Video: FIAT EMPIRE - Why the Federal Reserve Violates the U.S. Constitution

This is a new video I discovered, although it has been around for some time. I have only one problem with these documentaries and books. A Central Bank is a Central Bank, no matter what name it goes by. The practices by The Federal Reserve is no more different than that of the European Central Bank, Bank of England, Bank of Japan or the South-African Reserve Bank. Keep that in mind if you are not an American watching this video.

The problem is not exclusive to the U.S.A. Fortunately for us plebs, there are still Americans with a backbone and they are the only people exposing and addressing this issue, as far as I know.

This Award-winning documentary, which features presidential candidate Ron Paul, was inspired by the book, "The Creature From Jekyll Island" by author and FREEDOM FORCE founder, G. Edward Griffin.

To get the full documentary on DVD(with up to 120-minutes of additional uncut interviews of Ron Paul and the other experts) go to www.FiatEmpire.com/screener. To instantly download a DVD-quality version of FIAT EMPIRE, go to www.mecfilms.com/mid/orders/fiat4.htm.

Find out why some feel the Federal Reserve's practices are a violation of the U.S. Constitution and others feel it's simply "a bunch of organized crooks." Discover why experts agree the Fed is a banking cartel that benefits mainly bankers and their corporate clients as well as a Congress that would rather increase the National Debt to over $9 trillion than raise taxes. Find out how the corporate media facilitates the partnership between the Fed and Congress and why it fails to disclose what's going on. Lastly, find out how the Federal Reserve-member banks are owned and controlled by an elite group of insiders.

How to Socialise Risk

What does it mean when a government "socializes" something? The answer is quite simplistic.

When a government socialiszes something, it means that it is incurring a cost to do something, and that cost is transferred to the taxpayer. Northern Rock in the U.K. is an excellent example and illustrates The Economic Incompetence of Socialism.

The Wall Street Journal reports on the attempts by banks to get government to "socialize" some of the risk THEY took on:

"The banking industry, struggling to contain the fallout from the mortgage debacle, is urgently shopping proposals to Congress and the Bush administration that could shift some of the risk for troubled loans to the federal government."

Nice business to be in, this banking business. If going to school was anything like banking, nobody would fail, no matter how dumb you are.

January US Retail Sales are Down

In nominal terms, Retail Sales might be up 0.3%, if you can trust those figures.

However, the picture changes if you deduct CPI. If you use the US Government CPI of 4.1%, real sales are down to -3.8%.

If you use the CPI value of Shadow Stats, which estimates CPI at around 7.5%, then Retail Sales are down -7.2%! That makes more sense. I can not see how Retail Sales can grow when business is scaling back. Shedding more light on this, Mike Shedlock asks the question, Does The Shopping Center Economic Model Work?

The hype reflected on the stock markets over statistics like this, leaves me cold. Is this a sucker trap being used by big players to offload shares onto the next fool ?

I just can not see any valid reason for equities to go up in the current local and global economic environment.

How to Stimulate Yourself - Part 2

The Stimulus' Short-Term Purpose
Christopher Westley

The Wall Street Journal's Mark Gongloff quotes Lehman economist Ethan Harris in this morning's "Ahead of the Tape" column:

In the rush to enact a timely package, politicians may have stopped a 2008 recession, but they have ignored a risky letdown -- after the election. [The U.S. faces ] another brush with recession in 2009" [for this reason].

Gongloff adds that once the "stimulus cocktail wears off,"

...home prices seem likely to keep falling, weighing on consumer balance sheets, confidence and spending. The expansion after the the 2001 recession ... was partly fueled by more than $1 trillion in borrowing against home equity. It is hard to see the economy getting that lift this time.

Even if the stimulus package serves to help the political class survive the November elections, it remains that (as Hazlitt pointed out) the longer and indirect consequences of policies or actions are those that the good economists will focus on. Unfortunately, democratic capitalism produces politicians and the economists who focus purely on short-term results.

Until the rank-and-file realize that it is the expanding nation-state itself, with its monetary inflation and government spending, that has created this mess, and that more of the same can only prolong the inevitable (and make it worse), then the next few years will look like the 1970s all over again. This time, could we at least be spared the disco?

