Michael Hudson: How the Chicago Boys Wrecked the Economy

[Rajiv]

An Interview with Michael Hudson
How the Chicago Boys Wrecked the Economy

Mike Whitney: The United States current account deficit is roughly $700 billion. That is enough "borrowed" capital to pay the yearly $120 billion cost of the war in Iraq, the entire $450 billion Pentagon budget, and Bush's tax cuts for the rich. Why does the rest of the world keep financing America's militarism via the current account deficit or is it just the unavoidable consequence of currency deregulation, "dollar hegemony" and globalization?

Michael Hudson: As I explained in Super Imperialism, central banks in other countries buy dollars not because they think dollar assets are a “good buy,” but because if they did NOT recycle their trade surpluses and U.S. buyout spending and military spending by buying U.S. Treasury, Fannie Mae and other bonds, their currencies would rise against the dollar. This would price their exporters out of dollarized world markets. So the United States can spend money and get a free ride.

The solution is (1) capital controls to block further dollar receipts, (2) floating tariffs against imports from dollarized economies, (3) buyouts of U.S. investments in dollar-recipient countries (so that Europe and Asia would use their central bank dollars to buy out U.S. private investments at book value), (4) subsidized exports to dollarized economies with depreciating currency, and similar responses that the United States would adopt if it were in the position of a payments-surplus country. In other words, Europe and Asia would treat the United States as its Washington Consensus boys treat Third World debtors: buy out their raw materials and other industries, their export plantations, and their governments.

MW:Economist Henry Liu said in his article "Dollar hegemony enables the US to own indirectly but essentially the entire global economy by requiring its wealth to be denominated in fiat dollars that the US can print at will with little in the way of monetary penalties.....World trade is now a game in which the US produces fiat dollars of uncertain exchange value and zero intrinsic value, and the rest of the world produces goods and services that fiat dollars can buy at "market prices" quoted in dollars." Is Liu overstating the case or have the Federal Reserve and western banking elites really figured out how to maintain imperial control over the global economy simply by ensuring that most energy, commodities, and manufactured goods are denominated in dollars? If that's the case, then it would seem that the actual "face-value" of the dollar does not matter as much as long as it continues to be used in the purchase of commodities. Is this right?

Michael Hudson: Henry Liu and I have been discussing this for many years now. We are in full agreement. The paragraph you quote is quite right. His Asia Times articles provide a running analysis of dollar hegemony.

MW:What is the relationship between stagnant wages for workers and the current credit crisis? If workers wages had kept up with the rate of production, isn't it less likely that we would be in the jam we are today? And, if that is true, than shouldn't we be more focused on re-unionizing the labor force instead looking for solutions from the pathetic Democratic Party?

Michael Hudson: The credit crisis derives from “the magic of compound interest,” that is, the tendency of debts to keep on doubling and redoubling. Every rate of interest is a doubling time. No “real” economy’s production and economic surplus can keep up with this tendency of debt to grow faster. So the financial crisis would have occurred regardless of wage levels.

Quite simply, the price of home ownership tends to absorb all the disposable personal income of the homebuyer. So if wages would have risen more rapidly, the price of housing would simply have risen faster as employees pledged more take-home pay to carry larger mortgages. Stagnant wages merely helped keep down the price of houses to merely stratospheric levels, not ionospheric ones.

As for labor unions, they haven’t been any help at all in solving the housing crisis. In Germany where I am right now, unions have sponsored co-ops, as they used to do in New York City, at low membership costs. So housing costs only absorb about 20% of German family budgets, compared to twice that for the United States. Imagine what could be done if pension funds had put their money into housing for their contributors, instead of into the stock market to buy and bid up prices for the stocks that CEOs and other insiders were selling.
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[j4f2h0]

Re: Michael Hudson: How the Chicago Boys Wrecked the Economy

very disturbing, Makes me wonder how the bottom 90 percent can keep getting it in the ass when they are all gonna be unemployed and homeless in the coming years? Is our nation so fat and lazy that the bottom 90 percent would just roll over and be homeless and unemployed? Is this Obama's role, to introduce true Socialism to America, further impoverishing the bottom 90 percent?

