I light of everything going on, my father in law gave me this, so I felt compelled to post it: Enjoy!
A retired Constitutional lawyer has read the entire proposed healthcare bill. Read his conclusions and pass this on as you wish. This is stunning!
The Truth About the Health Care Bills - Michael Connelly, Ret. Constitutional Attorney
Well, I have done it! I have read the entire text of proposed House Bill 3200: The Affordable Health Care Choices Act of 2009. I studied it with particular emphasis from my area of expertise, constitutional law. I was frankly concerned that parts of the proposed law that were being discussed might be unconstitutional. What I found was far worse than what I had heard or expected.
To begin with, much of what has been said about the law and its implications is in fact true, despite what the Democrats and the media are saying. The law does provide for rationing of health care, particularly where senior citizens and other classes of citizens are involved, free health care for illegal immigrants, free abortion services, and probably forced participation in abortions by members of the medical profession.
The Bill will also eventually force private insurance companies out of business, and put everyone into a government run system. All decisions about personal health care will ultimately be made by federal bureaucrats, and most of them will not be health care professionals. Hospital admissions, payments to physicians, and allocations of necessary medical devices will be strictly controlled by the government.
However, as scary as all of that is, it just scratches the surface. In fact, I have concluded that this legislation really has no intention of providing affordable health care choices. Instead it is a convenient cover for the most massive transfer of power to the Executive Branch of government that has ever occurred, or even been contemplated If this law or a similar one is adopted, major portions of the Constitution of the United States will effectively have been destroyed.
The first thing to go will be the masterfully crafted balance of power between the Executive, Legislative, and Judicial branches of the U.S. Government. The Congress will be transferring to the Obama Administration authority in a number of different areas over the lives of the American people, and the businesses they own.
The irony is that the Congress doesn't have any authority to legislate in most of those areas to begin with! I defy anyone to read the text of the U.S. Constitution and find any authority granted to the members of Congress to regulate health care.
This legislation also provides for access, by the appointees of the Obama administration, of all of your personal healthcare direct violation of the specific provisions of the 4th Amendment to the Constitution information, your personal financial information, and the information of your employer, physician, and hospital. All of this is a protecting against unreasonable searches and seizures. You can also forget about the right to privacy. That will have been legislated into oblivion regardless of what the 3rd and 4th Amendments may provide...
If you decide not to have healthcare insurance, or if you have private insurance that is not deemed acceptable to the Health Choices Administrator appointed by Obama, there will be a tax imposed on you. It is called a tax instead of a fine because of the intent to avoid application of the due process clause of the 5th Amendment. However, that doesn't work because since there is nothing in the law that allows you to contest or appeal the imposition of the tax, it is definitely depriving someone of property without the due process of law.
So, there are three of those pesky amendments that the far left hate so much, out the original ten in the Bill of Rights, that are effectively nullified by this law It doesn't stop there though.
The 9th Amendment that provides: The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people;
The 10th Amendment states: The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are preserved to the States respectively, or to the people. Under the provisions of this piece of Congressional handiwork neither the people nor the states are going to have any rights or powers at all in many areas that once were theirs to control.
I could write many more pages about this legislation, but I think you get the idea. This is not about health care; it is about seizing power and limiting rights... Article 6 of the Constitution requires the members of both houses of Congress to "be bound by oath or affirmation to support the Constitution." If I was a member of Congress I would not be able to vote for this legislation or anything like it, without feeling I was violating that sacred oath or affirmation. If I voted for it anyway, I would hope the American people would hold me accountable.
For those who might doubt the nature of this threat, I suggest they consult the source, the US Constitution, and Bill of Rights. There you can see exactly what we are about to have taken from us.
Michael Connelly
Retired attorney,
Constitutional Law Instructor
Carrollton , Texas
Thursday, September 30, 2010
The History of the Federal Reserve (our central bank):
Many might not know this, but the Federal reserve is not the only Central Bank this country has known. In fact, it is the third.
The First Bank was a bank chartered by the United States Congress on February 25, 1791. The charter was for 20 years. The Bank was created to handle the financial needs and requirements of the central government of the newly formed United States, which had previously been thirteen individual colonies with their own banks, currencies, financial institutions, and policies. The First Bank held its charter from 1791-1811 (wikipedia)
After much push to eliminate The First Bank from Thomas Jefferson during his presidency from 1801-1809, the bank lost its charter by 1 vote in the House of Representatives under President James Madison in 1811. Thomas Jefferson was quoted, saying, "The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered."
The Second Bank (of the United States) was chartered by many of the same congressmen who in 1811 had refused to renew the charter of the original Bank of the United States. The predominant reason that the Second Bank of the United States was chartered was that in the War of 1812, the U.S. experienced severe inflation and had difficulty in financing military operations. Subsequently, the credit and borrowing status of the United States were at their lowest levels since its founding. (wikipedia) The Second Bank of the United States held its charter
In 1819 the Supreme Court ruled The Second Bank of the United States unconstitutional, limiting its powers on money production and taxation. While it was able to finish its charter term of 20 years, The Second Bank of the United States did not earn a second charter. In 1941, soon after John Tyler took over the Presidency, Congress passed a bill to reestablish The Second BUS (Bank of the Unites States). President Tyler vetoed the bill along with a second such bill, calling them unconstitutional and against states' rights. That led to the creation of a new banking system called the Independent Treasury System. On February 25, 1862, under President Abraham Lincoln, The Legal Tender act was passed allowing the secretary of the treasury to issue paper money (to be backed with gold and silver). This eliminated a long standing problem of having too many currencies circulating the US. This system lasted until 1913...until...
The Federal Reserve:
In the early 1900's, the people of the US were vary weary of the concept of a central banking system. J.D. Rockefeller, J.P. Morgan, Baron Rothschild, & Paul Warburg were the 4 businessmen that developed and wrote the plan for the Federal Reserve to be created. They were the leaders of the banking world during that era. They used their business influence at the time to manipulate the economy and spread rumors about insolvent banks to create the need of a new national bank.
