Most Money?
The timing couldn’t be any better to ask the question, especially since it follows Burt Abrams’ takedown of Paul Krugman’s “we only owe the national debt to ourselves so it doesn’t matter” argument and the official release of President Obama’s “mind-blowing” budget proposal tomorrow, but here is the answer at least through the end of the federal government’s 2012 fiscal year, depicted graphically:
It turns out that we don’t actually owe at least 34% of the national debt to ourselves, so that would seem to be a major hole in the Nobel Prize winner’s thinking.
More details here, including a neat discussion of the Federal Reserve’s role in lending roughly half of the money the U.S. federal government has borrowed during the last four years, but here’s the bottom line for how the national debt has grown nearly up to the present:
Through 29 March 2013, the halfway point of the U.S. government’s 2013 fiscal year, the total public debt outstanding of the United States has grown to $16.771 trillion – an increase of more than $744 billion in just six months time.
Meanwhile, on 3 April 2013, President Obama pledged to donate an amount equal to 5% of his $33,333 per month salary as President of the United States of America to the U.S. Treasury, which only accepts such voluntary payments to “help reduce the public debt”. Nearly a year earlier, on 10 April 2012, the White House’s official spokesman Jay Carney described such a gesture as a “gimmick” when proposed by opponents of the President’s ongoing calls for higher taxes, which the President later succeeded in obtaining on 3 January 2013.
View full post on MyGovCost | Government Cost Calculator
California taxpayers played for chumps? Most of new tax increase goes to govt employee pensions
California is so beautiful. There was a time when people dreamed of moving there. Now people are trying to get out. At least many of the people in private industry. The Golden State is golden no longer.
The state recently passed a voter approved tax increase of $50 billion over 5 years. It was a huge increase and passed as the “Temporary Taxes to Fund Education” initiative.
But what the initiative is mostly funding are the pensions of California’s army of public employees.
The state made promises it could not keep and now the bill is coming due. And you thought the money was going to the kids. Sucker.
(From Bloomberg.com)
What if a corporation raised $500 million in a securities offering on the premise that the proceeds would go for operating expenses, then disclosed a few months later that $300 million of this amount would instead be used to service a debt that wasn’t disclosed in the offering document?
This would be false advertising, subject to sanction by the Securities and Exchange Commission. Unfortunately, the SEC doesn’t have jurisdiction over state politicians engaging in the same behavior, and, in the case of California, involving sums that are 100 times bigger.
View full post on AgainstCronyCapitalism.org
The big banks are even bigger than most think.
I was 30 when I began to realize the absolute genius (evil and good) inherent in modern accounting. My whole life I had thought it was just simple inflows and outflows. Boy I had no idea of the level of creativity.
The world is driven by accounting. What’s an asset? What’s a liability? Questions with seemingly easy answers (and they are fundamentally,) but ones which when thrown into the alternate universe of high finance accounting are not.
That is why, as this article reports, the size of the big banks is actually much larger than they report. They are composed partially of “banking dark matter” which though unseen nonetheless increases the mass of the behemoths, bending and warping the economy around them.
(From The New York Times)
Under American accounting rules, banks that trade a lot of derivatives can keep literally trillions of dollars in assets and liabilities off their balance sheets. Since 2009, they have at least been required to make disclosures about how large those amounts are, but the disclosures leave out some things and — amazingly enough — in some cases do not seem to add up.
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Other • Here’s a healthy currency most people have never even heard
Here’s a healthy currency most people have never even heard of
by SIMON BLACK on MARCH 12, 2013
Reporting from Santiago, Chile
There is no such thing as a ‘good’ fiat currency.
Any model in which a tiny banking elite wields dictatorial control over a nation’s unbacked paper money supply is deeply flawed. The concept itself is dangerous, and comparing fiat currencies is like debating which is the ‘least harmful’ poison.
That being said, the world is not yet at a stage where you can walk into a Starbucks and pay for a few lattes with a quarter ounce of silver. Society still functions on paper currency, and if you want to engage in commerce, you have to pick one.
We’ve frequently mentioned several currencies in this column which are better options, i.e. ‘less ugly’, than the others.
The Hong Kong dollar is one example. It’s pegged to the US dollar in a very narrow band, so you’re not taking any risk of it fluctuating. And if the world experiences a deflationary spiral, both the US dollar and Hong Kong dollar will surge… so you’ll be protected.
