Paul Bodsky, QB Asset Management, July 2012: Global debt load – “staggering.” When creditors fail, banks lose.

A LOOK BACK – July 2012:

Globally, there is approximately “$100 trillion in bank assets” (bank assets are primarily comprised of their loan base).  And for the U.S. those bank assets (loans)are about “$20 trillion held in the U.S. and abroad.”

The “Base Money” (which is “currency in circulation plus bank reserves held at Central banks”) behind those massive loan levels amounts to a mere “$8.5 to $9 trillion dollars.”  This degree of leverage in the global banking system means that currently, “We are in a baseless monetary system,” according to Brodsky.

More from Brodsky:  “The marketplace forces deleveraging, and there are two ways to deleverage. One is to let credit deteriorate on its own in the marketplace. And the other is to manufacture new currency or bank reserves. Those are the only two ways to deleverage a balance sheet.

What policy makers do not want to see is bank asset deterioration. That would lead to all sorts of bad things. You would see banks fail. You would see bank systems fail. You would see debtors fail and it would just feed on itself in an accelerating fashion. And so monetary policy makers have no choice but to deleverage in the other way, which is to colloquially print money; to manufacture electronic credits and call them bank reserves.

And to the degree that that extends into the private sector where debtors begin to fail en masse, that would increase failures of the bank assets in turn. And it would end the mortgage bond securities market, for example, and the leveraged loan markets, and end the private sector shadow banking system. So it does not work for anybody to have credit deteriorate. The only way to deleverage an economy is as we are saying: to create new base money with which to do it.”

Brodsky Summary:  “What policy makers do not want to see is bank asset deterioration. That would lead to all sorts of bad things. You would see banks fail. You would see bank systems fail. You would see debtors fail and it would just feed on itself in an accelerating fashion. And so monetary policy makers have no choice but to deleverage in the other way, which is to colloquially print money; to manufacture electronic credits and call them bank reserves.

And to the degree that that extends into the private sector where debtors begin to fail en masse, that would increase failures of the bank assets in turn. And it would end the mortgage bond securities market, for example, and the leveraged loan markets, and end the private sector shadow banking system. So it does not work for anybody to have credit deteriorate. The only way to deleverage an economy is as we are saying: to create new base money with which to do it.

The point here is you can either monetize debt or you can monetize (sell) assets. Or you revalue an asset on the balance sheet already of the Treasury or the Fed. And obviously that asset, we think, is gold. And that is the monetary asset that they have always reverted in the past. And that is the one we think that currencies, currently baseless currencies will be devalued against.

And so that we think is the mechanism that is ultimately going to play out whether in the marketplace or through some policy administered devaluation. Currencies are going to be devalued and that is where we sit right now. Timing this is impossible. We think the amount it would have to be devalued by, getting back to your original question, has got to be the amount of or something close to the amount of the gap (tens of US$ trillions) between bank assets and bank reserves. So it is a significant number.”

Full article / podcast from Peak Prosperity:  http://www.peakprosperity.com/podcast/79208/paul-brodsky-central-banks-are-nearing-inflate-or-die-stage?utm_campaign=weekly_newsletter_3&utm_source=newsletter_2012-07-07&utm_medium=email_newsletter&utm_content=node_title_79208

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Meet America’s great debt neutralizer, offering massive debt reduction in both public and private sectors.

The Leviticus 25 Plan 2018 –  $75,000 per U.S. citizen

The Leviticus 25 Plan 2018 (2355)

June 2017: Tax receipts falling off, economic growth listless. There is a powerful economic solution to this smoldering misadventure…

Tax revenue growth is sluggish, economic growth – listless.  We are on a course where nobody wins…

It is time to think outside-the-box…

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State Corporate Tax Receipts Just Crashed The Most Since The Recession

ZeroHedge, June 9, 2017 – Excerpts”

“After flatlining for the past year, US income tax receipts – both at the federal government and on a state and local level – have been disappointing, and have posted a sharp drop since the start of the year, which is “sounding an alarm about the health of the US economy” in BofA’s words (in addition to the countless other alarms about the health of the economy, which however are ignored due to the record stock market).