J.P. Morgan was investigated for the Fraud of the rumors spread in 1907. The person in charge of the investigation was Senator Nelson Aldrich who had intimate ties to the banking community and later became part of the Rockefeller family through marriage. After his investigation of J.P. Morgans (false) rumors, his suggestion was that a central bank needed to be created to avoid a repeat of the panics of 1907.
President Woodrow Wilson ran for office with heavy backing from the bankers - promising ahead of time to sign the Federal Reserve Act in exchange for campaign support. Two days before Christmas in 1913, when most of congress was at home with their families, the Federal Reserve Act was voted in and President Wilson made it law.
However, in 1919 Woodrow Wilson was quoted in regret, “I am a most unhappy man, I have unwittingly ruined my country. A great industrial nation is now controlled by its system of credit. We are no longer a government by free opinion, no longer a government by conviction and the vote of majority, but a government by the opinion and duress of a small group of dominant men.”
Congressman Louis McFadden also stated in 1913 after the passing of the bill, “A world banking system was being set up here…a superstate controlled by the international bankers…acting together to enslave the world for their own pleasure. The Fed has usurped the government.”
The people of the US were told the Federal Reserve was an economic stabilizer and inflation and economic crisis' were a thing of the past. As we now know, nothing could be further from the truth.
From 1914-1919 the FED increased the money supply by nearly 100% using extensive loans to small banks and the public. In 1920, they called in a major of the outstanding money supply. This forced the small banks to call in their loans. Bank runs, bankruptcies and business collapses occurred at historical levels. Over 5400 independent small banks (outside the Federal Reserve system) went out of business, giving more power to the FED.
Noticing the atrocious crime by the FED, Charles Lindbergh stated in 1920, “Under the Federal Reserve act, panics are scientifically created. The present panic is the first scientifically created one, worked out as we figure a mathematical equation.”
Again, from 1921 to 1929 the FED increased the money supply in the country by 62% - sparking the economy with extensive loans to the banks and businessmen. They also helped create a new type of loan on Wall Street, called a margin loan. This allowed a person to put just 10% down on a stock with the other 90% loaned through the stock broker - giving 100% control of that stock. In other words, A person could own $1000 worth of stock by putting only $100 down! This was a major influence to the stock market boom of the 1920's. However, there was a catch to this "too good to be true" loan. A 24 hour margin call could occur at any time. If that happened, it had to be paid within 24 hours by whomever owned the stock.
Ironically, a couple of months before October in 1929 J.D. Rockefeller and his constituents exited the market. On October 24, 1929, the New York financiers who furnished the margin loans started calling them in in mass. This required selling off of margin loans in mass and in turn cause massive bank runs and bankruptcies, collapsing 16,000 more private banks. This allowed the conspiring international bankers to buy up rival banks and corporations at pennies on the dollar. Then, instead of expanding the money supply to deal with the economic collapse, the FED actually contracted the money fueling one of the largest depressions in history.
Congressman Louis McFadden had this to say about the collapse in 1929, “It was a carefully contrived occurrence. International bankers sought to bring about a condition of despair, so that they might emerge the rulers of us all.” Ironically, after 2 previous assassination attempts on the congressman's life, they finally succeeded and Louis McFadden was poisoned at a banquet before he could push for the impeachment of the FED.
To complete the execution of the financial independence of the United States citizens, the Federal Reserve bankers decided the gold standard should be removed. So, with executive order from President Franklin D. Roosevelt, under the pretense of "helping to end the depression", all people were required to turn in their gold coin, bullion and certificates with a penalty of 10 years imprisonment if they didn't turn it in by May 1, 1933. Basically, robing the public of what little wealth they had left...
With the FED now in control of printing "legal tender" without the backing of a gold standard, they had control of the countries money supply. The power to regulate the money supply is the power to regulate its value - which is also the power to bring an economy to its knees.
The Federal reserve is a PRIVATE corporation. They make their own policies and have very little regulation from the US Government. It is important for the people of this country to understand that the Federal Reserve is about as federal as Federal Express shipping. They exist to make money. All money they make is loaned to our government with interest attached. This is exactly the type of system that Thomas Jefferson and James Madison tried to avoid because they know what it would lead to.
Now let me get off track for a minute. In 1913, the Federal Reserve act was not the only act unconstitutionally pushed through. They also pushed through the Federal Income Tax bill. The reason our Federal Income tax is unconstitutional is because it is a direct unapportioned tax on our income.
Here is what the original constitution said in Section 2:
"Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union..."
However, in 1913, the 16th Amendment was pushed through!
Amendment 16 - Status of Income Tax Clarified. Ratified 2/3/1913.
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
While you would think the 16th Amendment changes the constitution and makes our Federal Income Tax legal, the 16th Amendment was actually never ratified by the required number of states to put it into law. This fact has been cited in modern court cases - "If you...examined (the 16th amendment) carefully, you would find that a sufficient number of states never ratified that amendment." - U.S. District Court Judge, James C. Fox, 2003
Why do I bring this up and tie the two together? Well, notice they Federal Reserve and and Federal Income Tax law were passed at the same time. On average 35% of peoples incomes are taken from this tax. That mean you work 4 months of the year to pay the government. You know where you money was designed to go? To pay the interest the Federal Reserve charges our government for loaning the money. It is the biggest fraudulent system EVER created and it is crippling our economy.
Now, this has been a slow slide down-hill for the FED. While they did recall all the gold in 1933 - eliminating the gold standard, they actually did remain fiscally responsible for a fairly long period of time keeping the cash supply in circulation proportionate to our gold reserves. Because of this the Bretton Woods act of 1944 made the US Currency the legal tender in all international matters - reinstating the gold standard in modified terms. However, in 1971, due to the expenses incurred in Vietnam, the United States was broke! And President Richard Nixon diverted from the economic policy that had been in place since the 1944 Bretton Woods act, using a great argument that it was in the best interest for our economy because of issues in the world at that time.
Where are we now?
Well, in summary, from 1914-1919 the FED increased the cash supply by nearly 100% only to recall much of the excess money causing a short depression and major business and economic chaos forcing 5400 private banks to collapse, gobbling up more monetary power in the process. However, that wasn't the end. From 1921-1929 the FED again increased the cash supply in the country by 62%. This time, Wall Street got involved and started making margin loans, making matters worse. The great depression, which I am convinced was set up by the major businessmen in the country at that time, set up a collapse of the final leg of the banking system (causing 16,000 banks to fail) as it used to be - giving the Federal Reserve absolute monetary power when they abolished the gold standard in 1933 to help "ease" the great depression they created.
