Monthly Archives: October 2017

America’s Colossal ‘Debt Overhang,’ Part 2: Solution: The Leviticus 25 Plan

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Massive debt equals massive debt service obligations, and over the long run – U.S. citizens lose.

It is time for a new plan…

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The Federal Reserve Has Never Printed ‘Money’: Part II

Seeking Alpha, October 19, 2017 – By Eric Basmajian

Excerpts:

The debt of the four critical non-financial sectors (Federal, State & Local, Corporate, Household) has increased to an aggregate of $70 trillion, or 370% of GDP.
 Total Public & Private Debt as a % of GDP (Excluding “Off-Balance Sheet” Items):

Source: Federal Reserve, Bank For International Settlements, US Treasury

Total Public & Private Debt (Trillions) (Excluding “Off-Balance Sheet” Items):

Source: Federal Reserve, Bank For International Settlements, US Treasury

The data is very clear that we, as an economy, are massively more indebted than any point during the last recession. As a system, there is $20 trillion more of debt. To put that into perspective, if that debt had an average interest rate of just 2%, that means the economy would be paying an additional $400 billion a year just to service that debt. That is nearly 50% of last year’s total increase in gross domestic product.

As debt levels increase, it takes a greater and greater percentage of the national income to service that debt, causing the saving rate to fall and causing a lower percentage of income to be invested into long-term cash-flow-producing goods and services.

The Federal Reserve, with their zero interest rate policy for an unprecedented length of time, was the primary driver behind this massive debt increase.

[snip]

Economist Lacy Hunt estimates that over the next year, of the current $70 trillion of total debt (Federal, State & Local, Corporate, Household), around 28% or $20 trillion dollars worth will have to be repriced to current interest rates. This is a combination of short-term debt that was taken out 1-2 years ago, as well as longer-term 5-year paper that was taken out in 2013 when interest rates made a short-term low of around 0.70% on the 5-year Treasury.

Using Lacy Hunt’s estimate, $20 trillion that needs to be repriced at an average interest rate that is 80 basis points higher translates to 160 billion of additional annual interest expense.

[snip]

A $160 billion hit to an average $600 billion GDP increase equates to a 25% reduction in growth. Growth has averaged 2.1% over the past 7 years so all else equal, we are looking at growth in the next two years to drop to around 1.6% simply due to an increase in debt expense.

This does not even take into consideration the decrease in disposable personal income growth, the decrease in the savings rate, or the increased rate of monetary tightening from the Federal Reserve, which is designed to stunt inflation and growth.

 This structural issue with the economy has been going on for decades. The level of debt increases, and each year, that takes a larger and larger percentage of our national income to service. Due to the fact that a larger percentage of our national income has to be used to pay down debt, slower economic growth is the result.

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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 2018 –  $75,000 per U.S. citizen

The Leviticus 25 Plan 2018 (2552)

 

Andrew Huszar, Federal Reserve Official: QE was “the greatest backdoor Wall Street bailout of all time”

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Andrew Huszar: Confessions of a Quantitative Easer – WSJ

Nov 11, 2013

Andrew Huszar directed the Federal Reserve’s [QE1] $1.25 trillion agency mortgage-backed security purchase program which kicked off during March 2009.

Here are his after-thoughts…or “confessions”  (Andrew Huszar: “Confessions of a Quantitative Easer”) excerpts: 

“We went on a bond-buying spree that was supposed to help Main Street. Instead, it was a feast for Wall Street. 

I can only say: I’m sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed’s first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I’ve come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time. 

Five years ago this month, on Black Friday, the Fed launched an unprecedented shopping spree. By that point in the financial crisis, Congress had already passed legislation, the Troubled Asset Relief Program, to halt the U.S. banking system’s free fall. Beyond Wall Street, though, the economic pain was still soaring. In the last three months of 2008 alone, almost two million Americans would lose their jobs.

