Global economic headwinds: LIBOR ‘surging’

Global liquidity pressures are intensifying, in part to the upsurge in the London Interbank Offered Rate (LIBOR).  And this new pressure could escalate to higher levels.

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World to face stress test as dollar Libor spikes and bond rout deepens

(Telegraph UK) – Surging rates on dollar Libor contracts are rapidly tightening conditions across large parts of the global economy, incubating stress in the credit markets and ultimately threatening overvalued bourses.

Three-month Libor rates – the benchmark cost of short-term borrowing for the international system – have tripled this year to 0.88pc as inflation worries mount.

Fear that the US Federal Reserve may have to raise rates uncomfortably fast is leading to an increasingly acute dollar shortage, draining global liquidity.

“The Libor rate is one of the few instruments left that still moves freely and is priced by market forces. It is effectively telling us that that the Fed is already two hikes behind the curve,” said Steen Jakobsen from Saxo Bank.

“This is highly significant and is our number one concern. Our allocation model is now 100pc in cash. This is a warning signal for the market and it happens extremely rarely,” he said.

Goldman Sachs estimates that up to 30pc of all business loans in the US are priced off libor contracts, as well as 20pc of mortgages and most student loans. It is the anchor for a host of exotic markets, used as a floor for 90pc of the $900bn pool of the leveraged loan market. It underpins the derivatives nexus.

libor-oct-16

h/t  DollarCollapse.com

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The world does not need more Central Bank centered liquidity solutions.

The world needs a properly targeted ‘ground level’ liquidity solution:

The Leviticus 25 Plan 2017 –  $75,000 per U.S. citizen                                                        The Leviticus 25 Plan 2017 (1811)

 

Oswald Grübel: NIRP choking banks. Warns on Central Bank crash scenario

Politicians have placed unbounded power in the hands of global Central Banks, and their negative interest rate policy (NIRP) is choking off liquidity in the banking sector.

The clock is ticking, according to Grübel, on a coming Central Bank crash.

The global system needs a new plan… soon.

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Former CEO Of UBS And Credit Suisse: “Central Banks Are Past The Point Of No Return, It Will All End In A Crash”                                                                              ZeroHedge 11-20-16  – Excerpts:

In an interview with Swiss Sonntags Blick titled appropriately enough “A Recession Is Sometimes Necessary“, the former CEO of UBS and Credit Suisse, Oswald Grübel, lashed out by criticizing the growing strength of central banks and their ‘supremacy over the markets and other banks’. The former chief executive officer claimed that the use of negative interest rates and huge positive balance sheets represent ‘weapons of mass destruction’. He calls for an end to the use of negative interest rates.

Sounding more like a “tinfoil” blog than the former CEO of the two largest Swiss banks, Grübel warned that central banks have “crossed the point of no return” which will ultimately “end in a crash.”

Joining Deutsche Bank in slamming NIRP, Grubel said that banks are losing hundreds of millions of francs each year to negative interest rates paid to central banks.

Worse, he warned that central banks will eventually lose their credibility in the markets but that this could take 10 years or more, at which point it will “all end in a crash.” What happens then? The former CEO believes that the final outcome will be wholesale financial nationalization: “after that all banks could belong to the state”

Grubel also the doubted the wisdom of the Swiss National Bank’s balance sheet: “the Swiss National Bank’s balance sheet now accounts for 100 percent of GDP. Japan is also 100%, but mainly invested in its own state paper. The ECB and the Fed are 30%. Switzerland is far, far, far ahead. Is that wise?

The former CEO also touched on a point we have made ever since 2010 when we said that in a world of unprecedented political polarity, politicians now control the world almost exclusively through monetary policy, to wit: “After the financial crisis, politics has taken power in the banking sector: It has bound the banks into a regulatory corset and now they can no longer move. Politicians have told central banks: now you determine what is going on with the economy.”

What are the implications of this power shift? “Previously, the risk was distributed to thousands of banks. They had to pay for their mistakes. The risk lay with the shareholders. Today, more and more the state carries the risk.” Which, of course, is another word for taxpayers. In other words, the next crash will be one where central – not commercial – banks are failing, and the one left with the bill will once again be the ordinary person in the street.