[ASH]

Re: Michael Hudson: How the Chicago Boys Wrecked the Economy

very disturbing, Makes me wonder how the bottom 90 percent can keep getting it in the ass when they are all gonna be unemployed and homeless in the coming years? Is our nation so fat and lazy that the bottom 90 percent would just roll over and be homeless and unemployed? Is this Obama's role, to introduce true Socialism to America, further impoverishing the bottom 90 percent?

I figure digging through the Census Bureau's Current Population Survey would be a good starting point for this discussion about the bottom 90 percent.

I haven't run the numbers I just linked, because I'm eager to get a start on my weekend, but elsewhere I read that the household income of the 95th percentile was around $170k or so in 2006.

References to the bottom 90% encourage drawing a line at the 90th income percentile and dividing the world into the struggling proletarian masses and their thieving capitalist overlords. Before we all rush out to man the barricades, we should probably differentiate between the top 10%, the top 1%, and the top 0.001%.

You can easily make it into the 95th income percentile on wages alone if you are a skilled worker. You know... with two professional salaries in a household, or one professional salary in a high-cost-of-living city, or something. Those guys aren't getting it in the ass, but neither are they dishing it out in a particularly flagrant way.

This gets at the fact that there are actually two problems going on. One is the concentration of wealth in the hands of a very few whose primary income comes from investment and the ownership of capital. The other, separate, problem is that through differences of opportunity, talent -- and the supply and demand thereof -- there is an enormous spread in the economic value of an individual's labor. (See prior discussion of dumb Americans.) As time goes by, the disparity between the value of skilled and unskilled labor keeps widening, the earning power of the majority of the population drops, and the tax burden (of necessity) shifts more and more to the shoulders of a smaller and smaller pool of people (with high incomes). This is not a recipe for social stability.

Anyway, I suppose these observations are somewhat tangential to j4f2h0's post. I think that the bottom 90% (a) knows things are bad now, but lacks the knowledge required to predict how bad things will get, (b) will in any case try re-arranging the deck chairs on the Titanic (i.e. political party in charge of the Whitehouse) before taking any more vigorous actions, and (c) have the numbers required to wring socialist goodies out of Washington in any case, and thus far have not met the immovable object of true fiscal crisis.

So I guess you're early.

[j4f2h0]

Re: Michael Hudson: How the Chicago Boys Wrecked the Economy

I figure digging through the Census Bureau's Current Population Survey would be a good starting point for this discussion about the bottom 90 percent.

I haven't run the numbers I just linked, because I'm eager to get a start on my weekend, but elsewhere I read that the household income of the 95th percentile was around $170k or so in 2006.

References to the bottom 90% encourage drawing a line at the 90th income percentile and dividing the world into the struggling proletarian masses and their thieving capitalist overlords. Before we all rush out to man the barricades, we should probably differentiate between the top 10%, the top 1%, and the top 0.001%.

You can easily make it into the 95th income percentile on wages alone if you are a skilled worker. You know... with two professional salaries in a household, or one professional salary in a high-cost-of-living city, or something. Those guys aren't getting it in the ass, but neither are they dishing it out in a particularly flagrant way.

This gets at the fact that there are actually two problems going on. One is the concentration of wealth in the hands of a very few whose primary income comes from investment and the ownership of capital. The other, separate, problem is that through differences of opportunity, talent -- and the supply and demand thereof -- there is an enormous spread in the economic value of an individual's labor. (See prior discussion of dumb Americans.) As time goes by, the disparity between the value of skilled and unskilled labor keeps widening, the earning power of the majority of the population drops, and the tax burden (of necessity) shifts more and more to the shoulders of a smaller and smaller pool of people (with high incomes). This is not a recipe for social stability.

