JP Morgan Déjà Vu — There You Go Again Wall Street

JP Morgan announces a $2 billion loss in the derivatives market. What may sound like everyday news from Wall Street actually gives us a glimpse into the bizarre world of the US banking cartel. JP Morgan manages derivatives that are twice the dollar value of the bank's entire capitalization, and the derivatives market itself, estimated at $700 trillion, is 10 times larger than the GDP of the planet Earth. 

Major banks make incredibly huge gambles in this market with no fear of loss, because the government says they are too big to fail, so their losses are passed on to taxpayers. This $2 billion loss allows us to see the whole scam in just one event.

Wake Up America!

Ever wonder why getting a $200,000 mortgage in Kansas is so tough?  Because that is not where the biggest banks make their big money.

Yesterday’s news from JP Morgan Chase of a $2 billion trading loss makes clear how banks – those still too big to fail – make their real money.

The story of this $100 billion dollar bet by a shadowy trading operation gone “egregiously” wrong, in the words of the firm’s CEO,  sounds very 2007/08.

A small unit of JP Morgan virtually no one knows called CIO was placing huge derivative bets.  These enormous bets were at twice the risk the company said they were just a few weeks ago. (How very AIG-like.)

The London-based JP Morgan trader implicated in this is nicknamed  ”The Whale” or “Voldemort” from Harry Potter.  The group he runs had $350 billion of securities as of the end of last year, according to the Wall Street Journal.  That’s nearly twice the market cap of the bank itself, the largest in the U.S.  “Voldemort” reportedly made $100 million last year.

A few weeks ago his division’s bets caused such concern that The Wall Street Journal had the story on its front page, noting how the trades were making the debt market nervous.  In reaction, CEO Jamie Dimon said the worries were a “tempest in a teapot.”

This gets back to the topic no one wants to talk about, and possibly no one  understands.  Synthetic derivatives – Credit Default Swaps.  There is a $700 trillion derivatives market, that is 10x larger than the GDP of the planet earth.  How is such a large market possible?  Just like “Voldemort” did not have the $100 billion he bet with, there is no actual money to back this $700 trillion market.

No one we have spoken to over the years has explained how this is possible.

Which gets us back to where we began… JP Morgan has unlimited access to virtually free money from the Fed… They could loan it out to the middle class (of course they do some of that) but they can take that free money and make huge, incomprehensible bets in the hopes of huge profits – multimillion dollar bonuses and if it’s all just a house of cards, it’s OK because they are too big to fail. 

Original Article by Zunaira Zaki of ABC News

25 Horrible Statistics About The U.S. Economy That Barack Obama Does Not Want You To Know

 

The human capacity for self-delusion truly is remarkable.  Most people out there end up believing exactly what they want to believe even when the truth is staring them right in the face.  Take the U.S. economy for example.  

Barack Obama wants to believe that his policies have worked and that the U.S. economy is improving.  So that is what he is telling the American people.  The mainstream media wants to believe that Barack Obama is a good president and that his policies make sense and so they are reporting that we are experiencing an economic recovery.  A very large segment of the U.S. population still fully supports Barack Obama and they want to believe that the economy is getting better so they are buying the propaganda that the mainstream media is feeding them.  But is the U.S. economy really improving?  The truth is that it is not.  The rate of employment among working age Americans is exactly where it was two years ago and household incomes have actually gone down while Obama has been president.  Home ownership levels and home prices continue to decline.  Meanwhile, food and gasoline continue to become even more expensive.  The percentage of Americans that are dependent on the government is at an all-time record high and the U.S. national debt has risen by more than 5 trillion dollars under Obama.  We simply have not seen the type of economic recovery that we have seen after every other economic recession since World War II.

The horrible statistics about the U.S. economy that you are about to read are not talked about much by the mainstream media.  They would rather be "positive" and "upbeat" about the direction that things are headed.

But lying to the American people is not going to help them.  If you are speeding in a car toward a 500 foot cliff, you don't need someone to cheer you on.  Instead, you need someone to slam on the brakes.

The cold, hard reality of the matter is that the U.S. economy is in far worse shape than it was four or five years ago.

We have never come close to recovering from the last recession and another one will be here soon.

The following are 25 horrible statistics about the U.S. economy that Barack Obama does not want you to know....

#1 The percentage of Americans that own homes is dropping rapidly.  According to Gallup, the current level of home ownership in the United States is the lowest that Gallup has ever measured.

#2 Home prices in the U.S. continue to fall like a rock as well.  They have declined for six months in a row and are now down a total of 35 percent from the peak of the housing bubble.  The last time that home prices in the United States were this low was back in 2002.

#3 Last year, an astounding 53 percent of all U.S. college graduates under the age of 25 were either unemployed or underemployed.

#4 Back in 2007, about 10 percent of all unemployed Americans had been out of work for 52 weeks or longer.  Today, that number is above 30 percent.

