2009-2013: Fed printing erodes Dollar – Americans losing purchasing power

The Federal Reserve and the Treasury Department have been printing up and pumping out fiat dollars and ‘zero-interest credit’ since late 2008.  The resulting erosion in the value of the U.S. Dollar does not show up much in the official CPI reports (where “CPI has averaged only 2% since the end of the Great Recession in early 2009”).

In the real world, “many basic commodities have soared since then. Gold was $930 an ounce when the recession ended, and today it’s just over $1,600. That’s an increase of 70% in four years, or an annualized rate of over 14%.

“The Reuters CRB Commodity Index, which tracks the prices of energy, coffee, cocoa, copper, cotton, etc. is up 38% over four years, or 8.6% at a compound annual rate.

The price of gasoline has gone up from $2.60 a gallon when the recession ended to around $3.70 today nationally. That’s a 41% increase in four years, or an annualized rate of 9%. Taxes have gone up almost as much. Federal, state and local income taxes have risen 35% over four years, an annualized rate of 7.8%.”

“Then there’s the so-called “Big Mac Index” that was popularized by The Economist some years ago. McDonald’s hamburgers are available in many countries and their prices reflect the cost of food, fuel and basic labor. The price of a Big Mac, therefore, can be yet another indicator of inflation in a particular country. Since the recession ended, the cost of a Big Mac in the US has risen from an average of $3.57 to $4.37, or 5.2% a year.”

Otherwise, how well has the government’s “print and credit’ agenda for major banks worked out for American families?

“Real median annual household income in January of this year was $51,584 – or 92.7% of the level in January 2000. Incomes inched up early in 2012 but have been treading water since May, according to the Household Income Index. While household income ticked up slightly in the past year, it remains well below the $54,008 level seen at the start of the recovery roughly four years ago.”

While the “headline Consumer Price Index has hovered around 2% for the last four years,” other key measurements are in the “5%-8% range.”

“Keep in mind that “our government has a record $16.7 trillion in debt it is paying interest on. If interest rates rise, it costs Uncle Sam more money. If inflation rises, interest rates follow. Obviously, the government has incentives to manipulate [ or massage] the official inflation rate lower than it really is.”

Source:  Gary D. Halbert – Commentary on Inflation: 3-23-13

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With the massive ($85 billion/month) on-going Fed printing agenda, there will be continued erosion of the Dollar, and American families will continue to get ‘squeezed’ by the inflationary impact.

The Leviticus 25 Plan offers substantial debt relief at the family level.  And this would be an important first step in shielding American families from even greater “ inflationary winds” which are certain to blow in over the months and years ahead.

 

U.S. household debt: $11.34 trillion aggregate, $978 billion delinquent; $8.3 trillion mortgage debt, 5.6% of mortgages delinquent – ‘Cleanup’ needed

NY Federal Reserve Bank

Quarterly Report on Household Debt and Credit – February 2013

Household Debt and Credit Developments in 2012 Q41

Aggregate consumer debt increased slightly in the fourth quarter, by $31 billion, a reversal from the downward trend that has been in place since the fourth quarter of 2008. As of December 31, 2012, total consumer indebtedness was $11.34 trillion, 0.3% higher than its level in the third quarter of 2012.

Overall consumer debt remains considerably below its peak of $12.68 trillion in 2008Q3.

Mortgages, the largest component of household debt, were roughly flat. Mortgage balances shown on consumer credit reports stand at $8.03 trillion, roughly unchanged from the level in 2012Q3. Home equity lines of credit (HELOC) were the only product to see a substantive decline in the fourth quarter; balances dropped by $10 billion (1.7%) and now stand at $563 billion. Non-housing household debt balances increased for the third consecutive quarter and now stand at 2.75 trillion, up by 1.3% in the fourth quarter. All non-housing components increased, with auto loans up by $15 billion; student loans up by $10 billion, and credit card balances up by $5 billion

Overall, delinquency rates continued to improve in 2012Q4. As of December 31, 8.6% of outstanding debt was in some stage of delinquency, compared with 8.9% in 2012Q3.

About $978 billion of debt is delinquent, with $712 billion seriously delinquent (at least 90 days late or “severely derogatory”).

Delinquency transition rates for current mortgage accounts were stable through 2012, with 1.8% of current mortgage balances transitioning into delinquency in the fourth quarter. The rate of transition from early (30-60 days) into serious (90 days or more) delinquency was also roughly stable, ending the year at 26.1%. The cure rate – the share of balances that transitioned from 30-60 days delinquent to current – improved slightly in the quarter and now stands at 28.1%.

About 336,000 consumers had a bankruptcy notation added to their credit reports in 2012Q4, a 21% drop from the same quarter last year, and the eighth consecutive drop in bankruptcies on a year-over-year basis.