In a tangent, Grübel gave his thoughts on what makes a man rich: “rich is a man when he goes to bed in a carefree manner and wakes up without care.” He is then asked if, by that definition, a billionaire is rich to which he replied: “No. Money has little to do with wealth. The real rich are carefree. Those who are healthy, are not dependent. The greatest wealth is independence.

Grubel takes issue with the unprovable claim that only trillions in central bank liquidity injections prevented the entire world from sliding into a 1929-type depression: “It is said that without this money we would fall into the worst recession since 1929. This is a typical utopian-socialist interpretation of the economy, which knows no limit of government debt.

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Liquidity is a powerful tool, when it is properly targeted. 

Massive Central Bank asset purchasing is NOT an example of proper targeting.

The Leviticus 25 Plan re-targets liquidity in favor of massive debt elimination at ground level.  This debt clearance will allow for an orderly transition to rate normalization, ultimately benefiting the banking system.  It will also effect dynamic improvement in the quality of collateral and restore non-performing loans to performing status.  And it will re-ignite a powerful, sustainable surge in economic growth.

The Leviticus 25 Plan is a dynamic economic initiative providing direct liquidity benefits for American families, while at the same time scaling back the role of government in managing and controlling the affairs of citizens.  It is a comprehensive plan with long-term economic and social benefits for citizens and government.

The inspiration for this plan is based upon Biblical principles set forth in the Book of Leviticus, principles tendering direct economic liberties to the people.

The Leviticus 25 Plan 2017 –  $75,000 per U.S. citizen                                                        The Leviticus 25 Plan 2017 (1807)

 

 

U.S. government-dominated health care suffers through ongoing disintegration. New citizen-centered plan gaining steam.

Patients skipping services. Premium costs, deductibles sharply rising. Small  businesses hammered with skyrocketing prices.

Physicians abandoning networks, reimbursements shrinking,

Government-directed health care, in all of its bloated administrative glory, is not the answer….

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Fox News / November 1, 2016                                                                                                    Half of ObamaCare enrollees are skipping doctor visits to save money      “Obamacare enrollees were asked what steps they had taken in the past year to lower their health care costs.

Thirty-six percent of ObamaCare enrollees cut back on doctor visits even when they were sick, 22 percent skipped preventive care, 12 percent reduced lab testing, and 12 percent delayed surgery.”

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 MRCtv / October 31, 2016
Physician Participation Plummets 20%…                                                                        
“According to a recent survey by SERMO, a social network for physicians, only about 57 percent of doctors said they’ll be taking new patients insured by the plans next year. That’s down about four percentage points from last year, when 61 percent of physicians said the same, Forbes reported Monday.

But a similar survey conducted by the Medical Group Management Association back in 2014 showed that at the time, 76.5 percent of physicians said their practice were accepting insurance plans offered on the state and federal marketplaces.

Based on these two surveys and a little basic math, we find the number of physicians accepting ACA plans has fallen an astounding 19.5 percentage points heading into Obamacare’s fourth enrollment period – a pretty remarkable decline, considering it’s been just three years since the exchanges were first opened.”

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ZeroHedge October 23, 2016                                                                                                     Risk Of “Mass Exodus” Of Doctors From Medicare Looms                                                If faced with increased reporting and administrative burdens, declining reimbursements and new payment arrangements that put their income at risk, many doctors – especially independent practitioners – may feel that they simply can’t afford to participate in Medicare any more. One recent survey of physicians found nearly 40-percent expect a “mass exodus” from Medicare over MACRA. Given the predicted shortage of doctors over the next decade and an aging population, this would be disastrous.   

Doctors already devote a considerable amount of time reporting on quality measures. A recent analysis found that a typical medical practice currently spends, on average, 785.2 hours a year per physician to track and report quality measures. That’s time away from patient care, and the costs — $40,069 per physician — present a particular hardship for small, independent practices operating on narrow margins. Moreover, three-quarters of the doctors surveyed felt that the measures did nothing to help them improve their care.

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The ideal health care system would put citizens back in charge of health care resources and health care decisions.