As Bank of America highlights something we warned about last September, according to the Rockefeller Institute and CBO, US federal income tax receipts have come in about 3% below expectations this year.

In fact, corporate income tax receipts fell a sharp $7bn in 1Q, the biggest drop since the recession. Since corporate income tax receipts only make up about 14% of the total, there was still a modest gain in overall state and local tax receipts. While there has been particular weakness of late, the trend through last year was weak; according to the Rockefeller Institute, total state tax collections grew only 1.2% in FY16 (declined in real terms), the weakest performance since 2010.

On a federal level, it will impact the amount the government has to borrow to fund its deficit, therefore determining when the government will hit the debt ceiling. This is quite relevant today since the debt ceiling was officially reached on 17 March and has been extended using extraordinary measures. However, the weakness in tax receipts could create challenges, pulling forward the date that the debt ceiling is hit. This was likely a motivating factor for Treasury Secretary Mnuchin to ask Congress to raise the debt ceiling before the Congressional summer recess begins on 28 July. In our view it is possible this becomes another point of conflict in Washington in coming weeks.

But most importantly, economists care about tax receipts because it is one of the few unvarnished, unadjusted, and realistic data points regarding the health of the overall economy. Tax receipts are a function of income creation in the economy: a slow-down in tax receipts indicates a slowing in income creation and therefore overall economic performance. Growth in federal tax receipts trends with the growth in aggregate payrolls (aggregate hours worked x earnings), which is why the recent deterioration in federal tax receipted is especially troubling.

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It is now time for an economic plan where everyone wins.

The Leviticus 25 Plan.

According to the CBO, our government is on track to add a minimum of $3.497 trillion to the national debt over the next five years, an average annual deficit or $699.4 billion.

The five year accumulating deficit increases, totaling $3.497 trillion, will be weighed down further with a related interest expense (2.23% per annum) amounting to $200.96 billion, for a total of $4.196 trillion.

The Leviticus 25 Plan generates a total government recapture benefit over the first five years of the program (federal income tax refund recapture plus federal expenditures recapture) of $8.56 trillion, an average of $1.72 trillion per year.

The Leviticus 25 Plan recapture provisions thereby generate an average annual budget surplus over the next five years of $1.02 trillion per year ($1.72 trillion – $699.4 billion) plus additional savings of $200.7 billion in unrealized interest expense.

The annual $1.02 trillion surplus during each year (2017-2021) will be used, in turn, to reduce the Federal Reserve Citizens Credit Facility balance sheet from the initial expansion event.

The Leviticus 25 Plan is unquestionably the most powerful economic acceleration plan in America.  It is the only economic plan that pays for itself over 10-15 years.

The Leviticus 25 Plan 2018 –  $75,000 per U.S. citizen

The Leviticus 25 Plan 2018 (2354)

U.S. – June 2017: staggering debt, liquidity problems. Solution: The Leviticus 25 Plan

The U.S.. economy has been crawling along in recent years.  Debt pressures are building…

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**$20 Trillion Debt – It’s Time To Start Believing In The Impossible

  ZeroHedge, Mar 28, 2017 – Excerpts:

Nearly every major western government is bankrupt with woefully unsustainable finances.

The United States leads the way with $20 trillion in debt and a total negative net worth of MINUS $76.7 trillion, according to its own annual financial report.

The US government loses money each year with no end in sight, posting a staggering loss of $1.05 trillion in 2016.

And relative to the sizes of their own economies, Japan, Greece, Italy, Spain, France, and the United Kingdom are not far off.

Moreover, pension funds across the world are in dire condition.

In the United States, Social Security and Medicare report each year that their programs are rapidly running out of money and have even calculated the date of their own insolvencies.

This isn’t some wild conspiracy theory, these are public reports signed by the Treasury Secretary of the United States.

We also see major risks with global central banks.

As I wrote to you just three days ago, the Federal Reserve is nearly insolvent.

And as they continue to increase interest rates throughout this year, they will effectively engineer their own bankruptcy.

In addition, major financial markets are extraordinarily overvalued.

Stocks in the United States trade at valuations only seen just prior to major crashes.