Housing Debt

• Originations, which we measure as appearances of new mortgage balances on consumer credit reports, rose to $553 billion. The level of originations has been increasing since bottoming out in the third quarter of 2011.

• About 210,000 individuals had a new foreclosure notation added to their credit reports between September 30 and December 31, a slowdown of 13.3%, continuing the downward trend.

• Mortgage delinquency rates continued to improve in 2012Q4, with 5.6% of mortgage balances 90+ days delinquent, compared to 5.9% in the previous quarter.

Delinquency rates in Home Equity Lines of Credit, which stood at 4.9% in the third quarter, dropped to 3.5%; a decline that can be attributed in large part to unusually high charge-offs of delinquent HELOCs this quarter.

Student Loans

Outstanding student loan balances increased by $10 billion during the fourth quarter, to a total of $966 billion as of December 31, 2012.

• The 90+ day delinquency rate on student loans continues to rise and now stands at 11.7%.

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U.S. household debt: $11.34 trillion aggregate, $978 billion delinquent; $8.3 trillion mortgage debt, 5.6% of mortgages delinquent.

Nationwide, American families continue to be burdened with a heavy debt loads.

Over the past 4 years, the Federal Reserve ‘created’ trillions of fiat dollars to resuscitate large commercial banks and investment banks after the ‘implosion’ of their high-risk, blind-bet gambling spree with subprime debt and derivatives.

The Fed’s massive ‘free money’ handouts to the big banking enterprises came with a price – erosion of the U.S. Dollar.

And American families are paying the price, the ‘hidden’ tax called inflation.

Note the 80% erosion of the Dollar vs 1 gallon of gasoline over the past 4 years:

U.S. average price/gallon gasoline on Jan 20, 2009:  $1.86                                        U.S. average price/gallon gasoline on Jan 21, 2013:  $3.35

It is now time for equal treatment for American citizens – with direct, 0% interest credit extensions.

Debt ‘Cleanup’ action is needed at the family level.  Now. 

The Leviticus 25 Plan.

Final note:

RealtyTrac: 1.8 million foreclosure filings in the U.S. during calendar year 2012.          January 2013:  Foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 150,864 U.S. properties                                        February 2013:  154,281 Foreclosure filings.

ShadowStats 3-8-13U6 unemployment is hovering at 14.3%  (ShadowStats estimates the true rate at 23%).

USDA – an all-time high of 47,791,966 Americans closed 2012 on the rolls for Electronic Benefits Transfer (EBT) cards…  a record 19.56% of eligible Americans are on Foodstamps. In December an additional 109,924 Americans became reliant on foodstamps for their poverty-level needs, bringing the total to 47.8 million.

 

Big banks, criminal enterprise, and favorable treatments

One of the main underlying presumptions of The Leviticus 25 Plan is that U.S. citizens should be treated with the same deference that many of the ‘too big to fail’ banks have received (and continue to receive).

Take HSBC, for instance.  This major U.K. banking titan (formerly the Hong Kong Shanghai Banking Corp) and current Fed-approved Primary Dealer, had purchased massive levels of credit default swaps from AIG  by the fall of 2008 – evidently without checking on the creditworthiness (and reserve levels) of AIG.

The housing bubble popped that fall, and AIG went ‘toes up’ as their counterparties (HSBC and numerous others) sought to collect.

The U.S. government immediately stepped in to fully fund (100 cents on the dollar) a $90 billion payout (“collateral postings”) to the major AIG counterparties involved.  

HSBC Holdings received a pass-through payment, courtesy of U.S. taxpayers, of $3.5 billion.

And… it was recently revealed that HSBC has been running “the largest drug-and-terrorism money laundering case ever” uncovered by the Justice Department.  The penalty – a slap on the wrist.                                                                                        

The Leviticus 25 Plan proposes that U.S. citizens be accorded the same financial deference that banking conglomerates like HSBC have been receiving.

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REUTERSHSBC among banks that received AIG payouts (03-16 12:59)
American International Group has disclosed that US and European banks such as HSBC have been among the biggest beneficiaries of the up to US$180 billion (HK$1.4 trillion) taxpayer bailout of the insurer.
AIG disclosed that more than US$90 billion has been paid to banks through collateral postings under credit default swaps, payments to CDS counterparties and payments to securities lending counterparties from September 16 to the end of December.Based on data provided by AIG, the largest recipients of funds are:
Goldman Sachs Group US$$12.9 billion
Societe Generale US$11.9 billion
Deutsche Bank US$11.8 billion
Barclays US$8.5 billion
Merrill Lynch US$6.8 billion
Bank of America Corp US$5.2 billion
UBS US$5 billion
BNP Paribas US$4.9 billion
HSBC Holdings US$3.5 billion
Dresdner US$2.6 billion
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(Excerpts from Rolling Stone)
February 14, 2013 8:00 AM ET
The deal was announced quietly, just before the holidays, almost like the government was hoping people were too busy hanging stockings by the fireplace to notice. Flooring politicians, lawyers and investigators all over the world, the U.S. Justice Department granted a total walk to executives of the British-based bank HSBC for the largest drug-and-terrorism money-laundering case ever. Yes, they issued a fine – $1.9 billion, or about five weeks’ profit – but they didn’t extract so much as one dollar or one day in jail from any individual, despite a decade of stupefying abuses.   
                    
