Get ready to participate in democracy!!

Sign The Petitions That Will Help Fulfill The Dream. We do not want blood flowing in the streets.
 
What is all the buzz about? Have you read the hottest story on the Internet? “Six Days Under A Tarp – NYC Occupy Wall St - Zuccotti Park” 

My name is Leonard C. Tekaat I need your help to prevent blood from flowing in the streets! 

First, let me introduce myself I am a retired small businessman, financier, investor, author, economic scholar with over forty years experience in the world of home financing and housing investment. I have a lifetime Ca. Teaching Certificate. I am the
Chairman of a special Committee for Economic Reform and A Better Economic Future. We are the creators of the People’s Economic Recovery Plan. Posted at www.recoverygovforthepeople.wordpress.com (copy and put the address in your browser if you have trouble opening the site. We are having trouble with this site)

I did not realize it until I spent 6 days with NYC Occupy Wall ST, that I am the first Occupier. I have been battling to change the policies that continuously help increase the wealth gap between the classes, since 198I, when I wrote the book titled “Inflation The Economy Killer, How to Create, Control and Stop High Inflation”. 

I realize our economy currently has a low Consumer Price Index number. I am thinking of the past, future, and our economy’s present economic condition. Before almost every recession there occurs either a financial bubble or high inflation. I will get back to the cycles of the economy later in this article.

Currently, I believe people are finally starting to wake up to the fact that the middle class, and the working class are the backbone of the economy; it is not Wall St., the big banks, big businesses or big government. If the middle class and small businesses are down the economy is down. The economic power is with them. They outnumber the rich by more than a million to one. They have come to the realization that they don’t have to take the leftovers anymore.

The people with extra cash can play their games of wealth protection and “investment” of their accumulated money, but without the masses participating in the economy all value will decrease for lack of demand for products and services, as it did in the Great Depression.

John Maynard Keynes, the noted British economist, was correct about demand, but he did not leave us with the correct tools to reduce excessive demand when inflation, or economic bubbles are occurring. This is what the book is about. But we do not have excessive demand currently on Main St. We have insufficient demand. This is the problem that must be fixed right now, not later!!

The younger generation, the middle, and the working class are getting tired of being ignored.  They are frustrated with Congress and President Obama for not changing the policies that would improve their opportunity to provide for themselves. Perhaps they don’t know what to do to improve the economy. All the ideas I have heard come out of Washington is the same O, same O! Perhaps they need directions to put the puzzle back together again. Let’s tell them HOW.

The middle class, working class, the Occupy Wall St. group doesn’t know how to fix the economy either, but they do know that it must change. They want a better future, where they can realize their dreams, no matter what their American Dream is. This is why people are marching in the streets, and occupying Wall St. They believe they have been short changed. That after working for so many years to accumulate a little piece of the pie, many of them have lost almost every thing. They don’t feel secure about their future.
 
They know that the “Big Boys” the “Politically Connected” and the “Disadvantaged” got the “Gold Mine”, and they are going to get the “Shaft” (“BILL”) I am afraid that unless we can change the direction of the White House and Congress there is going to be blood in the streets!

The Occupy Wall St movement is occupying sites all around the world, to draw attention to the younger generations’, the middle’s and the working class’s plight, they are fighting with the only effective tools they have, public opinion and non-violence. They are fighting for a better future for themselves and their posterity.. They are fighting for the millions of people that cannot join them at Zuccotti Park, a few blocks away from Wall St, and the Financial Center of the world. They are protesting for the policemen and women that stand guard to protect them, and subdue the democratic energy of the people, and the words Freedom, Justice, Responsibility and Opportunity for ALL.

The middle class, working class and the Occupiers, do not want to take away, by majority rule, what other people have. They want a level field of responsibility, and an economy that provides the opportunities, so they can work to obtain whatever position of wealth they desire.

Most importantly, they want to maintain that piece of pie, they have obtained through hard work. They do  not want to see it reduced, or eliminated by circumstances beyond their control every 8 to 10 years, as in the past, when a recession have occurred.

They want guiding policies put in effect that increase the chance that a person will succeed. They do not want  a repeat of the mortgage crisis that led to the financial crisis. They do not want credit obligations that were given to people who were obviously  going to fail at paying the money back.  They want credit terms that will strengthen the economy, and that they will succeed at.

For every person failing on their credit obligations, the economy and the financial sector get weaker. The more people that  succeed in life; the liabilities of the government decreases, and therefore fewer taxes are needed for social programs.

The credit games we play, during the inflation cycle, and economic bubbles, and the leveraging of debt to increase paper profits, decreases the productivity of our economy. The excessive creation of paper profits that Wall St., Big Banks, and investors do, only creates more and more money.

The government doesn’t create inflation. 

We create our own inflation when we walk through the bank’s door and ask for credit. We multiply the money created by the government 10 times. During the primary housing bubble years, we were multiplying money up to 40 times through the fractional banking system. This is how you create a primary home price bubble, or any economic bubble, by people creating an excessive amount debt. Debt represents money in our economy. To one person it is debt, to another person who loaned the person the money, it is capital and income.

Wall St was selling all the debt, that was being created, to investors around the world. The Big Banks and Wall St played our government, investors around the world, and American families for suckers. Now they are hiding behind the curtain of the law. They are saying’ “We didn’t do anything illegal.” Sure it was not illegal. They lobbied Congress, and former Presidents to change the law. They knew exactly what they wanted to do!

What they did was immoral. Making them richer and us poorer. And guess what! They want to do it all over again, by changing the laws back to the way they were before the financial melt down occurred.

Without sufficient supply, the creation of all this debt (money), creates rising prices (inflation), which creates more poverty, and increases government liabilities.

Rising collateral prices means that the banks can create more money (debt) based on higher collateral prices. If collateral prices rise 30% in one year, they can increase the amount of the loan (money being created) by 30%. Did your wages increase by 30% to pay back the loan. This is why the primary bubble exploded in our faces. While the management of these corporations and firms walked away with hundreds of millions of dollars, we, the taxpayers bailed the corporations and their businesses. These big banks and Wall St. firm need to participate in rebalancing the economy they played such a large part in creating the financial crisis, not only the middle and working class.

Our economy has been misguided for decades. That is why there is such a large wealth gap between the classes. It is not capitalism per-say. The problem with our economy, and the world’s economy is the guidance policies, and the misconception that rich people want to create jobs.

The people with money want to protect, and increase their wealth through “paper profit investments” and hedging in the commodities market. It is the people that are hungry to fulfill their dreams, that increase employment, and create new businesses, that create new jobs.

Businesses, consumers and entrepreneur may need financing to buy a home, expand or start a new business. They need something of value, the banks or investors will accept as collateral to guarantee the loan. It is important that the collateral value remain stable. Housing, buildings, and land value is the collateral for most loans. It must not increase too quickly or fall in value too much, to be good collateral, and a driver for economic expansion.

During the housing bubble the price of the collateral was increasing too much each year, that is why the economy collapsed, and we had the financial crisis, which started the Great Recession in 2008.

We are the government. We can change the policies that create economic bubbles, and the devastating cycles of high inflation and deep recessions, as explained on my web sites.

We are all in this plane together. If it goes down there may not be enough survivors to rebuild what we as a nation of free people have created.

It cost less to keep “Humpty Dumpty” on the wall, than to pay all the “kings men” to stand him back up, and put him back up on the wall again.
Do you remember the top income tax rate being 90%, and World War II? The preceding, all occurred after a financial crisis similar to the one that occurred in September 2008.

We are not out of the woods yet, we must strengthen the middle, and working class’s financial condition, so our economy can have the stable values it needs to grow again, to increase the standard of living of all our citizens.

There can be no greater reward than to bend down, and give your brother or sister a hand up. I am not talking about giving a person money. That would be an easy way to make you feel good. I am talking about opening opportunity for them, so they can  provide for themselves the standard of living they desire. It could be a job. A new beginning. Tutoring, a complement, advice if they seek it. There are so many ways you can  help improve your life, and other people’s lives. Look outward not inward, and your universe will expand along with all the people you meet along your path of life. The journey is as important as the designation. Happiness comes from involvement and participation. Enjoy what ever you are doing. Laugh a lot, live a lot and take a deep breath and relax.  Together we will suceed, is my advice, if you seek it.

There are two  articles I would like everyone to take the time to read, if you are rich or poor or somewhere in between.

“Alternative Mortgage Terms, Private Sector Solution For Job Creation and Economic Recovery”, which outlines what guiding policies need to be corrected to properly guide the economy, and a plan to restart the economy, and create jobs in the private sector of our economy. It is located at 

http://www.foreclosurecrisissolved.wordpress.com The other article I believe you should read is

“Six Days Under A Tarp-Occupy Wall St.- Zuccotti Park” is posted at
http://www.recoverygovforthepeople.wordpress.com It has important information included in it. (again if you have trouble getting though put address in your browser and search)

At the end of each article there is a desperate plea for help.

I have posted three Petitions at the White House’s petition site; two of the Petitions pertain to the People’s Economic Recovery Plan, and the creation of jobs in the private sector. The other Petition pertains to the Pledge Of Allegiance. Just click on the links to view, and sign the Petitions.

The country needs these Petitions to go viral, on the web. My goal is to obtain 1 million signatures by Oct. 25, 2011 to garner enough support for the Plan, that the President and Congress will wake up to the needs of the people, and pay attention to the common sense voice of the people, and quit their bickering.

You can view and sign the Petitions at these sites: www.wh.gov/gt2  www.wh.gov/2bc  www.wh.gov/2ft

The Plan, if applied correctly will not cost taxpayers a dime, and will not lower or raise taxes, but it will increase productive growth in our economy, and make it more efficient in eliminating poverty, instead of creating it.

It will take your participation. determined effort, and a united strong quite voice, but we as nation of free people can change our, and our children’s future !!! Change will only come about with your active participation, cemented with written petition and peaceful demonstration.
 
My contact information is Leonard C. Tekaat economic scholar.
firstoccupier1981@yahoo.com Ph. 661-619-4858

P. S.  If you support the ideas that I have expressed in this article, and you support Occupy Wall St.as rough as it is around the edges, like most upstart movements and start up businesses until they find their direction. Remember, it is the message,  not the messenger, that is important. Please, Please take the time to sign the Petitions. It is so important for all of us. The White House will not even look at the Petition untill it has 25,000 signatures They will then evaluate it, and send everyone, who signed the Petition a notification. That is when the fun will really start.

This article is not copyrighted so you can e-mail, or twitte the location of this article to all your followers, and the people you are following. Ask them to RT the location of the article. Send it to your friends and contacts. E-mail it to newspapers, and other people. TV stations and other news sources. It will soon be posted at: www.foreclosurecrisissolved.wordpress.com or http://t.co/OYVNb7re/

Don’t forget to send it to The Wall St. Journal and our own Occupy Wall St. Journal. This is very important!

Please send it to members of Congress and President Obama.

I agree with Senator Isakson, and his fellow US Senators that to have a robust economic recovery, we must improve the primary home market. The problem is that we can do a better job than what by them. . See our Plan, and then check theirs out.

The primary home market is interconnected with everything else. You do not need to buy a refrigerator or a bed, if you do not have a home or house to put them in. Primary homes are what everything is built around in a community. Large population areas hold our nation together by attracting small and big business to set up shop, to provide the people with products and services. A home is protection from the weather and security for the family or person. A robust primary home market creates households, and puts people back to work.

The Great Recession started in 2008, over three years ago. Keynesian deficit spending economic stimulus policies have failed to bring about a strong recovery. Not much has changed for the millions of people who are unemployed or have lost their homes to foreclosure. I believe that most of us will agree, that the primary home market is a drag on the economy. I believe we agree that  Main St. must improve before the overall economy will fully recover.

Thank you, Leonard

We wrote the People’s Plan in Oct of 2008, in rebuttal to the use of Keynesian Economic Policies that were going to be used to stimulate the economy with an enormous amount of deficit spending. We wrote it also because we disagree to how the TARP money was given or used to bailout the financial sector.  We felt that the 780 billion dollar stimulus bill will entomb our posterity in a mountain of debt.

Don’t you agree that the financial condition of the middle and working class people must be improved before any more roads or bridges are repaired?  Do you agree that Main St. economy must improve before the overall economy will fully recover and unemployment will decrease.

Get ready to participate in democracy!!

Sign The Petitions That Will Help Fulfill The Dream. We do not want blood flowing in the streets.
 
What is all the buzz about? Have you read the hottest story on the Internet? “Six Days Under A Tarp – NYC Occupy Wall St - Zuccotti Park” 

My name is Leonard C. Tekaat I need your help to prevent blood from flowing in the streets! 

First, let me introduce myself I am a retired small businessman, financier, investor, author, economic scholar with over forty years experience in the world of home financing and housing investment. I have a lifetime Ca. Teaching Certificate. I am the
Chairman of a special Committee for Economic Reform and A Better Economic Future. We are the creators of the People’s Economic Recovery Plan. Posted at www.recoverygovforthepeople.wordpress.com

I did not realize it until I spent 6 days with NYC Occupy Wall ST, that I am the first Occupier. I have been battling to change the policies that continuously help increase the wealth gap between the classes, since 198I, when I wrote the book titled “Inflation The Economy Killer, How to Create, Control and Stop High Inflation”. 

I realize our economy currently has a low Consumer Price Index number. I am thinking of the past, future, and our economy’s present economic condition. Before almost every recession there occurs either a financial bubble or high inflation. I will get back to the cycles of the economy later in this article.

Currently, I believe people are finally starting to wake up to the fact that the middle class, and the working class are the backbone of the economy; it is not Wall St., the big banks, big businesses or big government. If the middle class and small businesses are down the economy is down. The economic power is with them. They outnumber the rich by more than a million to one. They have come to the realization that they don’t have to take the leftovers anymore.

The people with extra cash can play their games of wealth protection and “investment” of their accumulated money, but without the masses participating in the economy all value will decrease for lack of demand for products and services, as it did in the Great Depression.

John Maynard Keynes, the noted British economist, was correct about demand, but he did not leave us with the correct tools to reduce excessive demand when inflation, or economic bubbles are occurring. This is what the book is about. But we do not have excessive demand currently on Main St. We have insufficient demand. This is the problem that must be fixed right now, not later!!

The younger generation, the middle, and the working class are getting tired of being ignored.  They are frustrated with Congress and President Obama not changing the policies that would improve their opportunism to provide for themselves.

The middle class, working class, the Occupy Wall St. group doesn’t know how to fix the economy but they do know that it must change. They want a better future where they can realize their dreams, no matter what their American Dream is. This is why people are marching in the streets and occupying Wall St. They believe they have been short changed. That after working so many years to accumulate a little piece of the pie, many of them have lost almost every thing. They don’t secure about their future.
 
They know that the “Big Boys” the “Politically Connected” and the “Disadvantaged” got the “Gold Mine” and they are going to get the “Shaft” (“BILL”) I am afraid that unless we can change the direction of the White House and Congress there is going to be blood in the streets!

Even thought the Occupy Wall St movement is occupying sites all around the world, to draw attention to the younger generations’, the middle’s and the working class’s plight, they are fighting with the only effective tools they have, public opinion and non-violence. They are fighting for a better future for themselves. They are fighting for the millions that cannot join them at Zuccotti Park, a few blocks away from Wall St and the Financial Center of the world. They are protesting for the policemen and women that stand guard to protect them, and subdue the democratic energy of the people and the words Freedom, Justice, Responsibility and Opportunity for ALL.