Anyway, I suppose these observations are somewhat tangential to j4f2h0's post. I think that the bottom 90% (a) knows things are bad now, but lacks the knowledge required to predict how bad things will get, (b) will in any case try re-arranging the deck chairs on the Titanic (i.e. political party in charge of the Whitehouse) before taking any more vigorous actions, and (c) have the numbers required to wring socialist goodies out of Washington in any case, and thus far have not met the immovable object of true fiscal crisis.

So I guess you're early.

Well said Ash!

[Rajiv]

Re: Michael Hudson: How the Chicago Boys Wrecked the Economy

Is the U.S. a Good Model for Reducing Social Exclusion in Europe?

Another basic measure of income inequality is the distance between the 10th, the 50th, and the 90th percentiles of the national income distribution. The greater the distance between points in the distribution, the greater the overall inequality. The first column of Table 1 demonstrate that, in the United States, the 10th percentile household earned about 39 percent of what the median household earned, while the 90th percentile household (see column two) earned about 210 percent of the median. The 10th percentile earner in the United States was further below the median than was the case in every other country in the table except Mexico (28 percent). In every European country except Italy (44), Ireland (46), and the United Kingdom (47), the 10th percentile household made at least 50 percent of median earnings. Among the major OECD economies, 10th percentile households fared best in Norway (57), Sweden (57), and the Netherlands (56).

Meanwhile, the 90th percentile household in the United States (210) was further above the median than in almost every other country in the table. Only Mexico (328), Luxembourg (215), and the United Kingdom (215) had larger gaps between the 90th percentile and the median. Incomes at the top were closest to the median in Denmark (155), Slovakia (162), Finland (164) , and the Netherlands (167).

The third column in the table calculates the ratio of the 90th and 10th percentile earnings, as an additional measure of income inequality (see Figure 1). Mexico (11.55) had, by far, the highest inequality using this simple gauge of inequality. The United States (5.45) was next, well ahead of the United Kingdom (4.58), Australia (4.33), and Canada (4.13). The countries with the lowest "90-10" gap were Norway (2.80), Denmark (2.85), Slovakia (2.88), Finland (2.90), and the Netherlands (2.98).

But also from the same paper this is what is mind boggling

Given that the United States has high, but not the highest overall, victimization rates, all else constant, we might expect the United States to fall somewhere near the top, but not at the top of the sample of countries when it comes to the portion of its population that is incarcerated. The last two columns of Table 9, which report prison-population rates from the International Center for Prison Studies, demonstrate however, that the United States has a prison-population rate (724 per 100,000) that is five to ten times higher than rates in Western Europe, where incarceration rates range from 68 in Norway to 143 in Spain and Luxembourg and 144 in the United Kingdom. Most of Western Europe, in fact, has incarceration rates below 100, including Finland (75), Denmark (77), Sweden (78), Switzerland (83), Ireland (85), France (88), Belgium (90), Greece (90), Germany (97), and Italy (97) (see Figure 6).

The magnitude of the incarcerated population in the United States is sometimes difficult to comprehend. In 2004, U.S. prisons and jails held 2.1 million inmates, about 90 percent of whom were men.13 Given that the adult male workforce age 16 and older in the same year was about 78.7 million,14 this implies that a staggering 2.3 percent of the adult male population of the United States was in prison or jail in 2004.

[Sapiens]

Re: Michael Hudson: How the Chicago Boys Wrecked the Economy

Rajiv,

It's nothing but business, nothing personal. :rolleyes:

Take a look at this:

http://cafr1.com/Revolution.html

Now for the reality per the present state of: "Who Owns this Country." The CAFR is the accounting Bible for all local government. It shows the total gross income, investment structure, and also shows the general purpose operating budget as is "selectively" created by your local government. I note that the selectively created operating budget usually amounts to one-third of the gross income and is where 100% of tax income is shown. The other two-thirds of the gross income is shown only in the CAFR report and the other two-thirds is derived from return on investments and enterprise operations of which said enterprise operations will have their own CAFR or Annual Financial Report listing their own investments and gross income separate from the local government they are under. (many games are played here)

If you polled 100% of the American population today with the question: Do you think that government's gross income was primarily tax income? Ninety-nine (99%) percent would answer yes when in fact that answer would be saying in comparison that the world is flat.