#5 When Barack Obama first became president, the number of "long-term unemployed workers" in the United States was 2.6 million.  Today, it is 5.3 million.

#6 The average duration of unemployment in the United States is about three times as long as it was back in the year 2000.

#7 Despite what the mainstream media would have us to believe, the truth is that the percentage of working age Americans that are employed is not increasing.  Back in March 2010, 58.5 percent of all working age Americans were employed.  In March 2011, 58.5 percent of all working age Americans were employed. In March 2012, 58.5 percent of all working age Americans were employed.  So how can Barack Obama and the mainstream media claim that the employment situation in the United States is getting better?  The employment rate is still essentially exactly where it was when the last recession supposedly ended.

#8 Back in 1950, more than 80 percent of all men in the United States had jobs.  Today, less than 65 percent of all men in the United States have jobs.

#9 In 1962, 28 percent of all jobs in America were manufacturing jobs.  In 2011, only 9 percent of all jobs in America were manufacturing jobs.

#10 In some areas of Detroit, Michigan you can buy a three bedroom home for just $500.

#11 According to one recent survey, approximately one-third of all Americans are not paying their bills on time at this point.

#12 Since Barack Obama entered the White House, the price of gasoline has risen by more than 100 percent.

#13 The student loan debt bubble continues to expand at a very frightening pace.  Recently it was announced that total student loan debt in the United States has passed the one trillion dollar mark.

#14 Incredibly, one out of every four jobs in the United States pays $10 an hour or less at this point.

#15 Household incomes all over the United States continue to fall.  After adjusting for inflation, median household income in America has declined by 7.8 percent since December 2007.

#16 Over the past several decades, government dependence has risen to unprecedented heights in the United States.  The following is how I described the explosive growth of social welfare benefits in one recent article....

Back in 1960, social welfare benefits made up approximately 10 percent of all salaries and wages.  In the year 2000, social welfare benefits made up approximately 21 percent of all salaries and wages.  Today, social welfare benefits make up approximately 35 percent of all salaries and wages.

#17 In November 2008, 30.8 million Americans were on food stamps.  Today, more than 46 million Americans are on food stamps.

#18 Right now, more than 25 percent of all American children are on food stamps.

#19 According to the U.S. Census Bureau, today 49 percent of all Americans live in a home that receives some form of benefits from the federal government.

#20 Over the next 75 years, Medicare is facing unfunded liabilities of more than 38 trillion dollars.  That comes to $328,404 for each and every household in the United States.

#21 During the first quarter of 2012, U.S. public debt rose by 359.1 billion dollars.  U.S. GDP only rose by 142.4 billion dollars.

#22 At this point, the U.S. national debt is rising by more than 2 million dollars every single minute.

#23 The U.S. national debt has risen by more than 5 trillion dollars since the day that Barack Obama first took office.  In a little more than 3 years Obama has added more to the national debt than the first 41 presidents combined.

#24 The Federal Reserve bought up approximately 61 percent of all government debt issued by the U.S. Treasury Department during 2011.

#25 The Federal Reserve continues to systematically destroy the value of the U.S. dollar.  Since 1970, the U.S. dollar has lost more than 83 percent of its value.

But the horrible economic statistics only tell part of the story.

In communities all over America there is a feeling that something fundamental has changed.  Businesses that have been around for generations are shutting their doors and there is a lot of fear in the air.  The following is a brief excerpt from a recent interview with Richard Yamarone, the senior economist at Bloomberg Brief....

You have to listen to what the small businesses are telling you and right now they are telling you, ‘Hey, I’m the head of a 3rd or 4th generation, 75 or 100 year old business, and I’ve got to shut the doors’ or ‘I’ve got to let people go. And if I’m hiring anybody back, it’s only on a temporary basis.’
Sometimes they do this through a hiring firm so that they can sidestep paying unemployment benefit insurance. So that’s what’s really going on at the grassroots level of the economy. Very, very, grossly different from what you’re seeing in some of these numbers coming out in earnings releases.”

All over the country, millions of hard working Americans are desperately looking for work.  They have been told that "the recession is over", but they are still finding it incredibly difficult to find anyone that will hire them.  The following example is from a recent CNN article....

Joann Cotton, a 54-year-old Columbus, Mississippi, resident, was one of those faces of poverty we met on the tour. Unemployed for three years, Joann has gone from making "$60,000 a year to less than $15,000 overnight." Her husband is disabled and dependent on medicines the couple can no longer afford. They rely on food stamps, which, Joann says, "is depressing as hell."

Receiving government aid, however, has not been as depressing as her job search. Joann says she has applied for at least 300 jobs. Even though she can barely afford gas, she drives to the interviews only to learn that the employers want to hire younger candidates at low wages.

The experiences have taken a toll: "I've aged 10 years in the three years that I've been looking for a job," Joann told us. "I want to get a job so I can just relax and exhale ... but I can't. After a while you just give up."