It would restore the patient – provider relationship, cutting out unnecessary regulations and reporting obligations.  It would eliminate unneeded middlemen, unnecessary regulations, and bureaucratic backscratching,

The ideal system would reduce waste and abuse and massive administrative costs, and allow for a mechanism encouraging direct payment to providers / organizations for medical services.

It all starts right here:                                                                                                                      The U.S. Health Care Freedom Plan 2017: America’s clean and affordable alternative to ObamaCare. Ready to launch.

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The Leviticus 25 Plan 2017 –  $75,000 per U.S. citizen                                                        The Leviticus 25 Plan 2017 (1797)

ObamaCare-related taxes and premiums plaguing America. A powerful new alternative emerges: The U.S. Health Care Freedom Plan 2017

American families and U.S. companies are being taxes ‘silly’ to help cover massive ObamaCare costs.

In addition to the suffocating new tax burdens, premiums have recently begun skyrocketing higher:                                                                                                                               Obamacare Premiums Up 30% In TX, MS, KS; 50% In IL, AZ, PA; 93% In NM: When Does The Death Spiral Blow Up?   –  ZeroHedge Oct 21, 2016

More on Taxes…                                                                                       ………………………………………………………………………………..

How Many Obamacare Taxes Are There? – Forbes  Feb 17, 2015

  • 2.3% Tax on Medical Device Manufacturers (this doesn’t hit you directly, but indirectly it sure can).
  • 3.8% Net Investment Income Tax. This one is a big one. Depending on your income, it adds a 3.8% tax on top of your interest, dividends and capital gains.
  • Employer Mandate on business with over 50 full-time equivalent employees to provide health insurance to full-time employees. $2000 per employee $3000 if employee uses tax credits to buy insurance on the exchange.
  • 40% Excise Tax on high-end (Cadillac) Health Insurance Plans (40% excise tax on the portion of employer-sponsored health coverage that exceeds $10,200 a year and $27,500 for families).
  • Medical Deduction Threshold tax increase (threshold to deduct medical expenses as an itemized deduction increases to 10% from 7.5%).
  • Individual Mandate (a tax for not purchasing insurance, though the tax penalty is called a Shared Responsibility Payment, the greater of 1% of your income above the filing threshold of $10,150 for singles and $20,300 for married couples filing jointly or $95 per adult ($47.50 per child), with a maximum of $285 for a family, whichever is higher. It goes up in 2015.
  • Excise Tax on Charitable Hospitals which fail to comply with the requirements of ObamaCare.
  • Elimination of tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D.
  • Medicare Part A Tax increase of .9% over $200k/$250k.
  • An annual $63 fee levied by ObamaCare on all plans (decreased each year until 2017 when pre-existing conditions are eliminated) to help pay for insurance companies covering the costs of high-risk pools.
  • Medicine Cabinet Tax (over the counter medicines no longer qualify as medical expenses for flexible spending accounts (FSAs), health reimbursement arrangements (HRAs), health savings accounts (HSAs), and Archer Medical Saving accounts (MSAs).
  • Additional Tax on HSA/MSA Distributions
  • Health savings accounts or Archer medical savings accounts, penalties for non-qualified medical expenses of 10% to 20% in the case of a HSA and from 15% to 20% for an MSA.

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The U.S. Health Care Freedom Plan is a comprehensive health care plan featuring  citizen-centered, not government-driven, health care.  It offers a clean ‘patient-provider’ focus, improved efficiencies, and dramatically lower costs.  It offers significantly improved operating margins for health care providers and the companies/organizations they represent.

The U.S. Health Care Freedom Plan eliminates 99% of the complexities  plaguing the current health care system.  It improves access for patients and reduces costs and bureaucratic entanglements for providers, health systems, and employers.

The U.S. Health Care Freedom Plan 2017: America’s clean and affordable alternative to ObamaCare. Ready to launch.

The Leviticus 25 Plan 2017 –  $75,000 per U.S. citizen                                                        The Leviticus 25 Plan 2017 (1793)

Big bank bailouts and ‘secret Fed loans’ 2007-2010

The Federal Reserve and U.S. Treasury Department ‘flushed’ billions of dollars (courtesy of tax-paying U.S. citizens) out through their big-big-bank-connected umbilical cord credit extension system during the height of the Great Financial Crisis.

