In Search of “Financial” Common Sense!
Heather and I try to avoid getting too “political” on this Life Without Limits blog, aside from our rants about incompetency / insanity (doing the same things over and over and expecting different results), entitlement-thinking, and thin-skinned political-correctness gone overboard.
So today I’m just going to start out by quoting Nobel Prize winner Milton Friedman, who famously said:
“There ain’t no such thing as a free lunch.”
While I’d love to use this blog to get into an in-depth discussion (and soap-box) about monetary policy, government deficit-spending, Keynesian economics and ponzi schemes like the Federal reserve and the Social Security system, I won’t! (another day, on another blog — in due time — my fellow renegade inquisitive truth seekers).
Instead, I’m just gonna stick to the fundamentals here — speak a little common sense (wish me well) and bring this down to street-level, home-spun wisdom.
First, the question:
Who should get the most heat — the figurative hickory stick across the ass — for over-consumption ?
For instance, when somebody buys something they can’t afford (er, say like a house — yeah, ya know, those things… 7.5 million of which are now vacant in the US alone — that people strive to keep), should the huckster force-feeding the thing be responsible, or the buyer who could have said ‘no’?
Well, let’s see… in the case of the current global economic BS, spurred on by sub-prime mortgages (read: mortgages willingly bestowed upon folks with poor credit histories), if we were to put Encyclopedia Brown on the beat, he might use his boy powers of obviousness and conclude:
“Well, Mr. Goss, on one hand, it’s crazy human nature that makes everybody think they’re a victim when something doesn’t work out, like they thought it either should or would. My older red-headed step-brother blamed ‘peer-pressure’ for being a dope-head. Yeah, I saw his point: hot college chicks smoking and downing the crap and then saying stuff like, ‘Aaaaah, come on Alfred, it’s cool, gives you a rush, and makes you look super-hot.’ But, like the person who doesn’t even have an emergency savings fund in place BEFORE he signs for a mortgage, Alfred coulda also said, ‘What da @#$% am I doing?'”
Okay, so our boy investigative genius ALSO has a thing for taking the rap for your own stupidity too.
“But, whoooaaaa, hold on a minute, Barry,” you yell to stop me in my tracks, “what about the hucksters selling the dream and encouraging the “financial leap” into home ownership?”
A-hem, ottaaaaaaaay, you know, you’re right, lest we forget: before somebody bought into the hype of having everything now even if they couldn’t afford it, somebody, something, or some group of diabolical madmen had to make the HYPE sing, dance, and yodel!
Whether government, elite bankers, lenders, insurance companies, monopolistic media, Wall Street traders, congress, or CEOs in cahoots with special interest, somebody had to perpetuate the dreamland (non real-world) state of excessive ‘instant gratification‘!
Maybe one, several or everybody on the list created the easy-credit, no-money-down ‘consumer’ economy that got us into this mess?
Sure, let out your opinions on the WHO, by making your comments below. Yup, I wanna hear ’em… yet, something even more sincerely important on my mind is the HOW!
As in, how do we as a collective deal with individual bad choices — financially irresponsible decisions made? How do we deal with greed, corruption and mis-information being orchestrated from the highest levels ?
SAY WHAT ?
“I readily concede I chucked aside my free-market principles.” —President George W. Bush
“Only government can break the vicious cycles that are crippling our economy.” —President Barack Obama
Do we just quit whining and complaining, stand up, and take action by joining groups that adamantly oppose giving more money to the very hacks who were part of the hype and insider-propaganda ?
As our boy investigator, Mr. Brown, might say: “Hey, that’s like openly sanctioning the junk dealer to go out and seduce naive, casual, impressionable, curious, open-minded users and turn ’em into junkies to the extreme… come on, it’s like cajoling the contestants on the T.V. show The Biggest Loser that the best way to shed the major pounds is to chow down as many donuts as possible.”
Or, as our intrepid man of all things economics, Bill Bonner (one of several peer researchers and fellow writers we lean on to help garner perspective) would say:
“Where do they get these ideas? What makes anyone think you can solve the problem of excess debt by lending people more money? Who is dumb enough to think that you can cure the problem caused by too much spending… by spending more?”
Who’s that dumb, Bill ?
Well, let’s reverse it to get the answer. How ’bout, who is that intelligent?