Meanwhile, Barack Obama and his family continue to live the high life at the expense of the U.S. taxpayer.

Even many Democrats are starting to get very upset about this.  The following is from a recent article by Paul Bedard....

Blue collar Democratic voters, stuck taking depressing “staycations” because they can’t afford gas and hotels, are resentful of the first family’s 17 lavish vacations around the world and don’t want their tax dollars paying for the Obamas’ holidays, according to a new analysis of swing voters.

It simply is not appropriate for the Obamas to be spending millions upon millions upon millions of U.S. taxpayer dollars on luxury vacations when so many Americans are deeply suffering.

But Barack Obama does not want you to know about any of this stuff.

He just wants you to buy his empty propaganda one more time so that he can continue to occupy the White House for another four years.

Original article by End of The American Dream

 

Ron Paul "The Only Candidate I Trust" Famed Black Swan Economist Reveals (Video)

Nassim Taleb’s book The Black Swan: The Impact of the Highly Improbable spent 17 weeks on the NYT bestseller list for good reason: it enlightened us to the vulnerability of, among other things, our financial system to random unpredictable events. Published in 2007, boy wasn’t that message timely, even if ignored?

This week, Taleb gave a rare interview in which he highlighted yet another timely message too many people seem to be ignoring. He warns the U.S. economy is in an even more precipitous position now, and more shockingly for such an academic, he explains, “Only one candidate, Ron Paul, seems to have grasped the issues and is offering the right remedies.”

Taleb refers to these issues as “the big four”:

1) deficits

2) the Fed

3) militarism (as opposed to defense)

4) resilience versus bailouts

On the issue of the Fed, Taleb says Paul “is going after the Fed; he’s only one with the guts to do it.”

He is quick to point out, “I am not a Libertarian, and I am not coming from a political standpoint, but from a risk-based view of the world.”

On risk, Taleb agrees with Paul: “You don’t gamble with future generations’ money, and you don’t gamble with hyperinflation.”

2012 Republican Presidential candidate Ron Paul’s economic platform of fiscal restraint, Federal Reserve skepticism, and antipathy toward self-feeding bureaucracies was praised today by one of the world’s premier risk managers, who endorsed elements of the 12-term Congressman from Texas’ path-breaking ‘Plan to Restore America.’ 

Nassim Taleb told CNBC that Dr. Paul’s fiscal Mayday in areas such as the threat of an impending hyperinflation tax that will harm low- and fixed-income Americans would further harm the nation’s overall economic standing. . . . In doing so, the best-selling author . . . praised the self-trained free-market economist Paul and said of Paul, “I’m a risk-based person. From my vantage point there’s only one candidate representing the right policies.”

Finally, Mr. Taleb said that Paul is the sole person in the American political landscape that has the courage to take on the Federal Reserve and recognizes that there is no conventional, quick fix to the ruinous financial situation.

Click here for complete article

The Federal Reserve's Explicit Goal: Devalue The Dollar 33%

 

The Federal Reserve Open Market Committee (FOMC) has made it official:  After its latest two day meeting, it announced its goal to devalue the dollar by 33% over the next 20 years.  The debauch of the dollar will be even greater if the Fed exceeds its goal of a 2 percent per year increase in the price level.

An increase in the price level of 2% in any one year is barely noticeable.  Under a gold standard, such an increase was uncommon, but not unknown.  The difference is that when the dollar was as good as gold, the years of modest inflation would be followed, in time, by declining prices. As a consequence, over longer periods of time, the price level was unchanged.  A dollar 20 years hence was still worth a dollar.

But, an increase of 2% a year over a period of 20 years will lead to a 50% increase in the price level.  It will take 150 (2032) dollars to purchase the same basket of goods 100 (2012) dollars can buy today.  What will be called the “dollar” in 2032 will be worth one-third less (100/150) than what we call a dollar today.

The Fed’s zero interest rate policy accentuates the negative consequences of this steady erosion in the dollar’s buying power by imposing a negative return on short-term bonds and bank deposits.  In effect, the Fed has announced a course of action that will steal — there is no better word for it — nearly 10 percent of the value of American’s hard earned savings over the next 4 years.

Why target an annual 2 percent decline in the dollar’s value instead of price stability?  Here is the Fed’s answer:

“The Federal Open Market Committee (FOMC) judges that inflation at the rate of 2 percent (as measured by the annual change in the price index for personal consumption expenditures, or PCE) is most consistent over the longer run with the Federal Reserve’s mandate for price stability and maximum employment. Over time, a higher inflation rate would reduce the public’s ability to make accurate longer-term economic and financial decisions. On the other hand, a lower inflation rate would be associated with an elevated probability of falling into deflation, which means prices and perhaps wages, on average, are falling–a phenomenon associated with very weak economic conditions. Having at least a small level of inflation makes it less likely that the economy will experience harmful deflation if economic conditions weaken. The FOMC implements monetary policy to help maintain an inflation rate of 2 percent over the medium term.”