And as the Wall Street Journal reported just -this morning-, “insiders”, i.e. key shareholders and managers who have inside knowledge of their businesses, are actively selling their stocks.

Economic growth in most of the developed world has also fallen flat– just 1.6% in the United States in 2016, 1.4% in Canada, and 1.9% in Germany.

These are hardly inspiring numbers, especially given that inflation is rising around the world.

According to the US Labor Department, inflation reached 2.7% last month, which was higher than 2.5% in January, which was higher than 2.1% in December, which was higher than 1.7% in November.

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America’s economic powerhouse solution:

The Leviticus 25 Plan 2018 –  $75,000 per U.S. citizen

The Leviticus 25 Plan 2018 (2349)

The answer to America’s liquidity problems: Grant U.S. citizens the same access to direct liquidity extensions that was provided to Wall Street’s financial sector 2008-2012. The Leviticus 25 Plan

Let’s do a brief review…
 
     During the peak of the housing boom, mortgage tranches were packaged and securitized as Mortgage Backed Securities (MBS)  –  and peddled as income-producing investments by major investment houses.  Participating parties like Goldman Sachs and others also purchased ‘insurance’ to hedge their risk profiles in the event of a housing market ‘swan dive’ – and a potential collapse of the underlying payment streams supporting the value of these MBS investments vehicles.
 
 The ‘insurance’ was purchased (primarily from AIG) in the form of Credit Default Swaps (CDS).  And, thanks to some nifty deregulation orchestrated by Robert Rubin (Treasury Chief under Clinton), AIG was not required to carry any meaningful level of reserves to back the Credit Default Swaps – to pay their counterparties if the Mortgage Backed Securities market… ‘went south.’ 
 
It did just that, and the rest is history.  Housing tanked.  MBS’ tanked.  And AIG had no reserves  with which to pay Goldman and others.  Had normal bankruptcy proceedings prevailed, Goldman Sachs would likely have received just pennies on the dollar in settlement – for placing a huge ‘blind bet’ on an investment that had no reserves backing it up.
 
But – the U.S. Government stepped in, and through an arbitration process, brokered a settlement of 100 cents on the dollar, amounting to a direct cash transfusion of a cool $12.9 trillion – from the U.S. taxpayer – to Goldman Sachs.  
 
And then the real ‘fun’ began.  The investment banking heavyweights, Goldman Sachs and J.P. Morgan, were ‘fast-tracked’ for “federal bank charters.’  Their newly acquired status as commercial banks allowed them to joined in with “Bank of America, Citigroup, J.P. Morgan Chase and other banking titans who could go to the Fed and borrow massive amounts of money” at near-zero percent interest. 
 
“The ability to go to the Fed and borrow big at next to no interest was what saved Goldman, Morgan Stanley and other banks from death in the fall of 2008.  “They had no other way to raise capital at that moment, meaning they were on the brink of insolvency,” says Nomi Prins, a former managing director at Goldman Sachs. “The Fed was the only shot.”
 
“In fact, the Fed became not just a source of emergency borrowing that enabled Goldman and Morgan Stanley to stave off disaster — it became a source of long-term guaranteed income. 
 
Borrowing at zero percent interest, banks like Goldman now had virtually infinite ways to make money. In one of the most common maneuvers, they simply took the money they borrowed from the government at zero percent and lent it back to the government by buying Treasury bills that paid interest of three or four percent. It was basically a license to print money — no different than attaching an ATM to the side of the Federal Reserve.”
 
“You’re borrowing at zero, putting it out there at two or three percent, with hundreds of billions of dollars — man, you can make a lot of money that way,” says the manager of one prominent hedge fund. “It’s free money.” 
(Source:  Wall Street’s Bail out Hustle – Matt Taibbi,  2-17-10)
 
And that is one of the primary justifications for the Leviticus 25 Plan  – granting U.S. citizens the same direct access to the Federal Reserve discount window – that was bestowed upon Goldman Sachs, J.P. Morgan, and certain other banking titans. 
 