The middle class, working class and the Occupiers, do not want to take away, by majority rule, what other people have. They want a level field of responsibility, and an economy that provides the opportunities, so they can work to obtain whatever position of wealth they desire.

Most importantly they want to maintain that piece of pie, they have obtained through hard work, and not see it reduced or eliminated by circumstances beyond their control every 8 to 10 years.

They want guiding policies put in effect that increase the chance that a person will succeed. They do not want to a repeat of the mortgage crisis that led to the financial crisis. They do not want credit obligations that were given to people who were obviously  going to fail at paying the money back.  They want credit terms that will strength the economy, and that they will succeed at.

For every person failing on their credit obligations, the economy and the financial sector get weaker. The more people that
succeed in life; the liabilities of the government decreases and therefore fewer taxes are needed for social programs.

The credit games we play, during the inflation cycle, and economic bubbles, and the leveraging of debt to increase paper profits, decreases the productivity of our economy. The excessive creation of paper profits that Wall St., Big Banks, and investors do only creates more and more money.

The government doesn’t create inflation. 

We create our own inflation when we walk through the bank’s door and ask for credit. We multiply the money created by the government 10 times. During the primary housing bubble years, we were multiplying money up to 40 times through the fractional banking system. This is how you create a primary home price bubble or any economic bubble. By people creating an excessive amount debt. Debt represents money in our economy.

Wall St was selling all the debt that was being created to investors around the world. The Big Banks and Wall St played our government, investors around the world, and American families for suckers. Now they are hiding behind the curtain of the law. They are saying’ “We didn’t do anything illegal.” Sure it was not illegal. They lobbied Congress and former Presidents to change the law.

What they did was immoral. Making them richer and us poorer. And guess what! They want to do it again by changing the laws back to the way they were before the financial melt down occurred.

Without sufficient supply, the creation of all this debt (money), creates rising prices (inflation), which creates more poverty,
and increases government liabilities.

Rising collateral prices means that the banks can create more money (debt) based on higher collateral prices.

Our economy has been misguided for decades. That is why there is such a large wealth gap between the classes. It is not capitalism per-say. The problem with our economy, and world’s economy is the guidance policies, and the misconception that the rich people want to create jobs.

The people with money want to protect, and increase their wealth through “paper profit investments” and hedging in the commodities market. It is people that are hungry to fulfill their dreams that increase employment, and create new businesses that create new jobs.

Businesses, consumers and entrepreneur may need financing to buy a home, expand or start a new business. They need something of value, the banks or investors will accept as collateral to guarantee and obtain a loan. It is important that the collateral value remain stable. Housing, buildings, and land value is the collateral for most loans. It must not increase too quickly or fall in value too much to be good collateral, and a driver for economic expansion.

During the housing bubble the price of the collateral was increasing too much each year that is why the economy collapsed and we had the financial crisis, and the start of the Great Recession in 2008.

We are the government. We can change the policies that create economic bubbles and the devastating cycles high inflation and deep recessions, as explained on my web sites.

We are all in this plane together. If it goes down there may not be enough survivors to rebuild what we as a nation of free people have created.

It cost less to keep Humpty Dumpty on the wall, than to pay all the kings men to stand him back up and put him back up on the wall again.
Do you remember the top income tax rate being 90% and World War II? The preceding all occurred after a financial crisis similar to the one that occurred September 2008.
We are not out of the woods yet, we must strengthen the middle and working class’s financial condition, so our economy can have the stable values it needs to grow again, to increase the standard of living of all our citizens.
There can be no greater reward than to bend down and give your brother or sister a hand up.

There are two articles I would like everyone to take the time to read, if you are rich or poor or somewhere in between.

“Alternative Mortgage Terms, Private Sector Solution For Job Creation and Economic Recovery”, which outlines what guiding policies need to be corrected to properly guide the economy and a plan to restart the economy, and create jobs. It is located at 

http://www.foreclosurecrisissolved.wordpress.com The other article I believe you should read is

“Six Days Under A Tarp-Occupy Wall St.- Zuccotti Park” is posted at
http://www.recoverygovforthepeople.wordpress.com 

At the end of each article there is a desperate plea for help.

I have posted three Petitions at the White House’s petition site; two of the Petitions pertain to the People’s Economic Recovery
Plan, and the creation of jobs in the private sector. The other Petition pertains to the Pledge Of Allegiance. Just click on the links to view, and sign the Petitions.

The country needs these Petitions to go viral, on the web. My goal is to obtain 1 million signatures by Oct. 25, 2011 to garner enough support for the Plan, that the President and Congress will wake up to the needs of the people, and pay attention to the
common sense voice of the people, and quit their bickering.

You can view and sign the Petitions at these sites: www.wh.gov/gt2  www.wh.gov/2bc  www.wh.gov/2ft

The Plan, if applied correctly will not cost the taxpayers a dime, and will not lower or raise taxes, but it will increase productive growth in our economy, and make it more efficient in eliminating poverty instead of creating it.

It will take your participation. determined effort, and a united strong quite voice, but we as nation of free people can change our, and our children’s future !!! Change will only come with your active participation, cemented with written petition and peaceful demonstration.
 
My contact information is Leonard C. Tekaat economic scholar.
firstoccupier1981@yahoo.com Ph. 661-619-4858

P. S.  If you support the ideas that I have expressed in this article and you support Occupy Wall St., Please, Please take the time to sign the Petitions.

This article is not copyrighted so you can e-mail, or twitte the location of this article to all your followers, and the people you are following. Ask them to RT the location of the article. Send it to your friends and contacts. E-mail it to newspapers, and other people. TV stations and other news sources. It will soon be posted at: www.recoveryforthepeople.wordpress.com 

Don’t forget to send it to The Wall St. Journal and our own Occupy Wall St. Journal. This is very important!

Please send it to members of Congress and President Obama.

I agree with Senator Isakson, and his fellow US Senators that have a robust economic recovery we must improve the primary home market. The problem is that we can do a better job than what is being proposed. See our Plan, and then check theirs out.

The primary home market is interconnected with everything else. You do not need to buy a refrigerator or a bed if you do not have a home or house to put them in. Primary homes are what everything is built around in a community. Large population areas hold our nation together by attracting small and big business to set up shop to provide the people with products and services. A home is protection from the weather and security for the family. A robust primary home market creates households and puts people back to work.

The Great Recession started in 2008, over three years ago. Keynesian deficit spending economic stimulus policies have failed to bring about a strong recovery. Not much has changed for the millions of people that are unemployed or have lost their homes to foreclosure. I believe that most of us will agree, that the primary home market is a drag on the economy. I believe we agree that  Main St. must improve before the overall economy will fully recover.

Thank you, Leonard

We wrote the People’s Plan in Oct of 2008, in rebuttal to the use of Keynesian Economic Policies that were going to be used to stimulate the economy with an enormous amount of deficit spending. We wrote it also because we disagree to how the TARP money was given or used to bailout the financial sector.  We felt that the 780 billion dollar stimulus bill will entomb our posterity in a mountain of debt.

I believe, that most of us will agree, that the primary home market is a drag on the economy.  Don’t you agree that the financial condition of the middle and working class people must be improved before any more roads or bridges are repaired?  You do agree that Main St. economy must improve before the overall economy will fully recover and unemployment will decrease.

Go to: www.foreclosurecrisissolved.wordpress.com/  for The Middle Class‘s Rebuttal Speech To President Obama’s State Of The Union Address and The letter to The Federal Reserve, How The Fed Can Do More Harm To The Economy.  The People’s Economic Recovery Plan is at www.recoverygovforthepeople.wordpress.com/  At www.economysflaw.wordpress/ you will find over 25 articles, including Zero Inflation Taxation Policy. Is President Obama Making A Mistake, The Means of Exchange, Repeating the Mistakes of The Great Depression. You will find a more detailed copy of the article that appeared in the Bakersfield Californian on Feb. 14, 2011, “Solution To Foreclosures Will Decrease Unemployment And Government Deficit” at www.foreclosuresolution.wordpress.com/ or www.foreclosurecrisissolved.wordpress.com

Thank you for visiting. Please click the Like button, leave a comment, and subscribe so that I can send you new posting, and keep you up to date. Thanks again. Leonard C. Tekaat

If you are unemployed, your home is being foreclosed upon, or are just sick and tired of getting the “shaft“(tax bill to clean up the mess the “big boys” make), join a growing number of people that want to change the guiding polices of our economy to increase  opportunities so they can provide for themselves and their families, and provide America a better financial, and societal future. The middle class does not want to become government dependent. We have worked hard to be self-sufficient. If the Financial Institutions and government continue on the path we are on, it will mean the demise of small businesses, and the middle class. We need people that are not afraid to stand up to be heard. To take a proactive position about their future, and the future of their nation. Join the R.E.B.E.L.S. it is free. Please get involved for your children, and their posterity’s future. There is a better way to improve our economy than to put them into debt to the Federal Government, which will ruin their chance at the American Dream of a better future for their posterity. Our e-mail is economysflaw@yahoo.com Connect on  www.facebook.com/leonard.c.tekaat/ Our Tweet handle is: “recessionkiller”, join the conversation.

 The People’s Jobs, Foreclosure, Home Value, Middle Class, Small Business Recover Plan, Without More Deficit Spending Or Taxes.

CAN YOU HEAR US NOW? CAN YOU HEAR US NOW! CAN YOU HEAR US NOW !!!

 All across America incumbent politicians are getting, or are going to be, voted out of office. What you are hearing is the voice of a nation of free people who are telling their government that it is going in the wrong direction. They are not mad. They are not crazies. They are concerned about our Nation’s future. 

They are determined to turn their government away from failed policies of huge government deficits, social programs that make people government dependent and ruin their personal dignity; Policies that reduce personal responsibility and economic opportunities; Policies that have destroyed the value of people’s savings and their investments. They do not want to leave a legacy of debt for their grandchildren and great grand children to pay off with higher taxes or with inflation. This is what the Tea Party movement is all about: The use of common sense ideas to make our economy more productive and raise the dignity of all our citizens. We are proud of our nation. We no longer want it to be the biggest debtor nation of the world. We support the enterprise system. This is where our real wealth is created, not in the halls of Congress or on Wall St., where they make “paper profits” and paper money and think they are creating wealth. 

By changing a couple of misguiding policies, this plan will create the opportunities for people to increase their disposable income, which will allow our economy to recover, thereby lowering the unemployment rate and the foreclosure rate. This plan will lower government liabilities and increase tax revenues, which will lower the deficit. The policies of the Alternative Economic Recovery Plan should have been used when I developed the plan in Oct of 2008. Employment would have been maintained and people would not have lost their homes to investors and banks. One person, or small group, cannot yell loud enough to be heard above the roar of the Wall Street and the financial sector lobbyist in Washington D.C. 

If you are interested in improving our economy and decreasing the federal deficit, raising the standard of living of your friends and neighbors without increasing your taxes, which will decrease the size of government and social programs, please send this article to the Bakersfield Californian, at the send a friend button, which is on the left side of your screen, using the e-mail address of business@bakersfield,com/ Also send it to other newspapers, TV stations and different media outlets via e-mail or snail mail.  President Obama said he would consider all option for a small business/middle class recovery. We should send this plan to the President of the United States at 1600 Pennsylvania Ave. NW Washington DC 20220.    Don’t forget Congress.  They need this information also. We must hurry as they are planning to do more deficit spending!  If we all yell together, we may get through to our Congressmen and Congresswoman, No More Deficit Spending! 

Ok! I won’t do any more soup boxing, for now. Lets roll up our sleeves and get down to solving the problems that have been created by the guiding laws that have misguided the people of our economy for the last 75 years.  

Preface 

Posted On Tuesday September 14, 2010, 3:22 pm EDT
The nation’s banks repossessed a record number of homes in August, according to industry sources. RealtyTrac, an online foreclosure sale site, will release its monthly numbers on Thursday, but sources there confirm the number of repossessions will come in just shy of 100,000 for the month.
That is the highest since the site began tracking in 2005. July’s repossession number was the second highest on record. The last highest was 93,777 in May of 2010.
Notices of Default, which are the first step in the foreclosure process, are up slightly but mostly thanks to a jump in California, where the numbers had been artificially low of late, as banks tried to modify borrowers.
“With respect to the NOD increase, I think it is the modification re-default wave beginning to build and new modifications slowing to a trickle, indicating banks have lost their primary borrower re-leveraging tool,” says mortgage industry consultant Mark Hanson.
Yesterday J.P. Morgan Chase (NYSE: jpm) cited the “shadow inventory” of foreclosed properties as one of their primary reasons for pushing back their expectations for a housing recovery as far as 2014. No question, a growing supply of repossessed properties will put further downward pressure on home prices, especially given the current 12.5-month supply of existing homes already for sale.
The question now is: Where does the government go from here? Some argue that housing needs to correct on its own, without artificial stimulus, as painful as it will be, in order to recover fully. What the Obama Administration has to decide is, will that correction, involving millions of foreclosures, take too large a toll on the greater economy?  

Tea Party Member’s, People’s Economic Recovery Plan, With a Policy Change To Prevent Creating Credit Bubbles

Policies to Increase The Disposable Income And Confidence Of The Middle Class Without A Tax Cut, Tax Increase, Or More Deficit Spending 

President Obama and the financial sector’s stimulus plans are not working as well as they had hoped. Their plans are not lowering the unemployment and foreclosure rate. President Obama has surrounded himself with Wall Street advisers, and big bank executives, they have written the current recovery programs to benefit them not Main Street. The recovery program I am purposing will help, saviors, long-term debt investors, the banking sector and main street. The advice given to President Obama by academia about using old school Keynesian Economics has not worked very well to lower the unemployment rate and stem foreclosures. 

If there is one thing that we have learned in the last 23 months, it is that small business and the middle class must be included in our economy’s recovery. Business will not hire or invest to increase production or services unless they see an increasing number of customers willing and able to make a purchase. An economic recovery plan must increase economic activity and disposable incomes, (Purchasing Power) of a majority of the people in the private and public sectors of the economy, which will reduce unemployment and foreclosures. This is what the deficit spending is supposed to do. It’s not working because the deficit spending is not restructuring the debt of small business and the middle class, thereby causing the middle class and small businesses to go bankrupt.  This creates the opportunity for the rich, investors and large corporations to obtain a larger portion of the economy and become larger and richer, consolidating economic and political power. 

What must be done, to make Our Economy Better For All Our Citizens? 

 #1. Create a new mortgage that fits the current economic conditions. The mortgage would have a starting interest rate of 3%. The interest rate would increase at 1/4% a year for seven years and cap out at 5%. The borrower must qualify at the 5% interest rate. This mortgage would be available to any homeowner that could qualify, even those people that their mortgage is underwater. By lowering the mortgage rate to 3%, a person paying $1500.00 mortgage interest per month on a 6% loan, would see their mortgage payment drop by $750.00. This would increase their disposable income by $750.00. If you multiply this by millions of people the extra disposable income that has been created will increase demand for products and services, which will reduce unemployment, facilitating an economic recovery. It will also reduce the number of people that are allowing their homes to go into foreclosure. 

