The U.S. debt mountain – a light at the end of the tunnel

The U.S. debt mountain is formidable.

………………………………………………………..                                                                   Excerpts from: ZeroHedge 12/22/2014  Submitted by Bill Bonner via Acting-Man blog,

US GDP is reported to be $18 trillion a year – with $3.5 trillion coming from US federal government spending. Add state and local government spending, and the total rises to more than $6 trillion.

This means that the private sector – the part that pays the bills – is only $12 trillion. Total debt – government, corporate and personal – in the US is now $58 trillion…. That’s nearly five times the real economy that supports it.

And it helps explain why it is so hard to “grow your way out” of debt.       Assuming an annual interest rate of 2%, even if you could contain debt increases to 3% of GDP a year, the productive part of the economy would have to grow at 5% just to stay even. No developed economy in the world is growing that fast.

At an interest rate of 3%, the annual interest on $58 trillion is $1.7 trillion. That’s slightly less than 10% of GDP. But it’s 14% – or one of every seven dollars – of the private sector economy.

And as recently as January 2002, the 10-year Treasury note yielded over 5%. If the average interest rate were to rise to that level again – and sooner or later it will – it would take $3 trillion to service America’s debt – or one-quarter of private sector output.

That can’t happen. The wings would fall off first. There would be a bear market in stocks and a depression in the economy – wiping out trillions of dollars of unaffordable debt and unworkable investments.

credit market debt vs GDP-cartoonversion

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There is a “light at the end of the (debt) tunnel.”  

It starts with massive debt reduction at ground level for U.S. citizens in the form of liquidity extensions, direct to American families, administered through a Fed-based Citizens Credit Facility.

If the U.S. doesn’t do something ‘creative’ real soon, there will come a cold, hard, grinding  ‘reset’ of hard assets vs paper.  And there is likely to be a lot of ‘disorder’ in the markets.

The Leviticus 25 Plan is the only comprehensive plan anywhere that can get America moving forward again.

Ask your members of Congress what their plan is…

The Leviticus 25 Plan 2015 – $70,000 per U.S. citizen                                                   The Leviticus 25 Plan 2015 (699)

 

 

Populist ideals – and The Leviticus 25 Plan

Populist solutions for serious, mainstream issues of an era are known to take root and blossom when public policies have shifted dramatically in favor of government control over people’s lives, and unabashedly favor wealthy, politically-connected individuals and groups.

Populist fervor thrives when public policies have so distorted the economic and social landscapes that trust in government is lost.

William A. Galston (WSJ – Dec 16, 2014) recently summarized the hallmarks of the current populist wave:
Populist movements flourish when established leaders and parties fail to solve their countries’ most urgent problems. Throughout the market democracies, one problem dominates all others: the economic squeeze on working- and middle-class families. Neither the center-left nor the center-right has responded in ways that make sense to rank-and-file citizens. So they are looking elsewhere.

Populism offers many satisfactions. Its narrative is clear and easy to understand. It identifies villains—corrupt officials, unresponsive bureaucracies, arrogant elites, large corporations, giant banks…

It legitimizes outrage, the expression of which is one of the greatest human pleasures. It flatters the people, whose virtue and common sense, it claims, could set the country right if only rich and powerful forces didn’t stand in their way. “The humblest citizen in all the land,” declaimed William Jennings Bryan more than a century ago, “when clad in the armor of a righteous cause, is stronger than all the whole hosts of error that they”—the elites—“can bring.”

Populism is the politics of nostalgia. It appeals to a better time in the past….
The ills against which populists inveigh are rarely illusory. On the contrary: Populism typically gives voice to genuine grievances, and in so doing gains credibility and energy.

At the heart of the American dream is the promise of opportunity. But in the ABC/Washington Post survey conducted days before the 2014 midterm elections, 71% of Americans said the U.S. economic system generally favors the wealthy. Only 24% disagreed. The favors-the-wealthy supermajority included 54% of Republicans, 59% of conservatives, 64% of college graduates—and even 57% of those making more than $100,000 per year.
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Government leaders in America today have failed to solve our nation’s most urgent problems,” both social and economic. The same can be said for the governments of many other nations around the world.

Governments have not “responded in ways that make sense to rank-and-file citizens.”