For at least half a decade, the storied British colonial banking power helped to wash hundreds of millions of dollars for drug mobs, including Mexico’s Sinaloa drug cartel, suspected in tens of thousands of murders just in the past 10 years – people so totally evil, jokes former New York Attorney General Eliot Spitzer, that “they make the guys on Wall Street look good.”  The bank also moved money for organizations linked to Al Qaeda and Hezbollah, and for Russian gangsters; helped countries like Iran, the Sudan and North Korea evade sanctions; and, in between helping murderers and terrorists and rogue states, aided countless common tax cheats in hiding their cash.                     
                                          
“They violated every [sic] law in the book,” says Jack Blum, an attorney and former Senate investigator who headed a major bribery investigation against Lockheed in the 1970s that led to the passage of the Foreign Corrupt Practices Act. “They took every imaginable form of illegal and illicit business.”                                                         
In April 2003, with 9/11 still fresh in the minds of American regulators, the Federal Reserve sent HSBC’s American subsidiary a cease-and-desist­ letter, ordering it to clean up its act and make a better effort to keep criminals and terrorists from opening accounts at its bank. One of the bank’s bigger customers, for instance, was Saudi Arabia’s Al Rajhi bank, which had been linked by the CIA and other government agencies to terrorism.
According to a document cited in a Senate report, one of the bank’s founders, Sulaiman bin Abdul Aziz Al Rajhi, was among 20 early financiers of Al Qaeda, a member of what Osama bin Laden himself apparently called the “Golden Chain.” In 2003, the CIA wrote a confidential report about the bank, describing Al Rajhi as a “conduit for extremist finance.” In the report, details of which leaked to the public by 2007, the agency noted that Sulaiman Al Rajhi consciously worked to help Islamic “charities” hide their true nature, ordering the bank’s board to “explore financial instruments that would allow the bank’s charitable contributions to avoid official Saudi scrutiny.” (The bank has denied any role in financing extremists.)
For more than half a decade, a whopping $19 billion in transactions involving Iran went through the American financial system, with the Iranian connection kept hidden in 75 to 90 percent of those transactions. HSBC has been headquartered in England for more than two decades – it’s Europe’s largest bank, in fact – but it has major subsidiary operations in every corner of the world. What’s come out in this investigation is that the chiefs in the parent company often knew about shady transactions when the regional subsidiary did not. In the case of banned Iranian transactions, for instance, there are multiple e-mails from HSBC’s compliance head, David Bagley, in which he admits that HSBC’s American subsidiary probably has no clue that HSBC Europe has been sending it buttloads of banned Iranian money.
By that time, numerous agencies, including the Department of Homeland Security, had crawled all the way up HSBC’s backside, among other things examining it as part of a major international narcotics investigation. In one four-year period between 2006 and 2009, an astonishing $200 trillion in wire transfers (including from high-risk countries like Mexico) went through without any monitoring at all. The bank also failed to do due diligence on the purchase of an incredible $9 billion in physical U.S. dollars from Mexico and played a key role in the so-called Black Market Peso Exchange, which allowed drug cartels in both Mexico and Colombia to convert U.S. dollars from drug sales into pesos to be used back home. Drug agents discovered that dealers in Mexico were building special cash boxes to fit the precise dimensions of HSBC teller windows.                                                                                               
Former bailout inspector and federal prosecutor Neil Barofsky, who has helped secure numerous foreign money-laundering indictments, points out that the people HSBC was doing business with, like Colombia’s Norte del Valle and Mexico’s Sinaloa cartels, were “the worst trafficking organizations imaginable” – groups that don’t just commit murder on a mass scale but are known for beheadings, torture videos (“the new thing now,” he says) and other atrocities, none of which happens without money launderers. It’s for this reason, Barofsky says, that drug prosecutors are not shy about dropping heavy prison sentences on launderers. “Frankly, our view of money-laundering was that it was on par with, and as significant as, the traffickers themselves,” he says.
Barofsky was involved in the first extradition of a Colombian national (Pablo Trujillo, a member of the same cartel that HSBC moved money for) on money­laundering charges. “That guy got 10 years,” says Barofsky. “HSBC was doing the same thing, only on a much larger scale than my schmuck was doing.”
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American citizens deserve at least as much regard from its own government as major banking conglomerates have been receiving, particularly those engaging in blatant criminal activity.
The Leviticus 25 Plan.