Yet if the US dollar continues its path to irrelevance, the Hong Kong authorities will likely re-adjust the peg, giving you an instant nominal appreciation.
The Singapore dollar is another option which have been steadily appreciating against other major currencies, backed by a strong economy and a government with zero net debt.
We’ve also talked about the Chilean peso. Like Singapore, Chile has a booming economy with minimal net debt. And the peso has been one of the best performing currencies in the world.
But what most people don’t know is that there’s another ‘currency’ in Chile. It’s called Unidad de Fomento, or UF.
To be clear, UF isn’t an actual currency. There are no UF bills and coins. But you can open a savings account here denominated in UF, and it’s freely interchangeable to pesos.
Why would someone do this? Because UF is a store of value. It constantly adjusts with inflation.
In other words, one UF today will buy you as many loaves of bread and gallons of gasoline that it bought five, ten, fifteen years ago.
This way, you can ensure that the purchasing power of your savings is preserved. And if you have a UF bank account, you can even generate an inflation-adjusted return on top of that.
This is a really innovative idea born from Chile’s own experience with hyperinflation several decades ago. And as I have traveled to over 100 countries, I have seen this concept in very, very few places.
Of course, few banks in the world outside of Chile offer Chilean peso or UF-denominated accounts; and establishing a bank account in Chile is incredibly difficult.
Like many things in this country, banking is very relationship-based. I liken the Chilean banking system to a private club. It’s closed to outsiders, and it’s very difficult to gain entry. But once you’re in, you’re in…
http://www.sovereignman.com/finance/her … -of-11182/
Statistics: Posted by yoda — Tue Mar 12, 2013 12:54 pm
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Use of coupons spikes most since 2007, the beginning of the Great Recession
The consumer is feeling renewed stress. Gas prices are up. Food prices are up. But incomes are stagnant or down generally.
Life for the middle class continues to be tenuous. As the Federal Reserve prints and prints and prints, pushing money into the stock markets and commodity markets, life for much the investor class has stabilized, and in the case of some (think big bankers) the past 4 years have been a time of unprecedented manna.
For those clinging to jobs, trying to put kids through schools with tuitions which continue to rise every year, who are in some cases struggling just to keep the pantry stocked, things have been tough for a long time now. Nothing seems permanent Little feels tangible. Many people remain underwater on their houses. Young people can’t find jobs out of college. Hours are being cut widely thanks to the healthcare experiment being hoisted on the country from Washington DC. Payroll taxes just went back up. It’s no wonder the use of coupons has spiked again.
For middle class America things are not much better than they were 5 years ago. For the bread and butter of the economy, the sarlied breadwinners outside of government and finance, the optimism of past generations, though not gone, is dimmer than in years past. Not only are we mired in a recession, but the rich have gotten richer and the government has gotten larger.
The only solution to this ongoing problem, the alienation and continued marginalization of the middle class, is the reintroduction of sound money. It is clear that the fiat money experiment, initiated by Richard Nixon in 1971 when he took the United States off of the gold standard has failed, for most people. But that’s for another post.
For your information Staples and Chipotle have great coupon deals going right now.
(From CNBC)
Consumers are clipping coupons at a rate not seen since before the 2007 recession, and that’s a troubling sign, according to Coupons.com CEO Steven Boal.
The website tracks how often people view and print coupons and their redemption rate. Right now, Coupon.com’s Internet Coupon Index, as it’s called, shows a spike in coupon offers and demand.
This pattern is almost identical to the one that played out right before the last major economic downturn. The higher the index value, the more consumers are under economic pressure, Boal told CNBC.com.
“The index tends to run in a range,” he explained. “In September, October, November in 2007, it popped out of its range for the first time… And, for the first time since then, we are seeing a tripping out of the range,”
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Tax Increases Hurt the Poor the Most, Leg Down in the World Economy Looms
The end of the payroll tax cut is hitting those struggling to get by the most. As the world teeters on another leg down in the economy many probably feel that they are already on the down slope.
Last week an internal memo from a Walmart executive said that February month to date sales were “a total disaster.” Walmart’s core customer is feeling pain. Sadly they are likely to feel more.
