PROMISES KEPT

The Federal Reserve Caused the Great Depression

I was asked to post this from Doug Nusbaum - from www.fskrealtyguide.blogspot.com

Wednesday, April 30, 2008
The Federal Reserve Caused the Great Depression

What caused the Great Depression? There is a huge amount of disinformation spread on this subject. The Great Depression was 100% caused by the Federal Reserve. Anyone who suggests otherwise is a propaganda artist or a fool.

In the mid 1920s, the Federal Reserve used its cartel power to set interest rates at a really low level. This caused inflation and an economic boom. Politically-connected insiders knew that an economic boom was being created. At the start of the boom, they loaded up and debt and bought assets before inflation set in.

The Great Depression is blamed on "greedy speculators". With artificially low interest rates, it made sense to borrow and buy assets. If interest rates are 2% and inflation is 10%, then borrowing to invest is sensible. Many farmers and small business owners were forced to borrow to expand, to keep up with their competition.

The "greedy speculators" were acting independently in the "free market". The Federal Reserve and negative interest rates were the real culprit. The speculators were following the false signal the Federal Reserve was sending via artificially cheap interest rates.

In 1929, the Federal Reserve insiders decided to jack up interest rates worldwide, causing a depression. The insiders knew what was coming. They stopped issuing loans and converted all their holding to cash.

At that time, the Federal Reserve did not publish its interest rate target to the general public. The Federal Reserve did not publicly state in advance whether it was planning to raise or lower interest rates. Even in the present, someone who knew in advance about a Federal Reserve move could profit immensely.

The insiders had converted their holdings to cash before the crash. After the crash, they were able to buy assets at a huge discount. Since they were unleveraged, they were able to borrow and buy up even more assets at the bottom of the Great Depression.

In 1933, President Roosevelt confiscated everyone's gold, defaulted on the dollar, and declared the USA bankrupt. The dollar was devalued relative to gold, from $20/oz to $35/oz. Since the dollar was no longer redeemable in gold, this allowed a further increase in the money supply. The insiders who borrowed to buy assets at the bottom of the Great Depression were allowed to default on their loans, repaying their debts with devalued dollars. Many loan contracts contained "gold clauses" requiring payment to be increased if the dollar were devalued relative to gold. Congress declared these "gold clauses" invalid, ripping off creditors and providing a massive subsidy to debtors.

In this way, politically connected insiders profited from all three legs of the Great Depression. They profited by borrowing and buying assets at the start of the boom. They were first in line to buy assets with the newly printed money, so they were the primary beneficiaries of inflation. Due to their political connections, they were able to foresee the crash coming. They converted their holdings to cash before the crash. At the bottom of the Depression, they were able to borrow and buy assets at a discount. Later, they were able to default on these loans via inflation; inflation meant these loans could be repaid with devalued dollars.

Insiders profit in this manner EVERY TIME there is a boom/bust cycle. The Compound Interest Paradox means that boom/bust cycles are an inevitable consequence of debt-based money. No matter what the Federal Reserve does, there will be boom/bust cycles. Insiders who know what the Federal Reserve is going to do have the opportunity to profit immensely.

The Great Depression accomplished several goals. It forced small farmers off their land when they were unable to repay their mortgages. It forced many small businesses to close. It caused the cartelization of many industries. Conditions of great poverty enabled the welfare state apparatus to be put into place. The Great Depression converted the USA from a nation of farmers and small business owners into a nation of wage slaves.

Nowadays, boom/bust cycles as severe as the Great Depression are no longer needed. The independence of the average American was permanently broken during the Great Depression.

Posted by FSK at 12:00 PM

4 comments:

gilliganscorner said...

Correct again. In fact, Bernanke admitted it (not as bluntly as you put it) that the Fed caused the Great Depression. He admitted to Milton Friedman here:

http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021108/default.htm

Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again.
April 28, 2008 10:27 PM
Anonymous said...