After all, it is ‘our money.’  And granting U.S. citizens direct access to liquidity extensions from a Federal Reserve special “U.S. Citizens Credit Facility,”  would clean up liquidity issues at the family level: $75,000 per U.S. citizen at zero percent interest – with a specified  ‘recapture provision.’
 
The Leviticus 25 Plan pays for itself over a 10-15 year period.  It would generate $1.02 trillion budget surpluses each of the first five years.  It would reignite economic growth, providing family income earning jobs, eliminating massive tracts of debt at ground level, and restoring economic liberty in America.
 
America, currently, has no other viable option.

 

“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 2018 –  $75,000 per U.S. citizen

The Leviticus 25 Plan 2018 (2341) 

     It would “strenghten the base” in America.

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Ill winds blowing for U.S. and European banking sectors. Global economies need this powerful new dynamic: The Leviticus 25 Plan

The banking sector is showing some early signs of fatigue.  Pervasive economic weakness and flat yield curves are leading the way into sector stagnation.

If another series of default waves roll in, things could once again get ‘dicey.’

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Banks Tumble After BofA, JPM Warn Revenue Will Be Down As Much As 15%

The banking sector is sliding after JPM CFO Marianne Lake warned that contrary to expectations for an ongoing rebound in revenue and profits, the bank’s second quarter revenue has been 15% lower from a year ago. And while she said that US economic figures are “solid, not stellar”, she blamed the same thing that has been the nightmare of daytraders everywhere: collapsing volatility.  ZeroHedge, May 31, 2017

Deutsche Bank Downgrades European Banks To Underweight

In what some may find an amusing change in outlook by the bank that less than a year ago was on insolvency’s door, its stock at record lows, this morning Deutsche Bank downgraded its peers, other (ostensibly more sound) European banks, to underweight from benchmark on expectations that fading euro-area growth momentum will weigh on the sector over coming months.   ZeroHedge, May 30, 2017

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Global economies need robust economic growth, and to that end, there must be massive debt elimination at ground level.  There must be improved loan demand, credit-worthy borrowers and sound collateral.

There is one power-charged plan to reignite growth in the system:

The Leviticus 25 Plan 2018 –  $75,000 per U.S. citizen

The Leviticus 25 Plan 2018 (2336)

 

 

Zuckerberg ‘free money’ proposal for “universal basic income” would keep citizens ‘tethered’ to the government umbilical cord. A far superior plan which would insulate citizens from government control: The Leviticus 25 Plan

Face Book founder, Mark Zuckerberg, wishes to set government up as the dispenser of a “universal basic income” for all Americans.

There are major problems with Zuckerberg’s grand idea:

  1. It would impose another budget ballooning, ‘means-tested,’ free money giveaway, hastening America’s slide toward the fiscal cliff.
  2. It would create greater dependence on government.
  3. It would do little, if anything, to reduce debt at the family level, and it would do virtually nothing to improve America’s overall massive debt profile.
  4. It would do nothing to advance the cause of economic liberty.

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Free Money: Mark Zuckerberg Says All Americans Should Get A ‘Universal Basic Income’

The potential presidential candidate suggested “we should explore ideas like universal basic income to make sure everyone has a cushion to try new ideas.” But who is going to pay for this?     ZeroHedge, May 26, 2017 

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Zuckerberg’s plan would put America on track for total government economic control over citizens, with eventual far-reaching consequences, inimical to freedom and liberty.

“Economic control is not merely control of a sector of human life which can be separated from the rest; it is the control of the means for all our ends. And whoever has sole control of the means must also determine which ends are to be served, which values are to be rates higher and which lower, in short, what men should believe and strive for.”  – Friedrich August von Hayek, Nobel Prize in Economic Sciences – 1974

There is a far superior plan offers the following advantages:

  1.  The Leviticus 25 Plan is NOT another ‘means-tested’ free money giveaway.  It treats all U.S. citizens equally.
  2. It pays for itself over a 10-15 year period.
  3. It would generate powerful economic growth by redirecting trillions of dollars from debt service to discretionary spending/saving.
  4. It promotes self-reliance and less dependence on government entitlement programs and social welfare.
  5. It provides for massive debt reduction at the family level, and it would vastly improve America’s overall massive debt profile – including $1 trillion budget surpluses each of the first five years.
  6. The Leviticus 25 Plan advance the cause of economic liberty for all Americans