In other words, a gradual destruction of the dollar’s value is the best the FOMC can do.

Here’s why:

First, the Fed believes that manipulation of interest rates and the value of the dollar can reduce unemployment rates.

The results of the past 40 years say the opposite.

The Fed’s finger prints in the form of monetary manipulation are all over the dozen financial crises and spikes in unemployment we have experienced since abandoning the gold standard in 1971.  The financial crisis of 2008, caused in no small part by the Fed’s efforts to stimulate the economy by keeping interest rates too low for, as it turned out, way too long is but the latest example of the Fed failing to fulfill its mandate to achieve either price stability or full employment.

The Fed’s most recent experience with Quantitative Easing also belies the entire notion that monetary manipulation can spur the economy.  Between November 2010 and June 2011, the Fed tried to spur economic growth by purchasing $600 billion in Treasury securities, flooding the banking system with reserves and keeping interest rates low.  In response the economy, which had been growing at a 3.4% annual rate, slowed to a 1% annual rate in the first half of 2011.  Once, the Fed stopped supplying all of that liquidity, economic growth in the second half of the year accelerated to a 2.3% annual rate.

Second, the Fed does not use real time indicators of the price level.  Instead, it views inflation through the rear view mirror of the trailing increases in the PCE.  And, even when it had evidence of rising inflation — as it did in the first quarter of last year — it chose to temporize, betting that the spike in inflation would prove temporary.

This spike in inflation did prove temporary, as Fed Chairman Bernanke predicted at the time, but not for the reasons — a slack economy — that he cited.  Instead, the growing debt crisis in Europe led to a massive shift in deposits out of the euro and into the dollar — an event totally out of the Fed’s control.  Yet, this increase in the demand for dollars was far more important than any action taken by the Fed because it increased the value of the dollar and produced a slowdown in the inflation rate.

What we are left with is a trial and error monetary system that depends on the best judgment of 19 men and women who meet every six weeks around a big table at the Federal Reserve in Washington.  At the end of a day and a half of discussions, 11 of them vote on what to do next.  The error the members of the FOMC fear most when they vote is deflation.  So, they have built in a 2% margin of error.

Given the crudeness of the tools the FOMC uses to set monetary policy, allowing for such a margin of error is no doubt prudent.  For example,  when the economy slowed in the first half of last year, inflation picked up, accelerating to a 6.1% annual rate during the second quarter.  And, when the economic growth accelerated in the second half, inflation slowed.  These results are the precise opposite of what the Fed’s playbook says are supposed to happen.

The best the Fed can do — an average debauch in the dollar’s value of 2% a year while producing recurring financial crises and a more cyclical economy — is demonstrably inferior to the results produced by the classical gold standard.  Here’s just one example.   The largest gold discovery of modern times set off the 1849 California gold rush and increased the supply of gold in the world faster than the increase in the output of goods and services.  The price level in the U.S. did increase by12.4 percent over the next 8 years.  That translates into an average of just 1.5% a year.  The gold standard at its worst was better than the best the Fed now promises to do with the paper dollar.

The Fed’s best is hardly good enough.  The time has arrived for the American people to demand something far better — a dollar as good as gold.

Article by Charles Kadler, Forbes.com

Banks Got Free Money From Fed - No Bailout For Americans, Only Bankers (Video)

Corrupt Federal Reserve is loyal only to their masters..most of whom are not even from this country. Bankers own the US and it is time to face the truth.

Wake Up America!

Federal Reserve Lent Banks Nearly $8 TRILLION During Crisis Without Asking ANYONE’S Permission!

The Federal Reserve is as “Federal” as FedEx! This private banking cartel being allowed to run our economy is one of the greatest criminal acts ever perpetrated against the citizen’s of this country. 

The Federal Reserve is robbing Americans blind.

Wake Up America!

While the nation's largest banks were publicly reassuring nervous investors of their stability during the height of the financial crisis, they were also quietly approaching the Federal Reserve, hat in hand. The total price tag: $7.77 trillion, many times the amount of the better-known TARP bailout.

The magnitude of the government's assistance to struggling banks allowed them to grow even bigger and continue paying executives billions in compensation, a report in Bloomberg Markets January issue said Monday.

A win in court against a group representing the banks and a FOIA request filed by Bloomberg LP revealed the extent of the central bank's largesse - as well as the $13 billion in profits banks earned from those bailouts. The so called "big six" - JPMorgan, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley - accounted for $4.8 billion of that total - nearly a quarter of their net income during that time. 