Who’s smart enough to know that the masses are practically hypnotized, mentally censored, and in denial about what really happens outside their own little world?
Well, bold reader, if you’re the kind of investigative, big picture thinking person, who likes putting puzzles together — somebody who does as much open-minded research via alternative media as you do through conditioned listening via mainstream media — you’ll readily find the answer.
But, where “they” have it all wrong is in the idea that the MASSES are still asleep. Nope, we’re NOT! Like somebody on a long drive, through a straight-away Nevada highway that goes on for miles and miles, we just stuck our head out the window, got some fresh air, and are now fully awake to land at our destination:
Truthville!
Conveniently, and most appropriately, by the way, right next to Common Senseville.
Yeah, we already “get” that America experimented with large-scale expansions of government spending in the 1930s with the New Deal, and again in the 1960s and ’70s with the Great Society. We “get” that these dramatic expansions of government spending coincided with economic failure.
We also are in tune with the unyielding truth that anything that heads too far away from equilibrium — from balance — has to snap back. If a rubber band is stretched too far, too many times, we know what’ll happen. (Ouch!)
Similarly, if a small business doesn’t focus on sales, revenue, and customer retention in favor of employee parties and expensive furniture, it deserves to go bankrupt, correct?
Or, if a homeowner continues to pay his mortgage with his credit card, he or she’d better find a way to EARN (labor for) money. Because, unlike the government who can borrow money from the unconstitutional Federal Reserve, who prints it out of thin air, the homeowner can only deficit-spend for so long.
Government spending is either financed through 1) higher taxes, 2) higher federal borrowing, or by 3) printing money. Those are the only possibilities. They all create GREATER economic damage than any stimulus effect of new spending.
So, continuing to allow our leaders to do the latter (magically make money appear by printing it) and then — holy @#$%, what are we thinking — sitting by as they give it to the very reckless lenders and investors who extended loans to people who couldn’t pay them back, is wild $h!t (yup, the equivalent of being on economic ‘shrooms).
So here’s the plan that’s happening right before our eyes:
1. The government buys up as much collateral, called “toxic assets,” as they can find (or, more appropriately said, as we as a nation allow them to TAKE OVER);
2. They underwrite a trillion dollars using money they haven’t got;
3. They then try to sell these assets back to the banks which buy them using bailout money;
4. The banks then try to sell them to people who just lost their shirts buying worthless securities that they didn’t understand (or shouldn’t have been involved in in the first place);
And, this brain-child scenario is supposed to save the day ?
Toto, I get the feeling we’re not in Kansas anymore!
(If you like playing outside the box and wanna meet some cool characters as you trot down the financial yellow brick road, CLICK HERE)
Your Partner in the Quest For
Living a Life Without Limits,
Filed under: Finance / Credit / Debt
That first paragraph says it all!!! What the heck is going on with people!!
Seems to me, that if we had given those TRILLIONS to the people … distributed equally (not just to the wealthy, as in the past) … a lot of this economic problem would be over by now …
Just a thought …
Guys
Agree with everything you have written.
Have to give a heads up to people like me who bought the hype. We the poor who wanted more for ourselves and ours. I had a three year plan worked 9 am until 12 midnight five days a week for the last two years plus I rented out rooms – paid my mortgage and bills on time. Now I am just holding on to one job by my fingertips while thousands are being made redundant in my industry. My friend had one job and saved. Out of work for six months her savings have been depleted and she had gone back home and rented out her flat.
This isn’t about sub prime mortgages. Yes we bought into the hype but the majority of us were prepared to do whatever it takes to achieve.
This is bigger – we are NOT BEING ALLOWED TO achieve. The avenues for our advancement are being taken away from us: no jobs; no interest on our savings; our houses and currency worth diddly – we are being broken down:
What we are seeing is propaganda designed to deceive, to distract attention from economic reality so as to promote the property and financial interests from whose predatory grasp classical economists set out to free the world.
http://www.blackagendareport.com/?q=content/language-looting
We have seen the wizard and he’s stark buck naked (if I may mix my metaphors)
Keep it coming guys
While I agree that those who accepted the goodies shouldn’t be bailed out (we were almost one of them ourselves), it was the government (Barney Frank and Chris Dodd) who forced banks to make sub-prime loans. They did not have any choice.