The Leviticus 25 Plan 2018 –  $75,000 per U.S. citizen

The Leviticus 25 Plan 2018 (2329)

Fed: 1Q 2017 U.S. Household Debt Vaults to Record $12.7 Trillion

US Household Debt Surpasses 2008 High, Hits Record $12.7 Trillion

  ZeroHedge, May 17, 2017

Total debt held by US household reached $12.73 trillion in the first quarter of 2017, finally surpassing its $12.68 trillion peak reached during the recession in 2008 according to the NY Fed’s latest quarterly report on household debt. This marked a$479 billion increase from a year ago, and up $149 billion from Q4 2016 after 11 consecutive quarters of growth since the deleveraging period immediately following the Great Recession.

the quick and dirty breakdown:

  • Total household indebtedness stood at $12.73 trillion as of March 31, 2017. This increase put overall household debt $50 billion above its previous peak set in the third quarter of 2008 and 14.1 percent above the trough set in the second quarter of 2013.
  • Mortgage balances, the largest component of household debt, reached $8.63 trillion as of March 31, a $147 billion uptick from the fourth quarter of 2016.
  • Balances on home equity lines of credit fell slightly in the first quarter, down $17 billion to $456 billion.
  • Non-housing debt saw mixed changes—an increase of $10 billion in auto loans and $34 billion in student loan balances, and a $15 billion drop in credit card balances.

Despite the new nominal all time high, on a relative basis, household debt remained below past levels in relation to the size of the overall U.S. economy, and in Q1 total debt was 66.9% of GDP, nearly 20% lower compared to 85.4% of GDP in Q3 of 2008.

Immediately following the 2009-2009 crisis, Americans reduced their debts to an unusual extent: a 12% decline from the peak in the third quarter of 2008 to the trough in the second quarter of 2013. New York Fed researchers, cited by the WSJ, described the drop as “an aberration from what had been a 63-year upward trend reflecting the depth, duration and aftermath of the Great Recession.”

Compared to 2008, balance sheets also look different now, with less housing-related debt and more, make that much, much more student and auto loans. As of the first quarter, 67.8% of total household debt was in the form of mortgages; in the third quarter of 2008, mortgages were 73.3% of total debt. Student loans rose from 4.8% to 10.6% of total indebtedness, and auto loans went from 6.4% to 9.2%.

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Dear U.S. Congress:

If you do not have a plan that sets America on course for massive U.S. Household Debt reduction and Federal Budget surpluses, you are not doing your job.

America’s economic blockbuster solution starts here:

The Leviticus 25 Plan 2018 –  $75,000 per U.S. citizen

The Leviticus 25 Plan 2018 (2319)

The Leviticus 25 Plan 2017: Restoring prosperity to America and financial health for American families.

May 2017:  America’s economic engine is sputtering badly.  Over 3,000 retail store closings.  Ford set to lay off 10% of global workforce including 1,400 in North America, Empire Fed signaling ‘contraction.’

America’s economic health is fragile.

Massive government debt, household debt and corporate debt burdens are draining astronomical amounts of liquidity from the U.S. economy.

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Visualizing America’s Retail Apocalypse

So far we’ve seen roughly 3,000 store closings announced in 2017, and Credit Suisse estimates that could hit 8,600 by the end of the year. That would easily surpass 2008’s total, which was 6,200 closings, to be the worst year in recent memory…  ZeroHedge, May 6, 2017

How Is This Not A Recession? Ford To Slash 10% Of Global Workforce

Having admitted in March that “used car prices will drop for years” and amid near-record inventories,  a so-called ‘plateau’ in car sales, and soaring auto-loan losses, WSJ is reporting that Ford is planning substantial cuts to its global workforce amid CEO Mark Fields’s drive to boost profits and address the auto maker’s sliding stock price.   ZeroHedge, May 15, 2017

‘Soft’ Data Slumps – Empire Fed Plunges Into Contraction As New Orders Collapse

Having surged to its highest since Oct 2014 early in the year on the back of Trumptopian exuberance, Empire Fed’s manufacturing survey crashed back to -1.0 in May. This is the worst (and first) contractionary print since October 2016 as New Orders crash from 7-year highs to 7-month lows.  ZeroHedge, May 15, 2017

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To restore prosperity to America and financial health for individual American families, we must grand U.S. citizens the same access to liquidity that was granted to major banks and insurers during the great financial crisis.