FMM Comment: My recommendations still stands on How to Stimulate Yourself

Words from the (Investment) Wise

by Prieur du Plessis


The past week witnessed a turnaround in sentiment as renewed recession fears dominated investors' actions. Stock markets across the globe were subjected to selling pressure, while credit spreads scaled new highs. "What the market giveth [the previous week], it also taketh away [last week]," was Briefing.com's very apt description of events.

A particularly weak ISM Services report and the specter of bond insurer downgrades further reignited recession concerns, and reminded pundits of the words of Lily Tomlin, the American comedian: "Things are going to get a lot worse before they are going to get worse."

Randall Forsythe of Barron's offered the following commentary: "The Mardi Gras that's lasted four decades for the American consumer is drawing to an end, if it is not already over. After Fat Tuesday comes Ash Wednesday, which is observed today, and is the beginning of Lent, a 40-day period of fasting, self-examination and renewal for Christians, analogous to Ramadan for Muslims or Yom Kippur for Jews. Lower interest rates are a palliative, not a cure, for the economy's woes. Time is the only healer. Economists call that time a recession, and it can no longer be avoided."

Before highlighting some thought-provoking news items and quotes from market commentators, let's briefly review the financial markets' movements on the basis of economic statistics and a performance chart.

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Another Asian Crisis Brewing?

Japan is the next sub-prime flashpoint

There is still $300bn of bad debt out there, and Japan could be hiding most of it. Ambrose Evans-Pritchard reports

Just as battered investors had begun to glimpse signs of recovery in America, the next shoe has dropped with an almighty thud in Japan. Echoes are rumbling across the Far East.

The Tokyo bourse has crumbled, suffering the worst start to the year since the Second World War. The Nikkei index is down 17 per cent since Christmas, and the shares of Japanese banks are leading the slide. Mizuho Financial, Mitsubishi UFJ and Sumitomo Mitsui have all been punished as hard or even harder than those US banks at the epicentre of the sub-prime debacle.

The nagging fear is that Japan's lenders - the conduit for the world's greatest stash of savings - have taken on a far bigger chunk of mortgage securities, collateralised loans obligations and other exotica from America's structured credit boom than they have yet revealed.

Americans and Europeans have so far confessed to $130bn of the estimated $400bn to $500bn of wealth that has vanished into the sub-prime hole. Somebody, somewhere, must be sitting on a vast nexus of undisclosed losses. We may find out soon enough whether the hold-outs are in Japan. The banks have to come clean under the country's strict new audit codes by the end of the tax year in March.

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Looking Into a Gifted Horse's Mouth

Gift Card Sales Backfire

The whole idea of gift cards seems kind of silly. Why give someone a $50 gift card when it can only be used at one spot, while $50 in cash can be used anywhere? And if a person gives you a gift card back what's the point of it all?

Why not trade $50 bills and be done with it? Heck, why not save the effort and not exchange anything at all? I guess attitudes have not sufficiently evolved for that yet.

For whatever reason gift cards have become increasingly big business. People like them. Perhaps it's because they can buy whatever they want instead of having to go through the hassle of returning something too big, too small, too red, too blue, or too pink.

And Businesses like them too! Or at least they did.

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Moral Obligations Of Walking Away

Walking away is certainly a hot topic. I brought up the issue of walking away on October 2nd 2007 in Mortgage Forgiveness Act - The Seen and Unseen.

The winner in the debt forgiveness provision (if there is a winner) is the struggling homeowner. The unseen loser is the mortgage holder, the NAR and the NAHB. Prior to this legislation a homeowner had to worry about tax liabilities of just handing over the keys and walking away. If debt was forgiven prior to bankruptcy, there was also a tax liability. Such considerations have been removed. At the margin, more people will be tempted than before to hand over the keys and walk away.