You forgot the part that the stock market crash of 1929 was also engineered. The margin account was invented in the roaring '20's, with low interest rates. Many investors took advantage and were leveraged to the hilt. This of course helped cause bubble to grow spectacularly. The bankers then called in their margin loans at the same time, forcing investors to sell their holdings at the same time. Voila, instant market crash.
April 29, 2008 12:21 AM

9/29/08 Sammy Averbuch

Time to laugh - Jewish Politics

Click on this smiley face :)

Too much bad news out there. The good thing about the human spirit is we can always find a way to laugh!!

What Billionaires Say About The Wall Street Crisis

Forget about what I think, my ideas behind this devestation in the financial markets are so doom and gloom that I see a depression looming. And, believe that no matter what we do as a Country...We will see this to a depression. The question I have is who will have the cash, when the depression is over with?

But, lets listen to the wise ones....BY Andrew Farrell, 09.17.08, 6:00 PM ET

How will John Catsimatidis--supermarket billionaire, New York mayoral hopeful and the 215th wealthiest person in America--know when the crisis on Wall Street is over?

"The situation is going to get better when you feel good about buying Citigroup (nyse: C - news - people ) stock," he says. "Right now, nobody feels good about buying it."

With all the turmoil on Wall Street these days, it's easy to get spooked. Miles of newsprint, endless talking heads, pandering candidates and economists quoted up the wazoo--all with opinions, most of them differing.

One group you haven't heard a lot from, though, are America's richest people--some of the savviest entrepreneurs and financiers on the planet. To get some insight into one of the most unpredictable periods in the history of Wall Street, we asked a handful of these billionaires to tell us about the economic indicators they're watching and what they think will happen next.

Don Marron, former chief executive of PaineWebber and founder of investment firm Lightyear Capital, has his eye on asset sales from troubled banks. In the coming months, Marron, a billionaire who is not on The Forbes 400 list, says they'll be an important gauge of how the economy is faring and how Wall Street is recovering.

"You have a number of situations here, notably one company in bankruptcy, where a certain set of assets have to be liquidated, and the market hasn't been tested on these," says Marron. "As a potential buyer, I would want to wait until we see these sales actually take place, and I think others would too."

Will investment banks ever post those eye-popping profits again? "I think it will be a long time getting back there," says Sam Wyly, who knows something about finance from his hedge fund Maverick Capital.

"One thing that I noticed about two years ago was that financial sector of the American economy had grown to percentages that were greatly disproportionate to history," he said. "The financing part of the economy grew much more than the part that was making and selling something. It will be shrinking at least for a while."

Stabilizing home prices will be a crucial part of the healing process since it will bolster the value of troubled mortgage securities. When does the housing market bottom? Catsimatidis, who has extensive real estate holdings in the New York area, says, "Home prices stabilize when they equal the cost of actually building of home plus the cost of the land plus a premium for location."

Billionaire entrepreneur George Lindemann, the 262nd wealthiest person in America with a fortune of $1.8 billion, says we'll see values stabilize much more quickly in some areas than others. "I think that's a regional issue and not a national issue. Houston, for instance, is strong as hell. No vacant jobs, prices are going up and building is continuing."

A year ago, Lehman Brothers (nyse: LEH - news - people ) shares traded for over $60 each. Now they're virtually worthless. Do the problems that totaled the once-mighty Lehman spread to other companies and industries?

"Any company that is built around the need to add debt is in trouble," says Mark Cuban, owner of the Dallas Mavericks and founder of HDNet. He ranks 161st on The Forbes 400 this year with a net worth of $2.6 billion. "The process of deleveraging is industry agnostic. If I had the time, I would be researching every company that needs renewable and expandable debt to survive and would short the sh*t out of it."

One thing that's clear is that despite the turmoil of the times, successful businesspeople have no shortage of ideas where to invest. On Monday, the Atlanta Journal-Constitution reported that one of Warren Buffett's subsidiary companies bought a corporate furnishings division from Aaron Rents.

Wyly, a billionaire who is not on The Forbes 400, advises to invest in areas you know are "rock solid." The author of 1,000 Dollars and An Idea likes companies like energy giant BP (nyse: BP - news - people ). He points to its investments in renewable energy, low price-earning multiple and management team.