The Fed said it wanted to help—through a new program of massive bond purchases. There were secondary goals, but Chairman Ben Bernanke made clear that the Fed’s central motivation was to “affect credit conditions for households and businesses”: to drive down the cost of credit so that more Americans hurting from the tanking economy could use it to weather the downturn. For this reason, he originally called the initiative “credit easing.”

In its almost 100-year history, the Fed had never bought one mortgage bond. Now my program was buying so many each day through active, unscripted trading that we constantly risked driving bond prices too high and crashing global confidence in key financial markets. We were working feverishly to preserve the impression that the Fed knew what it was doing. 

It wasn’t long before my old doubts resurfaced. Despite the Fed’s rhetoric, my program wasn’t helping to make credit any more accessible for the average American. The banks were only issuing fewer and fewer loans. More insidiously, whatever credit they were extending wasn’t getting much cheaper. QE may have been driving down the wholesale cost for banks to make loans, but Wall Street was pocketing most of the extra cash.

Trading for the first round of QE ended on March 31, 2010. The final results confirmed that, while there had been only trivial relief for Main Street, the U.S. central bank’s bond purchases had been an absolute coup for Wall Street. The banks hadn’t just benefited from the lower cost of making loans. They’d also enjoyed huge capital gains on the rising values of their securities holdings and fat commissions from brokering most of the Fed’s QE transactions. Wall Street had experienced its most profitable year ever in 2009, and 2010 was starting off in much the same way.

That was when I realized the Fed had lost any remaining ability to think independently from Wall Street. Demoralized, I returned to the private sector.

Where are we today? The Fed keeps buying roughly $85 billion in bonds a month, chronically delaying so much as a minor QE taper. Over five years, its bond purchases have come to more than $4 trillion. Amazingly, in a supposedly free-market nation, QE has become the largest financial-markets intervention by any government in world history. 

And the impact? Even by the Fed’s sunniest calculations, aggressive QE over five years has generated only a few percentage points of U.S. growth. By contrast, experts outside the Fed, such as Mohammed El Erian at the Pimco investment firm, suggest that the Fed may have created and spent over $4 trillion for a total return of as little as 0.25% of GDP (i.e., a mere $40 billion bump in U.S. economic output). Both of those estimates indicate that QE isn’t really working.

Having racked up hundreds of billions of dollars in opaque Fed subsidies, U.S. banks have seen their collective stock price triple since March 2009. The biggest ones have only become more of a cartel: 0.2% of them now control more than 70% of the U.S. bank assets.”

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The Leviticus 25 Plan levels the playing field by granting direct liquidity extensions to U.S. citizens for massive debt elimination at ground level.

This would provide dynamic economic stimulus for Main Street America.  And it would restore economic liberty across the land.

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

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

The Leviticus 25 Plan 2018 (2543)

WSJ: “ObamaCare’s Tax on the Poor” – Time for a Dynamic New Plan.

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WSJ: ObamaCare’s Tax on the Poor

By The Editorial Board – Sept. 22, 2017

Democrats claim to have a monopoly on caring for the poor and suffering, and this week the left is portraying a GOP health-care bill as an attack on society’s vulnerable. So check out the data on how ObamaCare is a tax on some low-income families.

IRS data offers insight into who paid the law’s individual mandate penalty in 2015 for not buying health insurance, the latest year for which figures are available. Spoiler alert: The payers aren’t Warren Buffett or any of the other wealthy folks Democrats say they want to tax. More than one in three of taxed households earned less than $25,000, which is roughly the federal poverty line for a family of four.

More than 75% of penalized households made less than $50,000 and nine in 10 earned less than $75,000. Fewer families paid the tax in 2015 than in 2014, yet government revenues increased to more than $3 billion from about $1.7 billion, as the financial punishment for lacking coverage increased.

These Americans are paying a fine to avoid purchasing a product they don’t want or can’t afford but government compels them to buy. Such individuals don’t suddenly have access to less expensive or higher quality medical care, but they do have less money for household expenses, which can consume a high share of income for this class of families.

