Three decades ahead – America’s dead-end economics

Big government central-planning is the problem.  Not the solution.

“Heading Off the Entitlement Meltdown” – WSJ 7-21-14                                                 Excerpts:

The Congressional Budget Office (CBO) “alternative baseline” projects that the U.S. government will add $10 trillion in new debt over the next decade. This will be “followed by $100 trillion over the subsequent two decades. Consequently, the CBO simply stops calculating the national debt after 36 years.”

“Apparently its models cannot conceive of a functioning economy” beyond that point.

This CBO projection also happens to be based upon a “rosy scenario” economic outlook, featuring “no more recessions, wars, terrorist attacks or natural catastrophes, and that interest on the national debt will be permanently held down by near-record low interest rates…”

It also features a highly questionable healthcare assumption – that the Affordable Care Act’s price controls will actually hold true to form for the next 30 years.

The government’s annual spending averaged about 20% of GDP over the past 50 years, but under the CBO’s forecast, “is projected to jump to 23%, 29%, and then 34% of the economy over the next 30 years.”
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These patterns are not sustainable. America is boxed in, with no politically feasible way out.

It is time for a for America to turn away from the big government, central-planning model, and reclaim an economic liberty model for our citizens.

The Leviticus 25 Plan.

Commerzbank AG – #22 recipient of Fed’s ‘secret liquidity lifelines’

Commerzbank AG, headquartered in Frankfort, is the second largest bank in Germany.

Bloomberg  Nov 28, 2011  –  Excerpts:
Commerzbank AG agreed to buy Dresdner Bank AG from the insurer Allianz SE for 9.8 billion euros ($14.4 billion) on Aug. 31, 2008. Two weeks later, Lehman Brothers Holdings Inc. filed for bankruptcy, sinking global markets and saddling both banks with bad loans and trading writedowns.

While the Dresdner price was later renegotiated down to 5.1 billion euros, by 2009 Commerzbank was heading for an annual loss and getting emergency liquidity from the U.S. Federal Reserve. Commerzbank borrowed as much as $22 billion from the Fed in July 2009.

The bank, which also had to get about 18 billion euros ($26 billion) of capital injections and 15 billion of debt guarantees from the German government, declined to say whether it got emergency liquidity from Germany’s central bank.

Peak amount of debt on 7/16/2009: $22 billion

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Commerzbank and Dresdner, chasing ‘yield’ in the red-hot subprime market, wired themselves up with some of Lehman’s supposedly high-grade securitized mortgage instruments.  The highly leveraged Lehman bled out quickly when the housing market collapsed and default waves began rolling in.  And Commerzbank and Dresdner got body-slammed with bad loans and trading write-downs.’

U.S. citizens, who did not make those disastrous investments were then called in to bail out Commerzbank…. to the tune of $22 billion.  To help make this foreign bank ‘healthy’…

You’ve got to be kidding me…  big banks made disastrous investments and get ‘bailed out.’  And we get ‘austerity’…(?)

It’s time to level the playing field.  It is time for U.S. citizens to receive nothing less than that same access to direct liquidity infusions that foreign banks received from the Fed.

It is time to make our own American families ‘healthy.’

The Leviticus 25 Plan.

Hidden costs of the financial crisis ‘bailout’ – working Americans are now taking the ‘haircut’

The Federal Reserve and the Treasury Department orchestrated trillions of dollars in liquidity transfusions to rescue the financial sector – primarily favoring the largest banking conglomerates in the world – along with a few other choice sectors, during the ‘economic meltdown’ years from 2008 to 2012.

Here is a partial list of the ‘big players’ (keep in mind that many, or most, of these companies created their own massive ‘capital holes’ with high-risk bets on subprime mortgage assets, collateralized debt obligations (CDOs) and enormous counterparty risk in credit default swap (CDS) hedging positions:
Morgan Stanley
Citigroup
Bank of America
Royal Bank of Scotland
State Street Corp
UBS AG
Goldman Sachs
JPMorgan Chase & Co
Deutsche Bank AG
Barclays Plc
Merrill Lynch
Credit Suisse Group AG
Dexia
Wachovia
Lehman Brothers
Wells Fargo
Bear Stearns
BNP Paribas

Bailing out these big companies involves creating trillions of dollars of cash and credit, out of thin air, came with a price. It has degraded the purchasing power of the U.S. Dollar.  And working Americans are now paying the price for these mega-giveaways – through the power of inflation.

