August Friedrich von Hayek, Nobel Memorial Prize, Economic Sciences (1974)
Quotes:
“There is all the difference in the world between treating people equally and attempting to make them equal.”
“Through the inevitable mismanagement of resources and goods at the disposal of the state, all forms of collectivism lead eventually to tyranny.”
“Social justice rests on the hate towards those that enjoy a comfortable position, namely, upon envy.”
“Few are ready to recognize that the rise of fascism and Nazism was not a reaction against the socialist trends of the preceding period but a necessary outcome of those tendencies.”
F.A Hayek, The Road to Serfdom — The End of Truth:
“…even the striving for equality by means of a directed economy can result only in an officially enforced inequality—an authoritarian determination of the status of each individual in the new hierarchical order—and that most of the humanitarian elements of our morals, the respect for human life, for the weak, and for the individual generally, will disappear….
The moral consequences of totalitarian propaganda which we must now consider are, however, of an even more profound kind. They are destructive of all morals because they undermine one of the foundations of all morals: the sense of and the respect for truth.”
Based on data from a U.S. Treasury report, the federal government has amassed $142 trillion in debts, liabilities, and unfunded obligations. This staggering figure equals 93 percent of all the wealth Americans have accumulated since the nation’s founding, estimated by the Federal Reserve to be $152 trillion.
Unlike other measures of federal red ink that cover an arbitrary period, extend into the infinite future, or ignore government resources, the figure of $142 trillion applies strictly to Americans who are alive right now and includes the government’s commercial assets. Thus, it quantifies the financial burden that today’s Americans are leaving to their children and future generations.
Complete Versus Incomplete Accounting
Federal law requires the U.S. Treasury to publish an annual report that details the government’s “overall financial position.” In addition to the national debt, the “Financial Report of the United States Government” also includes the government’s explicit and implicit financial commitments, such as:
• unfunded obligations for social insurance programs like Medicare.
Such “fiscal exposures,” as explained by the U.S. Government Accountability Office (GAO), “represent significant commitments that ultimately have to be addressed.” Thus, GAO stresses that ignoring them can “make it difficult for policymakers and the public to adequately understand the government’s overall performance and true financial condition.”
Yet, that is precisely what the media does. Although the Treasury published the report in February, Google News indicates that no major media outlet has mentioned it. Meanwhile, the same outlets have frequently reported on the national debt and federal budget, which are incomplete measures of the federal government’s fiscal situation.
The commonly cited national debt and federal budget are mainly based on cash accounting, which is the simplistic process of counting money as it flows in or out. Thus, liabilities like pension benefits for federal workers aren’t measured until they are actually paid, which is often decades after they are promised.
In contrast, the Treasury report mainly uses accrual accounting, which measures financial commitments as they are made. This is how the federal government requires large corporations to report their finances. In the words of the Financial Accounting Standards Board, which is tasked by the U.S. Securities and Exchange Commission to create private-sector accounting rules, accrual accounting is the “most relevant and reliable” way to measure the financial health of pension plans.
The same applies to other retirement benefits like healthcare. The accounting rule that governs such benefits explains that “a failure to accrue” implies “that no obligation exists prior to the payment of benefits.” Since an obligation does exist, failing to account for it “impairs the usefulness and integrity” of financial statements.
The Grand Total
A methodical tally of accrual accounting data in the Treasury report shows that the federal government has amassed $142 trillion in debts, liabilities, and unfunded obligations beyond the value of its commercial assets. This reflects the government’s finances at the close of its 2023 fiscal year on Sept. 30, 2023.
The primary components of this burden, which are unpacked below, include:
These figures tally to $147.1 trillion in debts, liabilities, and unfunded obligations. Offsetting this is $5.4 trillion in commercial assets owned by the federal government, leaving a grand total shortfall of $141.7 trillion.
Numbers in the trillions are hard to conceive, so it’s revealing to place them in context. The figure of $142 trillion amounts to 93 percent of the net wealth Americans have accumulated since the nation’s founding, estimated by the Federal Reserve to be $152 trillion. This includes all of their assets in savings, real estate, corporate stocks, private businesses, and consumer durable goods like automobiles and furniture.