The unfortunate irony is that ObamaCare destroyed the private market that offered options that in some cases made sense for these people. For example: High-deductible, limited coverage for unexpected events.

Then again, the point of this coercion was to substitute the government’s political preferences for individual judgment, while forcing the young and healthy to pay more to finance the mandated benefits that Democrats think everyone must have….

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It is time to set things back in order…

The U.S. Health Care Freedom Plan is the only comprehensive, citizen-centered health care plan in America.  It ‘resets’ the health care industry to present a clean, efficient and responsible system.  Most importantly, this plan restores individual freedom and liberty for all participating Americans.

The Plan:

  1. The U.S. Health Care Freedom Plan is available to each and every U.S. citizen – with no coverage mandates. Each U.S. citizen who wishes to participate will be granted a full and complete exemption from the ACA.
  2. This plan offers freedom of choice and equal justice for all. Those Americans who might wish to stay with the ACA may stay (‘If you like your ObamaCare, you can keep your ObamaCare’).
  3. Each participating U.S. citizen shall receive a credit extension, through a special Federal Reserve Citizens Credit Facility, of $25,000, electronically deposited into a Medical Savings Account (MSA) – for direct allocation toward family health care needs.
  4. Private insurance – Families shall be allowed to enroll in high-deductible ($10,000 – $15,000) major medical plans, to include basic, ‘no frills’ medical plans which best suit their individual needs and desires. These streamlined plans would lower premium costs for employees and employers, encouraging employers to cost-share savings with employees through incentive-based employer MSA contributions.
  5. Policies would not be automatically loaded with expensive government healthcare mandates.
  6. Those with extraordinary medical issues may be included in a high-risk category, with such plans being eligible for a government subsidy (similar to current Medicare Advantage).
  7. Federal / state programs – Individuals enrolled in Medicare / Medicaid / VA / TRICARE / FEHB programs would maintain their covered status, with an annual deductible of $5,000 per year per enrolled family member, for a period of five years for those benefits. The dedicated MSA funds would fully fund the offset for the higher ($5,000) deductible feature for that five-year period. MSA funds could also be used to pay Medicare supplement premiums and other potential co-pay obligations.
  8. Where health care services paid by patients directly with MSA funds, providers would not be bound by federal / state rules pertaining to Electronic Medical Records (EMRs), and other unnecessary administrative burdens.

Benefits:                                                                                 

Lower health care costs – With the elimination of millions of minor insurance claims across the nation over the course of each month, system-wide efficiency would improve, medical costs would drop significantly, and the direct patient-provider relationship would be restored. Medical professionals would not have to answer to HMOs, insurance companies, or government agencies in providing basic day-to-day healthcare access for their patients.

Scoring – if 300 million U.S. citizens were to participate in the plan, the total dollar transfer into family-based Medical Savings Accounts (MSAs) would amount to $7.5 trillion.

The potential cost savings from the $5,000 deductible provision for the approximate 150 million people currently enrolled in Medicare (55 million), Medicaid (72 million), VA (6.16 million), TRICARE (9.5 million), and FEHB (8.2 million) would amount to just  under $3.75 trillion over the first 5 years (or, one-half the $7.5 trillion initial roll out cost).

Summary:

This plan would generate trillions of dollars in cost savings from streamlining, vastly improved efficiency, and reductions in waste and fraud.

This plan would improve quality and ease of access to health care for all participating Americans.

 For patients: It would dramatically lower the cost of health care, while improving quality and access for all who chose to participate.

 For providers:  It would restore the patient-provider relationship and significantly reduce massive cost and time burdens imposed by a centralized system.