The Republicans want to lower taxes to increase people’s disposable income. This plan will increase people disposable income more than any tax cut proposed by the Republicans. In the above case, the person’s disposable income will increase the first year by $9000.00. The Democrats want to keep the Bush tax cuts for the middle class. Is that going to increase your disposable income? No, the tax cut is in effect right now. Do you have enough disposable income and if you do, do you have the confidence to spend it or go into long-term debt. Are you willing to commit to a 30 year mortgage when home prices are decreasing? The government is restructuring its debt at lower interest rates. The big corporations can go to the Federal Reserve and the Financial Markets to restructure their debt at a lower rate. Donald Trump the real estate developer stated on CNN on 9-22-2010 that he can obtain loans with a 2% interest rate. It estimated the HP could float bonds at 2.5%.  Where can the middle class and small business go to restructure their debt at a lower interest rate? The banks won’t do it. Read on there is a way! 

The Federal Reserve, US Treasury or a Home Owner’s Loan Corp could buy or trade government bonds. as it did in the Great Depression, the old mortgages at a discounted price and modify the terms of the mortgages as outlined. They would purchase the new MBSs until the housing market stabilized and then sell them all to investors when the interest rate on the securities increased to 5% and the value of the homes were 10% greater than the mortgages. Most of the mortgages could be modified which would not increase the money supply, reducing the chance of creating inflation. When you restructure a loan you do not create more money.  Restructuring a mortgage only changes the terms. The amount of debt is not being increased; therefore the money supply has not been increased.  The mortgages that are held by the government housing agencies, Fannie Mae/Freddie Mac and the Federal Reserve and its member banks/community banks can be modified with a modification agreement. The rest of the mortgages, with the approval of the following stated terms by the investors, would have their unpaid balances restructured without the homeowner being able to receive any money, and then the home loan corporation would hold and service them until they were able to be sold to investors, as new MBSs. The investor would receive payments. The Home Owner’s Loan Corp. would receive servicing fees. 

This mortgage would increase middle class people’s disposable income and confidence, thereby increasing economic activity, which would reduce unemployment by increasing demand for products and services. The mortgage-backed securities the Fed currently holds would increase in value because they include mortgages that have a higher interest rate than the new mortgages will have. The Fed would need to decide if it would be better to sell the Mortgage Backed Securities that they currently hold and use the funds to purchase the new MBS, or sell them later after the economy improves. The purchase of the previous MBSs did not increase the disposable income of a sufficient number of people, to improve the financial condition and confidence of consumers to restart the economy. 

#2. Mortgages that are underwater would have their unpaid balance reduced by an amount equal to 30% of their monthly payment amount each month for up to 10 yrs or until the mortgage equals the then current possible sale price of the home, which ever is less. Second lien holders would be able to participate in this mortgage reduction plan. Their interest rate and terms would be the same as the first lien holder. A modification agreement could be used for mortgages that are held by the banks and federal agencies and have not been securitized. I believe that the investors that hold securitized mortgages will prefer this program, than a possible foreclosure. The banks and F&F that hold securitized mortgages should also prefer this program to the short sale. 

There is no need to mark the mortgage down to current market value of the home as long as the borrower has hope that the mortgage will, at some point, equal the possible selling price of the home. The homeowner will continue to make the reduced mortgage payment as the market stabilizes and the home starts to go up in value, closing the gap between the appraised value of the home and the mortgage during the 10 years allowed by this program. With a 2 to 3% increase in the price of the home each year and a 2 to 3% decrease in the unpaid balance of the mortgage, the maximum amount the mortgage that may be discounted would be 30% over a ten-year period. If you add in the 30% increase in the value of the home the total amount would be a 60% change in the owner’s financial position in the home. 

#3. Enact the Zero Inflation Taxation Policy. This policy would decrease the chance of another bubble/ bust economic cycle.  It will stabilize interest rates so debt will not lose value because of interest rate increases.  People will be more willing to invest in mortgage-backed securities, and other debt, thereby maintaining interest rates at the lowest possible rate. Low interest rates will help the private sector maintain cost and the government’s interest payments on the national debt will remain a smaller part of the budget, thereby not bankrupting our economy and the government, which would cause hyperinflation to be created. 

The zero inflation policy would decrease inflation psychology. Inflation psychology is the perception that rising prices is profitable and money is losing its value. When people are affected by this perception, they are unwilling to keep any part of their money in the credit system of our economy, to support long-term debt, which in turn supports increased production. People feel that inflation is eroding the value of their money and that it must be spent or invested in the products of the economy as quickly as possible before it looses any more purchasing power. Paper profit is the money people receive from inflationary investments. (Investments in housing, commodities etc., purchased with credit, that increases in price without making improvements or increasing supply) 

The government has changed the way it figures the Consumer Price Index, by removing the cost of purchasing housing. This does not mean that we haven’t had HIGH INFLATION in our economy. In the last 30 yrs. home prices have increased 600% or more. With the cost to rent a home in the Consumer Price Index, the cost of owning a home was not reflected in the inflation rate. Therefore the Fed did not take action to slow down the rise in single-family home prices.  

The U.S. government does a lot, sometimes too much, to prevent a recession, but very little to control a boom. A boom is very profitable for governments, but leads to a recession. When the Fed steps in with their HIGH INTEREST RATE POLICY the economy goes bust again and thousands of small business go bankrupt. We need this tax policy change, before more and more people become government dependent.   We need a new method of controlling inflation in our economy.  It has become so big and electronically sophisticated the old ways no longer work. I submit that my idea is a real answer to this problem.  

The long-term capital gains rate devalues the domestic money supply. One of the reasons inflation exist in our economy is that we have made it very profitable. Another reason is we have made money investments (savings and bonds) compete with inflationary investments. Since inflationary investment income is taxed at 15%, (long-term capital gains tax rate), money investment income, which is taxed at up to 35%, is worth 20% less. In fact, to offset the capital gains rate on personal residences, which is at 0%, for the sale of most homes, and the home’s annual appreciation rate is 30% (which we had in 2003 to 2007) interest rates earned on bonds and bank accounts would have to go up to approx. 48.5% to control inflation psychology. This is why the Fed’s interest rate policies couldn’t have done anything about the single-family home housing bubble, even if they had tried. Is it any wonder that so much money was moving into single-family homes, which helped create the housing bubble and the economic crisis?  

The Federal Reserve, in the early 1980s, tightened the money supply enough to raise interest rates to 21%. Of course this created a recession, because normal production and consumption cannot continue under these conditions.  Many people were thrown into the unemployment lines. Small and large businesses went bankrupt and the government’s responsibilities increased as more people became dependent on welfare and other government programs.   A better way to control inflation psychology and maintain the value of money is by progressively reducing the interest deduction and the tax on interest income, at the same percentage rate, as inflation increases in our economy. The balance of our economy would be maintained. Whenever the interest earned on money investments becomes 15% taxable income, money investments would be as valuable as inflationary investments. This “zero inflation taxation policy” when used during an inflationary period would automatically take excess demand out of the market place, slow down the economy and maintain the value of money as needed. The same thing happens when the Federal Reserve tightens up the money supply by raising interest rates. But this action causes interest rates to go up, raising the cost of credit for consumers and producers. 

It must be remembered that the value of our money is determined by what it can purchase, the amount of interest a debt is earning above the inflation rate. It is also determined by the borrowers ability to repay the debt.  According to the U.S. Constitution, the U.S. Congress has the power, ” to coin money and regulate the value thereof”. Congress is responsible for maintaining the value of the debt (money) in our economy. If Congress continues to tax interest earned on debt or savings under the national inflation rate, it will be taxing a nonprofit. The money (debt) is losing purchasing power, by the inflation rate each year, therefore making the money investment worthless over the years.  

Inflation psychology should not exist in our economy. People are not responsible for maintaining the value of their money; it is Congress’s responsibility. If people try to protect the value of their money from inflation, by investing in inflationary investments, they create more debt (money) and more inflation.  

With the enactment of the “zero inflation taxation policy” normal production and consumption would continue. It would have the money, at the lowest possible interest rate, it needs to maintain employment and raise the standard of living of all our citizens. The long-term capital gains tax rate would still be in effect for those people who make capital improvements and increase the real wealth of our economy would benefit from its existence. People would not be making inflationary investments because inflation would not be profitable, or making investments to protect their money from inflation. Their money would stay in the credit system of our country, supporting increases in production and normal consumption, thus maintaining low-interest rates and inflation rates. 

Join us in creating a better future for our posterity. If you have any questions or want to discuss this plan I am available.  Make a comment or ask a question. I will reply.

What started the housing bubble and how can we stabilize home prices and help prevent more foreclosures and improve the unemployment rate without a tax reduction or a tax increase or more deficit spending? 

Do we want repeat the mistakes of the past? The Federal Reserve is considering more quantitative easing, which may create high inflation. Price stabilization and a lower unemployment rate can be obtained without quantitative easing. 

*Keynesian policies that may be good for stimulating the economy during a recession, but they become over stimulating and destructive to an economy during the inflation cycle. (*JOHN MAYNARD KEYNES, lst BARON, British economist (1883-1946) 

The reason that the economy is not responding very well to the stimulus spending is that we continue to use the same policies that we have used in past recessions. The Great Recession of 2008 is not the same as previous recessions. It was not caused by a lack of demand or over-supply.  It is similar to the Great Depression of the 1930s. As with the Great Depression of the 1930s, this recession was caused by a collapse of a credit bubble. If we continue on the same path that we are on, it will not turn the economy around. I believe we are headed for a complete collapse if interest rates are raised, high inflation if interest rates are not raised or hyperinflation when the Federal Reserve monetizes the federal government’s deficit. 

We have two major problems. Getting the economy re-started in creating private sector jobs without creating more money, which will create high inflation and inflation psychology. The other problem is: How do we slow down the economy, after it is up and running again, without higher interest rates, which will cause the economy to collapse again.  

If President Obama wants the economy to improve, the middle class’s financial condition must be improved. His effort to get the economy moving again is faltering because he has been miss-guided by the financial capitalist advisers that surround him.   We need to increase tax revenue, not by raising taxes or lowering taxes, but by increasing productive economic activity, by increasing demand without increasing the federal deficit or the money supply. We do not want to create more paper profits as we have done in the past, to expand the economy, to end previous recessions. 

By targeting a one time ascending interest rate reduction for home mortgages to the sectors of our economy that are having the most difficult time recovering, the primary home sector and the consumer, this will allow the economy’s third leg (enterprise sector) to restart the economy again. The primary home sector of our economy is where the economic crisis was created and where the credit bubble collapsed. We have not addressed this part of our economy in the correct way. I will explain.  

You might be thinking that mortgage interest rates are at a historical low. The spread between the cost of funds from the Federal Reserve and the current mortgage rate needs to be at least another 1.5% lower. Even then it would be at a historical high.

When interest rates went to 21% for a mortgage in the early 1980s that was less than 100% above the inflation rate of 12%. Currently we have home prices that are still declining, yet the interest rate for a 30 year fixed rate mortgage is 450%, (4.5% for the most credit worthy people), above the home price deflation/inflation rate. 

The banks can borrow money from the Fed at under a .25% interest rate.  They can loan it out for mortgages at a 5%, interest rate, that is an increase of 20 times between the cost of funds and the sale of funds to the consumer. 

Let me give you an example. If an auto manufacturer produced a car for $20,000.00, with a 20 times markup, the sale price of the car would be marked up to $400,000.00. The financial capitalist businesses can pay enormous bonuses because of these huge profit margins. The profit margin on other consumer and business credit is even greater, like consumer credit cards at 25% annual interest rate, plus fees. That is 100 times the cost of funds. The price of the car would be $2,000,000.00. Yes that’s 6 zeros! 

Wait,.. there is more profit to be made!  Unlike a new car, which can only be sold once as a new car, by using fractional banking methods, money returning to the bank as interest payments and paid principal payments, can be lent out as new loans more than 10 to 20 times, based on capital requirements.  This process is call leveraging.  So $20,000.00 of new money, created by the Fed and the US Treasury, created with debt, can draw interest, if the banking system has enough *customers to make the loans to, can draw interest payments on new loans, with an interest rate of 5% and using a multiplier of 10, of $4,000,000.00.  Credit card debt with a 25% interest rate can be marked up on $40,000,000.00 worth of debt.  *Customer that have been affected by inflation psychology, like the large number of people that were affected when the primary home price bubble was created.

The economy should not have to be in a depression for the economy to have interest rates low enough to stimulate the economy. The banks have failed to pass through the Fed’s low interest-rate policies to the main street economy, even through 98% of the new home mortgages and refinanced mortgages are either being sold or guaranteed, to or by government housing agencies. Since the terms of most mortgages that are purchased by government agencies are determined by the agencies, Fannie & Freddie and the government housing agencies could be used to offer a lower starting mortgage rate. If the agencies offered to purchase a primary home mortgage with the terms outlined here, banks would offer it to the public. 

The people, for the benefit of the people, created our government. It was not created to only benefit Wall Street and the Financial Sector. The government does not have to make a profit from a program for it to be beneficial for the people. A program has to make sense and break even without burdening the people with increased taxes. Why cannot our government agencies be used in the most efficient manner to lower mortgage starting interest rates? Why can’t the government agencies invest in our new and modified mortgages, which will increase in value and earn interest to pay for the operating cost of this program? Why could not the housing agencies modify or refinance people’s underwater mortgages at a lower starting interest rate. The banks won’t do it unless Fannie and Freddie and the other government housing agencies offer to buy the mortgages with the new terms, outlined in the article. It wouldn’t cost the taxpayer or the government any money because the program would be supported by the interest payments and the increases in the value of Mortgage Backed Securities that the government-housing agency will be investing in, the same way the Home Owner’s Loan Corporation did in the Great Depression with government bonds. 

The Home Owner’s Loan Corp. closed down in the 1950s returning the excess money they had collected to the US Treasury. There is an article on the web about the Home Owner’s Loan Corp. Goggle Home Owner’s Loan Corporation. You can locate more information on it at my web site www.economysflaw.wordpress.com Posted on one of my articles, at my web site, is a review of my foreclosure, job creating, primary home value, economic recovery plan, by CSUB Economics Professor Mark Evan, which mentions the Home Owner’s Loan Corp. 

Banks are not risk takers. They will only loan money when the collateral is maintaining or increasing in value. They are concerned with recouping their lost capital and have blinders on and can only think of balancing their books. They don’t realize that by improving the financial condition of the people, they help themselves.   ” There is more than one way to skin a cat or solve a problem”. As the financial condition of the middle class improves, so will the financial condition of the banking service industry. A bank is only as strong as the financial condition of its customers, the value of its collateral and capital. 

Credit underwriting standards should be maintained not lowered as the economy improves and home values increase.  If home prices increase more than 2 to 3% a year, raise down payments and underwriting standards. This will allow production time to catch-up with demand and give people the time to save for a down payment.   If we have low inflation rates, the money will not have lost much purchasing power, therefore the money drawn out of the bank will be sufficient to make the down payment. The home will not have risen very much during the time the saver was saving for the down payment.  Do not raise interest rates, this raises cost which raises the cost of the home. 

The program will end in 10 yrs or less without increasing our taxes. A lower starting home mortgage rate will increase consumer’s disposable income. As the economy improves, the foreclosure inventory will be eliminated. Since we will be modifying the mortgages, we will not be increasing the money supply, therefore the chance of creating hyperinflation will be decreased. We will be increasing people’s disposable income but at the same time we will decrease their desire to use credit and increase their desire to hold money as a store of wealth, during the inflation economic cycle, (as explained) which will decrease the ability of the banking industry to over leverage the money supply, during the inflation cycle. 