The government’s $142 trillion shortfall also amounts to:
• $430,252 for every person living in the United States.
• $1,098,087 for every household in the United States.
• 2 times annual U.S. economic output (GDP).
• 30 times annual federal revenues.
Publicly Held Debt
The simplest major item quantified by the Treasury report is the publicly held debt, which is $26.3 trillion. This is the money the federal government owes to non-federal entities like individuals, corporations, state governments, and foreign governments.
Publicly held debt is a partial measure of the national debt that excludes $6.9 trillion the federal government owes to federal programs like Social Security and Medicare. The Treasury report also details these intergovernmental debts and consolidates them with the items below.
Liabilities
Pension and other retirement benefits are a large part of compensation packages for government employees. With these generous benefits included, civilian non-postal federal employees receive an average of 17 percent more total compensation than private-sector workers with comparable education and work experience. Postal workers receive even greater premiums ranging from 25 percent to 43 percent.
In 2022, federal, state, and local governments spent $2.3 trillion on employee compensation, costing each household in the nation an average of $17,299.
The Treasury report shows that the federal government currently owes $14.3 trillion in pensions and other benefits to federal employees and veterans that are not accounted for in the publicly held national debt. To pay the present value of these benefits will require an average of $109,005 from every household in the United States.
The Treasury reports other liabilities of the federal government, such as:
• $124 billion in accounts payable.
• $645 billion in environmental and disposal liabilities.
• $99 billion in insurance and guarantee program liabilities.
Altogether, the Treasury records $16.6 trillion in liabilities that are not accounted for in the publicly held debt.
Social Security & Medicare
A similar but far more expensive situation exists with social insurance programs like Social Security and Medicare. This is because—contrary to popular belief—these programs don’t save workers’ taxes for their retirements. Instead, they immediately spend the vast majority of those taxes to pay benefits to current recipients. Thus, they are called “pay-as-you-go” programs.
In stark contrast, the U.S. Bureau of Economic Analysis explains that “federal law requires private pension plans to operate as funded plans, not as pay-as-you-go plans.” The reasons for this, as explained by the American Academy of Actuaries, are to increase “benefit security” and ensure “intergenerational equity.”
Social Security and Medicare, on the other hand, have levied dramatically increased tax burdens on succeeding generations of Americans, thus creating severe generational inequality. And unless retirement ages are raised or benefits are reduced in some other way, taxes will need to be increased again to keep the programs solvent.
Federal actuaries measure the unfunded obligations of Social Security and Medicare in several different ways, but only one of them approximates accrual accounting. This is called the “closed-group” unfunded obligation, which is the money needed to cover the shortfalls for all current taxpayers and beneficiaries in these programs.
In the words of Harvard Law School professor and federal budget specialist Howell E. Jackson, the closed-group measure “reflects the financial burden or liability being passed on to future generations.” These burdens are $49.8 trillion for Social Security and $53.9 trillion for Medicare. Placing these figures in context:
• Social Security’s unfunded obligations amount to an additional $272,237 from every person who currently pays Social Security payroll taxes.
• Medicare’s unfunded obligations amount to an additional $201,932 from every U.S. resident aged 16 or older.
Those shortfalls are what remain after the federal government has paid back with interest all of the money it has borrowed from Social Security and Medicare.
Social Security and Medicare differ from true pensions because taxpayers don’t have a contractual right to receive these benefits. Nevertheless, paying these benefits is an implied commitment of the federal government, and federal law requires that these programs be included in the Treasury report.
The Treasury report estimates that the combined closed group unfunded obligations of Social Security, Medicare, and some smaller social insurance programs are $104.2 trillion. This figure doesn’t include intergovernmental debt, which is consolidated with other data in the report.
Federal Assets
The Treasury also records the federal government’s commercial assets, such as:
• $922 billion in cash and other monetary assets.