In the past 2 years, the Federal Reserve has increased the money supply by 120%... What happens next? As you have probably read in past blog posts by me, the last time this happened was in the 1970's when the FED increased the cash supply by 13% during Jimmy Carter's administration. That led to record high interest rates to correct the problem. We now have increased the cash supply almost 10x more then they did in the 70's.
Many people say we have been here before and we will be fine... The problem to that argument is that times are different. When all of this happened in the teens and twenties of the 20th century, we were a lot more solid financially. We were a country of production and savings. Even in the late 70's we were much better off. Then it was only the beginning of the process. The U.S.' debt as a percentage to the GDP was only 33% at that time. Now our national debt as a percentage to GDP is over 90%. Not to mention the cash supply issue is FAR greater now than it was then. For too long now (40 years) we have been functioning as a bankrupt society - surviving only on the price fixing by the Federal Reserve (interest rate control) and the debt we have incurred in the process. The stakes are much higher now than they were back then. The people of the United States are in such cumulative debt that a needed correction to the dollar would cripple the economy, force millions (not just 5,400 or 16,000) of businesses and banks to fail and cause a far greater depression then the world has ever known. In my estimation from all of the research I have been doing, it is not a matter of if, it is a matter of when.
What can you do?
Well, I am still working on that one :-). From what I have gathered so far, precious metals like silver and gold. DON'T simply buy silver or gold certificates through brokerage houses. Companies like J.P. Morgan have had to make settlements in class action suits against them claiming J.P. Morgan was not actually warehousing the physical silver people owned with the silver certificates purchased through their firm. This actually means that the supply/demand ratio of silver is off balance and when all this comes to light I think silver is greatly undervalued. Not to mention, historically, gold and silver have had a 16:1 ratio. Right now they are operating at a 62:1 ratio. Something is off there. I have read a lot of information about invest in C.R.I.B. funds (China.Russia.India.Brazil), but I don't have much info on that at this time. However, I can tell you that I think gold and especially silver are where you want to invest and have on hand. If the U.S. economy does collapse, silver and gold will most likely be the basis on which a new currency is valued. After all, there has never been a currency in the HISTORY of the world that has survived without having gold or silver as it's backer.
The First Bank was a bank chartered by the United States Congress on February 25, 1791. The charter was for 20 years. The Bank was created to handle the financial needs and requirements of the central government of the newly formed United States, which had previously been thirteen individual colonies with their own banks, currencies, financial institutions, and policies. The First Bank held its charter from 1791-1811 (wikipedia)
After much push to eliminate The First Bank from Thomas Jefferson during his presidency from 1801-1809, the bank lost its charter by 1 vote in the House of Representatives under President James Madison in 1811. Thomas Jefferson was quoted, saying, "The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered."
The Second Bank (of the United States) was chartered by many of the same congressmen who in 1811 had refused to renew the charter of the original Bank of the United States. The predominant reason that the Second Bank of the United States was chartered was that in the War of 1812, the U.S. experienced severe inflation and had difficulty in financing military operations. Subsequently, the credit and borrowing status of the United States were at their lowest levels since its founding. (wikipedia) The Second Bank of the United States held its charter
In 1819 the Supreme Court ruled The Second Bank of the United States unconstitutional, limiting its powers on money production and taxation. While it was able to finish its charter term of 20 years, The Second Bank of the United States did not earn a second charter. In 1941, soon after John Tyler took over the Presidency, Congress passed a bill to reestablish The Second BUS (Bank of the Unites States). President Tyler vetoed the bill along with a second such bill, calling them unconstitutional and against states' rights. That led to the creation of a new banking system called the Independent Treasury System. On February 25, 1862, under President Abraham Lincoln, The Legal Tender act was passed allowing the secretary of the treasury to issue paper money (to be backed with gold and silver). This eliminated a long standing problem of having too many currencies circulating the US. This system lasted until 1913...until...
The Federal Reserve:
In the early 1900's, the people of the US were vary weary of the concept of a central banking system. J.D. Rockefeller, J.P. Morgan, Baron Rothschild, & Paul Warburg were the 4 businessmen that developed and wrote the plan for the Federal Reserve to be created. They were the leaders of the banking world during that era. They used their business influence at the time to manipulate the economy and spread rumors about insolvent banks to create the need of a new national bank.
J.P. Morgan was investigated for the Fraud of the rumors spread in 1907. The person in charge of the investigation was Senator Nelson Aldrich who had intimate ties to the banking community and later became part of the Rockefeller family through marriage. After his investigation of J.P. Morgans (false) rumors, his suggestion was that a central bank needed to be created to avoid a repeat of the panics of 1907.
President Woodrow Wilson ran for office with heavy backing from the bankers - promising ahead of time to sign the Federal Reserve Act in exchange for campaign support. Two days before Christmas in 1913, when most of congress was at home with their families, the Federal Reserve Act was voted in and President Wilson made it law.
However, in 1919 Woodrow Wilson was quoted in regret, “I am a most unhappy man, I have unwittingly ruined my country. A great industrial nation is now controlled by its system of credit. We are no longer a government by free opinion, no longer a government by conviction and the vote of majority, but a government by the opinion and duress of a small group of dominant men.”
Congressman Louis McFadden also stated in 1913 after the passing of the bill, “A world banking system was being set up here…a superstate controlled by the international bankers…acting together to enslave the world for their own pleasure. The Fed has usurped the government.”
The people of the US were told the Federal Reserve was an economic stabilizer and inflation and economic crisis' were a thing of the past. As we now know, nothing could be further from the truth.
From 1914-1919 the FED increased the money supply by nearly 100% using extensive loans to small banks and the public. In 1920, they called in a major of the outstanding money supply. This forced the small banks to call in their loans. Bank runs, bankruptcies and business collapses occurred at historical levels. Over 5400 independent small banks (outside the Federal Reserve system) went out of business, giving more power to the FED.