The Leviticus 25 Plan appeals to “virtue and common sense….its narrative is clear and easy to understand. It identifies villains – corrupt officials, unresponsive bureaucracies, arrogant elites, large corporations, giant banks…”

The Leviticus 25 Plan levels the playing field.  It grants individual citizens the same access to liquidity that was awarded to the likes of Morgan Stanley, Goldman Sachs, UBS, Bank of America, State Street, Barclays, GE Capital, and many, many others during the financial crisis years of 2007-2010..

The Leviticus 25 Plan provides for massive debt relief and economic liberty at the family level. It unleashes the power of free-market dynamics and counters price and supply distortions that have emerged with government control over markets.

It generates massive government tax revenues – without raising taxes.  And it pays for itself over a 10-15 year period.

This is the only plan, anywhere, that restores order and cleans things up.

The Leviticus 25 Plan 2015 – $70,000 per citizen                                                      The Leviticus 25 Plan 2015 (693)

Six global banks – and the manipulation of world currencies

Six major banks were recently fined $4.3 billion by regulatory agencies for rigging foreign exchange (FOREX) benchmarks at “crucial moments” on given trading days during 2008 though 2013.

The investigation by four regulatory agencies determined that traders from the big banks manipulated “two key exchange rates, or ‘fixes,’ set each day. One of them, the WM/Reuters fix, is based on trading in a one-minute window around 4pm every day in London. The other, the ECB fix, is a snapshot of the market at 2:15pm in Frankfurt.” (Source: Bloomberg, Nov 12, 2014)

According to the Wall Street Journal (Nov 12, 2014), “Improprieties in the $5.3-trillion-a-day foreign-exchange market have the potential to touch broad swaths of the public. Every time companies or individuals do business in a foreign currency, they are subject to the whims of a market that regulators said has been rife with misconduct by a group of bank traders.”

Here are the banks and the fines levied against each by the four regulating agencies:

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During the very time that these six banks had been rigging FOREX benchmarks (2008-2013), they had also been receiving essentially free liquidity via the Fed Discount Window, as well as billions of dollars in bailouts and emergency loans through the various credit facilities created by Federal Reserve.

Ultimately, these free-money rescue operations are extracted from the hides of U.S. taxpayers, and foreign countries whose currencies are pegged to the Dollar, through an insidious Dollar debasement effect.

The six major banks received billions through the various lending facilities created by the Federal Reserve (dollar figures identify Peak Amount of Debt extended by the Fed for a given date):
Citigroup    $99.5B on 1/20/2009
JP Morgan $68.6B on 10/1/2008
UBS            $77.2B on 11/28/2008
RBS            $84.5B on 10/10/2008
HSBC             $3.7B on 3/12/2009
Bank of America $91.4B on 2/26/2009

Six major banks that rigged FOREX ‘fixes,’  received billions of dollars in Fed (read: U.S. taxpayer) bailouts – to help them regain solvency and financial “health.”.

U.S. citizens deserve nothing less than the same access to their own money – in the form of Fed-based liquidity extensions – to help American families regain their own financial “health.”.

The conduit: a Citizens Credit Facility.

The Leviticus 25 Plan 2015 – $70,000 per U.S. Citizen                                                  The Leviticus 25 Plan 2015 (688)

WSJ: The “prime suspect in the global slowdown” – DEBT

If you don’t have a plan to deal with snowballing debt – you don’t have a plan.

And the world’s Central Banks do not. They have focused their ‘policy tools’ over the past 7 years on bailing out a banking system and ‘saving skin’ of major players that had ‘gambled’ their way into deep capital holes when the subprime default wave that they thought could never happen – ‘hit.’  With a vengeance.

On the backside of 7-year Central Bank liquidity transfusions, global debt has risen over 200%. “World-wide debt as a percentage of GDP has jumped 36% since 2008, to a record high of 212%” (WSJ 11-2-14).

Debt is deflationary, and it creates a dangerous undercurrent that chokes off economic growth everywhere in its path.

Central Banks think that growing deflationary pressures must be countered by piling on additional interest rate suppression and monetary stimulus (QE) operations.

They couldn’t be more wrong.
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WSJ, Nov. 2, 2014 / George Melloan – Excerpts:
“You want quantitative easing? I’ll show you quantitative easing!” That’s the message Japan’s central banker Haruhiko Kuroda sent to global securities markets [recently]…. He announced that he will boost asset purchases by up to one-third, snapping up even more debt paper than the Japanese treasury is issuing.
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Central-bank worries about deflation may be misplaced. Couldn’t it be that it is the mounting global debt that is dragging down economic growth, not a lack of fiscal or monetary stimulus? Yet central banks seem wedded to the so-called monetary stimulus course set by the Fed after the stock-market crash of 2008.