 The U.S. Health Care Freedom Plan an integral part of a larger, comprehensive economic plan:

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

The Leviticus 25 Plan 2018 (2543)

Central Bank “Money Conjuring Collusion”- Big Banks Win. Ordinary Citizens Will Eventually “Pay the Price.” Solution: The Leviticus 25 Plan

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Naomi Prins:  “Since late 2007, the Federal Reserve has embarked on grand-scale collusion with other G-7 central banks to manufacture a massive amount of money…” 

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Nomi Prins: A Decade Of G7 Central Bank Collusion… And Counting

ZeroHedge, Aug 30, 2017 – Excerpts:

The Winners and Losers

Since the global financial crisis, the biggest G7 winners have been the Big Six US banks that profited from access to cheap money. They benefited from central bank purchases of their securities that exaggerated the value of the remaining securities on their books. They used “printed” or electronically crafted money to stockpile cash and fund buybacks of their own shares and pay themselves dividends on those shares. By producing and distributing artificial money, central bankers distorted reality in global markets. Multi-national banks were co-conspirators in that maneuver.

After the Big Six banks passed their latest round of stress tests, they began buying even more of their own shares back. The move elevated their stock prices further. The largest U.S. bank, JP Morgan Chase, announced its most ambitious program to buy back its own shares since the 2008 crisis, $19.4 billion worth. Citigroup followed suit with a $15.6 billion buy-bank plan.

The Fed’s all-clear was just another version of quantitative easing (QE) for banks. Instead of buying bonds via QE programs, the Fed greenlighted banks to further speculate in their own stocks, creating more artificiality in the level of the stock market. In all, US banks have disclosed plans to buy back $92.8 billion of their own stock to say thank you to the Fed for the “A.” That was piling on to their existing trend; according to S&P Dow Jones Indices, “Stock repurchases by financial companies in the S&P 500 rose 10.2% in the first quarter [of 2017] and accounted for 22.2% of all buybacks.”

More ominous than that was another clear sign that a decade of money-conjuring collusion helped the same banks that caused the last crisis. Proof came in the form of a letter to the U.S. Senate banking committee from Thomas Hoenig, the vice-chairman of the U.S. Federal Deposit Insurance Corp. (FDIC), the government agency in charge of guaranteeing people’s deposits. He wrote that in 2017, U.S. banks used 99% of their net earnings toward purchases of their own stock and paying dividends to shareholders (including themselves).

They thus legally manipulated markets in plain sight by pushing their own share prices up with cheap money availed to them by the central bank that is supposed to regulate them.

As of this year, global debt levels stood at 325% GDP, or about $217 trillion. The $14 trillion of assets the G-3 central banks held on their books is equivalent to a staggering 17% of all global GDP. The European Central Bank (ECB), Bank of Japan (BOJ) and Bank of England are still buying collectively $200 billion worth of assets per month.

In the wake of that buying, noncash instruments – crypto currencies and hard assets like gold, unrelated to the main G-7 monetary system – have become increasingly attractive on the fear that in another major downturn or crisis, central banks and private banks will retract cash and liquidity from their customers.

In that likely event, banks will protect themselves and turn to governments and central banks again. In the absence of some sort of outside central bank benchmark, like a modern gold standard or use of currency basket benchmarks like the IMF’s Special Drawing Rights (SDR), currency wars will continue to be fought.

With rates hovering between zero and negative in some countries, there would be little to no room to maneuver in the face of another crisis. Thus – another thing has become increasingly clear: Central bankers have demonstrated gross negligence regarding the consequences of their monetarily omnipotent actions.

If rates were to rise higher in the US (and I don’t think we’re in for more than another 25 basis points, this year which is under last year’s Fed forecast) so would the cost of servicing that debt. That would hurt companies domestically and abroad, induce more defaults and a rush by the banks involved in derivatives associated with that debt to concoct more toxic assets. The vicious cycle of central bank bailouts would reverberate again. 

Savers and pensioners are getting close to no interest on their nest eggs. Depositors are paying banks to house their money through fees that offset negligible interest. Small businesses have to jump through hoops to get loans for expansion purposes. Wages are stagnant. Ultimately, big banks had played the system — and us — again, this time with central banks helping to fund them. The threat of an even larger collapse looms as stock markets and global debt have been propelled higher.