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Credit Crisis: Precursor of Great Inflation

The so-called "credit crisis" is gaining momentum. Investors increasingly question the solidity of the banking system, as evidenced by banks' tumbling stock prices and rising funding costs. With bank credit supply expected to tighten, the profit outlook for the corporate sector, which has benefited greatly from "easy credit" conditions, deteriorates, pushing firms' market valuations lower. In fact, peoples' optimism has given way to fears of job losses and recession on a global scale.

The obsession with a policy of lowering the interest rate is rooted in a deep-seated ideological aversion against the interest rate. It is a destructive ideology, in particular if the government is in charge of the money supply. Because then the government central bank will lower the interest rate to whatever is deemed appropriate from the viewpoint of the government, pressure groups, and vested interest. FULL ARTICLE

Northern Rock Nationalised?

Gordon Brown has been dealt another humiliating blow in his efforts to avoid nationalising Northern Rock after the Office for National Statistics announced it is treating the stricken bank as a 'public financial corporation'.

The Prime Minister is desperate to find a private buyer for the Rock to quickly recoup the £55billion in taxpayer-funded loans and guarantees which are currently keeping it afloat.

Nationalisation would mean saddling the taxpayer with the multi-billion pound loan arrangement for years and possibly decades, and 140,000 small shareholders would see the value of their holdings wiped out.

The last time the government was forced to take over a failing company was in 2001, when it put Railtrack into administration and faced years of legal action by shareholders.

Today the government-funded Office for National Statistics (ONS) said it had reclassified Northern Rock for statistical purposes, switching it from the private to the public sector.

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Debt Trap Mass Exodus

CBS4 is reporting on Miami's Middle Class Exodus.

In Broward County, foreclosures in 2006 were 8,995; in 2007, it was 23,476. For Miami-Dade County, there were 9,814 foreclosures in 2006; in 2007, there were 26,338.

In April of 2005, the Miami-Dade Housing Authority created a list for anyone who needed affordable housing. Forty-thousand people signed up. Three years later, 25,000 on the list are still waiting for a phone call.

Patrick Mason owns "Carolina Living," a magazine that markets to people from out of town. His research shows for the first time ever that Florida is now the number one exporter of people to South Carolina.

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The Real Scandal

HOW THE FEDS INVITED THE MORTGAGE MESS

PERHAPS the greatest scandal of the mort gage crisis is that it is a direct result of an intentional loosening of underwriting standards - done in the name of ending discrimination, despite warnings that it could lead to wide-scale defaults.

At the crisis' core are loans that were made with virtually nonexistent underwriting standards - no verification of income or assets; little consideration of the applicant's ability to make payments; no down payment.

Most people instinctively understand that such loans are likely to be unsound. But how did the heavily-regulated banking industry end up able to engage in such foolishness?

From the current hand-wringing, you'd think that the banks came up with the idea of looser underwriting standards on their own, with regulators just asleep on the job. In fact, it was the regulators who relaxed these standards - at the behest of community groups and "progressive" political forces.

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What if House Prices Fall by 30% Worldwide?

by Gary North

In the midst of local house-buying manias, the classic mark of the end is when buyers line up to buy a house and bid against each other. This is the best way to sell a house and the worst way to buy one.

Why do buyers do this? Because they have missed out again and again by offering less than the listed price. The buyers who offered the listed price bought the house.

[I did this in February, 2005 for my home. The other family thought that $90,000 for a 4-bedroom house was too much to pay. They were wrong.]

Then the panic escalates. Those offering the listed price get left behind. They wait too long. "Too long" means more than one day after the house comes on the market. They hesitate. He who hesitates is lost in a seller's market.

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Pushing on a String?

WHAT THE FED GIVETH, the banks taketh away.

Just days after the U.S. central bank completed its unprecedented 125-basis point easing in its key policy rates, its quarterly survey of bank lending officers showed they had become much more stringent in their extension of credit.

That's key because people and businesses don't borrow from the Federal Reserve, so how much credit the central bank provides, and at what price, affects the private economy only indirectly. It takes a banker or other lender to make that loan to pay for a house or a piece of capital equipment. Indeed, the Fed acknowledged as much when it slashed rates last week, noting that financial conditions had tightenened.