The rising debt burden was detailed on Sept. 16 in the annual Geneva Report, vetted by an international assemblage of 70 central-bank officials and other monetary specialists under the aegis of the International Centre for Monetary and Banking Studies (ICMB).
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The Geneva report is titled “Deleveraging, What Deleveraging?” It says that after the debt explosion of the 2000s contributed to the 2008 crash, there was a widespread expectation that governments, households and businesses would shed debt, or “deleverage.”

But that hasn’t happened. While American households have de-leveraged, world-wide debt has continued to grow rapidly, thanks in large part to governmental deficits. According to the report, global debt (excluding that of the financial sector) as a percentage of GDP has risen 36 percentage points since 2008, to a record 212%.
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Governments are big contributors to the debt boom. The U.S. ratio of public debt to GDP has climbed 40 percentage points to 105% since 2008. The report cites studies showing that high debt levels increase vulnerability to financial crises and give rise to “moral hazard” issues deriving from borrower expectations of government bailouts.
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As the global economy slows from an already low rate of growth, despite recent signs of life in the U.S., it should be clear that artificially suppressed interest rates have done little to stimulate growth. They have discouraged saving, hence retarding capital formation, and have encouraged borrowing, adding to the economic burden of debt service. If, as some economists argue, the Fed is keeping inflation in check despite zero-bound interest rates by exercising its Dodd-Frank powers over bank lending, the equivalence of that to central planning can hardly be considered healthy.
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As the Geneva report suggests, central bankers are now motivated by fear, no doubt hoping that the day of reckoning for the continuing global rise of debt will occur on someone else’s watch. But what if it doesn’t? Might it not be better to take more sensible measures now, like allowing interest rates to rise to a level that would bring saving and borrowing into better balance?

Full article : Missing the Prime Suspect in the Global Slowdown – Wall …

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The “more sensible measures” to drive down global debt starts with debt reduction at ground level.

The Fed and other Central Banks are correct in their assessment that liquidity is critical in countering deflationary pressures, but they have been misdirecting their liquidity operations.

It is time now to focus liquidity in a way that will effectively restore “financial health” of the people.. That focus starts with a Citizens Credit Facility for direct liquidity extensions to citizens.

The Leviticus 25 Plan delivers massive debt relief to citizens and massive debt reductions for government. And it pays for itself over a 10-15 year period.

One economic plan in America delivers $1.094 trillion annual surpluses for each of the next 5 years: The Leviticus 25 Plan

The Leviticus 25 Plan is the only plan that allows for gradual interest rate increases, through free market price discovery, without hindering legitimate economic growth and vitality…. and expanding the welfare state.

It is time to move.

The Leviticus 25 Plan 2015 – $70,000 per U.S. citizen                                              The Leviticus 25 Plan 2015 (682)

 

Main Street America’s economic headlines….

For the past 7 years the Federal Reserve has engaged in large-scale asset purchases in the credit market. It has executed selective liquidity-funneling to various fiduciary entities (foreign and domestic).
The U.S. government has expanded social programs, extended federal unemployment benefits, pumped billions of dollars into various stimulus schemes. And expanded the national debt from $9.08 trillion in the fall of 2007 to its current level of $18.01 trillion.
For the past 7 years big-government ‘central planning’ has been employed to allocate resources to ‘manage’ the economy and ‘direct’ the governments social plan.

How have things been going for Main Street America..?

13,500,000 Millennials Live in Poverty…

46,000,000 Americans on Food Stamps…

65% of Children Live in Households on Federal Aid Programs…

REPORT: Child Homelessness In US Surges To All-Time High…

Nearly half of Florida households are struggling financially

Welfare recipients can use debit cards to buy marijuana…

Black Unemployment Hits 11.4%...

Fed Official Warns ‘Disappointing’ Growth Could Foretell Future…

Sluggish jobs market points to structural problems…

Wages Down 23% Since 2008…

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It is time for a bold, new economic plan in America.

That Plan is here, and it grants individual American families the freedom to allocate resources on their own behalf – to manage their daily lives and access healthcare on their own terms. Not the government’s.

The Plan does NOT distort price and supply mechanisms in markets – as current government plans do.

The Plan does NOT disincentivize work and enterprise – as current government programs do.