Noticing the atrocious crime by the FED, Charles Lindbergh stated in 1920, “Under the Federal Reserve act, panics are scientifically created. The present panic is the first scientifically created one, worked out as we figure a mathematical equation.”
Again, from 1921 to 1929 the FED increased the money supply in the country by 62% - sparking the economy with extensive loans to the banks and businessmen. They also helped create a new type of loan on Wall Street, called a margin loan. This allowed a person to put just 10% down on a stock with the other 90% loaned through the stock broker - giving 100% control of that stock. In other words, A person could own $1000 worth of stock by putting only $100 down! This was a major influence to the stock market boom of the 1920's. However, there was a catch to this "too good to be true" loan. A 24 hour margin call could occur at any time. If that happened, it had to be paid within 24 hours by whomever owned the stock.
Ironically, a couple of months before October in 1929 J.D. Rockefeller and his constituents exited the market. On October 24, 1929, the New York financiers who furnished the margin loans started calling them in in mass. This required selling off of margin loans in mass and in turn cause massive bank runs and bankruptcies, collapsing 16,000 more private banks. This allowed the conspiring international bankers to buy up rival banks and corporations at pennies on the dollar. Then, instead of expanding the money supply to deal with the economic collapse, the FED actually contracted the money fueling one of the largest depressions in history.
Congressman Louis McFadden had this to say about the collapse in 1929, “It was a carefully contrived occurrence. International bankers sought to bring about a condition of despair, so that they might emerge the rulers of us all.” Ironically, after 2 previous assassination attempts on the congressman's life, they finally succeeded and Louis McFadden was poisoned at a banquet before he could push for the impeachment of the FED.
To complete the execution of the financial independence of the United States citizens, the Federal Reserve bankers decided the gold standard should be removed. So, with executive order from President Franklin D. Roosevelt, under the pretense of "helping to end the depression", all people were required to turn in their gold coin, bullion and certificates with a penalty of 10 years imprisonment if they didn't turn it in by May 1, 1933. Basically, robing the public of what little wealth they had left...
With the FED now in control of printing "legal tender" without the backing of a gold standard, they had control of the countries money supply. The power to regulate the money supply is the power to regulate its value - which is also the power to bring an economy to its knees.
The Federal reserve is a PRIVATE corporation. They make their own policies and have very little regulation from the US Government. It is important for the people of this country to understand that the Federal Reserve is about as federal as Federal Express shipping. They exist to make money. All money they make is loaned to our government with interest attached. This is exactly the type of system that Thomas Jefferson and James Madison tried to avoid because they know what it would lead to.
Now let me get off track for a minute. In 1913, the Federal Reserve act was not the only act unconstitutionally pushed through. They also pushed through the Federal Income Tax bill. The reason our Federal Income tax is unconstitutional is because it is a direct unapportioned tax on our income.
Here is what the original constitution said in Section 2:
"Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union..."
However, in 1913, the 16th Amendment was pushed through!
Amendment 16 - Status of Income Tax Clarified. Ratified 2/3/1913.
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
While you would think the 16th Amendment changes the constitution and makes our Federal Income Tax legal, the 16th Amendment was actually never ratified by the required number of states to put it into law. This fact has been cited in modern court cases - "If you...examined (the 16th amendment) carefully, you would find that a sufficient number of states never ratified that amendment." - U.S. District Court Judge, James C. Fox, 2003
Why do I bring this up and tie the two together? Well, notice they Federal Reserve and and Federal Income Tax law were passed at the same time. On average 35% of peoples incomes are taken from this tax. That mean you work 4 months of the year to pay the government. You know where you money was designed to go? To pay the interest the Federal Reserve charges our government for loaning the money. It is the biggest fraudulent system EVER created and it is crippling our economy.
Now, this has been a slow slide down-hill for the FED. While they did recall all the gold in 1933 - eliminating the gold standard, they actually did remain fiscally responsible for a fairly long period of time keeping the cash supply in circulation proportionate to our gold reserves. Because of this the Bretton Woods act of 1944 made the US Currency the legal tender in all international matters - reinstating the gold standard in modified terms. However, in 1971, due to the expenses incurred in Vietnam, the United States was broke! And President Richard Nixon diverted from the economic policy that had been in place since the 1944 Bretton Woods act, using a great argument that it was in the best interest for our economy because of issues in the world at that time.
Where are we now?
Well, in summary, from 1914-1919 the FED increased the cash supply by nearly 100% only to recall much of the excess money causing a short depression and major business and economic chaos forcing 5400 private banks to collapse, gobbling up more monetary power in the process. However, that wasn't the end. From 1921-1929 the FED again increased the cash supply in the country by 62%. This time, Wall Street got involved and started making margin loans, making matters worse. The great depression, which I am convinced was set up by the major businessmen in the country at that time, set up a collapse of the final leg of the banking system (causing 16,000 banks to fail) as it used to be - giving the Federal Reserve absolute monetary power when they abolished the gold standard in 1933 to help "ease" the great depression they created.
In the past 2 years, the Federal Reserve has increased the money supply by 120%... What happens next? As you have probably read in past blog posts by me, the last time this happened was in the 1970's when the FED increased the cash supply by 13% during Jimmy Carter's administration. That led to record high interest rates to correct the problem. We now have increased the cash supply almost 10x more then they did in the 70's.
Many people say we have been here before and we will be fine... The problem to that argument is that times are different. When all of this happened in the teens and twenties of the 20th century, we were a lot more solid financially. We were a country of production and savings. Even in the late 70's we were much better off. Then it was only the beginning of the process. The U.S.' debt as a percentage to the GDP was only 33% at that time. Now our national debt as a percentage to GDP is over 90%. Not to mention the cash supply issue is FAR greater now than it was then. For too long now (40 years) we have been functioning as a bankrupt society - surviving only on the price fixing by the Federal Reserve (interest rate control) and the debt we have incurred in the process. The stakes are much higher now than they were back then. The people of the United States are in such cumulative debt that a needed correction to the dollar would cripple the economy, force millions (not just 5,400 or 16,000) of businesses and banks to fail and cause a far greater depression then the world has ever known. In my estimation from all of the research I have been doing, it is not a matter of if, it is a matter of when.