The ‘biggest of the big’ made out well – and their insiders did even better.

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“Secrets and Lies of the Bailout” –  RollingStone, Jan 4, 2013

Goldman Sachs, which had made such a big show of being reluctant about accepting $10 billion in TARP money, was quick to cash in on the secret loans being offered by the Fed. By the end of 2008, Goldman had snarfed up $34 billion in federal loans – and it was paying an interest rate of as low as just 0.01 percent for the huge cash infusion. Yet that funding was never disclosed to shareholders or taxpayers, a fact Goldman confirms. “We did not disclose the amount of our participation in the two programs you identify,” says Goldman spokesman Michael Duvally.

Goldman CEO Blankfein later dismissed the importance of the loans, telling the Financial Crisis Inquiry Commission that the bank wasn’t “relying on those mechanisms.” But in his book, Bailout, Barofsky says that Paulson told him that he believed Morgan Stanley was “just days” from collapse before government intervention, while Bernanke later admitted that Goldman would have been the next to fall.

Meanwhile, at the same moment that leading banks were taking trillions in secret loans from the Fed, top officials at those firms were buying up stock in their companies, privy to insider info that was not available to the public at large. Stephen Friedman, a Goldman director who was also chairman of the New York Fed, bought more than $4 million of Goldman stock over a five-week period in December 2008 and January 2009 – years before the extent of the firm’s lifeline from the Fed was made public.

Citigroup CEO Vikram Pandit bought nearly $7 million in Citi stock in November 2008, just as his firm was secretly taking out $99.5 billion in Fed loans. Jamie Dimon bought more than $11 million in Chase stock in early 2009, at a time when his firm was receiving as much as $60 billion in secret Fed loans. When asked by Rolling Stone, Chase could not point to any disclosure of the bank’s borrowing from the Fed until more than a year later, when Dimon wrote about it in a letter to shareholders in March 2010.

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It is now time for ‘Part 2’ – granting the same direct liquidity access for U.S. citizens that was provided to major banks and insurers during 2007 – 2010.

The Leviticus 25 Plan 2017 –  $75,000 per U.S. citizen                                                        The Leviticus 25 Plan 2017 (1771)

 

 

 

THE HILL: ObamaCare administrative costs – ‘shocking’

When government controls the allocation of resources in a given economic sector (‘for the public good’) … bureaucratic red tape, systemic inefficiencies, pricing distortions, and other economic dislocations  become the rule of order.

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Overhead costs exploding under ObamaCare, study finds | TheHill                                       by Sarah Ferris 05/27/2015 – Excerpts:

The administrative costs for healthcare plans are expected to explode by more than a quarter of a trillion dollars over the next decade, according to a new study published by the Health Affairs blog.

The $270 billion in new costs, for both private insurance companies and government programs, will be “over and above what would have been expected had the law not been enacted,” one of the authors, David Himmelstein, wrote Wednesday.

Those costs will be particularly high this year, when overhead is expected to make up 45 percent of all federal spending related to the Affordable Care Act. By 2022, that ratio will decrease to about 20 percent of federal spending related to the law.

The study is based on data from both the government’s National Health Expenditure Projections and the Congressional Budget Office. Both authors are members of Physicians for a National Health Program, which advocates for a single-payer system.

“This number – 22.5 percent of all new spending going into overheard – is shocking even to me, to be honest. It’s almost one out of every four dollars is just going to bureaucracy,” the study’s other author, Steffie Woolhandler, said Wednesday.

She said private insurers have been expanding their administrative overhead despite some regulations from the Obama administration to control those costs, such as the medical loss ratio, which requires a certain amount of premium dollars to be spent directly on healthcare. She argues that a better approach would be a type of Medicare-for-all system.

The extra administrative costs amount to the equivalent of $1,375 per newly insured person per year, the authors write.

About two-thirds of the new overhead costs are the result of rising enrollment in private plans, which the authors say carries “high costs for administration and profits.”

The rest is the result of expanded government programs, such as Medicaid. It also includes the cost of running ObamaCare exchanges at both the federal and state levels.

The federal exchange, as well as the 13 state-run exchanges, have all been boosted by grant money, though those funds will run out by 2016. The exchange will then need to rely on fees to plan premiums.