Those borrowed trillions were a deeply-buried secret. It appears that even high-ranking Fed officials didn't know about the scale of the handouts. According to Bloomberg, then-president of the Federal Reserve Bank of Minneapolis Gary H. Stern “wasn’t aware of the magnitude,” and unnamed sources say that even top aides to Treasury Department head Henry Paulson were kept in the dark. 

The six biggest banks in the country received a total $160 billion in TARP funds, but as much as $460 billion from the Fed, raising the question as to how and why this nearly $8 trillion in loans, guarantees and limits remained under wraps for so long. According to the Fed, the massive scale of banks' borrowing - and the red ink that prompted it - had to be kept secret to avoid spooking investors and prompting a panic or bank runs that would have had even more devastating consequences on the shaken economy. 

The Fed defended its actions back then by contending that the biggest financial institutions in the country were too big to fail - a phrase that has become a bone of contention among lawmakers, some of whom argue that a "too big to fail" bank is one that's too big to exist.

Ohio Senator Sherrod Brown sponsored a bill last year that would cap a bank's non-deposit liabilities at 2 percent of gross domestic product, and crack down on workarounds banks currently use to bypass a 1994 law that prohibits any one bank from holding more than 10 percent of all deposits in the country.

Original Source

The Dollar Is Backed By The FED.. Gold Isn't Backed By Anything? Dumbest Reporter On The Planet Explains (Video)

This Bimbo is Possibly the Dumbest TV Reporter on the Planet!

Great Graphic Showing National Debt as a Household Budget

 

America's ever-growing debt crisis is in the trillions -- more than $14 trillion, give or take a few billion.

That's a lot of zeros, numbers so large they're sure to make Americans numb when trying to get their arms around what it means to them.

But what would the federal debt crisis look like if you set it up as a household budget?

A heck of a lot simpler, according to new figures from one Tea Party group, which estimates the government "household" spends nearly twice as much as it takes in every year, has a credit card bill nearly seven times annual income and cuts back less than 2 percent of that spending in an effort to control the debt.

"We had discussed about how any citizen needs to understand what the proposed cuts mean," said Laurie Newsom, president of the Gainesville, Fla., Tea Party. "One of our members had figured it out and put it in terms of a household budget. If you ran a household with these numbers, you would see that it's simply not enough."

The group looked at some key figures, mainly tax revenue, the current federal budget, debt and budget cuts, and divided each figure by $100 million, in an effort to break it down into simple terms that most Americans can comprehend. The group posted its findings online and came up with a household with an average family income of $21,700. But that "family" spent nearly twice that -- $38,200 -- and has an existing credit card balance of a whopping $142,710.

"Everyone tries to keep things extremely simple for these things meant for general public consumption and of course there's a give-and-take with that," said Seth Rabinowitz, a partner with Silicon Associates, an economics-focused management consulting firm based in California. "I would make it clearer for the layman.They used the line 'Money the family spent'...but really that means, 'Money the family spent (last year and intends to spend this year again).' "

"However, when you remove those eight zeros, the $385 spending cuts obviously aren't even visible. They don't even make a dent," he said.

The bottom line, according to Newsom: "Cuts won't take care of it. You need business growth, which we wouldn't have in a regulatory environment."

Article by Perry Chiaramonte, Fox News

France Bans Cash Sales Of Gold & Silver Over $600. Is US next?

On April 5, 1933, President Roosevelt Signed Executive Order 6102 "..forbidding the Hoarding of Gold Coin, Gold Bullion, and Gold Certificates within the continental United States". The pretense was that "hoarding" gold was stalling economic growth and making the depression worse. The reality is: The government did not want its citizens to have any currency options other than those which the Federal Reserve printed. 

Don't let this same crime happen again.

Wake Up America!

Central banks are presumably so frightened that a growing number of citizens are abandoning rapidly devaluing paper currencies and preserving their wealth through precious metals that governments are now cracking down on the anonymous purchase of gold and silver.

Following the Austrian government’s announcement that it was restricting the sales of precious metals to $20,000 a time, an amount which would purchase just 11 ounces, the French authorities have followed suit with an equally draconian new measure to deter people from buying gold and silver.

A recently amended French law states (translation), “Any transaction on the retail purchase of ferrous and non ferrous (metals) is made by crossed check, bank or postal transfer or by credit card, not the total amount of the transaction may not exceed a ceiling set by decree. Failure to comply with this requirement is punishable by a ticket for the fifth class,” going on to confirm that any amount over €450 euros or $600 US dollars “must be paid by bank transfer”.

“According to independent reports the law was passed to curb the illegal sale of stolen metals like copper, steel, etc. Given the rampant rise in thefts of these metals from telephone poles, construction sites and businesses here in the United States, we can certainly see this as a reasonable assessment for why the French passed this law,” writes Mark Slavo.

“However, the fact that no exception was made for gold and silver simply cannot be ignored. The new law effectively makes it illegal to purchase even a single Troy ounce of gold or around 18 ounces of silver in cash.”