• $1.2 trillion in property, plants, and equipment.
• $1.7 trillion in receivable loans, mainly comprised of student loans.
However, the report doesn’t account for federal stewardship land and heritage assets, such as national parks and the original copy of the Declaration of Independence. While these items have tangible value, the report explains that they “are intended to be preserved as national treasures,” not sold to the highest bidder to cover debts.
In total, the government owned $5.4 trillion in commercial assets at the close of its 2023 fiscal year.
Adding up the federal government’s debts, liabilities, and unfunded obligations and then subtracting the value of its commercial assets yields a fiscal shortfall of $142 trillion.
Root Causes
The first critical step in solving a problem is to understand its root causes. However, scientific surveys show that many voters are misinformed about the root causes of government debt.
A scientific, nationally representative survey commissioned in 2020 by Just Facts found that 25 percent of voters believe the main driver of the rising national debt is military spending. This accords with the reporting of media outlets that frequently blame the debt on military spending.
In reality, military spending has plummeted from 53 percent of all federal expenses in 1960 to 17 percent in 2022:
The same survey found that another 25 percent of voters believe tax cuts were the main driver of debt, in accord with news stories that blame the debt on tax cuts.
In reality, federal revenues have stayed at a roughly level portion of the U.S. economy for the past 80 years:
As shown in the charts above, the primary driver of the national debt is increased spending, particularly on social programs. These programs—which provide healthcare, income security, education, nutrition, housing, and cultural services—have grown from 21 percent of all federal spending in 1960 to 64 percent in 2022.
Yet, only 39 percent of voters correctly identify social spending as the primary cause of rising debt.
Moreover, the vast bulk of the government’s unfunded obligations are due to Social Security and Medicare. Thus, the Congressional Budget Office projects that the main drivers of future debt will be Social Security, Medicare, Medicaid, the Children’s Health Insurance Program, Obamacare, and interest on the national debt. Under the weight of these, the publicly held debt is due to soar to unprecedented levels over coming decades….
______________________________________
There is one, and only one, economically viable, politically feasible recovery plan to clean up this exploding debt crisis — and get America back on track.
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 – An Economic Acceleration Plan for America
By Diccon Hyatt | Investopedia | Published September 13, 2024
Excerpts:
Key Takeaways
The U.S. government will spend a record $1.2 trillion on interest payments in 2024, the highest amount ever recorded.
Interest payments are driven by a combination of deficit spending, especially during the pandemic, and the Federal Reserve’s campaign of anti-inflation interest rate hikes.
The trajectory of the deficit could be influenced by the election.
While both Democrats and Republicans propose new tax cuts and spending that could push up the deficit, Vice President Kamala Harris has proposed tax increases on the wealthy and corporations, to offset them.
The U.S. government is on track to spend more than $1 trillion on interest payments this year, surpassing military spending for the first time in history.
Interest payments on the national debt (held by the public in the form of Treasury securities) will cost the government $1.2 trillion in the government’s fiscal year ending in October, the Treasury Department said in a monthly report on the budget.1 Net interest outlays are the third costliest item in the budget behind Social Security and Medicare benefits.
Economists have grown increasingly concerned about the potential impact of those payments on the U.S. economy. Interest payments took up 2.4% of the entire U.S. gross domestic product in 2023, and The Congressional Budget Office estimates that could swell to 3.9% over the next 10 years.
Why Is The Government Paying So Much Interest? Two major factors have driven those payments skyward. First, the government spent trillions to support households and the economy during the pandemic, paying for it by borrowing rather than raising taxes. Second, the Federal Reserve raised interest rates starting in 2022 to fight inflation, which pushed up how much the government owes for that debt.
____________________________________
America’s billowing federal debt is a dire national security threat.
There is only one plan on the table with the power to reign in America’s ever-expanding debt and generate annual federal budget surpluses.
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 – An Economic Acceleration Plan for America
‘Teacher pay’ is a critically important goal for attracting and retaining dedicated, top-notch teachers and providing the best resources for high achievement by America’s school children.