So why are 99% of the public conditioned to reply with an answer that is so contrary to truth and signifies an intelligence factor of a mid-evil serve from the first century on this specific question of such great importance?

DUE TO THE MONEY INVOLVED and the financial fortunes that this money is, has, and will create for the inside players. The people are considered by these inside players to be nothing more than resources to be managed, controlled, and marginalized if the are contrary to the inside players own self-serving intent of wealth creation. They will continue doing what they do until they are stopped, and as required, stopped with true applied force.

With this in mind, it is obvious that the inside players crucial element for success was to make sure the people did not review, understand, or comprehend their financial game plan as it grew. It was essential to entertain the people (good entertainment, bad entertainment, it did not matter as long as the people were entertained) so that "business as usual" could continue in left field as all of the people were being entertained, conditioned, and directed to look in right field oblivious to what was taking place in left field.


--------------------------------------------------------------------------------


No espanol ?

Well...


The foxes have been writing the laws on how many chickens they can eat from the hen house. At first, out of our 3000 chickens we owned, we gave them 100 per year. They ate them and said they need 200. So we gave them 200. They ate them and then said they needed 400. So we gave them 400 but we started complaining saying enough is enough. So the foxes said they needed 440, justifying 440 with any logic available to them but realizing we were complaining about giving them 100, then 200, them 400, so they, in their wisdom, started to put 150 aside each year in their own hen house held by them and undisclosed to us. Well after many a year, in the foxes own hen house they have collected 6500 chickens (total available revenue not tied in directly with the publicly known operating budget) as they continue to collect the now 510 (the disclosed operating Budget) as the foxes cry to us saying they are barely getting by on the 510, but since we are complaining about the 510 they will cut back the annual take to 490 at great sacrifice to themselves, the foxes...

[ASH]

Re: Michael Hudson: How the Chicago Boys Wrecked the Economy

Rajiv,

It's nothing but business, nothing personal. :rolleyes:

Take a look at this:

http://cafr1.com/Revolution.html

Am I missing something, or is one man's "return on investments and enterprise operations" another's "user fees, permitting fees, public utility fees, and income from land grant endowments, etc."? It all sounds very sinister the way it is phrased in the quote -- rather like Chinese state-owned enterprises -- but the purple diction does not fill me with confidence about the source. Obviously, there are indeed programs that use prison labor to produce manufactured goods and, I think, even in call centers. How much of the total do they represent?

Local government supporting its operations primarily out of user fees doesn't necessarily seem like a bad thing. However, if most of the money was from profits derived from cheap prison labor, that would be bad. Which is it?

[FRED]

Re: Michael Hudson: How the Chicago Boys Wrecked the Economy

Rajiv,

It's nothing but business, nothing personal. :rolleyes:

Take a look at this:

http://cafr1.com/Revolution.html

The writer claims local governments earn 90% of revenues from investments and 10% from taxes. His complaint is the process of investment is undemocratic.

Where did the principle amount of the investments come from?

[ASH]

Re: Michael Hudson: How the Chicago Boys Wrecked the Economy

The writer claims local governments earn 90% of revenues from investments and 10% from taxes. His complaint is the process of investment is undemocratic.

Where did the principle amount of the investments come from?

Would these investments be in various pension plans for retired government employees? Although the pensions are a function of local government, there might be some basis for separate accounting. Would the principal then have come from tax revenue, being invested in a pension plan as part of the government workers' compensation?

[c1ue]

Re: Michael Hudson: How the Chicago Boys Wrecked the Economy

I haven't looked into this at all, but it seems that potentially these investments might consist of the muni and various other bonds 'let' out by said governments.