The result:

  1. Economic liberty
  2. Massive debt elimination
  3. Decentralized, free-market economics
  4. Reduced dependence on government
  5. Massive, new federal, state, and local government tax revenue flows and a balanced budget at the national level

There is exactly one powerful, dynamic economic plan in America that delivers:

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 2018 –  $75,000 per U.S. citizen

The Leviticus 25 Plan 2018 (2313)

Federal Reserve, March 2017 release: Mortgage Debt Outstanding, All Holders: $14.291 trillion

Mortgage Debt Outstanding, as of the end of the 4th Quarter of 2016, totals over $14.291 trillion.  This does not include nonhousing debt.

$14.291 trillion in mortgage debt, assuming a 20-year maturity on 30-year notes at a 4% rate of interest, would mean that Americans are paying approximately $68.2 billion in mortgage payments each month.

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Federal Reserve Board of Governors

Release Date: March 2017

Mortgage Debt Outstanding (1.54)

Millions of dollars, end of period

2016Q4 – All Holders            14,291,245

By type of property   

One- to four- family residences 10,265,680

Multifamily residences1                        1,186,655

Nonfarm, nonresidential                2,614,809

Farm                                                 224,400

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The Leviticus 25 Plan would easily accommodate the elimination of 50% of the Mortgage Debt Outstanding in the U.S..

This would result in approximately $34.1 billion in new money flowing into the cities and towns across America … each month… for the next 20 years.

This would ease the financial strain on American families, re-ignite economic growth, reduce dependence on government entitlement programs and social welfarism. This would also strengthen loan portfolio asset quality for banks and improve capitalization structures..

The Leviticus 25 Plan would also generate $1.02 trillion government surpluses annually for each of the next five years.

America’s one and only  ‘powerhouse’ economic acceleration plan:

The Leviticus 25 Plan 2018 –  $75,000 per U.S. citizen

The Leviticus 25 Plan 2018 (2306)

4Q 2016 Household Debt and Credit Report: $12.58 trillion.

Debt is a liquidity vacuum.  Massive debt, and its associated monthly debt service obligations, is an economy killer.

The U.S. economy is barely crawling, and prospects for a meaningful, sustainable turnaround are presently bleak.

Now… imagine the raw economy-boosting power of eliminating 40%, 50%, or possibly 60% of the $8.95 trillion housing debt in the U.S..

At $8.95 trillion, 4.0%, 20 year maturity, housing debt service for U.S. households is running at approximately $54.2 billion per month.

Eliminating 50% of the housing debt balance from U.S. Household Debt would erase approximately $27.1 billion in debt service per month… every month… for the next 20 years.

And that $27.1 billion, ladies and gentlemen, is fresh, new liquidity that would be walking the streets of America every month for the next 20 years.

And that is how you revitalize an economy and generate raw economic power.

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 Federal Reserve Bank of New York

Center for Microeconomic Data

HOUSEHOLD DEBT AND CREDIT REPORT (Q4 2016)

Household Debt Edges Up as Auto, Credit Card, and Student Debt Climb

The CMD’s latest Quarterly Report on Household Debt and Credit reveals that total household debt increased by 1.8% in the fourth quarter of 2016, rising $226 billion to reach $12.58 trillion, only 99 billion shy of its 2008 third quarter peak. Balances increased across all debt products, with a 1.6% increase in mortgage balances, a 1.9% increase in auto loan balances, a 4.3% increase in credit card balances, and a 2.4% increase in student loan balances this quarter.

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America’s raw economic power plan:

The Leviticus 25 Plan 2018 –  $75,000 per U.S. citizen

The Leviticus 25 Plan 2018 (2301)