PERSONAL DEBT AT ALL-TIME HIGH

SOME U.S. CONSUMERS WISE UP; SKIRT BANKERS’ DEBT SNARES

By Joan Veon

The Federal Reserve bank is a private corporation that controls the entire monetary and financial system of the United States. As such, it is not part of our government but controls it through creating highs and lows in the business cycle. What that means is that a small group of insiders can buy low and sell high while the rest of us hold. This is a direct transfer of wealth from us to them. Furthermore, every time our government borrows from this monopoly, they print money out of thin air and charge us interest on it.

Unfortunately those who think money grows on trees have no idea that it only pertains to a few well-placed thieves. The inflation and economic imbalances that we are hearing about are not created by us but are created by the system, which has been foisted upon us by deception.

The moneylenders, in order to give themselves access to the rest of the chickens in the chicken coop, had to eliminate the gold system which our monetary system was based on because a gold system can’t inflate money endlessly. As a result of the created depression in 1929, President Roosevelt took that opportunity to completely change our political and economic system.

At the time, Rep. Louis T. McFadden (R-Penn.) gave a now famous speech on the Federal Reserve: “At noon on the 4th of March, 1933, FDR, with his hand on the Bible took an oath to preserve, protect and defend the Constitution of the United States. At midnight on the 5th of March, 1933, he confiscated the property of American citizens. He took the currency of the United States off the gold standard of value. He repudiated the internal debt of the government to its own citizens. He destroyed the value of the American dollar. He released, or endeavored to release, the Fed from their contractual liability to redeem Fed currency in gold or lawful money on a parity with gold.”

Two of the steps include taking the common man off the gold standard and relying on British economist John Maynard Keynes. Shortly after Roosevelt was sworn in as president, he instructed the banks not to convert the gold-backed dollars, which our government used to print before the Federal Reserve was created. In addition, all gold that the people held was confiscated.

However, Roosevelt allowed foreign countries, which held our gold-backed certificates to cash them in for gold up until President Nixon closed the “gold window” in 1971.

Then, in 1980, President Jimmy Carter passed the Monetary De-Regulation Act, which removed the limit on the amount of interest that banks can charge. Instead of charging and paying a reasonable amount of interest, banks can now charge “market rates.” So, today, people are being paid 2% on their savings while they are being charged 25% for borrowing—or more.

Then, under President Reagan, the tax laws were changed so that you and I can’t deduct interest from the amount of taxes that are owed.

In response, the banking system came up with the idea of having people spend the equity in their home through “home equity lines of credit.” Interestingly enough, interest on these loans is tax-deductible. I don’t know what these people are going to do when the government eliminates any kind of interest on home loans and lines of credit.

Now add in the Nasdaq crash, which wiped out $7 trillion in investments and savings. In response, the Federal Reserve reduced interest rates to a 45-year low of 1% in June 2004. This achieved the unbelievable. People who were constrained by the amount they could borrow determined they could live like kings in the bigger home and went out and borrowed more as they moved up. Since interest on home equity lines of credit is based on prime, it became reasonable to build up a tremendous amount of debt based on the rising “equity” in the residential property.

PIPE DREAMS

After sufficient Americans followed their pipe dreams and increased their debt, Alan Greenspan announced the Fed needed to rein in inflation and interest rates began rising. Just the other day, his successor, Ben Bernanke raised interest rates for the 15th time to 4.75%. Stating that “further policy firming may be needed,” Bernanke said it is the intent of the Fed to “keep the lid on inflation.”

Let’s talk about inflation. What is inflation? According to geo-political expert Terry Hayfield, capitalism is inflationary all by itself. Capitalism has to be in constant motion. It has to constantly have a new product, a new market, a new buyer. Without it, capitalism will deflate and go into depression.

Furthermore, how are you going to buy the product that capitalism produces? You are going to pay for it with a Federal Reserve note, which was printed up like any other piece of paper. The act of printing up a piece of paper, which becomes “a dollar,” is inflationary because it was not there before you wanted to buy something. It comes into being as you spend money, which the Fed does not have to begin with. So, the Fed charges the federal government interest on all the money in the banking system. Are you smelling the coffee yet?

In other words, when you borrow money to buy the house, the car, the dress or the motorboat, you are borrowing money you did not have and money, which did not exist before your demand. Furthermore, you are borrowing it at usurious rates.

STOP CHARGING

Since capitalism needs a new product and continuous demand at all times, the solution to all of this, simply put, is to reduce our buying to necessities and to stop charging on credit cards. Turn in your Wal-Mart, Penny’s, Sears, Nordstrom’s, Neiman-Marcus, Discover, MasterCard and Visa cards. Start using cash and start living within your means.

Next, pay down what you owe and keep your cards closed. Take any excess that you have, when you have it, and pay down your mortgage. If you are living in the big house, sell it and move to a smaller house while you can. If you have a pretty substantial home equity line of credit, remember that you still owe that debt and putting it into your mortgage is dangerous. Do what you have to in order to pay it off. If you have money in your 401k, borrow it out. If you have an asset that you could sell, sell it and eliminate that home equity loan. Get yourself out of the system as much as possible.

Remember that McFadden was testifying on the heels of the Great Depression and the confiscation of gold. He rightly stated our plight:

“The people of these United States are being greatly wronged. . . . The wealth of these United States and the working capital have been taken away from them and have either been locked in the vaults of certain banks and the great corporations or exported to foreign countries for the benefit of the foreign customers of these banks and corporations. So far as the people of the U.S. are concerned, the cupboard is bare.”

(Issue #24 & 25, June 12 & 19, 2006)