If that were true, then the source of the 'investments' is still the taxpayer since the funding source which sustains the bond model are the taxes coming into the government.

[medved]

Re: Michael Hudson: How the Chicago Boys Wrecked the Economy

very disturbing, Makes me wonder how the bottom 90 percent can keep getting it in the ass when they are all gonna be unemployed and homeless in the coming years? Is our nation so fat and lazy that the bottom 90 percent would just roll over and be homeless and unemployed? Is this Obama's role, to introduce true Socialism to America, further impoverishing the bottom 90 percent?

Yes. And so was the role of every American president since FDR.

[medved]

Re: Michael Hudson: How the Chicago Boys Wrecked the Economy

I figure digging through the Census Bureau's Current Population Survey would be a good starting point for this discussion about the bottom 90 percent.


I haven't run the numbers I just linked, because I'm eager to get a start on my weekend, but elsewhere I read that the household income of the 95th percentile was around $170k or so in 2006.


References to the bottom 90% encourage drawing a line at the 90th income percentile and dividing the world into the struggling proletarian masses and their thieving capitalist overlords. Before we all rush out to man the barricades, we should probably differentiate between the top 10%, the top 1%, and the top 0.001%.


You can easily make it into the 95th income percentile on wages alone if you are a skilled worker. You know... with two professional salaries in a household, or one professional salary in a high-cost- of-living city, or something. Those guys aren't getting it in the ass, but neither are they dishing it out in a particularly flagrant way.

They are not getting much in terms of entitlements either. In the high-cost-of-living city where I live there are plenty of 95th percentile professionals working like horses from dawn to dusk to sustain their lifestyle of the rich and infamous. I haven't seen them getting a lot for the outrageous taxes they are paying. On the other hand, I know a lot of 'poor' people, that work for cash and send their children to private schools with the help of government money. The single biggest article in the budget of California is education. Who gets most of this money? Not the ninety-fivers.

We should not forget, that in a socialist society 'income' and 'consumption' are two very different things. E.g. a high paid contractor or a small business owner are paying their taxes through the nose, and then pay outrageous inflated prices for education and medical care. The 'poor' pay very little in terms of taxes, and then pay very little for either education and medical care (both very big items in both federal and state budget).

This gets at the fact that there are actually two problems going on. One is the concentration of wealth in the hands of a very few whose primary income comes from investment and the ownership of capital. The other, separate, problem is that through differences of opportunity, talent -- and the supply and demand thereof -- there is an enormous spread in the economic value of an individual' s labor. (See prior discussion of dumb Americans.) As time goes by, the disparity between the value of skilled and unskilled labor keeps widening, the earning power of the majority of the population drops, and the tax burden (of necessity) shifts more and more to the shoulders of a smaller and smaller pool of people (with high incomes). This is not a recipe for social stability.

There is no reason, why a low-skilled worker in America should be paid more, than a similarly skilled worker in Mexico. As long as we have some semblance of free trade, the US worker is not going to do better. The big question remains, whether we want to have free trade, open borders etc. I am not sure either way.

Anyway, I suppose these observations are somewhat tangential to j4f2h0's post. I think that the bottom 90% (a) knows things are bad now, but lacks the knowledge required to predict how bad things will get, (b) will in any case try re-arranging the deck chairs on the Titanic (i.e. political party in charge of the Whitehouse) before taking any more vigorous actions, and (c) have the numbers required to wring socialist goodies out of Washington in any case, and thus far have not met the immovable object of true fiscal crisis.

The only solution is to reduce the government intervention in our lives, while improving the remaining regulation process. E.g. eliminating FED, FNM, tons of government bureacracy and returning to the gold standard will not work by itself. We will still need regulation and auditing of the cheating banks and money shufflers, but it will be simpler, than dealing with the $%^&-ing derivatives crisis. Otherwise, the only surviving free market will be the one where the money bags buy politicians and regulators (which is the definition of socialist financial system). No marxist schemes a-la Michael Hudson will change it. More regulation begets more failures, and more failures beget more regulation.