QE1 was rolled out in March 2009. At that time, the average price of a gallon of gas in the U.S. was $1.91 / gal. The latest report for July 2014 shows the average price now at $3.59 / gal. This works out to an 88% increase in the price of gas – or more accurately an 88% decrease in the purchasing power of the Dollar vs gasoline.

This amounts to a 17% annualized loss of purchasing power of the Dollar vs gasoline.

The chart immediately below shows a more broad-ranging loss of purchasing power of the Dollar from 2000 through 2014.

costoflivingxpenses-7-1-14

This working American ‘haircut’ is particularly evident chart below. Note the decline in Real (inflation-adjusted) Median Household Income for the years 2008 – 2012.

median household income

(Charts accessed from ZeroHedge)

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The Leviticus 25 Plan levels the playing field – providing American families with the same access to liquidity that was given to the mega-banks and other preferred entities during 2008-2012.

It provides the mechanism for American families to regain ‘financial health.’

 

 

 

 

 

America’s monster debt hole – and the only way out…

Total Credit Market Debt Owed (TCMDO) covers all U.S. debt, public and private.
The chart below from the St. Louis Fed shows the massive gap that has developed over the past 25 years between TCMDO and Gross Domestic Product (GDP).

Total Credit Market Debt Owed has reached $54 trillion dollars (as of 2012), in a $16 trillion dollar economy (GDP).

This debt gap is an enormous drag on economic growth and financial stability for American families. And no one in government has any viable solution. No one.

Their ‘solutions,’ by default are Fed balance sheet expansion (fiat money printing), and austerity (which will hit only the working poor and the middle class).

The Leviticus 25 Plan is the only plan anywhere in America today – that offers a legitimate solution to this gigantic debt burden and enormous social dilemma.

The Leviticus 25 Plan provides a dynamic mechanism for the elimination of massive amounts of debt at the family level – through direct liquidity extensions to U.S. citizens.
The Plan will re-ignite economic growth.

It will breathe new efficiencies into the economy (healthcare, housing, family finances) through free market dynamics – and slow the rate of inflation.

It will lift people out of poverty, rather than facilitating poverty through government dependence and economic disincentives.

The Leviticus 25 Plan will ‘balance the budget’ for America. And it will pay for itself over a period of 10-15 years.

Leviticus 25 Plan: the precedent

“PROCLAIM LIBERTY THROUGHOUT ALL THE LAND

 UNTO ALL THE INHABITANTS THEREOF”

 Leviticus 25:10

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Leviticus, chapter 25 outlines a divinely inspired plan which “the Lord spake unto Moses” in proclaiming a unique period of Jubile. “And ye shall hallow the fiftieth year, and proclaim liberty throughout all the land unto all the inhabitants thereof” (verse 10).

Debtors – bondmen and bondmaids – were granted liberty from their indebtedness. Property was returned to the rightful owners, and distinct benefits were accorded “the poor, who now were acquitted from all their debts, and restored to their possessions” (Wesley). Leviticus 25:17 sets forth the solemn reminder, “Ye shall not therefore oppress one another; but thou shalt fear thy God: for I am the Lord your God.”

Jubile “set bounds both to the insatiable avarice of some, and the foolish prodigality of others, that the former might not wholly and finally swallow up the inheritances of their brethren, and the latter might not be able to undo themselves and their posterity forever, which was a singular privilege of this law and people.” (Wesley)

Jubile provided a fresh start with economic liberties and a societal rebalancing to counter permanent class structures.

America needs a plan that is modeled upon these divine concepts – an economic recovery plan that directly benefits American citizens in a timely manner.

108,592,000 on social welfare programs – not sustainable. America needs dynamic change: The Leviticus 25 Plan.

Background:                                                                                                         Cybercast News Service, April 16, 2014 Apr 16, 2014 – by Terence P. Jeffrey   Excerpts:

“Buried deep on the website of the U.S. Census Bureau is a number every American citizen, and especially those entrusted with public office, should know. It is 86,429,000. That is the number of Americans who in 2012 got up every morning and went to work — in the private sector — and did it week after week after week.

[snip]

First, let’s look at the basic taxonomy of the full-time, year-round American worker. In 2012, according to the Census Bureau, approximately 103,087,000 people worked full-time, year-round in the United States. “A full-time, year-round worker is a person who worked 35 or more hours per week (full time) and 50 or more weeks during the previous calendar year (year round),” said the Census Bureau. “For school personnel, summer vacation is counted as weeks worked if they are scheduled to return to their job in the fall.”