The world economy is misfiring in a big way right now. Both Europe and Japan are solidly in official recession. It is likely that we are also. The implementation of the Affordable Care Act, aka Obamacare later this year is likely creating a drag also.
I just spoke with a friend who explained that her employer is cutting her hours back so that she didn’t hit the 30 hour threshold for providing healthcare. Now she will probably have to find an additional job or simply do with less income. Either way its a strain. Multiply this out by millions and one can see that this great healthcare experiment may have very real unintended consequences.
Add inflated gasoline and food prices and one has the recipe for a long hot summer.
If gas prices don’t reverse their current trend a serious leg down in the Great Recession is all but guaranteed. But reversing the trend is going to be hard to do with our central bank racing to devalue the dollar.
So settle in folks, it looks like we’ve got another all too “interesting” year in economics and politics ahead.
(From CSMonitor.com)
“It’s a big deal,” says Morgan Housley, a macroeconomic analyst with Motley Fool, an online financial education website. “The biggest impact is on lower-income households since the payroll tax is regressive, only applying to the first $113,000 of income. Wealthier households don’t feel the same pinch because the tax doesn’t hit all of their income. Lower-income households also spend a larger share of their income than wealthier consumers.… Low-income families are in one of the toughest spots they’ve been in since 2009.”
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Other • Money Is A Form Of Social Control And Most Americans Are De
Money Is A Form Of Social Control And Most Americans Are Debt Slaves
By Michael, on February 19th, 2013
Is America really "the land of the free"? Most people think of money as simply a medium of exchange that makes economic transactions more convenient, but the truth is that it is much more than that. Money is also a form of social control. Just think about it. What did you do this morning? Well, if you are like most Americans, you either got up and went to work (to make money) or to school (to learn the skills that you will need to make money). We spend a great deal of our lives pursuing the almighty dollar, and there are literally millions of laws, rules and regulations about how we earn our money, about how we spend our money and about how much of our money the government gets to take from us. Not that money is a bad thing in itself. Without money, it would be really hard to have a modern society. Unfortunately, our money is based on debt, and debt levels in the United States have exploded to absolutely unprecedented levels in recent years. The borrower is the servant of the lender, and if you are like most Americans, nearly every major purchase that you make in your life is going to involve debt. Do you want to get a college education so that you can get a "good job"? You are told to get a student loan. Do you want a car? You are encouraged to get an auto loan and to stretch out the payments for as long as possible. Do you want a home? You are probably going to end up with a big fat mortgage. And of course I could go on and on and on. The cold, hard truth of the matter is that most Americans are debt slaves. Most of us spend our entire lives trapped in an endless cycle of debt that we never escape until we die, and meanwhile our years of hard labor are greatly enriching those that own our debts.
Have you ever found yourself wondering why you can never seem to get ahead financially no matter how hard you work?
Well, it is probably because you have gotten yourself enslaved to debt.
Just consider the following example about credit card debt from a former Goldman Sachs banker…
On the debt side of things, how much does your credit card company earn if you carry just an average of a $5,000 credit card balance, paying, say, 22% annual interest rate (compounding monthly) for the next 10 years?
In your mind you owe a balance of only $5,000, which is not a huge amount, especially for someone gainfully employed. After all, $5,000 is just a quick Disney trip, or a moderately priced ski-trip, or that week in Hawaii. You think to yourself, “how bad could it be?”
The answer, including the cost of monthly compounding, is $44,235, or about 9 times what it appears to cost you at face value.
But a large percentage of Americans never pay off their credit cards at all. They make small payments each month, but then they just keep on adding to their balances.
In the end, that is financial suicide.
If you carry an "average balance" on your credit cards each month, and those credit cards have an "average" interest rate, you could end up paying millions of dollars to the credit card companies by the end of your life…
Let’s say you are an average American household, and you carry an average balance of $15,956 in credit card debt.
Also, as an average American household, let’s assume you pay an average current rate of 12.83%.
Finally, let’s assume you carry this average balance for 40 years, between ages 25 and 65. How much did your credit card company make off of you and your extreme averageness?
Answer: $2,629,618.64
Sadly, approximately 46% of all Americans carry a credit card balance from month to month.
How stupid can we be as a nation?