As they say, buy when there's blood on the streets. But that raises another question: Who's to blame for the recent torrent?

Mike Bloomberg casts a wide net. The mayor of New York, former Wall Streeter, and founder of financial services company Bloomberg (which made him the 8th richest person in America with a net worth of $20 billion) told reporters Tuesday that, "You can’t just blame the banks, you also can blame the people that took out mortgages ... We were brought up that you first had to put some savings together and then enjoy. But this whole society has gotten to the fact that we’re a ‘now, give it to me today’ kind of society. I think regulation has not been adequate.

"There’s no one person to blame other than all of us," he added.

Intro to Mortgage Crisis Solution

Here is commentary from a gentleman who found me at ThePoint.com - Please let us know your thoughts.

By Doug Nusbaum - http://www.thepoint.com/campaigns/operation-home-ownership-reboot

In early March I was struck by an idea that I thought could greatly ameliorate the current mortgage / housing / credit problems currently having their impact on our country and economy. I wrote something up, showed it to a few people. They suggested areas that needed to be addressed. I did this, showed to them again, and to others. Those who have include people with many years in law, finance, real estate or some combination of the three. It also included the law professor at the Lied Institute for Real Estate who has signed my Inventors Notebook. Over two dozen people have seen my plan and none, not a single one, of those who have seen my plan have pointed out any serious flaws, and all thought that the idea was doable. Well, to the extent that reshaping a ten trillion industry is doable. Most said that it would take a few tens of millions to accomplish. I think I can show how we could do it for 20 million or less

I have been keeping an inventors notebook, something that will stand up in court. I recognize that my ignorance here vastly exceeds my knowledge, and that I really do need help from people with expertise in the areas of real estate, law, stock, time share etc. For that reason, I am publishing this little teaser seeking partners; advisers first, and seed money second.

There are literally millions of homes in this country in foreclosure, pre-foreclosure or owned by someone in some level of financial distress. Currently there are ¾ of a million that are already owned by the banks. More Foreclosure Info Here. And as of Sept 5, more mortgage info Here. At $200,000 each, the value of these homes approaches a trillion dollars. If my method works, and the initiators of my method can take out 1% license fee for each house 'processed' into my system, then you are looking at an amount in the area of ten billion dollars in the beginning. Further profits will accrue down the road as other aspects of my business process come into play.

dpaladin@ix.netcom.com

Here is the beginning of my proposal

Please take a minute to Follow these links

Fed Caused Great Depression

And some commentary

Remarks by Governor Ben S. Bernanke

At the Conference to Honor Milton Friedman, University of Chicago, Chicago, Illinois November 8, 2002

On Milton Friedman's Ninetieth Birthday Mr. Bernankes last sentence there.

"Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again".

This statement occured at the end of 2002 just when the Real Estate bubble started to inflate. So, it looks like, to paraphrase Prez Clinton, "It depends on what the meaning of 'it' is.

A NEW METHOD OF REAL ESTATE OWNERSHIP AND USE

THAT MAY RESOLVE THE CURRENT MORTGAGE CREDIT AND FORECLOSURE CRISIS

INTRODUCTION

I believe, and the 20+ individuals who have reviewed this --most of whom have a decade or more experience in real estate, law, or finance-- agree, that if the ideas stipulated herein are implemented, then the following will be accomplished:

1. Write offs for bad mortgages will be sharply reduced, buy 50 to 75%, possibly more. This may even apply to second mortgages
2. People who had real equity, not due to appreciation, will be able to recapture some of that.
3. People who are in financial distress, and some who have lost their homes, will be able to be partially again financially made whole.
4. In some situations the working poor will be able to be made homeowners
5. People who, have been fearful sitting on the sidelines, will be much more likely to come into the housing market, at least in part because they will not have to fear loosing any money that they put in.
6.

This will all be done with little or no government intervention.
7.

The cost of ownership, including purchasing and maintaining, will be reduced.
8.