At the same time, rejuvenating financial health for all working American families is a vital cause, all across America.
All working Americans – military, law enforcement, medical / healthcare, maintenance workers, construction, fire and rescue, service workers – are deserving of an opportunity, a comprehensive initiative, to strengthen their families’ financial status and relieve the burden of government interference in their daily lives.
Let’s do some math, and make a comparison between two significant economic initiatives.
Plan 1: The Leviticus 25 Plan – $90,000 per U.S. citizen. $60,000 per U.S. citizen is electronically deposited into a Family Account and $30,000 per citizen is electronically deposited into a Medical Savings Account.
Who benefits? Answer: All participating U.S. citizens and their families.
Who pays? Answer: The Federal Reserve creates a funding facility, a Citizens Credit Facility, to channel liquidity to American families, in the same way that they set up various credit facilities to fire-hose liquidity out to Wall Street’s financial sector during the great economic crises years (2008-2010). Many of these U.S. and foreign banks and insurers were the very institutions that had precipitated the financial crisis with their financial innovation schemes and leveraged speculation – which ‘bled out’ in the form of gaping balance sheet ‘capital holes’ when the big mortgage default wave hit.
How does the Federal Reserve then get the money back, in order to reduce its balance sheet back down to ‘normal dimensions,’ over time? Answer: Through a series of simple recapture provisions.
#1. Participating families would be required to give up their tax refunds each year for a period of five years.
#2. Participating families would also be required give up means-tested welfare benefits, income security program benefits, unemployment insurance, workman’s comp, SSI, SSDI, and various other social welfare benefits.
#3. For participating families, there would be a $6,000 deductible for five years ($30,000 total) for those enrolled in Medicare, Medicaid, VA, TRICARE, FEHB.
The Plan pays for itself over a 10-15 year period.
How much would The Leviticus 25 Plan benefit a typical teacher’s family? Case 1: Family of four. Mother teaches – salary $50,000 / year. Father also works. Two school-age children. $165,000 balance on 30-year fixed mortgage – maturing in 20 years. Two modest car loans. Monthly health care premiums – fairly substantial.
Through the Citizens Credit Facility, $240,000 would be electronically deposited into their Family Account, and $120,000 would be electronically deposited into their Medical Savings Account.
These liquidity grants are tax-free. The net benefit of these grants would be reduced slightly over the course of time through the loss of income tax refunds for five years (estimate: $5,000 per year for five years: $25,000).
Mortgage payoff example: Family pays off $165,000 balance remaining on a 30-year fixed $200,000 mortgage at 5.5% interest rate / 20 years remaining to maturity with principle and interest payments of $1,136 per month.
Total savings: $165,000 principle and $101,351 interest. Total: $266,351.
Approximate annual savings: $13,600.
This savings amount dwarfs the anticipated $5,000 loss per year from income tax refunds.
Family retains $75,000 in Family Account for additional installment debt reduction, discretionary purchases and savings.
With $120,000 in Medical Savings Account, family chooses to purchase a high-deductible policy with reduced premium costs.
Total impact on family financial health: significant. Benefits: powerful
And even more importantly, all families in America would benefit in similar ways.
…………………….
Plan 2: Raise teachers’ pay by a healthy 15% – via tax increases.
Who benefits? Answer: Teachers and their families.
Who pays? Answer: Everyone whose taxes were raised to cover the additional outlay on behalf of teachers. And that would include teachers themselves, whose taxes would also go up – and would therefore slightly reduce the net benefit of a 15% pay raise.
How much would a 15% pay hike actually benefit a typical teacher’s family? Case 1: Family of four. Mother teaches – salary $50,000 / year. Father also works. Two school-age children. $165,000 balance on 30-year fixed mortgage at 5.5% interest – maturing in 20 years. Two modest car loans. Monthly health care premiums – fairly substantial.
A 15% pay raise for the teacher in the family would generate additional gross income of $7,500 per year, or $37,500 over a five-year period – before taxes.