$600 USD isn’t even enough to purchase a half ounce of gold. This guarantees that citizens who are trying to transfer their savings over to precious metals will be known to the authorities, leaving them vulnerable to government confiscation of their gold and silver later on down the line, as happened in 1933 under FDR.

Why are central banks and governments in Europe so eager to make it as difficult as possible for citizens to buy precious metals? It’s largely because unlike every other financial commodity, they don’t have the market completely under their control, and cannot tolerate the idea of people having true power over their own economic destiny.

Secondly it’s because the great foundation stone of the globalists’ plan to create a federalized European superstate and the template for a future world currency – the euro – is crumbling amidst the debt crisis that has engulfed the continent. With eurozone members already preparing to abandon the single currency, the last thing the EU wants to see is European citizens of key member states like France doing the same thing by exchanging their euros for gold and silver.

The bottom line is that the central banks which run the world don’t like the slaves owning anything that they can’t manipulate the value of – it undermines their power monopoly.

In a related development, the London Gold Exchange, an international digital currency trader which has over 100,000 members, announced today that it is “permanently closed for business” due to operational difficulties.

The LGE provided a service whereby it exchanged fiat money for digital currencies stored in online user accounts, including c-gold, Liberty Reserve, Pecunix and v-money.

Article by Paul Joseph Watson, Prison Planet

America's Debt Woe Is Worse Than Greece's Yet We Continue To Spend Like We've Hit The Lottery!

Our government is utterly broke. There are signs everywhere one looks. Social Security can no longer afford to send us our annual benefit statements. The House can no longer afford its congressional pages. The Pentagon can no longer afford the pension and health care benefits of retired service members. NASA is no longer planning a manned mission to Mars.

We're broke for a reason. We've spent six decades accumulating a huge official debt (U.S. Treasury bills and bonds) and vastly larger unofficial debts to pay for Social Security, Medicare, and Medicaid benefits to today's and tomorrow's 100 million-plus retirees.

The government's total indebtedness -- its fiscal gap -- now stands at $211 trillion, by my arithmetic. The fiscal gap is the difference, measured in present value, between all projected future spending obligations -- including our huge defense expenditures and massive entitlement programs, as well as making interest and principal payments on the official debt -- and all projected future taxes.

The data underlying this figure come straight from the horse's mouth -- the Congressional Budget Office. The CBO's June 22 Alternative Fiscal Scenario presents nothing less than a Greek tragedy. It's actually worse than the Greek tragedy now playing in Athens. Our fiscal gap is 14 times our GDP. Greece's fiscal gap is 12 times its GDP, according to Professor Bernd Raffelhüschen of the University of Freiburg.

In other words, the U.S. is in worse long-term fiscal shape than Greece. The financial sharks are circling Greece because Greece is small and defenseless, but they'll soon be swimming our way.

To grasp the magnitude of our nation's insolvency, consider what tax hikes or spending cuts are needed to eliminate our fiscal gap. The answer is an immediate and permanent 64% increase in all federal revenues or an immediate and permanent 40% cut in all federal noninterest spending.

Such adjustments go miles beyond anything Congress and the president are considering. No wonder. They are focused on limiting growth in the official debt, while ignoring what's happening to the unofficial debt. To understand the thickness of their blinders, note that the fiscal gap, after inflation, grew by $6 trillion last year, whereas the official debt grew by only $1 trillion. Hence, our leaders are looking at one-sixth of the problem.

The August budget ceiling crisis deal calls for $2.5 trillion in budgetary savings over the next ten years. President Obama is unveiling plans Monday to cut the debt by $3 trillion. Both of these are peanuts compared to what's needed to start eliminating the fiscal gap.

There is a way forward to deal with both our fiscal mess and the economy, which is lying on the operating table in desperate need of open-heart surgery. Such surgeries are called radical because they require radical intervention. But they are also extremely safe compared with the alternative -- administering Band-Aids and letting the patient die.

At www.thepurpleplans.org, I provide five radical, but absolutely essential plans to fix taxes, health care, Social Security, the financial system, and energy policy. Collectively, they would more than eliminate the fiscal gap and get our economy out of the emergency room and onto the racetrack.

The plans are called purple because they should appeal to blue Democrats and red Republicans. If neither party adopts them, I guarantee that a third-party candidate running via www.americanselect.org will.

The Purple Tax Plan is of particular relevance now, given Obama's decision to push for a repeal of the Bush tax cuts for the rich and to levy a new tax on the super rich -- those with incomes above $1 million.

The president wants to raise taxes. Can't argue with that. We desperately need much higher revenues along with much lower expenditures. Federal revenues measured as share of GDP are at a postwar low. And the president wants the rich to bear a bigger share of the tax burden. It's hard to disagree with this either. The rich have been getting off far too easy for far too long.