Now, of course, Barnie and Chris are in charge of seeing that the bailout money (our, our childrens’, and our grandchildrens’ money) is spent “wisely.”
While our current president believes that government is the answer, Ronald Reagan rightly stated that government is not the answer. Government is the problem. For those who may not believe that, please note that authoritarian governments throughout history have failed miserably.
The answer is all of us using the principles that we share here to prosper and contribute to the greatest economic engine the world has ever known. Those who try to paint it as oppressive should be happy now that it truly is – in the name of compassion.
This year, taxpayers will receive an Economic Stimulus Payment. This is a very exciting new program that I will explain using the Q and A format:
Q. What is an Economic Stimulus Payment?
A. It is money that the federal government will send to taxpayers.
Q. Where will the government get this money?
A. From taxpayers.
Q. So the government is giving me back my own money?
A. Only a smidgen.
Q. What is the purpose of this payment?
A. The plan is that you will use the money to purchase a high-definition TV set, thus stimulating the economy.
Q. But isn’t that stimulating the economy of China ?
A. Shut up.
Below is some helpful advice on how to best help the U.S. economy by spending your stimulus check wisely:
> If you spend that money at Wal-Mart, all the money will go to China.
> If you spend it on gasoline it will go to the Arabs.
> If you purchase a computer it will go to India.
> If you purchase fruit and vegetables it will go to Mexico, Honduras, and Guatemala (unless you buy organic).
> If you buy a car it will go to Japan.
> If you purchase electronics it will go to Taiwan.
And none of it will help the American economy.
We need to keep that money here in America.
You can keep the money in America by spending it at yard sales, going to a baseball game, or spend it on prostitutes, beer and wine (domestic ONLY), or tattoos, since those are the only businesses still in the US.
How about some REAL MONEY?
Ask yourself why Government did away with the Gold Standard? ‘Nuff said!
[ Barry’s Note ] —
If anyone here needs help coming up with a decent answer to Bernard’s questions above, here’s a short 2-minute video to start with:
http://www.youtube.com/watch?v=E9GwuIk30mo
Hi guys (from Down Under),
Yes there are many theories and suggested solutions. I prefer to remain positive and look forward to “lean times” as
1. We’ll spend more time with each other (as that’s the only thing we’ll be able to afford)
2. Defence / Military recruitment will go up and our youth will learn mental strength and empowerment from achieving feats outside their comfort zone
3. We’ll come together globally as we’re all in this together.
Am I being too ultruistic???
Thank you for some great reading too.
Cheers,
Larissa
To Barry,
Our entire banking system is “all made up,” it’s a fiction, and we have a difficult time comprehending the truth because of the erroneous beliefs and conclusions we have been trained to follow by false advertising and ignorance. Reality is the labor we trade everyday for the labor of other people. The record of that labor is a unit of currency. Every thing else is imaginary an consists of artificial limits and psychological perceptions.
Notes, Mortgages and Signature Loans:
A promissory note is not negotiable in the consumer marketplace (general economy) until a depository institution (bank) takes ownership and deposits it into an account. ( A consumer cannot buy groceries with a promissory note.) The account, into which the deposit is made appears as an asset equal to the value of the note and a liability equal to the negative value of the note. The entries balance to zero. The record of this transaction is made in an accounting ledger that is subject to audit and public disclosure. This method conforms to the Generally Accepted Accounting Principles and the rules promulgated by the Federal Reserve Board.
Example, a $100,000 promissory note on deposit:
Asset Liability Balance
$100,000 $100,000 $0
The bank then draws a check from this account to pay the seller of the property being purchased. The seller’s bank accepts the check as a deposit, just like the first bank that accepted the note as the deposit. The note is the money owned by the maker, the bank customer, before the bank (lender) takes ownership and deposits it. The note or deposit is then transferred to the seller of the property in the form of a check to pay for the property. The first bank obtained ownership and possession of the note from the maker (borrower) without risking any assets. In exchange for giving the bank the note and making it negotiable in the consumer market place, the bank customer agrees to pay the value of the note, what the bank calls “principal,” plus interest and fees.