This increased income would provide additional resources for some possible modest reductions in mortgage and installment debt, certain discretionary spending, and it might allow for additional modest savings for their children’s future college education.
Teachers and their families alone would benefit financially. Others would not. Mortgage debt reduction: modest. Health plan premium reduction: none. Net cash benefit over five years: $37,500. ______________________________________
America needs a comprehensive economic acceleration plan that benefits all Americans – through massive debt reduction and the restoration of economic liberty..
The choice is clear.
The Leviticus 25 Plan will also generate $112.6 billion budget surpluses at the federal level during each of its first five years of activation (2025-2029 – compared to trillion dollar deficits each year into the foreseeable future.
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 – An Economic Acceleration Plan for America
F.A. Hayek is regarded by many as the greatest economist in the history of the Western world. In his famous work, “The Road to Serfdom,” Hayek warned about the dangers of national centralization.
There can be no doubt that most of those in the democracies who demand a central direction of all economic activity still believe that socialism and individual freedom can be combined. Yet socialism was early recognized by many thinkers as the gravest threat to freedom.
It is rarely remembered now that socialism in its beginnings was frankly authoritarian. It began quite openly as a reaction against the liberalism of the French Revolution. The French writers who laid its foundation had no doubt that their ideas could be put into practice only by a strong dictatorial government. The first of modern planners, Saint-Simon, predicted that those who did not obey his proposed planning boards would be “treated as cattle.”
Nobody saw more clearly than the great political thinker de Tocqueville that democracy stands in an irreconcilable conflict with socialism: “Democracy extends the sphere of individual freedom,” he said. “Democracy attaches all possible value to each man,” he said in 1848, “while socialism makes each man a mere agent, a mere number. Democracy and socialism have nothing in common but one word: equality. But notice the difference: while democracy seeks equality in liberty, socialism seeks equality in restraint and servitude.”
To allay these suspicions and to harness to its cart the strongest of all political motives—the craving for freedom — socialists began increasingly to make use of the promise of a “new freedom.” Socialism was to bring “economic freedom,” without which political freedom was “not worth having.”
[snip]
Individual freedom cannot be reconciled with the supremacy of one single purpose to which the whole of society is permanently subordinated. To a limited extent we ourselves experience this fact in wartime, when subordination of almost everything to the immediate and pressing need is the price at which we preserve our freedom in the long run. The fashionable phrases about doing for the purposes of peace what we have learned.to do for the purposes of war are completely misleading, for it is sensible temporarily to sacrifice freedom in order to make it more secure in the future, but it is quite a different thing to sacrifice liberty permanently in the interests of a planned economy.
To those who have watched the transition from socialism to fascism at close quarters, the connection between the two systems is obvious. The realization of the socialist program means the destruction of freedom. Democratic socialism, the great utopia of the last few generations, is simply not achievable.
___________________________________
There is one economic plan with the raw power to counter the false utopian promises of security and equality.
The Leviticus 25 Plan is the one and only economic dynamic in today’s world with the power to advance the cause of financial security for U.S. citizens and economic liberty for the whole of America.
The Leviticus 25 Plan provides direct liquidity access for participating 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 – An Economic Acceleration Plan for America
Natixis SA is a large French corporate and investment bank that took a big ‘hit’ in the fall of 2008 when the massive Bernard Madoff $50 billion mega-fraud ponzi scheme blew up on it and a lot of other big ‘players’ in the world of global finance.
Natixis’ exposure in the Madoff fiasco was estimated at 450 million euros ($605 million).
Natixis had also during this time been riding the red-hot subprime bandwagon, and when the mortgage default wave steamrolled through, Natixis’ got walloped again. Their write-downs topped out at $1.75B.
Natixis needed liquidity to survive, and the got it – courtesy of the U.S. Federal Reserve (and, indirectly, U.S. taxpaying citizens). ……………………
Bloomberg Nov 28, 2011 – Excerpts: Natixis SA reported the biggest net losses of any French bank during the financial crisis and kept an outstanding balance of more than $10 billion of loans from the U.S. Federal Reserve for six months. The loans peaked on Dec. 22, 2008, when the Paris-based bank was borrowing $15.5 billion from the Fed’s Commercial Paper Funding Facility and Term Auction Facility.