What can you do?
Well, I am still working on that one :-). From what I have gathered so far, precious metals like silver and gold. DON'T simply buy silver or gold certificates through brokerage houses. Companies like J.P. Morgan have had to make settlements in class action suits against them claiming J.P. Morgan was not actually warehousing the physical silver people owned with the silver certificates purchased through their firm. This actually means that the supply/demand ratio of silver is off balance and when all this comes to light I think silver is greatly undervalued. Not to mention, historically, gold and silver have had a 16:1 ratio. Right now they are operating at a 62:1 ratio. Something is off there. I have read a lot of information about invest in C.R.I.B. funds (China.Russia.India.Brazil), but I don't have much info on that at this time. However, I can tell you that I think gold and especially silver are where you want to invest and have on hand. If the U.S. economy does collapse, silver and gold will most likely be the basis on which a new currency is valued. After all, there has never been a currency in the HISTORY of the world that has survived without having gold or silver as it's backer.
Wednesday, September 29, 2010
The US Housing bubble: how did it happen? Where is it going?
Most of us have been taught that owning your own home is the only way to go. Someone who I respect very much recently gave me 4 reason for owning a home:
1. Appreciation
2. Depreciation (owning saves you on taxes)
3. Cash Flow (mortgage payments - assuming you don't have an ARM or something of that nature - are consistent while rent payments will fluctuate.
4. Principal reduction (as you pay off your mortgage).
In theory, those four reasons sound like a pretty solid argument for owning a home. However, markets change - they always have. I believe this market is changing. I have been doing A LOT of research on this topic as I believe it is a HUGE element in the downfall of the US Economy.
WHERE THE CHANGE BEGAN:
I think the change started not in the housing sector specifically, but in our society as a whole. Once upon a time, we were a nation of savers. At one point in time in the mid 1950's, the average US home saved 17% of their annual income. Now we are at less then 3% with 48% of Americans having less then $10,000 saved for retirement. At some point, we converted from a Nation of savers to a nation of Takers. Did you know that 42% of Americans are receiving some sort of Federal Assistance? 42%!!! Did you know the US spends more on its national education then ANY of the other 20 world powers - yet ranks 18th and 19th in math and writing. Did you also know that we spend more on Federal assistance for our citizens? We have become LAZY, but honestly, who in our position wouldn't? Our government has enabled our society as a whole to become complacent in the past 4 decades and because of that, the rest of the world is passing us by. Anyways, I don't want to get too far off track. I give you those stats so you can think about the psychology of things. The US housing bubble is a several part problem.
The psychological and sociological perspective of our country is the first place to look. Our government has taken all self accountability away from us. Unemployment used to be 180 days. However, people we struggling to find jobs so they upped it to a year. When the unemployment rate kept growing they upped unemployment benefits to 2 YEARS! People are able to live off the government for up to 2 years because they "can't find work". The bottom line is that we are a country of entitlement. People are turning jobs down because they don't feel they are up to their standard. History says that our system does not work. The Netherlands went through the same thing about a decade ago. When unemployment rates hit record highs, they kept extending the period in which people could obtain federal assistance for unemployment. You know what happened? The longer they extended the period, the higher the percentage of unemployment grew. Ironic the majority of people found jobs on average of 2-4 weeks before their unemployment benefits were about to end (whether it was a 1 or 4 years of compensation). I tell you this because I want to stress the fact that the easier you make it on people, the worse it makes the situation. These sorts of benefits are burying our country economically.
Most people feel like houses are supposed to appreciate. That is what we have been taught as a nation. When told that Appreciation was the #1 reason to buy a house, I thought about it. I guess in theory he is right. The problem is most people in the country don't take advantage of the appreciation of their house the way they should.
once upon a time (about a decade ago), the banking institution of our great nation required you to have 20% down-payment to buy a home. They also would only lend you about twice your annual income pre-tax (if you made $100,000 the most they would lend you is $200,000 on a home). Another rule of thumb was that the total mortgage payments, interest and taxes should not amount to no more than a third of pretax income. When the dot-com bubble burst at the beginning of the century we were heading for a major recession and major correction in the dollar. However, the government would not have that. What did they do? They lowered interest rates and created newer creative financing options for homebuyers. The result? Lending standards were dropped to a point so pretty much anyone could buy a home - creating a new bubble. Millions of people obtained ARM's, interest only mortgages and other creative financing that put people into homes they really could not afford. It used to be buying a house was a good idea because you would buy it, live in it, and pay it off so you could retire rent/mortgage-free (that is #4 on the list - principal reduction). However, owning a home became more of a speculative investment and people got burned for it.
Prior to the end of the Gold Standard by Richard Nixon in 1971 (more on that later), housing rates did not appreciate like they have in the past 40 years. Prior to the elimination of the Gold Standard, housing only appreciated by an average of 2.53% annually. Compare that with an average appreciation of 6.52% annually since the elimination of the Gold Standard and new economic policy. coincidence? I think not.
With the end of the dot-com bubble the US needed a new bubble to take its place to keep the economy "thriving". With the new creative financing programs in place for the people of the US to buy homes, the bubble was about to inflate. What if I told you you could buy a house for $500,000 without putting any money down. You can live in it paying only interest, and when it goes up in value 6-8 months later you can borrow (tax free) in a cash-out refinancing. So you have all the upside and no downside. If it doesn't work, you can just walk away...after all, you didn't put any of your own money into it! What do you have to lose? NOTHING! This is what an enormous amount of people were doing.
People have been refinancing their houses for ages. However, they used to refinance to make home improvements because common sense back in the day said that your house was not going to just appreciate because of time. Now people were living off the equity that grew in their home over a very short period of time. Millions of people refinanced their homes and lived off that money as income. The concept of owning a home was now flawed (and is to this day). Speculation played a huge roll in the inflation of the housing bubble. However, it was just speculation and people got way in over their heads as homes were overvalued and now 27% of all houses in the US have negative equity with another 24% having 5% equity or less. That means 51% of the homeowners in this country would lose money on their homes after real estate commissions and other fees if they were to sell their houses today.