The idea of a “principal” is a fiction that represents the value of the note; it is not the actual note. There is no principal. The money for the property came from the buyer’s note. The buyer could not give the note to the seller directly because the banking system will not allow it, it would be considered counterfeiting without the bank being involved. I think we can all understand that when we write a check, someone’s account is credited (the seller’s) and someone’s account is debited (the buyer’s). In any bank loan transaction, the bank customer’s account is credited, but no other account is debited. The money is created form nothing, or from the customer’s credit application or note. This is a simplification of what happens in some cases, an example being when a bank sends a potential customer a check to deposit in order to open a new credit line. The signer or maker of the check is the signer for the account number appearing at the bottom of the check. If you were to question the signer of that check, you would find that the money in that account was not debited from any other account and was probably opened within a very short time prior to the check being sent to the potential customer, and the amount of “money” in that account probably never exceeded the credit limit or amount of the check, and the account was probably closed after the check was drawn or after the account was debited by the new customer depositing the check into his account.
The bank must lead us to believe in the existence of principal so that interest can be charged against something that we believe to exist. The bank cannot charge interest against the note because it was used to buy the property. The bank is charging interest against the value of the note, what it calls the “principal.” The customer’s money the note, was first deposited into the bank’s account and then transferred to the seller’s bank account. Only banks can do this because only banks have the license and the monopoly in the banking industry. Only banks have access to clearing houses (databases for commercial paper) for checks, consumers do not, so consumers are not able to negotiate checks or notes without banks.
The cost to the consumer, or bank customer, for this service is what the bank calls the “principal” plus interest and fees. The bank secures the payment of this money by having the depositor, the bank customer, sign a mortgage. A mortgage is a lien against property that gives the bank legal title and one hundred percent equitable interest untiil the customer acquires more equity by payment. The customer acquires legal title once the mortgage is satisfied. There are two transactions, one where the note buys the property and the other where the buyer pays the bank for providing th service of moving (birthing) the note into thhe economy to make it negotiable, otherwise known as the mortgage. The first transaction is called the note and the second is called the mortgage.
The mortgage is a bank receivable, an asset to the bank, and the bank wants the depositor or maker of the note, its customer, to believe that the bank lent the funds for the purchase of the property and that paying on the mortgage is the way to pay it back. In fact, bank terminology for this practice is “origination.” The banks “originate” the “money” but this is not lending, it is creating money from nothing. Because the customer is truly the depositor, the orginator of the funds, it is the principal or the value of the note that is owed to the customer and not to the bank. Legally, the mortgage should be set aside as being null and void for failure of consideration and disclosure violations of the truth in lending law; however, experience tells us the best way to remedy the inequity of the arrangement is to sue the bank for the return of the deposit, “money lent.”
The bank is unable to identify the source of the funds for the principal it claims to be owed and against which it is collecting interest and fees. Because there are only two parties to the note and two parties to the mortgage (borrower and lender), and one of them cannot establish that it provided the funds for the account, we must conclude that the other party, the bank customer, provided the funds that created the account. If the bank truly provided the funds like it wants everyone to believe, then the bank would be able to identify the account that was debited when the loan account was created. In reality, the bank customer is paying the value of the note twice, once by trading his note for property and the second time by paying the bank what they call the principal, then he pays an additional two or three times the value of the original note in interest.
If the truth were admitted, an equitable arrangement would be where the bank is allowed to maintain its monopoly and only charge the customer a fee for creating money. The customer wold buy property with his note through the banking system, and the bank would charge a fee for this, maybe a percentage of the note. The fee would be limited by law to less than the value of the note. Instead, the bank receives the value of the note at no cost plus two or three times the value of the note in interest and if you don’t pay, the bank gets the property as well.
This is an excerpt from “Winning the Collection Game, 4th Edition, by John Gliha Copyright 2002
James
Blame it all on General Electric. I believe that was the company that introduced Television to the American people via a broadcast company called NBC. With television we were introduced to a large scale advertising scheme that there was more to the world than Mom, Dad, the telephone , neighbors , relatives and a back yard garden.
We were told we can have all this modern post war “stuff” and we SHOULD not only WANT it but we should HAVE it. The rest is his-story. All we have to do is get a T.V. into every third world country and they can become as broke as we are. No , wait, some one has already done that, its called the Internet.
Well lets get the G-20 together and declare Everybody bankrupt or is that whats really happening as I speak?
This goes along great with this post…
http://www.conspiracyoftherich.com/
Robert Kiyosaki’s new interactive online book
called The Conspiracy of the Rich..
Pretty educational.