Even as the Fed has made the raw material for those loans cheaper, bank lending officers indicate a far warier attitude toward making new loans, especially -- surprise! -- "nontraditional mortgages." Some 85% of loan officers responding to the quarterly survey they tightened lending standards for this category, which includes subprime.

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FMM Comment: My post yesterday, The Big Credit Squeeze, also refers

The Big Credit Squeeze

WASHINGTON (MarketWatch) - Banks are putting a stranglehold on credit, the Federal Reserve reported Monday.

Banks are raising their credit standards for mortgages, consumer loans and commercial real estate loans at a pace never seen in the 17-year history of the Fed's quarterly survey of senior bank loan officers, the Fed said.

Plain-vanilla business loans were also much harder to obtain, the Fed said.

Banks expect more delinquencies and charge offs for most types of loans to consumers and businesses, the survey said. Banks said they were tightening their lending standards in response to weaker economy, reduced tolerance of risk, and decreased liquidity in secondary markets.

The survey backs up the Federal Open Market Committee's comments last week that credit conditions had tightened considerably, a factor that led to the FOMC to slash interest rates by an unprecedented 125 basis points in two weeks.

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FMM Comment: Three things are happening here.

1. Banks are hoarding cash because Bank Reserves Go Negative
2. People can't or don't want to borrow
3. Banks can't or don't want to lend

Something the Fed can NOT do is force people to borrow. It can only sweeten the deal with low rates. So, if you are struggling to either inhale or exhale, you are suffocating, like the credit markets are doing now. It is just a matter of time, unless some "miracle" happens, before the credit market will turn blue in the face and collapse. And that, is called Deflation.

Axa axes withdrawels

Life and pension firm Axa has barred redemptions from its Life Property and Pension Property funds for up to six months in a bid stop panic selling.

AXA has written to all its customers who are invested in these funds and their advisers. The decision will impact upon some 100,000 private investors.

Certain transactions will not be affected by the deferral, including regular withdrawals, death claims and payment of pension benefits on retirement.

Axa is the latest in a growing list of firms to take such action to restrict access to their assets to prevent a Northern Rock-style run on their resources. There is now around £8bn of investor cash locked up in property funds.

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A boiled Egg is hard to beat

Reuters reports that the Web bank Egg withdraws cards from riskier customers. The Citigroup owned bank, following a risk review, will withdraw credit cards from 161,000 of their customers.

The Credit Card Time Bomb Is Ticking Away

Cash strapped consumers are increasingly turning to charge cards and home equity lines to support consumption. Some Debt Trends Are Good. This Isn’t One of Them.

American credit card debt is growing at the fastest rate in years, a fact that may signal coming trouble for the banks that issue them.

The Federal Reserve reported this week that the amount of revolving consumer credit that is outstanding hit $937.5 billion in November, seasonally adjusted, up 7.4 percent from a year earlier. The annual growth rate has now been over 7 percent for three months running, the first such stretch since 2001, when a recession was driving up borrowing by hard-pressed consumers.

Desperate Measures in Desperate Times

The Fed cut interest rates eight days after the last shift, but why do I feel that the biggest economy in the world is being run on a rolling day-to-day basis with policy makers reacting to each and every little toss and swirl of the markets?

Last week we had a 0.75pc cut which was odd enough (striking one almost as if game of scissors, paper, rock presided over whether to go for 1pc, 0.75pc or 0.5pc and paper won).
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Then, however, to follow it up only a few short days later with another 0.5pc smacks of desperation. The theory going round is that the Fed does not want to be seen as having being spooked by the Société Générale debacle, about which they were as in the dark as the French Government and has, therefore, followed up last week's panic move with a further cut. A bit fanciful, perhaps, but the whole thing does look a bit strange.

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Meredith Whitney fears $70bn carnage on monoliners

The high-profile banking analyst who triggered the resignation of Citigroup chairman Charles "Chuck" Prince is predicting investment banks will need to take further write-downs of $40bn (£20bn) to $70bn as a result of the current crisis in the bond insurance market.

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Bank Reserves Go Negative

By Mike "Mish" Shedlock

I have been watching a chart of Borrowed Bank Reserves for several weeks. The action is unprecedented.

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