But the Republicans want to ensure that more taxes don't mean more spending or smaller spending cuts than would otherwise arise. They also worry about high tax rates discouraging work, saving, and job creation by entrepreneurs.

Most of us agree with both the president and the Republicans, which is possible because they're both talking past each other. But what we really want is a tax system that's simple, transparent, fair, and efficient. Neither the personal income tax, the corporate income tax, nor the estate and gift tax meet these criteria. Each is a bigger nightmare than the next.

The Purple Tax Plan entails radical surgery. It eliminates the personal income tax, the corporate income tax, and the estate and gift tax. In their place it substitutes a highly progressive 17.5% federal retail sales tax plus a demogrant -- a monthly payment to each household, large enough that it reimburses the poor for the sales tax they've paid. (The 17.5% rate is the tax's nominal rate. Its effective rate is 15%, since 15 cents of every dollar spent goes to taxes and 85 cents to goods and services, with 15 divided by 85 equaling the 17.5% nominal rate.)

If you're a Democrat, a sales tax, apart from the demogrant, probably sounds highly regressive. But nothing could be further from the truth. Taxing consumption is mathematically identical to taxing what's used to buy consumption, namely one's wealth and one's wages. Warren Buffett would effectively pay 15% on his wages, but also 15% on the principal of all his wealth, which is not now being taxed.

The day the Purple Tax is implemented, Buffett will have the same number of dollars in wealth, but the purchasing power of his wealth will fall by 15%, thanks to the 17.5% higher costs of goods and services. And whether he spends his wealth on himself or gives it to his kids to spend, his wealth, plus any accumulated asset income, will buy 15% less in goods and services.

The Purple Tax also makes the payroll tax highly progressive by eliminating its ceiling and exempting the first $40,000 in wages from the employee portion of the tax. Finally, the Purple Tax includes a 15% inheritance tax on inheritances and gifts received in excess of $1 million.

Since the payroll tax is levied at close to a 15% rate, and the sales tax has an effective rate of 15%, and the inheritance tax rate is 15%, the Purple Tax plan imposes a single tax rate. This is very important for budgetary discipline. Under the Purple Tax, everyone will know that if Congress spends more on anything, the 15% effective tax rate will need to go up.

The ongoing food fight between Obama and the Republicans is hiding the real game -- spending ever-larger sums on ourselves and leaving ever-larger bills for our kids. This fiscal child abuse must stop. The Purple plans would let both sides claim victory, save our kids, and get our economy back in the race.

Article by Laurence J. Kotlikoff, Courtesy of CNN

Note: Laurence J. Kotlikoff, an economist, is a William Fairfield Warren Professor at Boston University, a columnist for Bloomberg and Forbes, and the author of 14 books including "Jimmy Stewart Is Dead" (John Wiley and Sons), "The Healthcare Fix" (MIT Press), and "The Coming Generational Storm" (co-authored with Scott Burns, MIT Press) 

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Those Who Do Not Learn From History...

This cartoon was published in the Chicago Tribune in 1934. We all know what was happening to our country during that time. 

Are we so ignorant as to not have learned our lesson from history? 

 

Click on image to enlarge

Wake Up America!

LESSONS FROM EGYPT

For the sake of the safety and well-being of our Republic, there are at least two lessons to be learned from the current Egyptian Event:

1.       America's leaders have been hypocritical, pretending to be what we have not been for far too long - i.e., defenders of the essential Principles underlying America's system of governance, and  

2.       A critical mass on the streets, imposing economic sanctions on the government, can peacefully remedy violations of natural Rights, when individuals and small groups cannot.

"All Men (including Egyptians) are created equal."

How utterly hypocritical it is for any public official in America, elected or appointed, to favor or facilitate despotism and its companion, "stability," at the expense of Individual Rights, limited government and democracy, whether in Egypt, Saudi Arabia, Syria, Jordan, Israel, China or anywhere else.

For far too long, America's leaders have been selling our souls for a plate of beans, pretending to be something they are not - i.e., defenders of the essential Principles underlying America's system of governance.

For decades, over many administrations and by both political parties, the public promises and assurances of America's leaders regarding limited government, individual Rights and the equality of man have been a deception, masking the true character of their collective acts, which actually sustain abusive government power over individual Rights.

Their acts, speaking louder than their words, have instead institutionalized abuse of power and populations around the Earth, all for the purpose of securing material bounty and geopolitical advantage, not in the national interest but for the few and privileged. 

The proof of this is demonstrated by America's foreign policy and its devastating, adverse impacts on the ordinary, non-aligned People of other countries. Egypt is but one example.

During the last three weeks, the political leadership of the United States, particularly the Executive, have appeared frequently on world-wide television to present statements regarding the obligation of Egypt's leaders to "address" the Grievances of the Egyptian People, respect the Natural Rights of Individuals and avoid violence.