When you become enslaved to the credit card companies, your toil and sweat makes them much wealthier. It is a form of slavery that does not require anyone pointing a gun at you.
But we never seem to learn. Incredibly, 43 percent of all American families spend more than they earn each year.
As the chart below demonstrates, consumer credit actually declined for a short while during the last recession, but now it has turned around and the growth of consumer credit is on the same trajectory as it was before the last economic crisis…
Today, the total amount of consumer credit in the United States is 15 times larger than it was 40 years ago.
And every major "milestone" in our lives typically involves even more debt.
-The total amount of student loan debt in the United States recently passed a trillion dollars, and approximately two-thirds of all college students graduate with student loan debt at this point.
-Total home mortgage debt in the United States is now about 5 times larger than it was just 20 years ago, and mortgage debt as a percentage of GDP has more than tripled since 1955.
-Car loans just keep getting longer and longer, and approximately 70 percent of all car purchases in the United States now involve an auto loan.
-Want to get married? That average cost of a wedding is now $26,989 which is probably going to mean even more debt unless you have wealthy parents.
-Do you have a serious medical problem? According to a report published in The American Journal of Medicine, medical bills are a major factor in more than 60 percent of the personal bankruptcies in the United States.
Are you starting to understand why approximately half of all Americans die broke?
And I have not even begun to talk about our collective debts yet.
Government debt is a collective form of debt. You may not have voted for any of the politicians that have been racking up debt in your name, but part of it still belongs to you.
Since the year 2000, state and local government debt has more than doubled. These are collective debts for which we are all responsible…
And of course the biggest collective debt of all is the U.S. national debt.
In a previous article, I discussed how the national debt has exploded out of control in recent years. If you can believe it, the U.S. debt to GDP ratio has increased from 66.6 percent to 103 percent since 2007, and the U.S. government accumulated more new debt during Barack Obama’s first term than it did under the first 42 U.S. presidents combined.
When you break things down by household, the numbers look even more frightening.
During Barack Obama’s first four years in the White House, the amount of new debt accumulated by the federal government breaks down to approximately $50,521 for every single household in the United States.
And as I have mentioned previously, if you started paying off just the new debt that the federal government has accumulated during the Obama administration at the rate of one dollar per second, it would take more than 184,000 years to pay it off.
Well, you might argue, none of that debt will ever be paid off in our lifetimes.
And you would be right.
But what we are doing is consigning our children, our grandchildren and all future generations of Americans to a lifetime of debt slavery.
How nice of us, eh?
Over the past 10 years, the U.S. national debt has grown by an average of 9.3 percent per year, but the overall U.S. economy has only grown by an average of just 1.8 percent per year.
How do we expect to continue doing this?
Fortunately, more Americans are starting to wake up to how foolish all of this is.
For example, the following is what Home Depot Founder Kenneth Langone told CNBC on Tuesday…
"The fundamentals haven’t changed … And we don’t know when the storm is going to hit," he predicted. "It has to happen.If you look at our debt to GDP, eventually you reach a point where there’s no turning back."
He used an analogy to make his point. "If you had one meal left, and you had your grandchild with you, would you eat if or give it to your grandchild?"
He said all people would say "give it to my grandchild."
But pursuing the president’s vision, he argued, "[Is] eating the grandchildren’s breakfast, lunch and dinner right now. And the [grandchildren] haven’t been born yet."
What we are doing to our children and our grandchildren is beyond criminal. We are selling away their futures in order to make our lives more pleasant.
Right now, we are stealing more than 100 million dollars from our children and our grandchildren every single hour of every single day.
So where is the outrage over this theft?
Sadly, most Americans don’t even realize that all of this is by design. When the Federal Reserve system was created back in 1913, it was designed to get the U.S. government trapped in an endless spiral of debt.
And it worked. Today, the U.S. national debt is now more than 5000 times larger than it was when the Federal Reserve was first created.
Our society has become addicted to debt, and that means that we have become addicted to slavery.
We are not the "land of the free". The truth is that we are now the "land of the servants".
Over the past 40 years, the total amount of debt owed in the United States (government, business, consumer, etc.) has grown from less than 2 trillion dollars to more than 55 trillion dollars…
So who benefits from all of this?
I talked about this in a previous article. The ultra-wealthy and the international bankers make enormous profits by lending money to all the rest of us.