Quis custodiet ipsos custodes?

[GRG55]

Re: Michael Hudson: How the Chicago Boys Wrecked the Economy

...There is no reason, why a low-skilled worker in America should be paid more, than a similarly skilled worker in Mexico. As long as we have some semblance of free trade, the US worker is not going to do better. The big question remains, whether we want to have free trade, open borders etc. I am not sure either way...

Dead wrong.

There are lots of reasons why a "low-skilled worker" in the USA can be (and often is) more productive than a low-skilled worker in other countries. Here's a few:

1. Better and more reliable capital equipment to work with;
2. A safer, healthier work environment than many other jurisdictions(OSHA regulations);
3. A better understanding of product quality concepts (some of the furniture manufacturing maquiladoras exporting to the US market have moved back north of the border as they found they simply could not explain product quality concepts to people who lived in dirt floor huts and had no ability to understand the expectations of the people buying their product - I dealt with a lot of similar situations with so-called tradespeople in my time in the Middle East);
4. Potentially shorter links between just-in-time component suppliers, end product producer, and final market;
5. Potential to be employed producing something other than a "commoditized" end product;

What should determine pay is the value of what you produce (defined as: Will somebody buy it, and what are they willing to pay for it), not the labour input effort (as most socialist teachings would have it).

This is not meant to be an indictment of Mexico or its workers, but simply to point out that labour "skill level" [and cost] is only one component of the value prescription.

[Sapiens]

Re: Michael Hudson: How the Chicago Boys Wrecked the Economy

http://cafr1.com/Answers.html

Questions received and Answers Given
Walter Burien - 08/31/08


Expose and Bob:

Ah, a question! Good!

First of all there are three "reality" points to understand.

1. The "fern" plan was brilliant on the part of the boys that implemented it. For 4000 years or so, a single commodity was used such as gold, silver copper (or a combination of all) the "golden rule" was in effect. He who owned the gold made the rules. The US Government owns some gold but in comparison with other countries like Asia, Russia, Africa, ect., the US was towards the bottom of the list. The fiat currency gave the ability for unlimited expansion (take-over and hidden abuses) by the players. As the Federal Reserve maintained the value of the currency by circulation techniques, 100% flowed right back to government as taxation AND investment / enterprise income as more and more was put into circulation to be re-captured for book entry ownership. Example: 100 units circulated, 100 units returned where 50 unites were lodged as investment ownership by government as 100 units were then circulated again. Multiply that procedure a thousand times over and it left government with 10,000 units converted into book-entry investment ownership and thus absolute ownership and control. This gave composite government the ability to "roll-over" for continued profit with that "barter" currency the dollar whereby the take over was absolute and at the same time they expanded their taxation base in their attempt to keep a thumb on inflation. Keep in mind it worked just fine for them 1963 - 2000 and the take-over of the wealth WAS ACCOMPLISHED by investment ownership and increased controls over the people. Well, the PROBLEM was, the People were stripped of their wealth by conversion. The greed of the players was absolute and they justified in their minds what they were doing by telling themselves that they were building a "better house" for the people. (cage is more like it).