These broadcasted claims by America's leaders, however, are nothing short of sheer hypocrisy when contrasted against the similar refusal by America's leaders to "Redress" the Grievances of the American People, repeatedly served via First Amendment Petitions for Redress, concerning gross violations of Rights guaranteed by our Constitution - (allegedly, still) the Law of the Land.

After America's leaders were finally shamed into finding quiet words of support for the unalienable Rights of common Egyptians, and forced to tacitly admit to America's policy of enduring support of the Egyptian dictator's despotic regime, we offer this reminder. These same U.S. leaders have, for over a decade now, steadfastly REFUSED  to Redress similar Grievances of the American People, that is, violations of our Constitution that continue to adversely impact the Life, Liberty and Prosperity of the American People, while continuing to wreak havoc, unrest and injustice abroad.

America's leaders during the Clinton, Bush and Obama administrations have refused to respond to the People's Petitions for Redress of Grievances, including those relating to: the application of the armed forces in hostilities overseas without congressional authorization;  the cartel of private banks known as the Federal Reserve System; the fiat (paper) Federal Reserve currency and fractional banking practices; the imposition of direct, un-apportioned taxes on labor; the virtual evisceration of the Bill of Rights by the USA Patriot Act; the failure of the Executive to "faithfully execute" existing immigration laws; the giving and lending of public funds to private entities for definitively private purposes; the use of public funds to bail out foreign currencies without congressional appropriations; the eligibility requirements of the office of President; and the movement towards a North American Union.

In true authoritarian style, between December 2006 and May of 2007, cornered by the persistent, highly visible pressure brought by members of our organization in the public exercise of the unalienable Right to Petition for Redress to hold the government accountable, the leaders of all three branches of the U.S. Government went as far as to collude in an veiled attempt to outlaw the First Amendment Right to Petition.

In short, just as we have witnessed in Egypt, Liberty is a force of Nature and no People can be expected to forever be deprived of their individual, unalienable and natural Rights, Freedoms and Liberties.

We, the People of America must hold America's leaders accountable to the following essential principles of Just and Lawful Governance:

·         All men (including Egyptians) are created equal; equality is not an American monopoly.

·         All men are endowed by their Creator with certain unalienable Rights, including Life, Liberty and the Pursuit of Happiness. Egyptians, too, have them simply because they are alive. Life-furnished Rights are not an exclusive American commodity.

·         To secure these Rights, governments are instituted among men; Government's sole purpose in America and elsewhere is to protect the Rights of their sovereign People.

·         People everywhere have the unalienable Right to Petition their Governments for Redress of Grievances if their Rights are being repressed, ignored and violated; All governments of, by and for the People are obligated to respond.

·         Whenever any form of government becomes destructive of these ends, it is the Right of the People to alter or abolish it; the Right to think freely and to hold the Government accountable extends to all People in America and beyond. 

Governments that prefer the calm seas of despotism rather than the boisterous sea of Liberty, where waves crash whenever Freedom is challenged, ought to be avoided like the plague by Americans and their leaders.

What is America after all, if it has all but abandoned its essential values both at home and abroad?  How can We, as a People, continue to claim moral primacy and spiritual authority for our acts when as a nation we have essentially forsaken our Founding Principles? 

The truth is coming to the surface and cannot be hidden; for decades America's leaders have used the unlawfully extracted wealth of this nation's citizens and violated its Constitution almost without restraint, to immorally and unlawfully meddle in the internal affairs of foreign countries, taking sides and assisting knowingly corrupt governments that openly oppress and violate the natural Rights, Freedoms and Liberties of the Free and Equal People within their borders.

America is now paying a heavy price for our hypocrisy.

As Ronald Reagan put it, "Government is the enemy of Freedom." Thus, every country has its Freedom Fighters whose Natural causes are limited government, individual Liberty and equality under the Law.

When the populations of despotic, authoritarian regimes realize the United States is the "friend" of their Governments, is it any wonder that America would have hostilities directed at us by those people, knocking down our buildings and the like? Even Osama Bin Laden and Michael Scheuer have told us this is so. Click to read the Petition regarding unconstitutional Foreign Aid.

So in the end, it is you and I, the working citizens of America, who end up not only financing, but becoming enduring victims of a "War on Terror" and its companion police state, all in the name of "security," but in clear violation of the Constitution which begins:

"We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America."

Despite the fact our nation may well have enemies, ironically many created as a product of our own ill-conceived foreign policies, a global war on terror and domestic police state do not serve the general Welfare of the People of the United States of America and should not be tolerated.

Where will it end?

Is there an alternative to a critical mass on the streets of America, imposing economic sanctions on the government, demanding an end to the police state and rising en masse to call for a foreign policy centered on the belief that the principal obligation of all governments is to protect the Creator-endowed, equal Rights of all men? 

 

Could a critical mass of Americans peacefully remedy the continuing violations of our Constitution, where individuals and small groups have thus far failed?

Article Courtesy of We The People