Truth to power (listen up)

June 5, 2012 by · Leave a Comment
Filed under: Opinion 

Basically I want to encourage you to navigate over to Marker Ticker by Karl Denninger.   You need to listen to the latest podcast called “Europe and China near detonation“.

There is a quote in this podcast from a CNBC show that occurred Monday.  A representative from Egan-Jones per Karl’s account, was being drilled by questions on Europe and there ability to issue money & credit to shore up their finances.   He shot back with this bombshell of truth to power.

When you emit credit in excess of GDP growth, you make creditors poorer.”   This is what we are doing in America and this is a core issue I have been pounding the table about for years now.  But here is the rub, WE ARE THE ULTIMATE CREDITORS.   He made the other wonderful and true point that most the money in our system is credit (ie: debt) and where is most of this generated??  Two words…. Commercial Banks.

Before I continue, I want to be clear, I have no issue with the concept of banks and I believe and a fair and regulated market.  The problem I have is that we have literally given over this most crucial power of government over to the Federal Reserve which is basically a cartel of most the banks in the United States.    That is not even the biggest problem, the biggest problem is that we allow this system to operate on a debt basis (treasuries to get dollars) AND on a fractional reserve basis.

This is why we are under the un-escapable sucking power of all this debt in the system, and why you allows hear we “have to grow” and “deflation is bad”.  These are bad because it would hurt the holders of assets priced in a currency that is be inflated daily.

The major portion of this credit creation is through loans via the commercial banks.  If you have real reserve requirements, it would be a real check against this unbridled debt creation we have happening now.  We will have a breaking point and it will be much sooner than later.

We need to flush all the bad credit out of the system and put into receivership, any institutions that are deem insolvent.  It is just absurd we have allow some of these banks hold derivatives in such excess that they are more that annual GDPs of major countries.  What is really happening is these derivatives just represent bad bets that are being rolled over at our expense so the some of these banks can not take the hit.   I want us back in an era of prudence and real market forces with government regulation that maintain the fairness of markets to keep the game of life fun.

Currently, we are just spending ourselves into perpetual debt and lowering our standard of living, while forcing people that did not have as many opportunities as others into difference forms of government assistance.  This is not how I want to see people living and I think most people would like to have more opportunity to better themselves and to make sure rules are enforced and are fair.   Under that scenario we can then look for prudent way to extend assistance in ways that are either absolutely necessary because we are a society of compassion or in area to help people that are working to help themselves.  We need this so we can get our optimism back.

Please do something, call your representative, comment below or read some books and get more understanding.   It is almost certain we are going to have it get real bad before we take enough pain and hardship to change this disconnected culture we are generating.   People need to wake up, know there is not free lunch and yes, you need to make time in your business life to engage in politics so you voice can be heard, and please, educate your opinion so its actually worthwhile.

 

 

U.S. Consumer Credit Dropped by $7.9 billion, the most since 1943 when it was tracked

October 7, 2008 by · Leave a Comment
Filed under: Industry News 

Wow, the tide is really going out quick. What is even more interesting is that lending that is secured by property (Home Equity Loans) is not tracked in this statistic. I believe if it was it would be even more drastic if that figure was included. I will do some research to see if I can find that number or please post it in the comments below and I will repost. The main fact is easy money through credit is over and this is reducing the U.S. consumers purchasing power and that is having a global effect. We need to get back to basics and people need to learn how to live within their means and if they want to go above that then they will need to think out of the box and work hard. Plain and simple.

Article:

Borrowing by U.S. consumers unexpectedly fell in August by the most on record as banks shut off access to loans, a report from the Federal Reserve showed.

Consumer credit fell by $7.9 billion, the most since statistics began in 1943, to $2.58 trillion, the Fed said today in Washington. In July, credit rose by $5.2 billion, previously reported as a $4.6 billion gain. The Fed’s report doesn’t cover borrowing secured by real estate.

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