In February 2009, Natixis‘s main shareholders, Groupe Banque Populaire and Groupe Caisse d’Epargne, announced they would merge to form Groupe BPCE, and the French government bought about 3 billion euros ($4.25 billion) of preferred shares in the combined entity and 4 billion euros of subordinated debt. The deal closed in July 2009. Natixis paid off the last of its Fed loans in January 2010.
Peak amount of debt on 12/22/2008: $15.5B
_____________________________________
And so, here we have a large foreign bank getting sucked into some high-risk, speculative financial ventures, losing big…. and then getting bailed out by the Fed.
Natixis tapped the Fed’s Commercial Paper Funding Facility, Term Auction Facility and Discount Window for a cool $15.5B.
‘Thank you,’ U.S. taxpayers…
And now it is time for fair play. U.S. citizens deserve nothing less than the same access to liquidity (it’s our money after all) that was so generously extended to Natixis, and many banking heavyweights… during their ‘time of need.’
The mechanism: A Federal Reserve Citizens Credit Facility.
The Leviticus 25 Plan – An Economic Acceleration Plan for America
p.s. For the record, Société Générale’, BNP Paribas, HSBC, and Royal Bank of Scotland (RBS) were among other big banks with large exposure to the Madoff ponzi investments, along with massive exposure to subprime leveraged speculation – and also received Fed emergency loan funds (courtesy of the U.S. taxpayer).
The Leviticus 25 Plan – An Economic Acceleration Plan for America
GE Capital, along with several other very large, well-heeled fiduciary entities was charged and convicted in a major municipal bond bid-rigging scandal in 2012. GE Capital had been shaking down municipalities across America, and screwing the pants off hard-working U.S. citizens. On a large scale.
“The state’s first witness, confusingly, was a CDR broker named Doug Goldberg… Right off the bat, in fact, Doug Goldberg explained that while at CDR, he had routinely helped the cream of Wall Street rig bids on municipal bonds by letting them take a peek at other bids:
Q: Who were some of the providers you gave last looks to?
A: There was a whole host of them, but GE Capital, FSA, J.P. Morgan, Bank of America, Société Générale, Lehman Brothers, Bear. There were others.… [snip]
Goldberg went on to testify that he repeatedly rigged auctions with the three defendants. Sometimes he gave them “last looks” so they could shave basis points off their winning bids; other times he asked them to intentionally submit losing offers – called cover bids – to allow other firms to win. ,,,,. The broker went on to detail how he had worked with the GE executives to manipulate a number of auctions. _________________________
Several short years prior to this monumental scam, U.S. taxpayers were helping bail GE Capital out of a financial hole, courtesy of generous Federal Reserve emergency lending initiatives.
Excerpts from Bloomberg report: Bloomberg Nov 28, 2011 : General Electric Co.’s GE Capital finance unit was the biggest U.S. issuer of commercial paper in 2008. GE, the world’s largest maker of jet engines and locomotives, turned to the Federal Reserve for emergency liquidity after the market for commercial paper — bonds with maturities of less than 270 days — froze in late 2008.
GE Capital, which had $91.8 billion of CP outstanding at the end of September 2008, borrowed from the Fed’s Commercial Paper Funding Facility from October 2008 through February 2009, with a balance as high as $16.1 billion, data show. Initially, a GE spokesman said the company borrowed from the program “to demonstrate our support for what the Fed is doing.” In December, GE Treasurer Kathryn Cassidy said the company was using the CPFF “primarily as a liquidity backstop.”
Peak amount of debt on 11/21/2008: $16.1B
____________________________
If the U.S. government and the Federal Reserve can firehose liquidity out to companies like General Electric Co, in its time of need….
…then shouldn’t honest, hard-working U.S. citizens also be granted the same direct access to liquidity to restore financial health, across the board, to America’s working class, tax-paying U.S. citizens?