It used to be you could only get a loan based on credit worthiness. However, after the dot-com bubble and 9/11 Uncle Sam wanted economic growth. By allowing Fannie Mae and Freddie Mac to relieve banks of credit risk they created an environment of moral hazard and conflict of interest.
Here is an excerpt from Peter Schiff's book, Crash Proof 2.0;
Securitization, when housing demand is abnormally high, creates a conflict of interest. On one side are the mortgage originators, the banks and mortgage brokers that represent 80 percent of them. They do the marketing and the paperwork and collect hefty commissions and fees. With no risk of default, they want mortgages. On the other side are mortgage-buying entities that take on the risk, package loans, and issue mortgage-backed securities. They want prime loans that won't default.
The result: collusion between originators and appraisers resulting in faulty documentation, phony appraisals, and lax credit screening practices that have gotten many people in over their heads, caused speculative home buying to be rampant, and discouraged the kind of saving that an economy needs to be productive and healthy.
So much of the appreciation obtained in the housing market was speculative to a fault and has yet to be corrected. People have been basically living off debt for the past decade, refinancing their home. However, the market is tapped out. Housing prices need to come down by some economists estimations as much as 70-80% to show true value. Remember, housing prices have been appreciating by about 4% annually higher then they should be in a free market. However, lowering the values of the housing market by even as much as 20% at this point would crush this country economically. Another reason housing values have been increasing is the federal interest rate. It has been at all time lows, getting lower and lower for pretty much the entire first decade of the 21st century. The interest rate has been artificially low for too long to prop up our unhealthy economy. Anytime there is a potential recession in site, what's the FED's answer? Lower the interest rates! Well, guess what, we have been at 0% since the end of 2008. We have nowhere to go. When interest payments rise, people with the ARM's and other creative financing are going to be way in over their heads increasing the amount of foreclosures on the market to as many as 19 million homes. In addition, when interest rates go up, we all know mortgage payments go up, so the total value of a home new "qualified" buyers will actually qualify for will be much much less - which will also force a correction in home values.
#3 on the list at the beginning was "cash flow". I don't know about you, but I would rather not have a 30 year fixed mortgage on a $250,000 house at 5% for $1,600 per month when the house drops to $100,000-125,00. Now you are stuck in that location with no options.
Where does that leave us now?
What have our leaders done? Well, we can't lower the interest rate anymore, so what should we do? Stimulate the economy! Ah yes, the $847 Billion dollar economic stimulus in 2009 was their answer. Let's "print" money and give it to people to spend so we can keep our economy going. The Obama administration has a national debt higher then all other administrations in the history of the US COMBINED!!! They have increased the national money supply by 120% in the past two years by simply printing monopoly money. You can't increase the cash supply by that amount and expect every dollar to be worth what it was before. Our economy is over inflated and needs a major correction. The US Government is not going to allow this to happen. They will keep printing money to prop us up until inevitably hyperinflation hits us and the US Currency is worth nothing in this world. Back in the 1970's there was a major inflation issue. A couple years after we first got off the Gold Standard, President Carter increased the Cash Supply by 13%. That 13% increase created such an inflation issue that the interest rate needed to be raised to an all-time high of 20% just to get the inflated money off the streets to avoid hyperinflation. What will the interest rates need to be to correct a 120% increase in the cash supply for our country? That doesn't include more potential money they will be printing in the near future...
The fact is, this country has been bankrupt since Richard Nixon got rid of the Gold Standard in 1971 - that's the reason he got rid of it in the first place! In 1944 the United States currency was made the world currency in accordance to the Bretton Woods act. We were the only country in the world with enough gold and silver reserves to back our currency. Therefore, all international disputes would be settled in US dollars. It is because of Bretton Woods that we have held our status as the dominant world power for 70 years. However, when Nixon axed the Gold Standard (an act which was unconstitutional on its own - Article I, section 10 of the US Constitution says, "No state shall make anything but gold and silver coin a tender in payment of debts.) it was the beginning of a drawn out end that has been taking its course over 40 years. The US has been a house of cards since that time, surviving off the manipulative monetary and political policies of the Federal Reserve and allowing inflation to eat us up in the process.
The world is going through a shift right now and at the end, the United States is going to get the boot from the throne. They may be able to save our so-called "to-big-to-fail" corporations by bailing them out with printed money, but in the process, it devalues everything it's countries citizens have worked their entire life for and will ultimately fail itself. The national banking system is essentially saving its peers at the expense of YOU. EVERY paper currency in the history of man-kind has eventually been worth nothing. Because of economic and political policy, along with assistance from the Federal Reserve (our central bank), our historic run of 40 years as a fiat currency has outlasted the longest run of 17 years of longevity any country has lasted with a fiat currency before a major correction had to be made.
Let me end with a quote from Thomas Jefferson (1743-1826):
"I believe that banking institutions are more dangerous than standing armies... If the American people ever allow private banks to control the issue of currency...the banks and corporations that will grow up around them will deprive the people of their property until their children wake up homeless on the continent their father conquered".
That quote was made as he eliminated equivalent of the Federal Reserve in 1817. Knowing that it was UNCONSTITUTIONAL to have such an organization.
I know this wasn't the most organized piece of literature, but my head is bouncing all over the place. I tried to stay on point as much as I could... It is virtually impossible to put all my thoughts in here as I wanted without writing a novel, so if you have any questions or feel I was unclear about something, please let me know!
What can you do now? Recommendations to come!!!
1. Appreciation
2. Depreciation (owning saves you on taxes)
3. Cash Flow (mortgage payments - assuming you don't have an ARM or something of that nature - are consistent while rent payments will fluctuate.
4. Principal reduction (as you pay off your mortgage).
In theory, those four reasons sound like a pretty solid argument for owning a home. However, markets change - they always have. I believe this market is changing. I have been doing A LOT of research on this topic as I believe it is a HUGE element in the downfall of the US Economy.