According to a stunning report that was released last summer, the global elite have up to 32 trillion dollars stashed away in offshore tax havens around the globe.
How did they get so much money?
The borrower is the servant of the lender. They have gotten rich at our expense.
But most people live their entire lives without ever understanding how the game is being played.
Today, most Americans see that the Dow is back above 14,000 and they hear the mainstream media telling them that happy days are here again and so they just believe that things are going to turn out okay somehow.
And it certainly does not help that most people seem to let others do their thinking for them. In fact, about 23% of all Americans can’t even read at this point.
http://theeconomiccollapseblog.com/arch … ebt-slaves
Statistics: Posted by yoda — Wed Feb 20, 2013 12:00 am
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Money Is A Form Of Social Control And Most Americans Are Debt Slaves
Is America really “the land of the free”? Most people think of money as simply a medium of exchange that makes economic transactions more convenient, but the truth is that it is much more than that. Money is also a form of social control. Just think about it. What did you do this morning? Well, if you are like most Americans, you either got up and went to work (to make money) or to school (to learn the skills that you will need to make money). We spend a great deal of our lives pursuing the almighty dollar, and there are literally millions of laws, rules and regulations about how we earn our money, about how we spend our money and about how much of our money the government gets to take from us. Not that money is a bad thing in itself. Without money, it would be really hard to have a modern society. Unfortunately, our money is based on debt, and debt levels in the United States have exploded to absolutely unprecedented levels in recent years. The borrower is the servant of the lender, and if you are like most Americans, nearly every major purchase that you make in your life is going to involve debt. Do you want to get a college education so that you can get a “good job”? You are told to get a student loan. Do you want a car? You are encouraged to get an auto loan and to stretch out the payments for as long as possible. Do you want a home? You are probably going to end up with a big fat mortgage. And of course I could go on and on and on. The cold, hard truth of the matter is that most Americans are debt slaves. Most of us spend our entire lives trapped in an endless cycle of debt that we never escape until we die, and meanwhile our years of hard labor are greatly enriching those that own our debts.
Have you ever found yourself wondering why you can never seem to get ahead financially no matter how hard you work?
Well, it is probably because you have gotten yourself enslaved to debt.
Just consider the following example about credit card debt from a former Goldman Sachs banker…
On the debt side of things, how much does your credit card company earn if you carry just an average of a $5,000 credit card balance, paying, say, 22% annual interest rate (compounding monthly) for the next 10 years?
In your mind you owe a balance of only $5,000, which is not a huge amount, especially for someone gainfully employed. After all, $5,000 is just a quick Disney trip, or a moderately priced ski-trip, or that week in Hawaii. You think to yourself, “how bad could it be?”
The answer, including the cost of monthly compounding, is $44,235, or about 9 times what it appears to cost you at face value.
But a large percentage of Americans never pay off their credit cards at all. They make small payments each month, but then they just keep on adding to their balances.
In the end, that is financial suicide.
If you carry an “average balance” on your credit cards each month, and those credit cards have an “average” interest rate, you could end up paying millions of dollars to the credit card companies by the end of your life…
Let’s say you are an average American household, and you carry an average balance of $15,956 in credit card debt.
Also, as an average American household, let’s assume you pay an average current rate of 12.83%.
Finally, let’s assume you carry this average balance for 40 years, between ages 25 and 65. How much did your credit card company make off of you and your extreme averageness?
Answer: $2,629,618.64
Sadly, approximately 46% of all Americans carry a credit card balance from month to month.
How stupid can we be as a nation?
When you become enslaved to the credit card companies, your toil and sweat makes them much wealthier. It is a form of slavery that does not require anyone pointing a gun at you.
But we never seem to learn. Incredibly, 43 percent of all American families spend more than they earn each year.
As the chart below demonstrates, consumer credit actually declined for a short while during the last recession, but now it has turned around and the growth of consumer credit is on the same trajectory as it was before the last economic crisis…
Today, the total amount of consumer credit in the United States is 15 times larger than it was 40 years ago.
And every major “milestone” in our lives typically involves even more debt.
-The total amount of student loan debt in the United States recently passed a trillion dollars, and approximately two-thirds of all college students graduate with student loan debt at this point.