Answer: Yes they should.
Leviticus 25 Plan – An Economic Acceleration Plan for America
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 ______________________________________
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.
______________________________
The Fed then stepped right up to the plate… to cover 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 to the plate and provide one new 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 the same direct access to liquidity extensions.
The Leviticus 25 Plan – An Economic Acceleration Plan for America
Washington Republicans are back at the table… with no politically feasible, economically credible plan to solve America’s ongoing, run-away budget deficit catastrophe — and put an end, once and for all, to these exasperating budget impasse episodes.
Main Street America Republicans do have a plan – a powerful deficit-eliminating, ‘hands-down’ election-winning plan.
Trump urges party to take hard line on election security in negotiations with Democrats
By Katy Stech Ferek | The Wall Street Journal | Updated Sept. 18, 2024 – Excerpt:
WASHINGTON—An initial proposal by House Speaker Mike Johnson (R., La.) to fund the government was voted down Wednesday, underscoring the divisions within the Republican Party but potentially setting the stage for talks with Democrats on avoiding a partial shutdown at the end of the month.
The vote on the short-term funding bill was 202 in favor to 220 against, with more than a dozen holdout Republicans joining most Democrats in opposition. Two Republicans voted present.
With the House GOP’s initial effort defeated, Johnson now must quickly decide his path forward. Some GOP figures, including Republican presidential nominee Donald Trump, are demanding that Republicans leverage the specter of a shutdown to strike a hard bargain with Democrats to tighten voter-ID rules, while others say such an effort would be futile and wrongheaded just ahead of the November elections.
Johnson’s initial proposal would have extended government funding levels for six months past the Sept. 30 end of the current fiscal year. The bill, known as a continuing resolution, also includes a provision that would require voters to provide proof of citizenship to register, nodding to an issue that is a priority for Trump and many Republican voters.
After the measure failed, Johnson said he was disappointed and was talking with Republican colleagues about his next steps. He didn’t provide details.
“Now we go back to the playbook. We’ll draw up another play, and we’ll come up with a solution,” he said. “We have time to fix the situation.”
“This bill is an admission that a House Republican majority cannot govern,” said Rep. Rosa DeLauro of Connecticut, the top Democrat on the Appropriations Committee.
__________________________________
The Main Street America Republican economic plan generates $112.6 billion budget surpluses annually, during the first five years of activation (2025-2029).
It restores financial security for millions of American families by eliminating massive amounts of Household Debt, re-incentivizing work and productivity, and minimizing government control over the daily lives of countless numbers of U.S. citizens.
It provides U.S. citizens with gold-plated reasons to elect Republicans across the board in election cycles for years to come.
The Leviticus 25 Plan – An Economic Acceleration Plan for America
“Hudson Castle Group Inc., a firm started by former Lehman Brothers Holdings Inc. executives, sponsored three asset-backed commercial paper conduits — investment vehicles that bought financial assets and raised money by selling short-term bonds. Such conduits were among “shadow banks” that “contributed significantly to asset bubbles” by converting “opaque, risky, long-term assets into money-like and seemingly riskless short-term liabilities,” according to a July 2010 report by the Federal Reserve Bank of New York.
On a combined basis, Hudson Castle’s three conduits had as much as $16.2 billion of outstanding loans from the Fed’s Commercial Paper Funding Facility in March 2009. They included Belmont Funding LLC, Ebbets Funding LLC and Elysian Funding LLC.
Peak amount of debt on 3/31/2009: $16.2B
___________________________________
Here we see the Fed providing emergency funding to bailout a company that had “contributed significantly to asset bubbles” by converting “opaque, risky, long-term assets into money-like and seemingly risk-less short-term liabilities.”
The Leviticus 25 Plan levels the playing field by restoring financial security for players who had ‘not’ contributed to asset bubbles” through “opaque, risky”carry-trade schemes, namely U.S. citizens.
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 – An Economic Acceleration Plan for America
