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Friday, March 8, 2013

Being Debt-Free is to be Truly Free

It looks like Wall Street is going to finish this week as strong as it began, which in a way we'd assume since they orchestrated the whole gala affair..

It would be like spending $3 Trillion on the ultimate birthday party for yourself and finding out you hated the decorations, the band and the flavor of cake.

$3 Trillion is quite a lot to spend on oneself.

Remember, the Federal Reserve is not a government agency-- it is as 'Federal' as FedEx.   It was pushed into law 1913 by the banks via the puppet-string politicians of the day which they owned, to work solely for the interests of the banks...

And banks and investing and Wall Street... all part of the same cabal.

We saw an interesting article from AP yesterday-- the statistics weren't so much as the joyfulness the writer presented them...
"Americans stepped up borrowing in January to buy cars and attend school... Consumer borrowing rose $16.2 billion in January from December to a total of $2.8 trillion, the Federal Reserve said Thursday. That's the highest level on record.

The stock market has also surged this year, pushing the Dow Jones industrial average this week to a record high. And a housing recovery has helped lift home prices.  A separate Fed report Thursday showed Americans have regained the wealth they lost to the Great Recession and are increasingly taking on more debt."

Isn't that wonderful!

So pardon us a moment while we work out a math problem..

Fed has spent $3.18 Trillion since QE1 (March 2009) until the present (QE4 & QE5 simultaneously -- $85/bil per month indefinitely starting in late 2012)

So.. hmm.. $3.18T  - $2.80T =  $380billion
The Fed could have (not that it ever would have) eliminated the debt load of 100% of all American citizens (mortgages, student loans, car loans, credit card debt, etc..) and still have $380 billion to throw themselves a nice tea party

But that would have defeated the purpose wouldn't it..

This nation... all economies of all nations are set up to grow and expand based on debt accumulation.

The money in your pocket...those pretty pictures of good men like Washington and Jackson, and bad men like Lincoln and Grant...  they're Federal Reserve notes.. a physical reminder of debt.  Each piece of paper was printed because it was borrowed by someone.. a bank, the Fed, the US Treasury...

And the way our hocus-pocus monetary system is set up, if all debts were say to be magically repaid, the entire economy would collapse on itself.

We can tolerate some individuals being debt free (savers) when times are good but when in recession or worse, we need those responsible people to burn for their financial crimes of being prudent and sound with their money...  We need them indebted..
"I'm no sugar baby.. Its love.. He loves paying my debts"

So that's why you will never see any serious discussion or plan of action to cut down the US National Debt..  Oh sure efforts will be made to cut the deficit-- halfhearted ones, and you'll see some cut-snips here and cut-snips there..

But there's no advantage for anyone to sincerely curb debt.

As long as the US is the reserve currency.. and as long as major commodities like oil are converted into financial value based on the dollar, we can kick the can indefinitely to avoid insolvency.

Now certainly the citizenry will feel the pain-- cut backs in social services and money to the states which result in cutbacks to education, fire and police, other state/city government departments, etc..

But individuals and collectively 'people' mean nothing..
Take the student loan debt which a few months ago topped $1 Trillion for the first time ever..  Most of it will never get repaid..  But enough people make livelihoods and profit off the interest, debt collection, etc that its still profitable as is..

And if the masses defaulted in unison?  No worries-- government would just bail them out by lowering interest rates or help to restructure the debt by turning 20 yr loans into 40 or 50...  And now that $350/mo payment is only $175 and that's no hardship, is it?

We'll end this post with a true story from yours truly..

Back in 5th grade, I had a most wonderful teacher named Mr Franks. He was the first person to ever teach me economics.

So to be brief, we the classroom established a pretend currency which we called 'Flushers' with a picture of a smiley face in the center...
We'd get paid 'X' Flushers per week based on chores like picking up trash by our desks or successfully completing pop quizzes.  We got 'bank accounts' and a 'checkbook', and learned the proper way to write checks...

We also had weekly, the creation of a 'town' within the classroom where everyone provided objects or services to each other in exchange for Flushers.  My 'profession' was I took people's photographs using a Polaroid instant camera.  Some 'businesses' faltered.. others like mine thrived.

So at the end of the school year, we all have these Flushers and obviously they had no value to anyone outside our classroom.  So Mr Franks set up an auction-- he brought in lots of things-- magic markers, scratch n' sniff stickers, etc... things really fun in the eyes of a 5th grader for us to bid on.

So.. we all are bidding and using up our money except one guy-- he had his eye on 'The' Prize literally... I forget what it was but I do remember it was something quite special that made the other items pale by comparison.

He had so many Flushers in his possession, that it took 6 others pooling their remaining Flushers to try to put up counter-bids.. But they couldn't keep up with the increased bids..

Ultimately the guy won..  He was really beaming; we were all bummed.
And lesson was learned:

When you possess money, you possess true purchasing power.  You don't have to borrow or beg or plead or pool...  And you don't need loans..  No one profits off you beyond normal profit for an item or service, and no one controls you months or years after that item was bought..

There are two kinds of true freedom in this world..  one is the freedom based on time.  That you fully control your day and all aspects of it.  The second is freedom based on money.. That you can buy and do anything you want in this world without needing others to assist in the purchase.

And a person in that position.. the only thing limiting them is themselves.