The Leviticus 25 Plan will power up legitimate growth, generate massive government tax revenue gains (without raising taxes), and pay for itself over a period of 10-15 years.

The Leviticus 25 Plan 2015 – $70,000 per U.S. citizen                                                   The Leviticus 25 Plan 2015 (678)

 

Moody’s: U.S. company pension funds short “$110 billion in the next seven years”

Moody’s Nov 3, 2014 has reported that growing pension fund liabilities will leave
U.S. firms with a $110 billion deficit in funding future defined benefit obligations for their employees.  These firms will be forced to cut benefits for their covered retirees, unless something changes soon.

America does not need any more big government ‘central-planning’ solutions.
It needs to ‘decentralize’ and return to a citizen-based allocation of resources.

America needs debt relief at ‘ground level,’ and it needs the power of free market dynamics to re-ignite economic growth. Legitimate, robust, self-sustaining economic growth.

The Leviticus 25 Plan 2015 –  $70,000 per U.S. citizen                                                 The Leviticus 25 Plan 2015 (673)

‘Scalping’ Social Security for a cool $1.2 billion

Social Security Disability Insurance (SSDI) benefit payments have been rocketing higher over the past 5 years.  And lawyers are racking up some handsome fees in the process.

“Lawyers Scalp $1.2 Billion From Social Security In 2013”

 Via David Stockman’s Contra Corner blog / accessed from ZeroHedge 12/08/2014
Excerpts:
“Social Security’s financial woes due to an aging American population are hardly news.   Since 1956, disability has been included as a part of Social Security, providing ncome to those who are physically unable to work.  Along with the American with Disabilities Act of 1990 (ADA), these two programs have provided a booming industry for attorneys, according to a report from the Manhattan Institute’s Center for Legal Policy.”

 

Social Security Disability Insurance (SSDI) is no small program, costing taxpayers more than the combined cost of federal welfare payments, housing subsidies, food stamps and school lunches. Attorneys receive taxpayer-funded fees each time they successfully place a client in the program, which incentivizes them to encourage clients to file disability claims. The fees are capped at 25 percent of the successful client’s SSDI award, or $6,000, whichever is less.

Attorneys took in $1.2 billion in such fees in 2013, up from just $425 billion in 2011.

In 2010, the report notes that nine of the top 10 highest-earning SSDI lawyers made more than $2 million just in fees that year.  Claimants’ representatives need not be attorneys to receive the fees, a rule that changed in 2004 when Congress voted to allow non-lawyers to represent disability claimants. What resulted, however, was an explosion in profits to SSDI-focused law firms such as Binder and Binder, which hired large teams of people to work on disability claims and sent their profits soaring, reaching $88 million in 2010.”

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The CBO projects that “in 2022, the [Social Security] DI program will provide benefits totaling $204 billion to over 12.3 million disabled workers and their dependents.”

That works out to a 45.7% increase in cost over the next 7 years, although it is set to ‘run dry’ by 2016 – resulting in a 20% decrease in benefits if Congress doesn’t add funding (of course, they will).

America needs a strategic plan to help people get off government programs, rather than the trying to get more people dependent upon government for their livelihood.

The Leviticus 25 Plan helps people escape their dependence on government – by directly providing them with the resources to manage their daily lives in the way that best meets their individual needs, and frees them from government control and domination.

The Leviticus 25 Plan ‘recapture’ provisions generate annual government budget surpluses of $1.094 trillion over the first 5 years of the plan.

It is time for a change.

 

 

 

American International Group, Inc (AIG) – #28 recipient of Fed’s “secret liquidity lifelines”

Bloomberg excerpts:
“As an insurer, American International Group Inc. didn’t qualify for the Federal Reserve’s crisis-lending programs for banks. So when trading partners squeezed AIG for liquidity in 2008, the Fed gave the New York-based company two credit lines all its own, with a combined borrowing capacity of $122.8 billion.

AIG’s balance under the credit lines reached about $90 billion in October 2008, data show. By then, the U.S. Treasury Department had taken over AIG, making about $70 billion of separate capital injections during the crisis.

In January 2009, the company borrowed $16.2 billion from the Fed’s Commercial Paper Funding Facility. Bloomberg didn’t include the credit lines in its Fed-loan ranking because they weren’t available to a range of institutions and the borrower was never kept secret.