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The U.S. Health Care Freedom Plan allows U.S. citizens to allocate resources directly and take ownership of their own health care needs and decisions.

This dynamic new plan is the only comprehensive, citizen-centered health care plan in America.

Freedom starts at ground level:                                                                                                    The U.S. Health Care Freedom Plan 2017: America’s clean and affordable alternative to ObamaCare. Ready to launch.

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“He who will not apply new remedies must expect new evils.” – Sir Francis Bacon

The Leviticus 25 Plan is a dynamic economic initiative providing direct liquidity benefits for American families, while at the same time scaling back the role of government in managing and controlling the affairs of citizens.  It is a comprehensive plan with long-term economic and social benefits for citizens and government.

The inspiration for this plan is based upon Biblical principles set forth in the Book of Leviticus, principles tendering direct economic liberties to the people.

The Leviticus 25 Plan 2017 –  $75,000 per U.S. citizen                                                        The Leviticus 25 Plan 2017 (1766)

Massive fiscal storm brewing for the next President…

The light at the end of the ‘fiscal tunnel’ has been growing progressively dimmer over the past 10 years and is now barely flickering.

The U.S. government’s ‘inside-the-box’ cadre of soft thinkers has no politically feasible idea of how to change our country’s rapidly deteriorating fiscal climate.

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Obama’s Fiscal Legacy  WSJ  11-9-16Excerpts:

“The annual deficit in 2016 rose for the first time in three years [according to the most recent CBO report] —by $148 billion to $587 billion. That’s 3.2% of GDP, up sharply from 2.5% last year. Mr. Obama has been able to ride falling defense spending from reduced military deployments overseas, but Pentagon outlays were flat in 2016. Military spending will probably have to increase in future years, no matter who wins Tuesday, to meet the growing challenges from Russia, China and Iran.Mr. Obama will also leave town having failed over eight years to do anything to slow the booming burden of Social Security, Medicare and Medicaid. Outlays for those three programs grew by $75 billion last year, or about 4.2%. They now account for 10% of the entire U.S. economy, the highest level ever, and rising.

The President’s main contribution has been to put Medicaid on hyperspeed by expanding its coverage through ObamaCare. CBO’s budget gnomes report that Medicaid spending has climbed by nearly 40% in a mere three years—to $368 billion in 2016. That doesn’t include what the states are obliged to chip in.

Another lesson is that faster economic growth is essential to a healthier fisc. One reason for the deficit rebound in 2016 is that federal revenues increased by a mere $18 billion or less than 1%. Individual income-tax receipts were flat, while corporate income taxes fell by $44 billion or 13% as business profits sagged. This is what happens when the economy sputters at about a 1% growth rate for most of a year.

Growth that slow couldn’t keep up with spending that increased 4.5% or $166 billion in 2016. Federal outlays were 20.9% of the economy for the year, up from 20.4% in 2014…

The tragedy is that Mr. Obama spent his political capital not on growing the economy but on growing entitlements and raising costs for business via regulation. The next President needs to make faster economic growth the policy default, or every other political priority will be hard or impossible to meet. The deficit burden will get worse faster.”

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Our solution to this fiscal dilemma is one that restores order and economic energy at ground level.
This solution redirects trillions of dollars of annual debt service to dynamic liquidity infusions for Main Street America and powerful tax revenue growth for government.
It relieves millions of Americans of dependence on government.
It cleans up America’s administratively bloated health care system, saving billions of dollars and improving access for U.S. citizens.
It all very simple.  It starts at ground level, granting U.S. citizens the same access to liquidity that was used to bailout major banks and insurers during the financial crisis (2007-2010).

The Leviticus 25 Plan 2017 –  $75,000 per U.S. citizen                                              The Leviticus 25 Plan 2017 (1763)

 

November 2016 U.S. employment: Is this what we have to show for 9 years of central planning and ‘floating’ Wall Street’s financial sector with trillions of dollars in liquidity transfusions?

