President Obama said that those who oppose this fee are audacious to think that it is unfair.

“Obama Questions the ‘Audacity’ of Those Who Say the Bank Fee Is Unfair”

Well I for one think it is grossly unfair.

The Banks are not people and did not cause the crash. The management teams running them did bad things, took great risks and are fully accountable and responsible for the financial crash.

Not only did they destroy their own banks, they destroyed the shareholders - the rightful owners of the banks and destroyed many lives across the world who had nothing to do with them.

When you applied for a loan was it the bank that rejected it or was it the bank manager?

They need to be held accountable, NOT the institution itself…..

This is the usual way that the government avoids having to prosecutes its mates or its campaign contributors.

Let’s just walk through this……

The management send the bank broke with unbelievable risk taking practices.

The government aids and abets in this process.

The bank managers lose billions of dollars.

The bank managers lose billions is share value.

The government gives the bank managers billions of tax payer dollars to rebuild the broken banking institutions.

The bank managers use that money to create algorithmic stock trading systems and make billions gambling in stocks.

The balance of the money the bank managers fails to lend out is deposited with the FED.

For the first time in history the FED pays the banking institutions interest on their deposits.

The bank managers believe they have “earned this money and it forms part of their bonus calculation.

These bank deposits with the FED are the deposits consisting of tax-payer bailout money and Bernanke Helicopter money.

This is the money the bank managers are supposed to lend out.

Using their windfall profits from using tax-payer and Bernanke helicopter stake money the bank managers pay back the Government with interest.

Then the managers pay themselves massive bonuses and think that it is nobodies business but their own because they have paid back the government.

Well it is. It is the world’s business because these bank managers destroyed millions of peoples wealth all over the world.

The President saw an opportunity to be populist and act against the grotesque bonuses. But instead of prosecuting the bank managers for the wealth destruction he decides to charge a fee for “pain and suffering” which he levies on the banks themselves - NOT the managers who inflicted the pain.

Punishing an institution, and the share holders and bond holders for the sins of the bank managers is totally wrong.

The Fee should be levied on the managers after they have announced their bonuses. They must be forced to present the bonuses to be paid before the fee is levied.

If anyone thinks the Fee is going to affect the bonuses they have to be joking. The bonuses will almost certainly be paid on the profit BEFORE the President’s Fee.

I’m sure there will be some managers who did not do the wrong thing and are innocent of  involvement in the financial crisis. I’m sorry about that but nothing is fair.

If it was, then millions of innocent workers would not have lost their jobs. Millions of innocent citizens would not have lost their homes. small business would not have gone bankrupt. I cannot imagine what it might be like for people in the poorer countries at this time who might well be starving due to the bad behaviour of the bank managers.

A Bank Fee levied on the banks and not the bank managers is an easy option as it does not hurt any individual directly. No behaviour is likely to be modified.

Punish the bank managers NOT the bank. The bank is innocent.

Take money from the managers, NOT the shareholders and other investors. That’s the hard thing to do. Doing it will do far more to curb risk-taking than trying to set up regulations to catch the bank managers out next time.

Making regulations to protect against what happened is useless. The bank managers will find new ways to take unprecedented risks which will not covered by new regulations aimed at stopping their old tricks.

Prison terms and confiscation of unearned and undeserved assets is the only thing that will modify management risk taking behaviour.

Do the hard thing Mr President.

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They just cannot help themselves. This time it is far more dangerous. They want to take control of some or all of your nest egg in the form of an annuity. Read this article, “Why the Government Wants to Hijack Your 401(k).”

The original retirement schemes were set up by governments to force (in Australia at least) people to save for their own retirement. It is known as a defined contribution scheme. The idea being that you contribute to your own retirement in a tax advantaged savings account.

This account was normally with a fund manager who’s job it was to diversity and balance your portfolio of investments so that when you retired you’d have enough to live on without a government pension.

How well has it worked? Not very well at all for you - but great for them.

The usual short-sightedness of governments and their failure to monitor the financial industry effectively has resulted in two major stock market crashes in 10 years resulting in many Baby Boomers losing 30-40% of their nest egg.

The wealth industry only makes “real” money when there is volatility in markets. Just look at how well they have done in 2009. And nothing has changed after the great financial crisis of 2008 - nothing.

But as usual politics gets in the way of objectively analysing what went wrong and fixing it.

Right now governments around the world are strapped for cash. Their bond issues are on the nose, especially those of western governments who have been running up huge Keynesian debts for years. They know this cannot go on. Governments will need your money to pay down their debts and finance the running of their governments.

Printing money will only work for so long before the people demand it be stopped as their wealth disappears under inflation.

Australia actually was in good shape financially until Mr Rudd decided to send us into serious debt - apparently for no good reason.

Your governments are now in the process of putting together some propaganda that says we cannot be trusted to provide for our own retirement. As proof they will point to the losses over the last decade. You will be blamed for not taking enough interest in your nest egg even though it is virtually impossible to get timely and useful information from the funds you are forced to invest with.

Those baby boomer who took responsibility for providing for their retirement will be hit the most.

What your government is now thinking of doing it taking a percentage (or all of it if they think they can get away with it) of your nest egg and placing it in some sort of government guaranteed annuity.

Why would they do this? Well in Australia there is over $1  Trillion locked up in Superannuation. This is too much for the government (especially a Labour Government) to bear. They can think of lots of socially good things to do with that money.