WHERE THE CHANGE BEGAN:
I think the change started not in the housing sector specifically, but in our society as a whole. Once upon a time, we were a nation of savers. At one point in time in the mid 1950's, the average US home saved 17% of their annual income. Now we are at less then 3% with 48% of Americans having less then $10,000 saved for retirement. At some point, we converted from a Nation of savers to a nation of Takers. Did you know that 42% of Americans are receiving some sort of Federal Assistance? 42%!!! Did you know the US spends more on its national education then ANY of the other 20 world powers - yet ranks 18th and 19th in math and writing. Did you also know that we spend more on Federal assistance for our citizens? We have become LAZY, but honestly, who in our position wouldn't? Our government has enabled our society as a whole to become complacent in the past 4 decades and because of that, the rest of the world is passing us by. Anyways, I don't want to get too far off track. I give you those stats so you can think about the psychology of things. The US housing bubble is a several part problem.
The psychological and sociological perspective of our country is the first place to look. Our government has taken all self accountability away from us. Unemployment used to be 180 days. However, people we struggling to find jobs so they upped it to a year. When the unemployment rate kept growing they upped unemployment benefits to 2 YEARS! People are able to live off the government for up to 2 years because they "can't find work". The bottom line is that we are a country of entitlement. People are turning jobs down because they don't feel they are up to their standard. History says that our system does not work. The Netherlands went through the same thing about a decade ago. When unemployment rates hit record highs, they kept extending the period in which people could obtain federal assistance for unemployment. You know what happened? The longer they extended the period, the higher the percentage of unemployment grew. Ironic the majority of people found jobs on average of 2-4 weeks before their unemployment benefits were about to end (whether it was a 1 or 4 years of compensation). I tell you this because I want to stress the fact that the easier you make it on people, the worse it makes the situation. These sorts of benefits are burying our country economically.
Most people feel like houses are supposed to appreciate. That is what we have been taught as a nation. When told that Appreciation was the #1 reason to buy a house, I thought about it. I guess in theory he is right. The problem is most people in the country don't take advantage of the appreciation of their house the way they should.
once upon a time (about a decade ago), the banking institution of our great nation required you to have 20% down-payment to buy a home. They also would only lend you about twice your annual income pre-tax (if you made $100,000 the most they would lend you is $200,000 on a home). Another rule of thumb was that the total mortgage payments, interest and taxes should not amount to no more than a third of pretax income. When the dot-com bubble burst at the beginning of the century we were heading for a major recession and major correction in the dollar. However, the government would not have that. What did they do? They lowered interest rates and created newer creative financing options for homebuyers. The result? Lending standards were dropped to a point so pretty much anyone could buy a home - creating a new bubble. Millions of people obtained ARM's, interest only mortgages and other creative financing that put people into homes they really could not afford. It used to be buying a house was a good idea because you would buy it, live in it, and pay it off so you could retire rent/mortgage-free (that is #4 on the list - principal reduction). However, owning a home became more of a speculative investment and people got burned for it.
Prior to the end of the Gold Standard by Richard Nixon in 1971 (more on that later), housing rates did not appreciate like they have in the past 40 years. Prior to the elimination of the Gold Standard, housing only appreciated by an average of 2.53% annually. Compare that with an average appreciation of 6.52% annually since the elimination of the Gold Standard and new economic policy. coincidence? I think not.
With the end of the dot-com bubble the US needed a new bubble to take its place to keep the economy "thriving". With the new creative financing programs in place for the people of the US to buy homes, the bubble was about to inflate. What if I told you you could buy a house for $500,000 without putting any money down. You can live in it paying only interest, and when it goes up in value 6-8 months later you can borrow (tax free) in a cash-out refinancing. So you have all the upside and no downside. If it doesn't work, you can just walk away...after all, you didn't put any of your own money into it! What do you have to lose? NOTHING! This is what an enormous amount of people were doing.
People have been refinancing their houses for ages. However, they used to refinance to make home improvements because common sense back in the day said that your house was not going to just appreciate because of time. Now people were living off the equity that grew in their home over a very short period of time. Millions of people refinanced their homes and lived off that money as income. The concept of owning a home was now flawed (and is to this day). Speculation played a huge roll in the inflation of the housing bubble. However, it was just speculation and people got way in over their heads as homes were overvalued and now 27% of all houses in the US have negative equity with another 24% having 5% equity or less. That means 51% of the homeowners in this country would lose money on their homes after real estate commissions and other fees if they were to sell their houses today.
It used to be you could only get a loan based on credit worthiness. However, after the dot-com bubble and 9/11 Uncle Sam wanted economic growth. By allowing Fannie Mae and Freddie Mac to relieve banks of credit risk they created an environment of moral hazard and conflict of interest.
Here is an excerpt from Peter Schiff's book, Crash Proof 2.0;
Securitization, when housing demand is abnormally high, creates a conflict of interest. On one side are the mortgage originators, the banks and mortgage brokers that represent 80 percent of them. They do the marketing and the paperwork and collect hefty commissions and fees. With no risk of default, they want mortgages. On the other side are mortgage-buying entities that take on the risk, package loans, and issue mortgage-backed securities. They want prime loans that won't default.
The result: collusion between originators and appraisers resulting in faulty documentation, phony appraisals, and lax credit screening practices that have gotten many people in over their heads, caused speculative home buying to be rampant, and discouraged the kind of saving that an economy needs to be productive and healthy.
So much of the appreciation obtained in the housing market was speculative to a fault and has yet to be corrected. People have been basically living off debt for the past decade, refinancing their home. However, the market is tapped out. Housing prices need to come down by some economists estimations as much as 70-80% to show true value. Remember, housing prices have been appreciating by about 4% annually higher then they should be in a free market. However, lowering the values of the housing market by even as much as 20% at this point would crush this country economically. Another reason housing values have been increasing is the federal interest rate. It has been at all time lows, getting lower and lower for pretty much the entire first decade of the 21st century. The interest rate has been artificially low for too long to prop up our unhealthy economy. Anytime there is a potential recession in site, what's the FED's answer? Lower the interest rates! Well, guess what, we have been at 0% since the end of 2008. We have nowhere to go. When interest payments rise, people with the ARM's and other creative financing are going to be way in over their heads increasing the amount of foreclosures on the market to as many as 19 million homes. In addition, when interest rates go up, we all know mortgage payments go up, so the total value of a home new "qualified" buyers will actually qualify for will be much much less - which will also force a correction in home values.