This IS what we have to show for 9 years of central planning and ‘floating’ Wall Street with trillions in liquidity infusions…

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ZeroHedge:

Despite Massive Upward Revisions, Fed’s Own Jobs Indicator Plunges Year-Over-Year – Flashes Recession Warning

Thanks to sudden upward revisions for the last 7 months in a row, The Fed’s Labor Market Conditions Index “looks” better than it did before (with a 0.7% rise in October MoM). However, despite all the revisions, the October print leaves LMCI negative year-over-year for only the 8th time in US history.   Nov 7, 2016 10:13 AM

 

Multiple Jobholders Hits Record High, As Full-Time Jobs Tumble

A new warning has emerged when looking at the number of Multiple jobholders, or people who are forced to hold more than one job due to insufficient wages or for other reasons: when looked on an actual, unadjusted basis, the number of multiple jobholders just rose to 8.050 million, the highest number on record.  Nov 4, 2016 9:30 AM

 

People Not In Labor Force Surge By 425,000 To 94,609,000

Contrary to expectations that people are rushing back into the labor force, in October the number of Americans who were not in the labor force rose by a substantial 425,000 to 94,609, the highest print in the series since May, and suggests that the exodus of Americans out of the labor force has resumed.   Nov 4, 2016 9:03 AM

 

NYC Homelessness Surges To The “Highest Levels Since The Great Depression”

The number of homeless New Yorkers seeking shelter each night has nearly doubled over the past 10 years and currently stands at the highest level ever experienced since the Great Depression in the 1930s.   Nov 3, 2016 8:15 PM

 

Here Is The Reason Why 82% Of American Workers Don’t Feel Any Wage Growth

There is a simple reason why the vast majority of American workers, some 82% of them, are not feeling any wage growth: there simply isn’t any.            Nov 4, 2016 10:24 AM

 

Since 2014 The US Has Added 547,000 Waiters And Bartenders And Lost 36,000 Manufacturing Workers

According to the BLS’ seasonally adjusted “data”, starting in March of 2010 and continuing through October of 2016, there has been just one month in which restaurant workers lost jobs. Meanwhile, the US manufacturing industry is getting hammered.  Nov 4, 2016 11:34 AM

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The clock is ‘ticking’ on America. 

We need a citizen-driven economy, not government central planning.

We need debt elimination at ground level, ‘real’ economic growth, balanced budgets, reduced dependence on government by the citizenry, and economic liberty.

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The Leviticus 25 Plan is a dynamic economic initiative providing direct liquidity benefits for American families, while at the same time scaling back the role of government in managing and controlling the affairs of citizens.  It is a comprehensive plan with long-term economic and social benefits for citizens and government.

The inspiration for this plan is based upon Biblical principles set forth in the Book of Leviticus, principles tendering direct economic liberties to the people.

The Leviticus 25 Plan 2017 –  $75,000 per U.S. citizen                                                        The Leviticus 25 Plan 2017 (1754)

 

 

Large Central Bank balance sheets shooting skyward, global debt marches relentlessly higher. A bold, new plan is in order…

Large Central Banks are doubling down on balance sheet expansion, triggering predictable and destabilizing adverse consequences: distorted asset allocation, distorted incentives, ballooning pension deficits, growing inequality, and bank profitability concerns.

Meanwhile global debt is exploding upward to an all-time record high $152 trillion…

ZeroHedge Oct 5, 2016The IMF Sounds An Alarm As Global Debt Hits A Record $152 Trillion Or 225% Of World GDP

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Global banking elites had better shake out the cobwebs – soon.  Or they will surely wake up one day to system-wide credit dislocation and economic chaos. And that is not healthy for a system that is based in large measure upon ‘trust.’

The world needs bold new thinking to relieve the ‘distortions,’ restore growth and stabilize global economics.

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“He who will not apply new remedies must expect new evils.” – Sir Francis Bacon

The Leviticus 25 Plan is a dynamic economic initiative providing direct liquidity benefits for American families, while at the same time scaling back the role of government in managing and controlling the affairs of citizens.  It is a comprehensive plan with long-term economic and social benefits for citizens and government.

The inspiration for this plan is based upon Biblical principles set forth in the Book of Leviticus, principles tendering direct economic liberties to the people.

The Leviticus 25 Plan 2017 –  $75,000 per U.S. citizen                                              The Leviticus 25 Plan 2017 (1741)