-Total home mortgage debt in the United States is now about 5 times larger than it was just 20 years ago, and mortgage debt as a percentage of GDP has more than tripled since 1955.
-Car loans just keep getting longer and longer, and approximately 70 percent of all car purchases in the United States now involve an auto loan.
-Want to get married? That average cost of a wedding is now $26,989 which is probably going to mean even more debt unless you have wealthy parents.
-Do you have a serious medical problem? According to a report published in The American Journal of Medicine, medical bills are a major factor in more than 60 percent of the personal bankruptcies in the United States.
Are you starting to understand why approximately half of all Americans die broke?
And I have not even begun to talk about our collective debts yet.
Government debt is a collective form of debt. You may not have voted for any of the politicians that have been racking up debt in your name, but part of it still belongs to you.
Since the year 2000, state and local government debt has more than doubled. These are collective debts for which we are all responsible…
And of course the biggest collective debt of all is the U.S. national debt.
In a previous article, I discussed how the national debt has exploded out of control in recent years. If you can believe it, the U.S. debt to GDP ratio has increased from 66.6 percent to 103 percent since 2007, and the U.S. government accumulated more new debt during Barack Obama’s first term than it did under the first 42 U.S. presidents combined.
When you break things down by household, the numbers look even more frightening.
During Barack Obama’s first four years in the White House, the amount of new debt accumulated by the federal government breaks down to approximately $50,521 for every single household in the United States.
And as I have mentioned previously, if you started paying off just the new debt that the federal government has accumulated during the Obama administration at the rate of one dollar per second, it would take more than 184,000 years to pay it off.
Well, you might argue, none of that debt will ever be paid off in our lifetimes.
And you would be right.
But what we are doing is consigning our children, our grandchildren and all future generations of Americans to a lifetime of debt slavery.
How nice of us, eh?
Over the past 10 years, the U.S. national debt has grown by an average of 9.3 percent per year, but the overall U.S. economy has only grown by an average of just 1.8 percent per year.
How do we expect to continue doing this?
Fortunately, more Americans are starting to wake up to how foolish all of this is.
For example, the following is what Home Depot Founder Kenneth Langone told CNBC on Tuesday…
“The fundamentals haven’t changed … And we don’t know when the storm is going to hit,” he predicted. “It has to happen.If you look at our debt to GDP, eventually you reach a point where there’s no turning back.”
He used an analogy to make his point. “If you had one meal left, and you had your grandchild with you, would you eat if or give it to your grandchild?”
He said all people would say “give it to my grandchild.”
But pursuing the president’s vision, he argued, “[Is] eating the grandchildren’s breakfast, lunch and dinner right now. And the [grandchildren] haven’t been born yet.”
What we are doing to our children and our grandchildren is beyond criminal. We are selling away their futures in order to make our lives more pleasant.
Right now, we are stealing more than 100 million dollars from our children and our grandchildren every single hour of every single day.
So where is the outrage over this theft?
Sadly, most Americans don’t even realize that all of this is by design. When the Federal Reserve system was created back in 1913, it was designed to get the U.S. government trapped in an endless spiral of debt.
And it worked. Today, the U.S. national debt is now more than 5000 times larger than it was when the Federal Reserve was first created.
Our society has become addicted to debt, and that means that we have become addicted to slavery.
We are not the “land of the free”. The truth is that we are now the “land of the servants”.
Over the past 40 years, the total amount of debt owed in the United States (government, business, consumer, etc.) has grown from less than 2 trillion dollars to more than 55 trillion dollars…
So who benefits from all of this?
I talked about this in a previous article. The ultra-wealthy and the international bankers make enormous profits by lending money to all the rest of us.
According to a stunning report that was released last summer, the global elite have up to 32 trillion dollars stashed away in offshore tax havens around the globe.
How did they get so much money?
The borrower is the servant of the lender. They have gotten rich at our expense.
But most people live their entire lives without ever understanding how the game is being played.
Today, most Americans see that the Dow is back above 14,000 and they hear the mainstream media telling them that happy days are here again and so they just believe that things are going to turn out okay somehow.
And it certainly does not help that most people seem to let others do their thinking for them. In fact, about 23% of all Americans can’t even read at this point.
So is there any hope for us?
Please feel free to post a comment with your opinion below…
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