2. Where we sit right now is at the door step of an ever-growing potential for violent revolution by the people. The people are starting to get a clue as to the take-over and thus as new-bees to the comprehension of the take-over are pissed. Where as for the majority of the government capitalist boys it is just business as usual. The people are tired of being stripped in all respects at the greed choices of the players as well as getting sick from watching the fatal conquest games as they unfold. They smell a rat in the cupboard but have not quite put their finger on it yet. (My work for the public's comprehension is showing the aspect of the scope of ownership by investment / hidden gross income take-over by government in viewing their local government's true accounting the CAFR). The public 'has" lost control AND ownership as they were masterfully entertained over the last eighty years with brilliant (greed driven) covert intent played out. Where the real bubble exists and danger is: We, the US started the game and through the teaching of the game to the international players to solidify the one world standard of the New World Order, the greed factor is coming to play as to "who" is going to be the "king of the hill" as the "top player". The US had that role for the last 65 years without question. Now, the push / shove or ever-growing potential for it is coming to play between the big three and coalitions of grouped smaller players. Let me be real clear on one point here. The fiat dollar play is what gave the US the ability to be king of the hill for the domestic and international take-over. The new-bees to the game take great resentment to: "Just because you did it first does not mean you will maintain being king of the hill" One of the plays being pushed to strip the US by conversion is going back to the gold standard to back a currency. If done, and by conversion, the people of the US will be stripped of 90% of their wealth in the blink-of-an-eye. WE DO NOT OWN MOST OF THE GOLD, Asia, Africa, India, and Russia does. We would have to buy it from them and in the conversion, Poof! There goes 90% of the wealth of the US and the golden rule is put back into effect. (We really do not want those international players that control the gold to make the rules unless our intent is to be gang banged) A better choice would be to put the gun in our mouths and pull the trigger.. To resolve that fiat currency problem where there was true commodity value backing the dollar whereby the value was established by tangible commodities over productivity and circulation management, the dollar could be backed by a commodity index made up of "all" metals, grains, meats, oil, natural gas, coal, and land. Here is where the true value rests and we already most definitely have the value there to equal the 500 trillion dollars or so of "intrinsic" book-value of the dollar. Here the dollar would "leap" forward with value (rightfully so). The gold bugs would not be killed, they would just not make a killing of US. Gold will be part of the index so the gold bugs can still be content..

3. Now, for the real nitty-gritty. Government is NOT GOVERNMENT at this time. It is, by unrestrained growth an overbearing corporate virus of organized greed, graft, arrogance, ego, and lethal in-justice established to this point out of well planned covert opportunity. (Gives the definition to the "bait and switch routine"). Left unchecked in its growth and arrogance will lead to no other option then a full blown lethal confrontation between the people and the government. millions will die and in the confusion, the international players will own it all, and in most likely hood take it all by force when the time is right during the confrontation. Not a pleasant, though very probable reality if the course at present persists. The government boys greed and lust for power will not yield, and the public's inept ease of being entertained and misdirected by sound-bites will not be changed. So, we are heading towards a brick wall at 200MPH. Two factors will change this. One action accomplishes both. THE PEOPLE NEED TO REGAIN TRUE OWNERSHIP AND DIRECT BENEFIT OF THE TAKE-OVER ALREADY PULLED OFF. I gather "the people" have not grasped the importance of the transition plan I have put forward per the TRF (Tax Retirement Funds). This one thing accomplishes converting by direct outline of prospectus written, ownership back to the people for direct benefit; the phasing out of all taxation; downsizing of government; and builds greater investment wealth whereby the financial inside players survive and in fact will prosper under the restructure and then reinstatement now with greater investment wealth under management then was ever "justifiably" possible before. Win win for all concerned. Combine that with the pegging of the dollar to a firm commodity index, and it is "off to the races" cash in hand...

To make it happen??? Circulating this email planting the seed of comprehension would be "a good start."

It will not happen unless some big players come on board "to make it happen." The rats currently scurrying within the halls of politics and judicial are many and well entrenched feeding vigorously on their scraps grabbed from the kitty. (some very big scraps I may add). Those rats are fat and have very sharp teeth with no hesitation to use them if they think their feeding grounds are going to be disrupted. Rats will muster around the feet of sheep and cattle feeding to their hearts content, but rats will run in terror and not return at the site of a pack of lions moving in. TRF funds when comprehended as to application and effect will attract the lions. The wealth of this country assured by a commodity index valuation over a fiat paper manipulation will also attract lions.. (Lions with the USA's interests at heart)

Time period it will take for it to sink-in for the lions attention and comprehension is the question at hand...

As Confucius says "The journey of a thousand miles starts with one step."