Because of the “standard deduction” and the exclusion of so many people from the income tax rolls, the upper middle class, the rich, and investors use the mortgage interest deduction to purchase primary housing and single-family homes as investments. This extra stimulus/demand in primary housing is needed when the economy is experiencing a recession, but not when it is experiencing inflation. By using the income tax to reduce demand from the top of the economic ladder, with an automatic change in our income tax system, when inflation begins to occur, will make our economy more efficient and raise all of our citizen’s standard of living.

We have a flaw in our economic policies. We have a dynamic economy that is changing from recession to inflation over the years. Yet we have an income tax that is static. The Flat Tax and the Fair Tax are also static taxes. The stimulus that is enacted in a recession to improve the economy is left in tact as the economy moves into the inflation cycle. This causes the economy to heat up too much and the economy collapses into a recession or a depression. The policies that are good to end the recession become destructive during the inflation cycle. Our economy experiences Gloom, Boom, and Doom cycles. 

In the past the Federal Reserve used higher interest rate policies to control inflation in our economy. This policy reduces demand from the bottom of the economic ladder, which causes untold misery and hardship for the middle class, the poor and small business. Thereby increasing government dependency and its deficit. Relying only on the Fed’s high interest rate policies to control inflation is an obsolete policy and it should be changed. 

In the last 18 months jobs have been created or saved, but not as many that have been lost. This is why the unemployment rate has increased to 9.6%.  The majority of the jobs that have been saved or created have been local, state, or Federal jobs.  My main concern is that we need more jobs in the private sector. The Great Recession was not caused by a lack of demand or by an over-supply.  The bursting of a credit bubble, very similar to the Great Depression, caused the Great Recession.  In the Great Depression millions of people lost their purchasing power. During the 1920s it was mostly cash, which was used in the economy to facilitate exchanges of goods and services. In the Great Recession we have many social programs that maintain people’s minimum purchasing power. 

To turn the economy around and end the Great Recession we must reestablish the disposable income of the millions of people who have lost their disposable income, by restructuring their credit obligations and increase the confidence of the general population. They must know that there will be a better future. A future made up of a different set of rules. A future where jobs are available and the economy will not be moving so fast that they cannot save and invest without it all disappearing again, caused by a financial collapse or inflation or hyperinflation. 

Our homes had become the new “gold standard”.  Almost all consumer and small business credit was established with the collateral value of our homes and real estate. Wall Street Firms and banks, in the Federal Reserve system, in their desire to increase profits, created ways to increase the amount of money that could be created. In 1999 President Clinton changed the capital gains tax on the sale of primary homes, making it zero for most sales of primary homes.  It took a couple of years to get the snow ball rolling but this change gave the home owner a profitable reason to sell and a buyer, expecting to reap the same rewards when they sold the home, brought the home without much concern about the price, because primary home prices have been rising since the end of World War Two.  The Financial Institutions and Wall Street with their new ways of expanding credit were more than willing to finance the increases in home prices, thus creating enormous amounts of  “paper profits”. As more and more people realized that easy profits could be had, it became a feeding frenzy? Banks lowered their underwriting standards, because they felt safe, knowing that because the home that was securing the mortgage was going up in value and they could sell the mortgage to Wall St. or a government housing agency.  

The Federal Reserve did not do anything about the bubble because they couldn’t do anything (as explained previously) except collapse the entire economy by increasing interest rates.  Besides the consumer price index had been changed not to reflect the cost of owning a home, therefore even though homes prices were going up 30% a year, we had low inflation rates based on the CPI, during the bubble years, so the Fed took no action at all, even if they had known what was causing the bubble. The rest of the story is history. 

The basis behind these policies is simple.  Tax some thing and you will get less of it.  Give a tax benefit and you will get more of it. The banks have their product on the business and consumer income tax deduction list.  If you have a differential tax rate on something, it will become more valuable because more people will want to buy the lower taxed item. Put the two together and create a shortage or excessive demand and you will create a credit bubble, when the price increases become profitable enough to attract more and more people. With prices going up the banks can make larger and larger loans, creating nothing but more paper profits. 

Our taxes policies are based on how people act during a recession or a depression. For economic security reasons they saved more money and did not want to invest or spend it. To reverse this behavior the government enacted the long-term capital gains tax rate and the interest deduction. Because this change lowered people’s income taxes, their spending and investing habits changed. It works very well to stimulate an economy, but left in force, without being neutralized, inflation is created by the excessive use of credit for investing and consumption reasons. 

Home prices have been falling for over 3 years. Foreclosures and unemployment are increasing. The Federal Deficit is growing larger everyday.  Something has to change. If you agree that this program will be better than the Federal Reserve and it’s banks and President Obama’s primary home and economic recovery plans, again, please e-mail it to the Bakersfield Californian and other newspapers for reprint or information purposes. Also send this article to your friends and neighbors. Tell them to send it to the President. Don’t break the chain until we have been heard in Washington D.C. 

I want a voice, a load voice, to get the government to change its policies. I sent this information to every member of Congress and the President. What you get back is a form letter about what they are doing for you, not a discussion about economic policy. I sent it to our Republican friends. I don’t think they want the economy to improve until they get in power again. I am beginning to think that the only way the people will get heard is through a grassroots organization like the Tea Party. Don’t you agree that we need smaller deficits, smaller government, lower taxes, people that are closer aligned to the founding father principles. 

You have to make a big splash to be heard. I have sent the information to all kinds of media outlets. All they want is sound bites. Three sentences that are how long their discussions are, if you even hear back from them. It’s frustrating because there are so many people out there that their lives could be improved. You might say they deserve it because of bad financial decisions they have made. Sure the sub-prime mess should not have occurred. But the Federal Reserve and its member banks and the government and Wall st. had a lot to do with that. They lowered their underwriting standards. The banks and Wall St. should be taking a loss by discounting the unpaid principal amount each month, not the taxpayers. The financial institutions and investors need to realize that they would be better off reducing the unpaid mortgage balance monthly, than with a foreclosure or short sale.

You could all help by e-mailing a copy of the article to www.business@bakersfield.com/   or mailing a copy to the President. I want to get a national debate going so we can discuss the cons and pros of the plan. What the government is doing now is not working very well to reduce the unemployment and foreclosure rate. Until the debate starts I am going to continue posting and sending the article to as many places as I can.

Primary home prices are about were they were before the credit bubble occurred.  Since local and state government rely on property tax values to pay for public services, they will soon have to start cutting services or raise taxes. Raising taxes would be the wrong thing to do in a recession, so they may decide to lay off more people, which will mean more foreclosures, and government dependent people. We are now getting down to raw meat and the Great Recession is destroying small businesses and the middle class. People that were responsible home owners and home buyers, who put 20% or more down are becoming unemployed and losing their homes. Some thing has to change or this economy is going to hell in a hand basket.

All prices are relative to other prices in an economy.  If you want to see lower prices, simply take a zero off all the prices and incomes. In the sixties the minimum wage was $1.25, bananas were $.10 a pound, gasoline was $.30 a gallon.  You could buy a three-bedroom home for $8000.00.  It is all a numbers game. Everything is relative to time and location.

Myself I am OK. I paid off my mortgage years ago. I am concerned about the other people and families in the economy. I am 66 years old and have lived through 3 or 4 of these down turns. This one is more like the Great Depression according to what I have learned about it. Look what it took to get the world out of that bursting of a credit bubble, World War II. I hope some of you e-mail the article to the Bakersfield Californian or other places. Thanks again, maybe I will see some of you at a Tea Party meeting sometime. We will discuss economics and politics.

As I see it, we have three chooses: We can restructure the mortgages and have a soft landing.  We can let it crash and have another Great Depression. The Fed can quantitative ease and the government can deficit spend more and more and we can have hyperinflation. 

I am going to leave it up to you. You decide. Let me know. Leave a comment.

Join us in creating a better future for our posterity. We would love to see you come to our meeting. If you have any questions or want to discuss this plan I am available. Leave a comment and I will reply.

Contact the local Tea Party Group in Bakersfield or near you. http://bakersfieldteapartyp… Bring a copy of this article with you. 

Sincerely Leonard C. Tekaat economysflaw@yahoo.com 

Leonard C. Tekaat is a retired economic analyst, economic scholar, investor, businessman, financiers, author, and former candidate for Ca. Congress. He has a special lifetime teaching credential.

You can obtain Mr. Tekaat’s best-selling book, INFLATION THE ECONOMY KILLER, How to Create, Control and Stop High Inflation at www.amazon.com/ for just $14.95 + S&H

For other articles by Leonard C. Tekaat go to www.economysflaw.wordpress.com/

How the monetary mayhem began: the Federal Reserve has inflicted a century of financial havoc on Americans. Looking at how this came to pass reveals who desires this state of affairs and how they profit from it.

 Inflation, The Cause and Effect, History Of The Federal Reserve System

This article is not about a conspiracy theory.  It is about a very important part of our economy’s history, and then a solution to rebalance our economy to end the misery created by the Great Recession of 2008. 

Nearly all Americans know they are plagued by inflation. In 1962, a postage stamp cost four cents, a candy bar a nickel, a movie ticket 50 cents, and a pair of tennis shoes $5. A new imported Renault automobile cost $1,395, annual tuition at Harvard was $1,520, and the average cost of a new house $12,500. Over the last century, a dollar’s purchasing power has declined over 95 percent–i.e., it won’t buy what a nickel did in 1909.

What causes inflation? The public hears various explanations from the establishment media–that oil’s rising cost causes inflation, since nearly all industry sectors use it; or that inflation is the fault of American workers demanding wage increases, which has a ripple effect throughout the economy. In other words, Joe tells his employer, “Boss, my wife’s expecting. How about a raise?” The boss says, “Joe, the only way I can afford that is by raising out prices–I’ll have to pass the cost on to out customers.” Then firms doing business with Joe’s company say, “Since you’ve raised your prices, we’ll have to raise ours.” And so, all across America, prices rise because “greedy” Joe, and millions like him, asked for a raise.

Furthermore, the public has been lulled into believing that inflation is inevitable, like “death and taxes.” Indeed, based on the Consumer Price Index (CPI), the broad index used to measure the price of goods and services, that seems true. America has experienced general price increases every year since 1955, without exception.
But as we can easily prove, inflation is not inevitable. Figure 1 depicts American price levels from 1665 to the present. Note there was no significant increase for the first 250 years. Little blips upward are on the graph, as during the American Revolution, War of 1812, and Civil War, when the United States issued large quantities of paper money to pay for those conflicts. Of course, increasing the supply of money (which is what inflation really is) diminishes its value, causing prices to rise. But notice that, after the wars, money always returned to its normal value. A dollar in 1900 was worth the same as in 1775; there had been no net increase in the cost of living since George Washington’s day. Throughout this time, Americans asked for, and received, wage increases, without causing prices to rise overall.

But look at the graph’s right side. During World War I, our currency inflated, but instead of resuming its normal value afterwards, it continued inflating out of sight. American money, relatively stable for 250 years, began to rapidly and permanently lose its value. This did not happen by chance; every effect has a cause. Around the time of World War I, something significant must have happened to induce this transformation. As we shall see, the cause of this transformation has nothing to do with Joe and others who, suffering from the effects of inflation, asked for a raise.

The Bankers’ Beast

The change came from a single factor: creation of the Federal Reserve in 1913. Though most Americans have heard of it, few know much about it.

Ben Bernanke is current chairman of the Federal Reserve Board; Alan Greenspan held that position from 1987 to 2006. The Fed chairman has been called America’s economic czar, because he and the board set U.S. interest rates. This in turn impacts the stock market’s direction. If interest rates rise, CDs and other interest-bearing securities appear more profitable, causing money to flow out of the riskier stock market. But if interest rates fall, investors tend to return to stocks (the recent meltdown notwithstanding). Mutual fund managers try to stay ahead of the curve; when the Fed chairman holds a news conference, their fingers are often poised over their “buy” and “sell” buttons, hoping the chairman will reveal some hint about the direction of interest rates.

The Fed was established when Congress passed the Federal Reserve Act in 1913. But the original legislation, containing the essential points of that act, was introduced by Senator Nelson Aldrich, front man for the banking community. Few today have heard of Aldrich, but many are familiar with billionaire Nelson Rockefeller, who was Gerald Ford’s vice president, long New York’s governor, and one of America’s richest men. His full name: Nelson Aldrich Rockefeller–named for his grandfather, Nelson Aldrich. Aldrich’s daughter married John D. Rockefeller, Jr., and his son Winthrop served as chairman of the Rockefellers’ Chase National Bank. Long associated with America’s richest family, when Nelson Aldrich spoke on Capitol Hill, insiders knew he was acting for the Rockefellers and their allies in high finance.

The legislation he introduced in the Senate, which became the basis of the Federal Reserve System, was not written by him. It was crafted by several of the world’s richest bankers, at a secret nine-day meeting in 1910, at a private club on Jekyll Island off the Georgia coast. This is well documented. The first reporter to break the Jekyll Island story was B.C. Forbes, founder of Forbes magazine.

Many years ago, Citibank was called National City Bank, and was largely controlled by the Rockefellers. Its president, Frank Vanderlip, attended the Jekyll Island meeting and discussed it in The Saturday Evening Post 25 years later:  
  There was an occasion near the close
   of 1910 when I was as secretive, indeed
   as furtive, as any conspirator….
   I do not feel it is any exaggeration to
   speak of out secret expedition to Jekyll
   Island as the occasion of the actual
   conception of the Federal
   Reserve System…. We were
   told to leave our last names
   behind us. We were told further
   that we should avoid
   dining together on the night
   of out departure. We were
   instructed to come one at a
   time and as unobtrusively
   as possible to the terminal
   of the New Jersey littoral of
   the Hudson, where Senator
   Aldrich’s private car would
   be in readiness, attached to the rear
   end of the train for the South. Once
   aboard the private car, we began to
   observe the taboo that had been fixed
   on last names…. Discovery, we knew,
   simply must not happen. If it were to
   be discovered that our particular group
   had got together and written a banking
   bill, that bill would have no chance
   whatever of passage by Congress.

Attending this meeting were agents from the world’s three greatest banking houses: those of John D. Rockefeller, J.P. Morgan, and the Rothschilds. Together they represented an estimated 25 percent of the world’s wealth. Acting for the Rockefellers were Senator Aldrich and Frank Vanderlip. Representing the Morgan interests were: Benjamin Strong, head of J.P. Morgan’s Bankers Trust Company; Henry Davison, senior partner in J.P. Morgan & Co.; and Charles Norton, head of Morgan’s First National Bank of New York. But the most important figure, credited with running the meeting, was Paul Warburg, who belonged to a prominent German banking family associated with the Rothschilds. The latter, the world’s most powerful banking dynasty, had grown rich by establishing central banks that loaned money to European countries. Its patriarch, Amschel Mayer Rothschild, said: “Permit me to issue and control the money of a nation, and I care not who makes its laws.”

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In 1902, Paul Warburg came to America, intending to establish a similar central bank in the United States. Shortly after immigrating, he became a partner in Kuhn, Loeb, & Co., the Rothschilds’ powerful banking satellite in New York City.

The Rothschilds had long been linked to America’s two foremost banking families, the Rockefellers and Morgans. They had provided seed money for John D. Rockefeller’s Standard Oil Company, and had influenced the Bank of England to bail out J.P. Morgan with a low-interest loan of 800,000 pounds, when his firm was verging on collapse in 1857.