Of the 103,087,000 full-time, year-round workers, 16,606,000 worked for the government. That included 12,597,000 who worked for state and local government and 4,009,000 who worked for the federal government.

The 86,429,000 Americans who worked full-time, year-round in the private sector, included 77,392,000 employed as wage and salary workers for private-sector enterprises and 9,037,000 who worked for themselves. (There were also approximately 52,000 who worked full-time, year-round without pay in a family enterprise.)

At first glance, 86,429,000 might seem like a healthy population of full-time private-sector workers. But then you need to look at what they are up against.

The Census Bureau also estimates the size of the benefit-receiving population.

[snip]

In the last quarter of 2011, according to the Census Bureau, approximately 82,457,000 people lived in households where one or more people were on Medicaid. 49,073,000 lived in households were someone got food stamps. 23,228,000 lived in households where one or more got WIC. 20,223,000 lived in households where one or more got SSI. 13,433,000 lived in public or government-subsidized housing. Of course, it stands to reason that some people lived in households that received more than one welfare benefit at a time.

To account for this, the Census Bureau published a neat composite statistic: There were 108,592,000 people in the fourth quarter of 2011 who lived in a household that included people on “one or more means-tested program.”

Those 108,592,000 outnumbered the 86,429,000 full-time private-sector workers who inhabited the United States in 2012 by almost 1.3 to 1.”

[Note:  The above number (108,592,000) does not include Social Security and Medicare enrollees who have paid money into those trust funds, nor does it include veterans who “served their country in the most profound way possible.”]

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The 1:3 ratio above is hardly sustainable, especially since means-tested welfare and income security programs include built-in incentives for individuals to ‘not work.’ Our government has constructed social welfare programs that penalize people (loss of benefits) who ‘find a job’ (full or part-time) and earn ‘new income.’

The Leviticus 25 Plan does not penalize people for becoming gainfully employed. They do not lose even a ‘nickel’ for working and earning new income.

This plan gives Americans a dynamic ‘hand-up,’ instead of continuing on with a monthly dribble of social welfare ‘hand-outs.’

Millions of Americans who are on the 80+ means tested welfare programs, income security programs, and receiving unemployment compensation are not long-term entitlement-minded people. They actually landed in those programs in the wake of the 2007-2010 economic meltdown.

It should not be assumed that they wouldn’t want to work and want to regain self-reliance – if the system did not penalize them for earning of new income.

It is also worth noting that ‘the system’ rewarded Wall Street mega-firms and hedge funds and foreign banks and hedge funds with massive cash transfers, credit lines, foreign swap lines – trillions of dollars’ worth – to many of the very companies ‘leveraged up’ with junk securities and nearly brought the U.S. economy to a grinding halt.

The current system is not sustainable. America needs a change that starts at ground level – with American families.

The Leviticus 25 Plan.

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Norinchukin Bank – #21 recipient of Fed’s “secret liquidity lifelines.”

Norinchukin Bank is a Japanese bank with a hefty U.S. investment portfolio (over $800 billion). It is Japan’s largest hedge fund and has branches overseas in New York, London, and Singapore.

Bloomberg notes below that Norinchukin routinely accessed the Federal Reserve discount window for “usual fundraising needs for U.S. dollars.”

Bloomberg  Nov 28, 2011:
While the U.S. Federal Reserve’s website says its 97-year-old discount window is designed to “relieve liquidity strains in a depositary institution,” Norinchukin Bank made the discount window part of the business plan. “We used the Fed’s discount window as part of our usual fundraising needs for U.S. dollars,” Junji Okamoto, a spokesman for Japan’s largest lender for farmers and fishermen, said in an interview.

“We did not have any special urgency or specific needs for the borrowing.” The Tokyo-based lender, owned by more than 4,000 shareholders including farm, fishing and forestry cooperatives, kept a $6 billion balance at the discount window from October 2008 through October 2009. Its overall Fed borrowings peaked at $22 billion in June 2009.

Peak amount of debt on 6/29/2009: $22B

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Question: If a Japanese Bank / hedgefund with shareholders from 4,000 Japanese cooperatives can routinely draw liquidity infusions from the Federal Reserve, then would there be a reasonable basis for allowing U.S. citizens direct access to the same liquidity?

Answer: Yes.

The Leviticus 25 Plan.

 

 

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