An accidental byproduct of this will be that it will become possible for low income hard working families to partake of home ownership.

All dishonest unscrupulous politicians and their associates will see the light and, lemming like, will rush to the nearest seashore and drown themselves.

OK --- the last claim is not likely, but the first 8 are.

These things are obvious: Our society changes, and how we live changes. Sometimes associated things, for various reasons, do not change at the same rate. Sometimes these things that do not change do not need to do so. Often, however, they should have been changing along with how humans live, and do not do so until something comes along to reveal a sort of seismic fault in the culture. Then there occurs a sort of cultural earthquake, revealing the dislocation between where this thing should be and where it is.

Such a cultural earthquake has happened in the financial markets. The underlying cause of the fault that is responsible for this earthquake is NOT the ways in which loans were made and packaged and resold. This was a symptom. The true underlying cause is the way in which we dealt with housing and real estate for the past 50 years.

To a migrant or nomadic people the concept of owning the land would appear, quite rightly, absurd. But if you are not migratory, if you are born live and die in the same place, or maybe in two or three places at the most, then the idea of not caring for and being responsible for the land on which you live is equally absurd. This is especially true if the land is the source of your livelihood, as in farming.

Our society is much more mobile, if not nomadic, than it has been in the past. How we treat real estate and the associated financing has not kept pace with this increased mobility. The ideas that I set forth in this paper are an attempt to make the way we acquire and finance our living spaces more appropriate to our new quasi nomadic capitalistic-ownership lifestyle.

There are few if any new ideas or concepts in this paper. What this paper presents, is a way of using existing concepts in a manner that is more appropriate to the increased mobility of many people todays culture. Take, for example, the idea of a vacation. Two hundred or so years ago there were no such things. If a person traveled it was for business or possibly serious family business like a wedding or funeral, but it was not just "to have fun". There was the occasional inn to shelter such travelers. More often than not travelers camped by the road or slept in a barn. The Rulers or lords might have had one or additional residences in which they stayed.

After World War II, the travel and vacation industry grew and changed. Middle class families would travel and stay in hotels or motels as a family. They were homeowners most of the time, and renters for one or two weeks a year. Since that time our culture has developed many creative ways of allowing the average person to "own" additional living space other than their single residence. While more people can afford a second home, most are comfortable with owning a part of a place or parts of several places. This goes under the name of time share. For many purposes, including taxes, it is treated like real estate.

What I will propose is NOT a replacement for the current way in which housing ownership and renting is done. Is is another way to do housing ownership that will exist alongside current methods. Like all forms of real estate ownership/use, be they owning, renting, time share or something else, this new one would be voluntary and contractual, and could be one of many ways that a person participates in land and shelter use/ownership. Among its many benefits will be reduced costs of ownership, greatly reduced costs of moving, and due to bulk purchasing and standardization, reduced costs of upkeep and greater reliability of capital improvements and maintenance.

This new way of doing real estate will also, as I said above, greatly help to ameliorate our current problems with housing. This will be accomplished by making it easier to for people to own their residence, and to bring people into ownership who are now holding back for fear of loosing money invested in a down payment. Please note that my methods for making it easier to own property are not based on flim-flam, loaning money to people who can not pay it back or other questionable practices.

In order to see the entire 8000+ words of my plan, I will need to know who you are, and have you sign a non-disclosure document.

Doug Nusbaum

Please comment

So, if you think you could be of assistance to birthing this product, then by all means get in touch

Grab a Nondisclosure

Now all we need are lower mortgage interest rates

Today marked a big step in the correction of the US Mortgage Market with the US Treasury stepping up and taking on the responsibility.  This is great news, not for the current investors.

With the news of the US Treasury aking over 80% of Fannie Mae and Freddie Mac we now will see a mortgage market with extreme layers of liquidity and security.   All new issued mortgages will be as safe as anything. 

However, in order to stabalize the real estate housing crisis, interest rate must be lower....So low, that people will start buying again because the lower interest rates make buying a house very favorable again.

Click here to see this article and tell me what you think?

Thanks,

Sammy Averbuch