The axis of Warburg/Rothschild, Morgan and Rockefeller, and their Wall Street confederates, became known as the “Money Trust.” It worked in unison to force a central bank on America. In 1907, Morgan, who controlled numerous newspapers, began a false rumor concerning the insolvency of a rival bank, the Trust Company of America. The rumor led to a drastic run on the bank by depositors. This was part of the frenzy that historians call the Panic of 1907. Subsequently, Morgan’s and Rockefeller’s newspapers clamored for a central bank to prevent further crises; Senator Aldrich echoed the call in Congress; and Paul Warburg traveled the country lecturing on why the change was needed.

All this materialized in the Federal Reserve, which ultimately resulted from the legislation, penned on Jekyll Island, that Senator Aldrich introduced. Partly because of the senator’s well-known ties to Wall Street, Congress never passed the Aldrich Bill itself. But the bankers gained acceptance of a very similar act, the Glass-Owen Bill, much of which was copied word-for-word from the Aldrich Bill.

On December 23, 1913, when Congress was eager to adjourn for Christmas, the Glass-Owen Bill passed, officially creating the Federal Reserve System. This name itself had been carefully chosen to deceive Americans. While “Federal” implied public control, it is in fact owned by private shareholders. “Reserve” suggested it would hold reserves to protect banks, but it has no hard assets–only bonds and other instruments of debt, and, as we will see, “fiat money,” created from nothing. “System” implied its power would be diffuse (through 12 regional Federal Reserve banks), whereas actual power would be centralized in the Board and the New York Fed with its powerful Open Market Committee.

Monetary Motives

Why did the bankers want the Fed? Whom do you suppose President Woodrow Wilson named first vice chairman of the Federal Reserve Board (a position from which national interest rates would be set)? Paul Warburg. Who was first head of New York Fed, the system’s nucleus? Benjamin Strong. Thus the very men who had secretly planned the bank now controlled it. The foxes were running the henhouse. At the time, neither Congress nor the public had any inkling of the Jekyll Island meeting.

Paul Warburg’s annual salary at Kuhn, Loeb, & Co. had been $500,000, the equivalent of well over $10 million in today’s dollars. He relinquished that for a Federal Reserve Board position that paid only $12,000. Was it altruistic patriotism that tempted Warburg to make this transition? Or was it because $500,000 paled in comparison to the countless millions he could make, for himself and his associates, by controlling American interest rates, and thus making the stock market rise or fall at will?

Charles Lindbergh, Sr., father of the famous aviator, was a distinguished member of the U.S. House of Representatives. Congressman Lindbergh helped lead the fight against the Federal Reserve Act. In December 1913, he declared on the floor of the House:This act establishes the most gigantic    trust on Earth. When the President    signs this act the invisible government    by the money power [Lindbergh here    refers to the Rothschild-Rockefeller-Morgan    alliance], proven to exist by the money trust investigation, will be legalized. The money power overawesthe legislative and executive forces of the nation. I have seen these forces exerted during the different stages of this bill. From now on depressions will be scientifically created. The new    law will create inflation whenever the    trust wants inflation. If the trust can get a period of inflation, they figure    they can unload stocks on the people at high prices during the excitement    and then bring on a panic and buy them back at low prices. The people may not know it immediately, but the day of    reckoning is only a few years removed.

Lindbergh’s words were prophetic. Did inflation follow the Fed’s establishment? Yes; Figure 1 graphically proves the impact on price levels. Were stocks unloaded on the people at high prices, then bought back at low prices after a panic? Yes. The “day of reckoning” Lindbergh predicted came with “Black Thursday” and the Great Crash of 1929.

The October 1929 stock market collapse wiped out millions of small investors, but not the Money Trust’s insiders, who had already exited the market. Biographers attribute this to their fiscal ”wisdom.” But fiscal foreknowledge, especially of the Federal Reserve policy they were controlling, is more like it. The Fed increased the discount rate from 3.5 percent in January of that year to 6 percent in late August. While the Fed was not the only tool used to precipitate the crash, it was one of the most preeminent. Senator Robert Owen, who cosponsored the Glass-Owen Bill that created the Fed, later testified before the House Committee on Banking and Currency: The powerful money interests got control of the Federal    Reserve Board through Mr. Paul Warburg, Mr. Albert    Strauss, and Mr. Adolph C. Miller…. The same people,    unrestrained in the stock market, expanding credit to a    great excess between 1926 and 1929,    raised the price of stocks to a fantastic    point where they could not possibly    earn dividends, and when the    people realized this, they tried to get    out, resulting in the Crash of October    24, 1929.

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Congressman Louis McFadden, chairman of the House Committee on Banking and Currency from 1920 to 1931, said of the crash: “It was not accidental. It was a carefully contrived occurrence. The international bankers sought to bring about a condition of despair here so that they might emerge as rulers of us all.” McFadden stated further: “When the Federal Reserve Act was passed, the people of these United States did not perceive that a world banking system was being set up here–a super state controlled by international bankers acting together for their own pleasure.”

Curtis Dall, son-in-law of President Franklin D. Roosevelt, was the syndicate manager for Lehman Brothers. He was on the floor of the New York Stock Exchange on the day of the crash. He said of it: “Actually, it was the calculated ‘shearing’ of the public by the World Money powers.” Afterwards, the Money Trust moved back into the market–exactly as Congressman Lindbergh had predicted. They bought up stocks that once sold for $10 per share at $1 per share, expanding their ownership of corporate America.

Something From Nothing

But stock market manipulation was not the only purpose behind the Federal Reserve. Another was creating money from nothing. The book that best explains this, and the Fed itself, is G. Edward Griffin’s The Creature From Jekyll Island.

As nearly everyone knows, the U.S. government is very expensive. The federal deficit for 2008 was $455 billion. This means that, on an average day, the government spent over $1 billion more than it took in.

How does the government get money? Chiefly from taxes and the sale of government bonds. (The latter is a poor funding method, since money from bonds must be repaid later with interest.) But these revenues never come close to satisfying the federal budget’s demands.

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Still, despite insufficient income, the government always meets its obligations. It continues to pay federal employees, defense contractors, Social Security and Medicare recipients, etc. How does the government manage this?

It happens through a little-known mechanism. We’ll borrow from an illustration given by Griffin. Let’s say that, this week, the federal government is short one billion dollars needed to pay its employees. It sends a Treasury official to the Federal Reserve building, where a Fed officer literally writes out a check for $1 billion to the U.S. Treasury. This check, however, is not based on any assets the Fed actually holds. It is “fiat money,” created from nothing. If an American citizen wrote a check without assets to back it up, he’d be jailed. But for the Federal Reserve, it’s perfectly legal. The technical term the Fed uses for this is “monetizing the debt.”

Warburg and his accomplices knew that fiat money would give the government the potential to spend without limit. The banking cartel was, and still is, intimately linked to corporations that did business with the U.S. government. This meant these corporations (in modern culture, Halliburton, Bechtel, AT&T, etc.) could earn virtually unlimited revenues from government contracts.

But the mechanism also benefited the bankers directly. As Griffin notes, what do you suppose the federal employees will do with that billion dollars in salary? Deposit it in their banks. How does a bank make profits? By loaning out deposited money. The more money in, the more it can loan. Thus, out of nothing, the Fed has created a billion loanable dollars for the banks.

Furthermore, this billion automatically becomes ten billion, because under Federal Reserve rules, a bank need only keep 10 percent of deposits in reserve. For every dollar deposited, nine may be loaned. Thus the Fed’s creation of $1 billion from nothing actually manufactures an additional $9 billion in loanable money for the banks.

In Europe, the Rothschilds had perfected this system of fabricating bank deposits through central banks. Warburg largely designed the Federal Reserve from that model. For the bankers, the system meant countless profits, but for the rest of us, endless inflation. Why? Because every time the Fed creates dollars from nothing, it increases the amount of money in America, thereby decreasing money’s value.

A textbook example of inflation struck Germany in the early 1920s. Defeated in World War I, Germany was compelled to pay the Allies massive reparations. To meet this obligation, it printed huge quantities of money. This decreased the value of German currency so badly that by November 1923, a loaf of bread cost 80 billion marks. People carted paper money around in wheelbarrows; some used it as fuel for stoves.

Whenever the Fed “monetizes” the debt, it does the same thing as Germany, only on a smaller scale. In today’s high-tech world, of course, printing money is no longer necessary; the Fed can simply create money electronically, but the inflationary impact is the same. That is why, following 250 years of stable prices, we’ve had pernicious inflation since the Fed’s birth in 1913.

Incidentally, Washington politicians love this system. By letting the Fed finance their expenditures with money made from nothing, politicians know they can spend without raising taxes. Tax increases are a “kiss of death” at reelection time (as President George Bush, St. learned in 1992 after voters rejected him for breaking his pledge of “Read my lips, no new taxes”). When the Fed produces more currency, making prices rise, who do we blame? Not the Fed. Not politicians. Instead, we blame the local retail store. “Why are you guys jacking up your prices?” Or we blame the candy company for making smaller chocolate bars, or the cereal company for putting less corn flakes in the box. But these businesses are simply trying to cope with the same dilemma as we are: inflation. The culprit is the Federal Reserve, and the problem is not that prices are going up, but that money’s value is going down.

George Bush, Jr. waged war against Iraq without increasing taxes, and even introduced new tax credits and rebates. How did he manage this? Instead of raising taxes like his father, he had the Fed largely finance the war with fiat currency. This massive inflation caused the cost of food, energy, college tuition–everything–to soar.

Actually, inflation is a tax, a hidden one the public generally doesn’t perceive as such.

A Well-coordinated Plot

After developing this scheme, the bankers still faced a problem. The billions deposited in their banks, created from nothing, still belonged to depositors. To make it profitable, the bankers had to loan it to someone.

They wanted to loan the money especially to one man: Uncle Sam–right back to the government through which they had it manufactured. Why? Because Uncle Sam would borrow astronomically more than individuals or businesses, and unlike the latter two, could always guarantee repayment.

Government borrowing is generated through sale of bonds. The Federal Reserve was empowered to buy and sell U.S. government bonds. Who would purchase those securities from the Fed? To a great extent, the Money Trust’s own banks and investment firms. We thus see yet another motive for the Fed: interest on government loans.

But the Jekyll Island bankers still had a problem. How would America pay back all the interest on those loans? In 1913, the U.S. government had few revenue sources; its largest was tariffs collected on foreign imports.

The bankers’ solution? Income tax. Though now an accepted way of life, income tax was not always around. The original U.S. Constitution excluded it; in 1895, the Supreme Court ruled it would be unconstitutional.

Therefore the only way the Money Trust could establish income tax was by legalizing it through a constitutional amendment. The senator who introduced that amendment in Congress? Nelson Aldrich–the same senator who introduced the incipient Federal Reserve legislation.

Why did Americans accept income tax? Because it was originally only one percent of a person’s income, for salaries under $20,000 (the equivalent of over $400,000 in today’s dollars). On Capitol Hill, the tax’s supporters issued assurances it would never go up. So patriotic Americans said: “If Uncle Sam needs one percent of my salary, and I can always keep the rest, it’s OK by me!”

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But we all know what happened. Congress later dolefully informed Americans it needed to raise taxes a smidge. A few smidges later and, depending on bracket, we’re losing 15 to 33 percent of our income to federal tax.

It was a long-range plan.

Some may object that rich bankers would never have wanted an income tax. After all, it supposedly “soaks the rich”: the wealthier you are, the more you pay. It’s true that the income tax structure is graduated. If an American today earns $100,000 or $200,000 per year, he or she usually owes lots of tax. But not the super-rich. The Warburg-Rockefeller-Morgan axis had no intention of paying income tax.

When Nelson Rockefeller sought to become Gerald Ford’s vice president, he had to disclose his tax returns. These revealed that in 1970, the billionaire hadn’t paid one cent of income tax. Likewise, the Senate’s Pecora Hearings of 1933 discovered that J.P. Morgan had not paid any income tax in 1931 and 1932.

How did the Money Trust escape taxes? Primarily by placing their assets in tax-free foundations. The Carnegie and Rockefeller foundations were already operational by the time income tax passed.

Let’s review the scenario. In 1913, the bankers created the Federal Reserve, which not only gave them control over interest rates and thus the stock market, but empowered them to create billions of dollars from nothing, which they would then loan back to America. Also in 1913, the bankers installed the income tax, enabling them to extract repayment on these interest-bearing loans to the government.

Only one thing was still missing: a significant reason for America to borrow. In 1914, just six months after the Federal Reserve Act passed, Archduke Ferdinand was assassinated, triggering the start of World War I. The United States participated; as a result, out national debt grew from a manageable $1 billion to $25 billion. Ever since, America has been immersed in sky-rocketing debt–now officially over $10 trillion.

The consolidation of power in Washington has also grown immensely, much to the benefit of the political and financial elites who hold the reins of power. Both a central bank and an income tax–particularly a graduated income tax that largely consumes the wealth of the middle class in the name of taxing the wealthy–are powerful tools for bringing about this consolidation. In fact, this is why Karl Marx, in his Communist Manifesto, called for both in his 10-step plan for establishing a communist state. Step 2 was: “A heavy progressive or graduated income tax.” Step 5 was: “Centralization of credit in the hands of the State, by means of a national bank with state capital and an exclusive monopoly.”

Thus, in 1913, the United States enacted two of Marx’s conditions for a communist totalitarian state. The original Constitution excluded an income tax, which the Founding Fathers opposed. Concerning money, the Constitution declares (Article 1, Sec. 8): “Congress shall have the power to coin money and regulate the value thereof.” The Federal Reserve Act transferred this authority from elected representatives to bankers.

In America today, many young couples work hard. Commonly, both spouses hold jobs. A young man might say: “When my great-grandfather came to this country, he worked only one job, but he owned a house, had seven kids, and his wife never worked outside the home. But me and Mindy, we’re working two jobs, we have only one kid, and can barely pay the rent. What are we doing wrong?”

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But it’s hardly their fault. When great-grandpa came to America, he paid no income tax, and his dollar was stable; it didn’t plummet in value every year as it does now.

But you’ll be glad to know the bankers are sorry about the trouble they’ve caused. They realize people can’t make ends meet, and they’ve found a solution: multiple credit cards. Can’t afford this month’s groceries? Just swipe some plastic. Of course, they will charge double-digit interest on that.

Thus the banking cartel created inflation and income tax, robbing us of our income; therefore we don’t have enough to live on, forcing us to borrow from … the banks.

The solution to the Fed? Get rid of it!

Charles Scaliger

COPYRIGHT 2009 American Opinion Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.

Copyright 2009 Gale, Cengage Learning. All rights reserved. 

American Opinion Publishing, Inc posted the original article. It should have the graphs implanted. This article is located at. The other articles are also posted at http://www.thefreelibrary.com/How+the+monetary+mayhem+began:+the+Federal+Reserve+has+inflicted+a…-a0198169125/

Three articles  are included in this post to better inform you on what is going on in our economy. I do not receive any monetary reward for displaying them here.

Comment and article by Leonard C. Tekaat

Revamp The Federal Reserve To Serves And Benefit The People Or Replace it.

Eliminating the Central Bank, (The Federal Reserve System), Is not the answer. Revamping it with the principles outlined in my book is the answer. We must revamp the Fed in such a way that it serves, and benefits the people. If the federal reserve banks will not cooperate, then what the government (people) has created, it can take apart. Besides one shoe does not fit everyone. Just like one interest rate does not produce economic activity, and developement evenly in all the states. Some states may be experiencing inflation, while others will be in recession.

Our country is so large, and electronically sophisticated, the old policies that are guiding our economy are no longer effective to maintain balance in our economy. Our economy has become inefficient, and is creating more poverty, than it is “real wealth”.