Peak amount of debt on 1/27/2009: $16.2B
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AIG FP (AIG Financial Products) raked in billions of dollars selling credit default swaps (CDS) during the housing boom. And they did not set aside adequate “reserves” to cover the potential of a hard down-turn in the market.

That hard down turn arrived when the housing bubble popped in 2007. And when the storm hit, AIG FP was sitting on $450 billion in CDS contracts. They could not ‘cover’ their counterparty obligations – to major fiduciary institutions like Goldman Sachs, Societe Generale, and many others.  And those counterparties did not adequately verify that AIG had the unwalled reserves necessary to cover their massive exposure.

And so the Fed stepped in and covered those obligations – 100 cents on the dollar.
Note: The Fed “gave the New York-based company [AIG] two credit lines all its own, with a combined borrowing capacity of $122.8 billion.”

It is now time for the Fed to step up and provide one credit line, a Citizens Credit Facility, to American families (who, by the way, did not ‘roll the dice’ with leverage speculation like AIG and other major Wall Street players).

It is time for U.S. citizens to be granted equal access to liquidity extensions.

The Leviticus 25 Plan.

“The greatest transfer of wealth in the history of the world”

“Legendary oilman T. Boone Pickens famously calls America’s oil imports ‘the greatest transfer of wealth in the history of the world.’

Excerpts from Zero Hedge, 10-24-12 –  Simon Black of SovereignMan blog

“Pickens is referring to the money that is paid each year to oil exporting nations, particularly those in the Persian Gulf which raked in around $100 billion last year.   No doubt, this is an enormous transfer of wealth.

“But it’s a drop in the bucket compared to the TRILLIONS that Ben Bernanke” [gave away to] the world’s elite.

During the height of the financial crisis (2007 – 2010) the central banks created trillions of dollars, “most of which they loaned to commercial banks at 0%. The commercial banks then loaned this money to their best customers (and governments) at a slightly higher rate.”

“The end result is that a huge chunk of those trillions ended up in the pockets of a small handful of people. The banks and their best customers get sweetheart deals to make even more money, while the vast majority of people get screwed with inflation.

…I call this ‘philanthropy of the wealthy.’ And it starts with Mr. Bernanke.

Naturally, the average guy on the street doesn’t get these deals. Instead, he gets hit with inflation and watches his savings erode. Just this morning…

This issue isn’t about rich vs. poor….The issue lies within the system itself– that our ‘free society’ has awarded a tiny elite the supreme power to control the price of money.  And in doing so, central bankers steal purchasing power from the many and benefiting the few.”

“The scale of this theft is in the trillions of dollars. It constitutes, by far, the greatest transfer of wealth in history, vastly exceeding America’s energy imports.”

It’s an unconscionable, immoral, ridiculous game….”

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Black’s insights help illustrate why —  U.S. citizens should demand ‘equal treatment’ from the Federal Reserve – in regard to direct liquidity transfers.

American families deserve nothing less than the same access to direct, zero-interest (or near ‘zero-interest) credit extensions that are were provided to major domestic and foreign financial institutions like Morgan Stanley, Bank of America Corp, Citigroup, Inc.,  Royal Bank of Scotland Plc, State Street Corp, UBS AG, Goldman Sachs,  JP Morgan, Deutschbank, BNP Paribas SA, Merrill Lynch, Barclays Plc, Credit Suisse, Wells Fargo & Co, Bear Stearns, … and many, many, many others.

Free money for global financial elites.

The Leviticus 25 Plan would help restore financial ‘health’ to millions of American citizens, making it possible for them to pay down large debt burdens and gain relief from dependence on government.

The Leviticus 25 Plan would jump-start economic growth, generate new tax revenues (without raising taxes), and it would breathe in new efficiencies in the purchase of health care, and reduce the ‘cost’ of government.

G-20 Debt-to-GDP racing along

G-20 nations have a debt problem.  A growing problem, led by Japan.                             Italy and the U.S. have also topped the 100% mark and are on track to continue climbing.

http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/11/20141115_Putin7_0.jpg

These debt-laden countries need some fresh thinking – to avoid the looming fiscal cliff.

The Leviticus 25 Plan offers that fresh start:                                                            Massive debt relief and a restoration of economic liberty at the family level.                          Free Market efficiencies and powerful economic growth dynamics.                                        Enormous government tax revenue gains and recapture.

There is NO OTHER PLAN. Anywhere.

The Leviticus 25 Plan 2015 – The $70,000 Solution                                                      The Leviticus 25 Plan 2015 (649)