As we approach the ninth anniversary of the collapse of one of my former employers, Lehman Brothers, and the 10th anniversary of the beginning of central bank collusion into the financial crisis, there has been – no change – in global G7 central bank monetary policy.

While speaking to the monetary policy glitterati at central bank base-camp [Jackson Hole], Yellen declared any dialing back of regulatory reform measures for banks should be “modest.” She said, “The evidence shows that reforms since the crisis have made the financial system substantially safer.” There was no mention of the unprecedented decade of easy money bolstering the financial system – that makes it appear – solvent.

For all the cheap cash offered up, much at the expense of taxpayers who will bear the burden of the associated debt this enabled, and the bank fraud it plastered over, it will be ordinary citizens who will pay the price – yet again.  In the era of money fabrication and monetary policy collusion, a decade of ongoing “emergency” procedure spells an eventual recipe for disaster.

Big US banks are bigger than before the crisis. They float atop a life-raft, among other things, of $4.5 trillion Fed asset book, as part of a total $14 trillion G7 central bank asset book. Yellen’s speech was code for preserving the status quo and central bank elasticity high……

Take the composite of all that and what are you left with? Ongoing G7 central bank monetary policy collusion, zero percent interest rates globally, unlimited QE potential, and major asset bubbles.

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Review:  Major global banks, the very banks that precipitated the 2008 credit meltdown, received massive liquidity transfusions, courtesy of G7 Central Banks, during the great financial crisis to magically make their gambling debts ‘disappear’ and restore them to ‘financial health.’
Ordinary citizens received nothing to stave off the financial burdens and stresses imposed on them from the ensuing financial turmoil.
There is now one clean, powerful way to level the playing field...
Grant citizens the same direct access to liquidity that was provided to major players in the global financial markets.

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

The Leviticus 25 Plan 2018 (2526)

“The U.N.’s Fat Kleptocrats”.. and why we need the Leviticus 25 Plan

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Keep Your Eye on the U.N.’s Fat Kleptocats – WSJ

Sep 14, 2017 – Excerpts:

Corruption costs the world $2.6 trillion a year, according to one estimate cited by the Organization for Economic Cooperation and Development. This endemic problem cannot be lost on institutions like the World Bank and International Monetary Fund, yet they continue to hand billions of dollars to nations whose leaders are on the take. Why not put these jokers through an audit?

Brazil has so many crooks—convicted and alleged—that you need a scorecard: … the Inter-American Development Bank lent Brazil at least $11 billion. Since 2000, the World Bank has poured more than $30 billion into the same rabbit hole. Transparency International ranks Brazil 79th out of 176 countries on corruption.

Then there’s Angola, which Transparency International ranks 164th. The World Bank has granted the country more than $1.7 billion since 2000, and the IMF another $1.4 billion. Neither group seems interested in investigating how the daughter of President José Eduardo dos Santos, who has ruled Angola since 1979, became what Forbes calls “Africa’s richest woman” (net worth $3.5 billion)…

When Western institutions drop money into the capitals of developing countries, they think themselves do-gooders. Instead they’re tools in an unprincipled scheme. Here’s how the racket works: German plumbers and New York waitresses pay taxes. Their respective governments contribute some of that money to the IMF, the World Bank and an alphabet soup of other outfits. Those groups funnel money to nations with corrupt politicians…..

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The U.S. pours billions of dollars each year into the World Bank and International Monetary Fund (IMF) – a fair amount of which supports global corruption… and monetary support for America’s enemies.

If the U.S. can take U.S. citizens’ hard-earned tax dollars and ‘firehose’ it out in such a manner, then U.S. citizens absolutely deserve equal access to the same liquidity transfusions.

It is time to grant U.S. citizens that access.

The inspiration for The Leviticus 25 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 (2520)