 Our former mighty industrialized economy has been reduced to what we learned to do the best in our economy, over the last 100 years, is to create “paper profits” and call it wealth. Maintaining our economy in balance will restore our nation to its former greatness, and return our nation to the land of opportunity. We must relearn how to “make money” the old fashion way, we must earn it, not just “create it” out of thin air.

Given the opportunity, like water, people will go the way of least resistance. If they can receive money without working for it, they will tend to go in that direction. That is what has happened on both ends of the economic ladder in our economy. Our brightest young people either go to the financial institutions for the easy money, or due to a lack of motivation, they drop out of school to obtain a minimum paying job to get a jump on having a piece of the consumer products of the world, that they hear about every day with advertisements. Some of our kids just drop out, and end up as government dependent people, or on the streets. This problem needs to be corrected.

By reducing the number of people who want to take out loans during the inflation cycle, with the Zero Inflation Taxation Policy, will return the power to the economy (people), in determining what the interest rates will be in our economy, uninfluenced by the income tax, and inflation psychology. A truly balanced market for credit will be created. Not a buyers market or sellers market.  Money should be created based on economic growth, not by fear of being left behind by rising prices, or rising interest rates.  The people create the economy. They are the productive power of the enterprise economy, not the financial capitalist, or the government.

As I point out in my articles the income tax causes the “herd effect” to occur in our economy. When almost everyone is affected by inflation psychology, enormous amounts of money (debt) are created as collateral prices increase. Higher inflation rates therefore are created, as more money (debt) is created. The Fed now has a reason to raise interest rates, and a recession is created. The government is snookered into the banks game, and deficit spends to increase the money supply. Creating more money, and more poverty. Creating more government dependent people, therefore it must raise taxes, or increase its deficit spending.

The Zero Inflation Policy will allow people, and businesses to make independent decisions on how they want to spend their money in a calm, and rational way. They will not feel that their money must be protected from inflation, or that it must be spent immediately before it loses more purchasing power. Normal production, and consumption can take place over a long period of time, which will raise the standard of living of our citizens.

We will no longer be creating unnecessary poverty in our economy, because people’s wages will make it possible for them to be able to support themselves, and their families. Our society will improve as more people are included it the private sector economy. Over 300 million people will make different decisions about for what, how, and when they will spend their money. Not just a few well-connected people who determine the direction (up or down), of our economy, and the future of our nation. Our economy will return to a more balanced economy, not an economy that is controlled, and guided by the financial capitalist.

 The following article outlines a policy change that would improve our economy without the Federal Government deficit spending.

Foreclosure Solution, Reduces Unemployment Rate, and Federal Deficit

Is The Sun Setting On Our Economy?….. Not If We Join Together And Change Our Future!

We can help the middle class, working people, and the economy (reduce unemployment and foreclosures) better, and less money creation than with deficit spending stimulus recovery programs, by doing the same thing they did in the Great Depression.

In the Great Depression the government created the Home Owners Mortgage Corp., which created the 30-year fix rate mortgage. The new terms allowed people to stay in their homes, because the banks did not have to foreclose on people’s homes. When the HOLC closed down in the 1950s it returned the excess funds it had collected to the U.S. Treasury. It was a very successful program. 

To get complete information on the People’s Economic Recovery Plan, go to www.recoverygovforthepeople.wordpress.com/  It is free. We just want you involved to improve our nation’s future.

There is a major flaw in our economic guiding policies. Our modern economy is very different from the economy of the 1930s. We have created a mortgage with new terms that fits the current economic conditions, and our modern economy. The new mortgage has new terms that will solve the foreclosure, and unemployment crisis in our economy. The new mortgage terms will be available to almost everyone, including those people with underwater mortgages, by restructuring most of the existing mortgages without refinancing cost. The new mortgage terms will increase most people’s disposable income, similar to an income tax rate cut.

 Unlike the HOLC program, the government is not required to purchase the underwater mortgages; therefore this recovery plan will not cost the government, or the taxpayers a dime. The new terms are beneficial to all parties concerned, homeowners, banks, financial institutions, and investors.

The increase in disposable income will increase aggregate demand, which will increase production, productive investment, and normal consumption, increasing employment, and reducing foreclosures. The increases in economic activity will increase tax revenues, which will lower local, states, and federal government’s deficits. The States will not need help from the Federal Government; therefore the federal deficit will not increase because of this.

We must always look forward, and learn from the mistakes of the past. I have been writing from before TARP was enacted, and before the first deficit spending stimulus plan was created, that deficit spending was the wrong type of stimulus to facilitate an economic recovery when you have a recession created by the busting of a credit bubble. The deficit spending stimulus plans created by President Obama, and Congress are not working to lower the unemployment, and foreclosure rate very well. The unemployment, and foreclosure rate will be increasing, along with our taxes, to pay down the deficit in the future.

 The bursting of a credit bubble caused the Great Recession of 2008. Which was cause by a price bubble in the primary home market. When the credit bubble burst millions of people’s disposable income, and confidence was reduced or eliminated. This is what had to be repaired, not a bunch of roads, and bridges, to have an economic recovery in the private sector. Businesses don’t hire more people until they see more people willing, and able to make purchases of products and services.

There is time to fix Congress’s, and President Obama’s mistake. Please go to www.recoverygovforthepeople.wordpress.com/  also to www.economysflaw.wordpress.com/ Get involved in changing the future, for your own benefit, also so your posterity has a better future. Our representatives in Congress need to know what to do. You can contact your Congress representatives at www.contactingthecongress.org/ and President Obama at www.WhiteHouse.gov/  

Very, Very Important, To help spread the word please click the “Like” button at the top of the page, and link to this website by filling in the subscription form. This will make it easier for people to find our website. I will also be able to inform you when I post more information on this very important matter. Send these four articles, and my comment on to your friends, and contacts Tell your friends, and contacts to do the same.

The more people we can get involved, the faster the economy will improve, and the less taxes we, and our children, and our great, great grand children will have to pay to reduce the deficit.  The working people, and middle class families must unite, and Yell in a load, and united voice to be heard above the roar of the special interest lobbyist of the “Big Boys” and the “Moneyed”

The Big Boys, Moneyed, and the “Disadvantaged” got the Gold Mine. The middle class, and small businesses get foreclosed on, and go bankrupt. They then get the “shaft” (bill), for the whole mess, by having their taxes raised. People are sick, and tired of getting the shaft.

Are you mad enough yet, to do something about it?

Do It For Them!!! If not for you, for Your posterity

It is estimated that if just 20 people forwarded this message to 20 of their friends, and contacts, and they did the same, again and again, everyone in the United States would have a copy of this information in 30 days or less.

Thank you for your help…….Leonard C. Tekaat is a retired economic analyst and economic scholar, small businessman, investor, financier, and author. He has over forty years of experience in the financial world. He has a California teaching certificate. He is a former candidate for the California Congress. He is Chairman of a special Committee For Economic Reform and A Better Economic Future.

Leonard C. Tekaat’s book, INFLATION THE ECONOMY KILLER, How to Create, Control and Stop High Inflation. Is an easy to read  and understand 157 page book on how to facilitate an economic recovery for the American people, without huge government deficits. It is a handbook for the American people, their political representatives, and their children to guide themselves into the future. This book is a must read for every person concerned with solving the problems of high taxes, high interest rates, unaffordable housing, high unemployment, and improving America’s economic, social, and political future.

 The easiest way to order this ground breaking, world-changing book is through www.Amazon.com/, for $14.95 +S&H, If you have any comments or question, please post them at the website or contact International Economy Publications. Bakersfield Ca. at economysflaw@yahoo.com/ or fill out the contact form at our web sites, www.recoverygovforthepeople.wordpress.com/  www.economysflaw.wordpress.com/

There is no requirement to buy the book to participate in improving yours, and your children’s future. I only offer it to you if you would like more information on this very important matter. If you decide to purchase the book, it would be greatly appreciated. The contact form for questions or comments about the book is on the opening page, or www.amazon.com/ to order. 

It is how we help pay the cost of our grassroots movement to lower your taxes, and mortgage payment. Reduce the unemployment, and foreclosure rate, and end the misery created by the Great Recession of 2008.                               

Thanks again Leonard

Copyright by Leonard C. Tekaat Jan. 7, 2011

All rights Reserved.

The following two articles are to better inform you about what is happening to our economy.

Creating wealth: the Federal Reserve’s ability to create money out of thin air and to manipulate the value of the dollar gives if ultimate control over the purse strings of every American household. 

Sordid History of Central Banks

The Federal Reserve, despite its misleading name, is in fact a type of bank known in the rest of the world as a central bank. Explained Liaquat Ahamed, a former employee of the World Bank turned financial historian: “Boiled down to its essentials, a central bank is a bank that has been granted a monopoly over the issuance of currency. This power gives it the ability to regulate the price of credit–interest rates–and hence to determine how much money flows through the economy.” Central banks, in other words, are the ultimate trusts; they, and they alone, are authorized to issue a nation’s money supply, giving them complete ascendancy over world finances.

Although central banks date all the way back to the late 17th century (the Riksbank of Sweden was the first), central banking in its modern form arose from the ashes of the First World War. Prior to the war, most of the world’s largest economies had central banks, but although they exerted great power over world finance, they did not enjoy complete monopolies over money supplies. Nor, for that matter, were they free to create quantities of money without limit, for the world of the 19th century was a world tied to the gold standard (and, among poorer nations like Mexico and China, the silver standard). That is, money issued by banks, central or otherwise, needed to be backed by guarantees of redemption in “specie,” the economists’ term for precious metals.

Soon after the outbreak of World War I, European central banks, recognizing that they did not have enough gold reserves to finance an international war, suspended specie redemption so that they could begin to create money without regard for the limits of the gold standard. This was, properly speaking, the inauguration of the modern age of central banking.

“Endless money forms the sinews of war,” the Roman statesman Cicero observed in the Philippics, and so it proved true throughout history. The governments of Europe, no longer bound by the limits of their gold reserves, issued vast amounts of unbacked paper money through their respective central banks to finance the war effort. The United States, which acquired a central bank of its own in 1913 with the creation of the Federal Reserve, was similarly able to fund its involvement in the war, including the enormous expense of transporting hundreds of thousands of men and armaments across the Atlantic Ocean.

When the war finally ended, the belligerents were left with destroyed towns and cities, millions of war casualties, crippling debts, and oceans of paper money that could not possibly be redeemed in specie. The result was an economic maelstrom that destroyed the currencies of Germany and Austria and brought about severe recession elsewhere. Even the United States, which had gotten off comparatively easily, saw its economy collapse in 1920.

Amid the turmoil, the great powers, including Great Britain, made the fateful decision to return to the gold standard without discounting the value of their currencies against gold in spite of all the excess money that had been printed during the war. Not only that, the standard they tried to put in place was not a true gold standard but a gold exchange standard. This meant that gold no longer circulated in most countries (except in the United States, which remained on a true gold standard until the early 1930s) as currency. Redemption in specie was only guaranteed for big investment concerns, foreign and domestic.

The gold exchange standard was a disaster. No one had any idea how much new money was actually in circulation as a result of the wartime printing presses, and currency values oscillated wildly. At the time, the pound sterling was still the international reserve currency, so the governor of the Bank of England, Montagu Norman, devoted an enormous amount of energy trying to get the central banks of the other great powers, especially France, Germany, and the United States, to conduct parallel operations so that the pound would be able to preserve its value.

[ILLUSTRATION OMITTED]

Money-supply Manipulation

But how exactly do central banks exert control over the money supply? The most important technique is called open-market operations, where the Federal Reserve, the Bank of England, or some other such institution, actually purchases debt (in the form of Treasury bonds, bills, and the like) issued by its government, and creates money out of thin air to pay for it. Ordinarily, open-market operations are carried out with certain privileged investing houses rather than with the government directly, so that the new money issued by central banks enters the economy in the form of payment for government securities to the banks and other authorized investment firms that sell them. From there, the money is loaned out to other banks. Because modern banking operates on a “fractional reserve” basis, banks are free to keep only a fraction–usually around 10 percent–of money on deposit available for withdrawal. The test they lend out. That money is in turn deposited in other banks, and a sizeable portion of it loaned out again, and so on.

The so-called “money multiplier” effect means that new money originating with the Federal Reserve or other central bank will increase many fold as it is loaned, deposited, and loaned again. With a reserve requirement of ten percent, new money is typically multiplied by a factor of 10 so that e.g., a billion new dollars injected by the Federal Reserve into the money supply will amount, in the long run, to an increase in the monetary base of about 10 billion dollars.

In practice, the mechanism is considerably more subtle than this For one thing, open-market operations are usually carried out as repurchase agreements or repos. This means that the purchase or sale of government securities is usually for a short-term only, and the effect of any individual transaction means that the money supply contracts when the seller of government securities repurchases the instrument when the term expires. But open-market operations are carried out every week, meaning that the contractionary effect of securities that the central bank resells can be easily offset and usually is, in the long run by a greater volume of purchases.

Central banks also have other means to manipulate the money supply, including raising or lowering reserve requirements. If, for example, the reserve requirement is lowered from 10 percent to five percent, the money multiplier effect will cause a billion dollars in new money created by the Fed to expand into 20 billion dollars in the money supply as a whole.

The Federal Reserve and other central banks are most closely identified with interest rates in the public mind. But what interest rates are meant? In point of fact, the Federal Reserve concerns itself with two very different interest rates, only one of which it actually sets. This latter is the discount rate, the rate at which the Federal Reserve is willing to lend out its own assets to member banks, via what is called the “discount window.” In theory, at least, lowering this rate will encourage banks to borrow more, and hence will tend to increase the money supply, while lowering it will have the opposite effect. But in practice, banks have become very wary of borrowing through the discount window, fearing that such activity will be interpreted as a sign of a weak balance sheet.

The other interest rate that the Fed is concerned with, and the one that is meant whenever the media speak of the Fed “raising” or “lowering” interest rates, is the federal funds rate. This is the average interest rate that Fed member banks charge to one another for short-term loans of funds on deposit at the Fed. Banks make such loans to make sure their funds on reserve do not fall below legal requirements. However, the Fed does not set the federal funds rate directly. Instead, it announces a target value, to be arrived at by expanding or contracting the amount of funds available to banks, via the aforementioned open-market operations.

Inflation and Central Banking

All of these activities of central banks in general, and of the Federal Reserve in particular, are the cause of inflation. The public tends to believe that inflation is raising prices, especially of consumer goods, but in reality, inflation denotes an increase in the money supply, of which rising prices are the most visible effect. Whenever the amount of money available is increased relative to the amount of goods and services, prices will go up. Although, as we have seen, central banks do not inflate the money supply by running the printing presses directly, the creation of money via open-market operations and artificially low-interest rates has an effect similar to what would happen if money were simply printed and then tossed out of helicopters except that in the latter case, people would understand exactly what was going on, and the illusion of easy money could not be perpetrated for very long.

The effects of inflation always appear first in those sectors of the economy closest to the new credit bubbles emanating from the central bank. In modern economies, this means inflationary increases in pricing are manifested first and foremost in the form of highly inflated asset values and prices for claims on capital in real estate, in securities markets, and (at least in the United States) in higher education, because these are the sectors of the economy that benefit first from an expanded credit base. Huge sums of new money are poured into the purchase of stocks and bonds by large investment firms, hedge funds, and other financial entities, while a large proportion of loans that commercial banks make with the new money are always real estate and education-related. As a result, stock prices rise at a dizzying clip–but so does the cost of college education or a new house. Inflation thus has the effect of enriching those who own securities, but driving middle-class homebuyers and college students very deeply into debt. In this way, the mechanism of central banking really does make the rich richer and the middle class poorer.

