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.’

 

 

 

 

 

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