#3 on the list at the beginning was "cash flow". I don't know about you, but I would rather not have a 30 year fixed mortgage on a $250,000 house at 5% for $1,600 per month when the house drops to $100,000-125,00. Now you are stuck in that location with no options.
Where does that leave us now?
What have our leaders done? Well, we can't lower the interest rate anymore, so what should we do? Stimulate the economy! Ah yes, the $847 Billion dollar economic stimulus in 2009 was their answer. Let's "print" money and give it to people to spend so we can keep our economy going. The Obama administration has a national debt higher then all other administrations in the history of the US COMBINED!!! They have increased the national money supply by 120% in the past two years by simply printing monopoly money. You can't increase the cash supply by that amount and expect every dollar to be worth what it was before. Our economy is over inflated and needs a major correction. The US Government is not going to allow this to happen. They will keep printing money to prop us up until inevitably hyperinflation hits us and the US Currency is worth nothing in this world. Back in the 1970's there was a major inflation issue. A couple years after we first got off the Gold Standard, President Carter increased the Cash Supply by 13%. That 13% increase created such an inflation issue that the interest rate needed to be raised to an all-time high of 20% just to get the inflated money off the streets to avoid hyperinflation. What will the interest rates need to be to correct a 120% increase in the cash supply for our country? That doesn't include more potential money they will be printing in the near future...
The fact is, this country has been bankrupt since Richard Nixon got rid of the Gold Standard in 1971 - that's the reason he got rid of it in the first place! In 1944 the United States currency was made the world currency in accordance to the Bretton Woods act. We were the only country in the world with enough gold and silver reserves to back our currency. Therefore, all international disputes would be settled in US dollars. It is because of Bretton Woods that we have held our status as the dominant world power for 70 years. However, when Nixon axed the Gold Standard (an act which was unconstitutional on its own - Article I, section 10 of the US Constitution says, "No state shall make anything but gold and silver coin a tender in payment of debts.) it was the beginning of a drawn out end that has been taking its course over 40 years. The US has been a house of cards since that time, surviving off the manipulative monetary and political policies of the Federal Reserve and allowing inflation to eat us up in the process.
The world is going through a shift right now and at the end, the United States is going to get the boot from the throne. They may be able to save our so-called "to-big-to-fail" corporations by bailing them out with printed money, but in the process, it devalues everything it's countries citizens have worked their entire life for and will ultimately fail itself. The national banking system is essentially saving its peers at the expense of YOU. EVERY paper currency in the history of man-kind has eventually been worth nothing. Because of economic and political policy, along with assistance from the Federal Reserve (our central bank), our historic run of 40 years as a fiat currency has outlasted the longest run of 17 years of longevity any country has lasted with a fiat currency before a major correction had to be made.
Let me end with a quote from Thomas Jefferson (1743-1826):
"I believe that banking institutions are more dangerous than standing armies... If the American people ever allow private banks to control the issue of currency...the banks and corporations that will grow up around them will deprive the people of their property until their children wake up homeless on the continent their father conquered".
That quote was made as he eliminated equivalent of the Federal Reserve in 1817. Knowing that it was UNCONSTITUTIONAL to have such an organization.
I know this wasn't the most organized piece of literature, but my head is bouncing all over the place. I tried to stay on point as much as I could... It is virtually impossible to put all my thoughts in here as I wanted without writing a novel, so if you have any questions or feel I was unclear about something, please let me know!
What can you do now? Recommendations to come!!!
Thursday, September 23, 2010
A Simple Explanation to Hyperinflation:
Let me sum this up - you can't increase the national money supply by 120% in 18 months and expect it to be worth the same as it was before. Zimbabwe, Germany (in the 1920's), and the USSR all failed because of doing EXACTLY what our government is doing right now! The sad part is Ben Bernanke is telling everyone we are in recovery and there really isn't an issue with the economy. Of course, his words don't really mean anything anymore. After all, he is the one who said the auto industry was recovering - only 6 months before the Federal Government decided it was their spot to step in and bail them out for billions of dollars - only to have the file bankruptcy anyways (even after getting the $$$) a few months later. Bernanke is also the one who said there was not going to be a housing bubble only a year before it burst. If you really want to be informed, we need to stop listening to the LIES of Obama, Bernanke and others trying to push a socialistic big government policy on the US.
Things NEED to change. There needs to be a correction with the US dollar. That is going to mean hard times on the US for a couple of years, but if we keep on with the current policy (just printing money to pay off international debt), we are inevitably going to have Hyperinflation which would most likely equal the end of the US Dollar as we know it. History doesn't lie. I am not talking 2012 end of the world stuff here, it is simple economics, and math doesn't lie...
What this will be all about:
So, any of you who know me know that I am a pretty laid back person - someone who generally keeps to himself and doesn't want to get involved in politics. Recently, I have been looking into the economy and the downward turn the USA has taken in the past 20 years. It is my belief that the majority of the US population is unaware the dire straights to come.
I am going to use this blog simply as a sounding board - a way to air out all my thoughts. It my not get many followers, but that's fine with me. I simply want a way to be able to put the info that I have found out there and share it with people who are looking to "learn" that this country isn't what we think it is and we are not going to be the world super power for much longer. Remember, Rome fell, it's not such an egregious statement that we could fall too...
Included in my blog will be info sources to help understand the current US Economic situation. This will include documents and research papers (by organizations like the CRS "Congressional Research Service"), You Tube videos, documentaries to watch, audio files to listen to and anything else I feel will help open people's eyes.
I am going to use this blog simply as a sounding board - a way to air out all my thoughts. It my not get many followers, but that's fine with me. I simply want a way to be able to put the info that I have found out there and share it with people who are looking to "learn" that this country isn't what we think it is and we are not going to be the world super power for much longer. Remember, Rome fell, it's not such an egregious statement that we could fall too...
Included in my blog will be info sources to help understand the current US Economic situation. This will include documents and research papers (by organizations like the CRS "Congressional Research Service"), You Tube videos, documentaries to watch, audio files to listen to and anything else I feel will help open people's eyes.
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