Unfortunately, although the George Soroses and Warren Buffets of the world understand exactly how the system works, most ordinary Americans do not. Enticed by easy credit terms for higher education and mortgages, they take on irrational amounts of debt as the inflationary bubble expands, secure in the belief that, as the value of assets continues to grow, they will have no trouble paying down their debts.

Inflationary bubbles always result from the operation of modern central banks because central bankers are always motivated first and foremost by political, not economic, considerations. Despite the pretense of political neutrality, all central bankers are well aware that their primary job is to enable modern governments, which typically recognize few if any limitations on their own power, to do anything they want, no matter how unpopular. Wars, for example, especially wars of occupation fought for prestige or for conquest, are typically unpopular the moment taxes are raised to pay for them. But thanks to the magic of central banking, governments can in effect print the money they need….that is, issue debt which the central bank then converts into money–without directly encumbering the taxpayer.

[ILLUSTRATION OMITTED]

But of course, there is always a price to be paid since, as we all learned on our parent’s knee, money–real money, at any rate–does not grow on trees. Inflation destroys the value of money and hence of savings accounts. It is therefore a kind of tax on the thrifty, and withal a thoroughly dishonest, underhanded kind of tax. Since the inception of the Federal Reserve, the U.S. dollar has lost more than 95 percent of its value, courtesy of the slow but steady artificial expansion of the money supply by the Federal Reserve.

But as long as prices at the gas pump and the supermarket increase only gradually–say, at two or three percent a year–then inflation is deemed acceptable by the manufactories of public opinion and consent.

Occasionally, however, the huge amounts of funny money issued by central banks find their way into the money actually in circulation. When this happens, a financial cataclysm called hyperinflation occurs. Prices of consumer goods soar, sometimes at the rate of thousands or even millions of percent a year. Savings accounts in banks quickly become worthless, and paper money in circulation no longer suffices to buy anything. This happened in Germany after World War I, in Argentina in the late ’70s and early ’80s, in the Balkans in the ’90s, and is happening in Zimbabwe at the time of this writing. Next to total war, hyperinflation is the worst man-made disaster that can beset any society. It often leads to the overthrow of governments, to civil war, and to dictatorship. In postwar Germany, it paved the way for the supremacy of the Nazis.

Inflationary Bubbles Always Burst

But even without the appearance of hyperinflation, all central bank-created financial bubbles burst, leaving devastation in their wake. At some point, realization dawns on investors and the general public that, thanks to years of unnaturally low-interest rates and low credit, valuations and allocations of capital have been enormously distorted. There ensues a crack up in which asset prices tumble, over-leveraged businesses fail, and other corrective measures take their inevitable toll. It is as if the economy, after years of addiction to artificial, habit-forming stimulants, is now forced to undergo the painful symptoms of withdrawal from a long-term addiction.

This is in effect what happened in 1929 through the early 1930s, after the end of an international bubble inflated by the coordinated policies of the Bank of England, the Federal Reserve, and other European central banks. It is also what is happening right now. In our day, however, the bubble is much larger, and has actually been imploding for years, beginning with the market crash in 2000.

The end of the so-called dot-com bubble was in fact only the beginning of the end of a credit bubble decades in the making, a bubble that had produced the fantastic run-up in stock and other asset prices from the early ’80s until the end of the 20th century. During that era, public confidence–on which all inflationary bubbles crucially depend–was buoyed by a series of auspicious world events: the fall of the Berlin Wall, the breakup of the Soviet Union, an easy American victory in the Gulf War (purging the demons of Vietnam, and reinforcing the illusion of American military invincibility), the growth of modern industry in huge new markets like India and China, and the appearance of a panoply of new technologies, like cell phones and the Internet, that promised to transform lifestyles permanently for the better. In fine, it was a time of almost unbridled optimism, allowing the bubble economy to expand and expand.

The new century, however, witnessed a series of events that helped to puncture the illusion of unending prosperity. First came the Clinton administration’s successful antitrust case against Microsoft, which showed the world that, contrary to the giddy expectations of the high-tech crowd, Washington’s venal politicians were determined to control, regulate, and extort money from billionaire Internet parvenus and the exciting new industry they had created. On the day Microsoft was found in violation of antitrust statutes, the dot-com portion of the bubble burst.

Then came 9/11, the long and costly occupations of Iraq and Afghanistan, and Hurricane Katrina, which drained national coffers and pointed up the vulnerability of America. Not that any of these events “caused” the bubble to burst; they only helped to catalyze its demise.

It is impossible to predict how long inflationary bubbles and the booms they engender will last, only that they will not last forever. On the other hand, when they end, it is possible to limit the extent and duration of the damage by doing–nothing at all. This is how governments acted during what used to be called “panics,” allowing the liquidation of bad assets during market corrections to run their course quickly.

[ILLUSTRATION OMITTED]

With the Great Depression, however, governments reacted very differently, trying to prop up failed corporations (especially banks), creating jobs by spending taxpayer dollars on wasteful public works projects, and, in general, doing everything they could to hamper the ability of the markets to correct themselves. The result: a long and brutal depression that did not end until the conclusion of World War II, when the United States government finally was forced to do what it should have done years earlier: cut spending and get out of the way.

Now, of course, history is repeating itself as the Bush and Obama administrations pour trillions of dollars into an economy that refuses to respond to their aptly named “stimulus” packages. For just as the hard-core drug addict reaches a point where no further enjoyment can be derived from chemical stimulation, so too an inflationary economy will reach a point where no amount of funny money can rouse it from its corrective lethargy.

For the ability of the Federal Reserve to inflate the money supply depends crucially on the willingness of banks to borrow and lend. If banks refuse to drink from the Fed’s money spigots, or if (as has been the case lately) they hold on to new money to strengthen their balance sheets instead of lending it to customers, the money supply will not increase.

When this happens, every edifice built on excessive debt–every speculative real estate venture, every over-leveraged business, every factory making overpriced products–will come tumbling down. In the short run, this means bankruptcy and layoffs, but in the long run, it means an increase in national savings that will be the basis of a sounder national prosperity, as profligacy is transformed into thrift.

Time to End the Fed

But none of the economic devastation we are now experiencing could come about without the help of the Federal Reserve and kindred central banks abroad. The evils of inflation, the deadly illusion of economic bubbles, the migration of wealth from the savings of the middle class to the asset portfolios of the wealthy and well-connected all are by-products of the Federal Reserve and its arcane financial wizardry.

But no Federal Reserve chairman will ever admit that, least of all the man most responsible for the great bubble of the “80s and ’90s. Alan Greenspan. Nor has his successor, Ben Bernanke, been chastened by events. Bernanke, a longtime adherent of the so-called “monetarist” school of economics, popularized by the likes of Irving Fisher, Milton Friedman, and Anna Schwarz, believes, like all monetarists, that the Great Depression was caused by the failure of the Federal Reserve to act decisively. Instead of pumping more money into the economy when stocks were plummeting and banks failing, the Fed turned off the money spigots–so goes the monetarist argument. In fact, as Murray Rothbard and other Austrian economists have shown, the Fed tried to reinflate the bubble, but was unable to overcome the reluctance of banks and the general public to continue to borrow and lend.

Nevertheless, Ben Bernanke bas chosen to take the advice of Milton Friedman et al., and has, since the onset of the latest crisis, been doing everything he can to open the Fed’s money spigots wider, hoping to soften the effects of the recession. He bas even created a whole new set of facilities, starting with the Term Auction Facility, whereby the Fed can pump credit into the economy along entirely new pathways–by lending directly to a much wider range of financial institutions, and against a much broader spectrum of collateral than was previously the case. And to date, all of the actions of the Fed have been for naught.

Undeterred, Bernanke and his economic coreligionists are now insisting that greater international coordination of financial policies, as well as a global regulatory structure, will be necessary to prevent such crises in the future. “This is very much an international problem, and it requires international solutions,” Bernanke told the members of the New York-based Council on Foreign Relations recently. The Fed chairman continued: 
   In particular we need to work together
   effectively, to make sure that we have
   solutions for our banking systems that
   are not mutually inconsistent or create
   problems across jurisdictions. We
   need to make sure that we’re working
   together, to stabilize the banking
   system and to avoid the failure of systemically
   critical firms. We need to
   begin to establish a framework.

[ILLUSTRATION OMITTED]

The failures of the Federal Reserve, as well as the utter inability of the likes of Bernanke to anticipate the economic catastrophe that is overwhelming us, are now being used as a pretext, not to abolish the system but to strengthen its powers to manipulate the money supply and to regulate and micromanage the once-free markets.

This, then, is the Federal Reserve System: a central bank tasked with manipulating the supply of paper money to the advantage of politicians and other privileged classes. Because of its ability to convert instruments of government debt into money, it is the unelected, unaccountable leadership of the Federal Reserve, not Congress–in spite of what the Constitution stipulates–that controls the purse strings of the federal government. Not only that, because of its power to destroy the value of the dollar over Time and perpetuate boom and bust economic cycles, the Federal Reserve has ultimate control over the purse strings of every American household.

Until the Federal Reserve is abolished and replaced with a free, specie-based banking system, Americans will not enjoy the economic and financial freedom our ancestors enjoyed. We will continue to be at the mercy of booms and busts unleashed by the mandarins of high finance to serve their own political ends.

Fed Accountability Now!

Texas congressman Ron Paul has long been a vocal critic of the Federal Reserve. Recently, Congressman Paul introduced H.R. 1207, the Federal Reserve Transparency Act of 2009, which as of March 23 had more than 40 cosponsors. The bill, introduced on February 26, is intended to rectify one of the long-standing complaints about the Federal Reserve, its secrecy and complete freedom from congressional oversight. H.R. 1207 provides for the Comptroller General to conduct a thorough audit of the Fed and submit his findings, along with policy recommendations, to Congress.

Congressman Paul also introduced H.R. 833, a bill that would abolish the Federal Reserve and repeal the Federal Reserve Act altogether.

While Congress is unlikely to consider abolishing the Federal Reserve yet–the notion of a congressional audit of America’s central bank may be an idea whose rime has come. H.R. 1207, which would at least throw more light on the Fed’s clandestine monetary policy, seems to have considerable momentum. Congressman Paul told Judge Napolitano on Freedom Watch that even Ben Bernanke, chairman of the Board of Governors of the U.S. Federal Reserve, called Congressman Paul to indicate his support of the bill!–CHARLES SCALIGER

COPYRIGHT 2009 American Opinion Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder

Copyright 2009 Gale, Cengage Learning. All rights reserved.

These three articles are included in this post to better inform you on what is going on in our economy. I do not receive any monetary reward for displaying them here. 

Economics a hot topic in Meltdown: today’s hard times are prompting people to learn more about the forces that drive our economy, and Thomas Woods’ Meltdown offers an entertaining way to do just that.

In this writer’s view, it is a terrible shame that so few, even among the partisans of liberty, are willing to make the effort to read Mises’ Human Action or Rothbard’s Man, Economy, and State, let alone the dozens of other luminous offerings by these and other Austrian economists. But few are disposed to read a book of 800 or a thousand pages on any subject, let alone economics. The closest thing to an Austrian bestseller until now is Friedrich Hayek’s Road to Serfdom, which is less an economic study than a work of political philosophy, and withal not one of Hayek’s most ideologically consistent offerings. Were Henry Hazlitt or even Leonard Read alive today, gifted as they were with clean, epigrammatic prose, they might have written the likes of Meltdown.

They might. But Thomas Woods has proven with Meltdown to be a popularizer second to none, a girl sorely needed, particularly when it comes to capturing the attention and holding the interest of a sluggish if not altogether silent majority who instinctually oppose Big Government but have not educated themselves in any depth.

In Meltdown hitherto-unapproachable topics like the Federal Reserve and the business cycle are dissected and reduced to clear and pithy descriptive, spiced with Dr. Woods’ barbed wit. A sample: As several economists have noted, blaming the crisis on “greed” is like blaming plane crashes on gravity. The current crisis was caused not by the free market but by the government’s intervention in the market.    This is not special pleading on behalf of the market, but the clear verdict of both theory and experience…. As predictably as night follows day, the dupes who didn’t see the crisis coming, and said everything was fine are the ones George W. Bush and Barack Obama alike have looked to for advice on how to reverse it. We are in trouble.

Turning Up the Heat on the Fed

As Woods correctly diagnoses, the Federal Reserve System is the main culprit for the economic meltdown–the “elephant in the living room,” Woods styles it, because so few, even among so-called conservatives, are willing to look askance at the Fed. It is fashionable on the political right to ascribe blame for the recession on the financial distortions produced by the Community Reinvestment Act and the quasi-government agencies Fannie Mae and Freddie Mac, but blaming such programs, noxious though they are, for the enormity of the crisis is akin to, in another of Woods’ bons mots, “divert[ing] attention to the patient’s runny nose and away from his cancer.”

And in Meltdown the full scope of the Fed’s complicity in events is revealed in language a bright fifth grader could understand. Inflation, fiat money, the rudiments of Keynesian economics, fractional reserve banking–all are laid bare and (which is more important still) rendered interesting to the non-specialist and even the non-bookish. It’s not too much of a stretch to say that Meltdown is the closest thing to a “gripping” work of nonfiction this author has read in a very long time.

But Woods is first and foremost a historian. His love of a good tale (in this case, a tale of deceit and skullduggery) is evident in chapter five, where he manages, in 20 pages, to deliver a concise history not only of the Great Depression and its real causes (hint: the Fed and Big Government had something to do with it), but also of banking and the boom and bust business cycle from the inception of the American republic.

Boom and bust did not originate with the Federal Reserve System but with fractional reserve banking, a distinctly modern innovation that came about when banks began to confuse the deposit and the loan functions, and to create money by pyramiding loans on top of non-existent reserves. But the Federal Reserve, by creating a true banking cartel, allowed banks to inflate the money supply much more concertedly than had ever happened in the past, leading to much more acute inflationary economic bubbles and correspondingly more severe recessions and depressions. Not for nothing is the current bubble being termed, by Peter Schiff and others, the greatest asset bubble in history.

If Meltdown is anywhere deficient, it would be perhaps in failing to emphasize enough how economic bubbles are Big Government’s best friend. Inflationary booms allow the state to finance all sorts of conceits, from wars of imperial expansion to heedless public works projects, that would never be tolerated if the public were obliged to pay for them by direct taxation. But they also permit government to raise taxes to obscene levels, because the public, confident that the values of their real estate holdings and stock portfolios will rise indefinitely, have little objection to ponying up confiscatory sums of income and capital gains taxes. Why begrudge the state its pound of flesh as long as the good times continue to roll?

As a result, the decades corresponding to the bubble that is now bursting–the ’80s and ’90s–saw tax rates and revenues balloon to unexampled proportions. During that same time, the size, intrusiveness, and cost of government have reached levels that would dismay our grandparents, not to mention the founding generation. Yet the American public has been complacent because the gains in the stock market and housing prices have made (nearly) Everyman a paper millionaire. Public officials have been delighted at the windfalls, and have not scrupled to transform our once-limited federal government into the largest, most powerful, and most expensive superstate the world has ever seen. And all of this has come about courtesy of the Federal Reserve and the magic of monetary printing presses.