Well, that step has been taken with this and prior disclosures. I am sure there are many kittens that want to jump in on the trip, but only lions will fit the role and "make it happen"

Lions like big kills and establishing territory. Well, there is no bigger correction to a feeding grounds for establishing real and not "fictional" plenty whereby there is true prosperity and ownership for all. (and a much smaller government body also)

Please do not send this communication to the rats as a heads up, lions ONLY please!

Truly yours,



Walter J. Burien, Jr.
P. O. Box 2112
Saint Johns, AZ 85936

Tel: 928-445-3532

Website: http://CAFR1.com

Someone asked... Interesting point about Gold.

[D-Mack]

Stupid question

Guarantees Are Worthless,
When the System Is Bankrupt

by John Hoefle


...

The Federal Government, it is assumed, can always borrow more money, but under our current unconstitutional central banking monetary system, it borrows that money by issuing bonds, which are sold through the Fed into the financial markets. That is, it is borrowing money from the very financial markets it is attempting to bail out. One does not have to be a professional economist to spot the flaw in such a scheme (in fact, it appears, the only people who fail to see the glaring flaw in the scheme are professional economists, bankers, and their pet regulators, who have a vested interest in ignoring the obvious).

In the end, whatever the Federal Government does manage to borrow, becomes the obligation of the taxpayers, most of whom are themselves dependent upon borrowed money for their survival, and living in an economy which has been operating below breakeven for some four decades, and falling further behind by the day. Ultimately, the guarantees are worthless, because there is nothing backing them.
Shrinking Banking System

For those who would prefer to believe that the banking system is sound, the FDIC's just-released second-quarter report is not encouraging. For one thing, the net income reported (read: claimed) by FDIC-insured commercial banks and savings institutions was just $5 billion, the second-lowest figure since 1991, and a whopping 87% below the second quarter of 2007. This is not surprising, given the huge losses the banks have been reporting of late, and while we believe that the reported income figures are seriously overstated, the plunge from the consistent $30 billion plus quarters of recent years shows a trend which cannot be ignored. The FDIC also reported a small drop in the total assets of the 8,451 institutions it insured, to $13.30 trillion from $13.37 trillion in the first quarter. Such drops are uncommon—it is the seventh quarterly drop since 1987—but it is also the largest, and a sign of things to come. The asset drop was also accompanied by a small drop in equity capital.

http://larouchepub.com/other/2008/35...worthless.html

I was reading the article above by Hoeffle and the article by Hudson and I am not sure what is going to happen. When I read Hudson it seems like there is no problem with this, did I miss something?

MW:According to MarketWatch: "In the three months from April to June, banks posted their second worst earnings performance since 1991.... Earnings for the quarter totaled just $5 billion, compared with $36.8 billion a year ago, a decline of 86.5%." Also, according to a front page article in the Wall Street Journal: "financial institutions will have to pay off at least $787 billion in floating rate notes and other medium term obligations before the end of 2009." How are the banks going to pay off nearly $800 billion ($200 billion by December!) when they only earned a measly $5 billion in the quarter!?! And how in the world is the Federal Reserve going to keep the banking system functioning when earnings can't even cover current liabilities? Do the banks have some secret source of revenue we don't know about or is the system headed for disaster?

Michael Hudson: The traditional way to pay debt is with yet MORE debt. The interest due is simply added on to the principal, so that the debt grows exponentially. This is the real meaning of “the magic of compound interest.” It means not only that savings left to accumulate interest keep on doubling and redoubling, debts do to, because the savings that are lent out on the “asset” side of the creditor’s balance sheet (today, that of America’s wealthiest 10%) become debts on the “liabilities” side of the balance sheet (the “bottom 90%”).

The banks don’t have a secret source of revenue. It’s right out in the open. They will take their junk mortgages to the Federal Reserve and borrow the money at full face value. The government will be left with the junk.

It then can either take over the bank, as the Bank of England did with Northern Rock when it went bankrupt early this year, or it can let the bank “earn” money by stiffing its customers some more.

http://counterpunch.org/whitney08292008.html