Now, of course, the bloom is off the rose, so to speak. Stock portfolios and asset values are shrinking like laundered wool, but tax rates, and the dimensions of the government they help to support, are unchanged.

This may be the reason Meltdown is so popular. The economic bust is forcing people to take an interest in economics and to seek to understand the forces that are reshaping our lives and lifestyles. If the crisis grinds on much longer (and it will), the thing that the Ben Bernankes and the Timothy Geithners of the world fear most may come to pass: the Federal Reserve System, in all its unalloyed villainy, may finally be exposed to the general public and abolished by popular demand. For those who want to stay ahead of the public’s learning curve, however, Meltdown is indispensable, educational, and entertaining reading.

COPYRIGHT 2009 American Opinion Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.

Copyright 2009 Gale, Cengage Learning. All rights reserved.

Three articles are included in this post to better inform you on what is going on in our economy. I do not receive any monetary reward for displaying them here. I thought you might be interested.

To be heard above the roar of the special interest lobbyist, the people must unite, and talk in a loud and clear voice to inform our political representative of the correct thing to do to improve our economy. 

To send the President, and Congress a message loud and clear: 

E-mail www.WhiteHouse.gov/ or call the WH comment line          1-202-456-1111, and say some thing similar to this, 

“I have read an alternative economic recovery plan that will work better to decrease unemployment, and stop the rising number of foreclosures than the current policies. The Plan does not rely on increases or decreases in taxes, more deficit spending, or the Federal Reserve’s  use of quantitative easing. I want the economic policies outlined on www.recoverygovforthepeople.wordpress.com/    enacted before our economy gets any worse.  I do not want the Federal Reserve to create inflation with quantitative easing. It will make Americans poorer, and cause the government to have more dependent people.  More government dependent people will cause our taxes to go up, the deficit to get larger, and interest rates to increase!

I want the government to listen to the people, not the special interest lobbyist, that only have their financial betterment in mind; not what is best for our economy, and our great nation.”

Thank you for your help and participation. This is the only way things will change for the better for your children and grandchildren. We cannot leave them a mountain of government debt, and ruin their chance of a better future.

It is small business and the middle class that always gets the shaft (bill). Big business, the Federal Reserve member banks, the “moneyed” and the “big boys” all go to Congress and get the “gold mine” with special deals and favors. The middle class has no association or group that will stand up for them. Congress is supposed to represent everyone. Our last hope is the Tea Party, and this is why I am a Tea Party member. 

The middle class, and small businesses have been left out of the recovery.  I believe this is one reason there are so many people who are “mad as hell” at the government and the Federal Reserve and its member banks. 

Big business, the government, the moneyed, and investors have all had their credit obligations restructured. That is why Wall St. is doing fairly well. What money the Fed is creating is being pumped towards those people. Were as the middle class is being foreclosed upon and small business are closing their doors or going bankrupt. 

I am fighting for the middle class to be included in the recovery, by convincing the banks it would be better for all parties concerned to restructure the mortgages, than to foreclose or short-sale the home. When the banks foreclose on people homes, it creates more people who become government dependent, which increase government liabilities, which increase the deficit and later our taxes. We need the middle class to be included in the recovery, or the whole economy will collapse. 

The middle class is going to get the bill again for all the deficit spending that the government is doing. The raising of taxes on you and me is what I am trying to prevent. This tax compromise is another deficit spending stimulus plan, the same as the first, disguised as a Bush tax cut extension. This is why President Obama supports it. 

The Federal government will be borrowing another 850 billion dollars to stimulate the economy. This is more Keynesian economics, which we have used since the 1930s, the same policies that has created the mess that we are in now. Interest rates will go up which they are already have done in the last month. This will further depress our fragile recovery and bankrupt the government and the economy. 

Given the power of increased disposable income (read Plan), the middle class will create our economy’s recovery without increasing the money supply or the deficit. We know how to spend our money better than the government does. When the government deficit spends, the banks invest in government debt rather than in the economy, and middle class mortgages. 

Please read more of what I have written so that you will understand better, what I am trying to do, and whom I support. If you want smaller deficits, and you support the American Dream of a better future for our posterity, the middle class and small business, please join the R.E.B.E.L.S. at my Central Valley Tea Party  group or at my facebook page at www.facebook.com/leonard.c.tekaat or www.recoverygovforthepeople.com/

Thank you for your comment.  I hope I have cleared up a few of the points you made. Feel free to send me a message or make other comments or questions.

Since 1982, when we had the other Great Recession, I have been feeling very badly about how the middle class people have been treated to control inflation and inflation psychology. I have been trying to change our guiding policies since then to avoid another Great Depression. I failed to accomplish what I wanted to do. We are now in another Great Recession, and too much unnecessary misery has been created. 

I know that all the numbers tell us, and the Federal Reserve believes we currently do not have a problem with inflation and inflation psychology. But, look at what the prices of gold and commodities are doing. They are all going up, which will mean higher prices in the future for almost everything. People do have inflation, and dooms day expectations. 

When the Fed raises interest rates by tightening credit, this reduces demand from the bottom of the economic ladder by increasing unemployment, bankruptcies of small businesses and foreclosures. I believe higher interest rates are the wrong tool to use to control inflation and inflation psychology. It is a major flaw in our economic policies. 

I believe we should use the income tax to maintain the value of our money. When inflation begins to occur in our economy the income tax should change automatically based on the inflation rate as outlined in my articles on my web site. This change in our guiding policies will reduce the excess demand in our economy from the top of the economic ladder and make our economy more productive and efficient. It will allow normal production and consumption to continue while the income tax controls inflation and inflation psychology. There is no reason for so much misery to be created in the working class to correctly guide our economy to create jobs, and maintain the standard of living for our citizens. 

Please read the following two-part article, and go to my web site to read my other articles, which go into greater detail on how to stimulate the economy to create jobs without using deficit spending policies. 

Thank you sincerely for your effort to improve the middle class families lives. 

Leonard C. Tekaat 

P. S. If you do not find the article I posted, The Bush Cut Extension Is The Wrong Kind Of Stimulus To Facilitate An Economic Recovery, you will find this letter and the article on my web site at www.recoverygovforthepeople.wordpress.com/

The Bush Tax Cut Extension Is The Wrong Kind Of Stimulus To Facilitate An Economic Recovery!

The Bush tax cuts are in existence now. Have they done anything to improve the economy for Main Street, and the middle class in the last two years? The unemployment and foreclosure rate have gone up in the last two years. We have increased our national debt by trillions of dollar to solve these problems, and they have only gotten worst. If the tax cut does not expire for people with an income of $250,000.00 the deficit will increase by more than 850 billion dollars. If the first deficit spending stimulus recovery plan failed to bring down the unemployment and foreclosure rate, which among us is insane enough to believe a second deficit spending stimulus recovery plan, almost as large as the first one, will result in a different outcome. 

There is a better way to increase the disposable income of the middle class, than to extend the Bush tax cuts to the upper income people. 

When there is dooms day talk or inflation expectation in the economy, as there is currently, the people in upper income levels do not create jobs. Most of them move their money into protective positions, and make unproductive investments, in gold, inflation hedges, and commodities “investments”, causing more increases in food prices, and production materials.    

We can help the middle class and the economy (reduce unemployment and foreclosures) more by doing the same thing they did in the Great Depression. In the Great Depression the government created a new mortgage that fit the then current economic conditions. It created the Home Owners Mortgage Corp., which created the 30-year fix rate mortgage. The new mortgage terms allowed people to stay in their homes. The banks did not need to foreclose on the homes. People that lose their homes to foreclose can create more government dependent people and a larger deficit. When the HOLC closed down in the 1950s it returned the excess funds it had collected to the U S Treasury. It was a very successful program.    

I have created a mortgage with terms that fit the current economic conditions. www.recoverygovforthepeople.wordpress.com/ Unlike the Home Owner Mortgage Corp., it is unnecessary for the government to purchase the bad and underwater mortgages. The financial institutions and investors should be willing to restructure the mortgages with the terms that are outlined on my web site, instead of foreclosing or short selling the homes. 

The mortgages do not need to be refinanced. When you restructure

a mortgage, you only need to send the borrower a modification letter with the new terms. The new mortgage terms should be offered to everyone, even the people whose mortgages are underwater.    

The reason this mortgage would be good for the economy, the middle class, the government, investors and the financial institutions is that it will increase a large number of people’s disposable income, all at the same time, similar to a decrease in tax rates, but by a much larger amount, and without cost to the taxpayer or the government.   

 With an increase in disposable income, extended over a long period of time, the middle class will restart the economy with increased economic activity. Businesses will see demand pick up, and hire the unemployed. This will reduce the unemployment rate, which will lower the foreclosure rate.   

 With the new mortgage terms the foreclosed inventory will be sold very quickly. With the foreclosure inventory eliminated home prices will stabilize and then slowly rise.

This will maintain the tax base for state and local governments and their financial condition will improve. They will not need further assistance from the Federal Government, which will help lower the federal deficit. 

I do not want the tax cuts extended for anyone that has over 250 thousand dollars of  income. The deficit must be reduced. The middle class cannot afford an increase in their taxes. If people with over $4500 per week income do not pay the 4.6% increase in their tax rate, the middle class, you and I will have to pay more taxes in the future. Tax increases on the middle class will depress normal economic activity further.

Spending should be cut after the economy is operating more efficiently with new guiding policies.  

With the federal government increasing the amount it is borrowing, interest rates will increase and suppress our fragile recovery.    

There is a second part to this recovery plan that I explain in my articles posted on my site. It is more important than the first part. It helps prevent the creation of another Great Recession. 

Leonard C. Tekaat 12/12/10 economysflaw@yahoo.com JOIN ME ON FACEBOOK    Join R.E.B.L.E.S www.facebook.com/leonard.c.tekaat/ 

Leonard C. Tekaat is a retired economic analyst and an economic scholar, small businessman, investor, financier, and author. He has over 40 years experience in the financial world. He has a California teaching certificate.  He is the Chairman of a special Committee for Economic Reform and A Better Economic Future. 

If you want smaller deficits and lower taxes, please send a copy of this article to your representatives in Congress and President at www.WhiteHouse.gov/

Have you read the articles at www.recoverygovforthepeople.wordpress.com/ or www.economysflaw.wordpress.com/

Are you concerned enough yet to take action to improve yours and your children’s future?   

The deficit spending economic recovery plans that President Obama, and Congress have tried, to reduce unemployment, and foreclosures, are not working. I have developed a two-part Plan that will work!! 

First, the financial institutions must be convinced to, restructure the middle class’s underwater mortgages to increase their disposable income, which will increase aggregate demand. which will decrease the unemployment rate, solve the foreclosure crisis, and then reduce the deficit.

Second, we must change our economy’s guiding policies, to correct the cause of the world wide economic credit crisis, and the Great Recession of 2008. We have a major flaw in our economic guiding policies, that reduces demand from the bottom of the economic ladder with unemployment and foreclosures when, inflation begins to occur in our economy. This policy must be changed to increase the standard of living of all our citizens and so our nation can prosper again. We must learn how to “make” money the old fashion way. We must earn it, not just create “paper profits”

THE PEOPLE’S ECONOMIC RECOVERY PLAN IS GOOD FOR THE ECONOMY, THE BANKS, AND IT BENEFITS YOU AND YOUR CHILDREN!! 

Read the People’s Economic Recovery Plan. If you agreed, that there is a better way to solve the unemployment, and foreclosure crisis, than with inflation, and a huge federal government deficit, empower yourself and call the White House’s comment line 202-456-1111 or post a comment on www.WhiteHouse.gov/ If enough people did this, we can reduce the tax burden on ourselves, and our posterity and change the future. All we have to do is convince one person that this plan will work better than what the government is currently doing to solve the unemployment, and foreclosure crisis.

That one person is President Obama. He will then convince Congress. Which won’t be hard to do, because a solution to the unemployment, and foreclosure crisis is desperately needed! Neither Congress nor the President has a viable plan that will work to facilitate an economic recovery!

When John Maynard Keynes, the British economist, met with President Roosevelt, presented his Keynesian economic policies. That is all it took. Keynes had met someone with the courage, and the power to put his economic policies into action.  

Have you read, Alternative Economic Recovery (Stimulus) Plan Without Deficit Spending at www.recoverygovforthepeople.wordpress.com/ it corrects the weak points, and the abuses that have occurred when the federal government uses Keyensian policies to help the economy our of the recession economic cycle.

I am really concerned about the middle class, and small businesses, which are the backbone of our great nation. The “Big Boys”, the “Moneyed” and the “disadvantage” got the gold mine from Obama’s recovery plan. What did the middle class, and small business get, the shaft (bill)? This is why so many people are upset. People are tired of getting the shaft. The middle class is being foreclosed upon, and small businesses are closing their doors, creating more unemployed people, and distressed families.

ARE YOU “MAD AS HELL” YET?  

Unless we change how our economy is guided, we are going to continue to have more GLOOM, BOOM, and DOOM economic cycles? The cycles are getting deeper, and higher as if the boat, that we are all in, is about to flip over and sink.   

My ideas are brand new, and will correct the flaw in Keynesian economic policies that are causing the cycles of deep recessions and high inflation. The People’s Economic Recovery Plan will stimulate the economy back to normal economic activity, without tax increases, or decreases, more deficit spending, or quantitative easing by the Federal Reserve. All of these policies, if used, will make our economy worst.  

You can connect with us at  www.facebook.com/leonard.c.tekaat/ to join R.E.B.E.L.S and become a rebel yourself. Its free!  We are grassroots group that supports the “American Dream”, and small businesses. We want our posterity to have the opportunities to pursue their dreams, and create a better life for themselves. We don’t want their dreams squashed by high taxes, excessive government deficits, inefficient policies, and unconstitutional laws. We are willing to standup, and fight for our freedoms, and America. Are you ready to do the same. We need your help.

My name is Leonard C. Tekaat, the author of Recovery.Gov For The People. I am a retired economic analyst and economic scholar, investor, small businessman, financier, and author. I have over 40 years experience in the financial world. I have a California teaching certificate. I am Chairman of a special Committee for Economic Reform and A Better Economic Future.  

We must Engage, Educate, Empower, Unite, Participate, to Win!  Win for yourself, for your children, and their posterity.

If you don’t do it now, who will do it, and when will they do it. It’s up to YOU to help change the future, or your great, great grandchildren will suffer through the Great, Great Recession, or Depression!  

If each person that receives this message will forward it on to 20 people, in three days, most people in The United States of America will have read it. This is one proposal that really needs be out there, so people can make an informed choice.  

Leonard C. Tekaat  economysflaw@yahoo.com/  Please read the articles, and if you agree please contact the White House, your Congressional representatives, www.contactingthecongress.org/, and have your voice heard. Have a say in how your future will be! Use the e-mail button at the bottom of this article to send it to their friends and contact so they can join in the battle, and do the same.

LETS CONVINCE  THE BANKS, AND FINANCIAL INSTITUTIONS TO RESTRUCTURE YOUR UNDER WATER MORTGAGE.  IT IS FOR THEIR-OWN GOOD, AND YOUR, AND YOUR CHILDREN’S BENEFIT!…… GIVE THEM THE HELL, THAT YOU ARE GOING THROUGH!!

Very Important: To help spread the message, please fill out the subscription form to my site. There is no cost to do this, but it will make it easier for people to locate my blog with the search engines, google, yahoo, and the others. I will inform you when I post more information about this very important matter.  Thanks again, Leonard