So this idea is gradually being sounded out with the various vested interests and as usual there will be pay-offs to those financial institutions that might “miss out” and a financial gift to those charged with the responsibility of setting up a national annuity scheme.

Private Annuity firms are lining up to try to get some of your money under government legislation.

The financial industry works on a percentage of funds under management so just think how much they are going to get of your money when they have to sell down some of the equities to placing a government annuity?

At each point in the process someone will have their hand in your nest egg pocket stealing a few dollars.

Annuities in and of themselves may be a good idea for part of your nest egg or all of it if you don’t have a big nest egg. But as with any financial product you need to chose the one that suits your personal situation and a government annuity scheme just cannot do that.

However I think the real danger here is just as we all rushed into stocks thinking that was the path to retirement wealth, so too will many rush into a government annuity scheme.

The problem is inflation. This is the next big threat based on the massive amount of money the central banks have created. Even if the government offers an inflation indexed annuity you can be sure if we get run-away inflation the government inflation figure will be massaged by your government. This will result in one thing, you getting less and less money over time.

Another concern is what if you just bought  an annuity and put 30-50% or your nest egg in it and died yesterday (as the insurance guys would say so there is no pressure)? Will your family get the bulk of the money in the annuity or would it just go to the annuity provider - in this case the government. Read, “Your Pension Payout: Annuity or Lump Sum?”

Make no mistake this will be a grab-for-cash by your government and will only lead to your nest egg being depleted or taken from you by force unless you object.

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Normally this would not worry me too much but I recently watched a series of 8 YouTube video of Dr Albert A. Bartlett Professor Emeritus at the University of Colorado lecturing on the exponential function.

His opening statement is,

“The Greatest Shortcoming of the Human Race is our Inability to Understand the Exponential Function”.

To those that may be mathematically challenged it is all about things that increase at a constant rate and what happens over the long term.

He tells us if we can remember just one thing from the lecture let it be the number 70. And when someone tells you your investment returns “on average” will grow at 7% a year you just divide 70 by 7 and that will give you the time it takes to double your investment. In this case 10 years.

Or you can say how long will it take my investments to double if my return is 7% a year. Answer is 10 years.

I urge you to grab a coffee and watch all 8 videos as he explains in simple language the implications of the exponential function.

So when President Obama said he is going to double exports in 5 years I mentally divided 70 by 5 and came up with 14% almost fell off my chair.

What he is saying is that he is going to increase US exports by 14% per year for the next 5 years.

I thought I should check the Export performance of the US over the last few years.

So I decided to check the US Export figures and found the “US Trade in Goods and Services Balance of Payments Tables” since 1960.

I added the % Export Growth Year on Year Column figures and noticed that export growth is quite volatile but in some years has reached 20-30%.

I cannot find a figure for 2009. The US Export fact sheet only states some monthly figures but does admit,

“Although the decline in year-to-date figures from 2008 to 2009 has been significant, the monthly figures do show signs of stabilization in U.S. goods and services trade.”

On the surface it looks like Obama can double the exports in 5 years when you look at the growth from 2003 to 2008 when exports increased by 80%. But I wonder how much of that was Banks and Financial Institutions selling “virtual” products and services overseas, products like CDOs and other complex derivatives with meaningless financial numbers attached to them  :-(. This business has evaporated and may never come back.

The other problem is even if he achieves it he might be setting the world up for another boom and bust in 5 years. How will he maintain the 14% growth rate in exports AFTER the five years? I think it would be unsustainable unless he does what China does?

They loan money to poor countries to buy Chinese Goods. I wonder how that will work out in the long run. The US and other western countries have done that on and off for years too.

Isn’t everyone saying the high growth rates are unsustainable because we have Peak Oil, India and China becoming the worlds largest economies and climate change to contend with?

The Professor talks about the electrical energy consumed in the US. It has doubled on average every 10 years. A quick division into 70 shows it has grown at about 7% a year. What will be the energy needs to ensure Obama can double the US exports?

The Professor makes this sobering statement,

“The growth of any doubling time is GREATER THAN the TOTAL of ALL the PRECEDING GROWTH” (In the table below for instance the double from 4 to 8 is greater than the total of 7 already on the board)

Every time the quantity doubles it take more than the total of all the preceding growth. Grains of Wheat on a Chess Board example

Even if he could grow the economy at 14% a year he is going to need lots of energy and resources and that will upset his Democratic base and the Greens and the Climate Changers.

Always remember the number 70 when listening to politicians and financial people.

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But what is far more important is what it means for the future of the socialisation of America. I’m sure it won’t stop it as it has been going on for years, but it has received a serious set-back.

More importantly the Health Care bill is all but dead which means the US economy will not have to find $1 Trillion dollar to provide health care for about 30 million people.

This is not only good for the US, it is good for the world. The world needs the US to create wealth through business and entrepreneurship, not spend 20% or more of its budget on a national health care system. Why follow the rest of the developed world into the health care black hole?

Anyway everyone knows the right answer to the US health care system but it is just not politically acceptable to the Democrats. Tort reform to stop the lawyers living off the health system and true free markets for health insurance companies. At present they have to bow down to state governments and provide stupid benefits to keep elected representatives in power or not be allowed to sell their insurance in that state.

When I found that out I though how ironic it was that the country of free enterprise completely controlled health insurance at the state level. However we in Australia do have private insurance that can operate in any state but which goes cap-in-hand to the federal government every year for a price increase. It has been approximately 7% each year for the last few years. Where’s the competition in that - so who are we to talk?

I’m off message again so let me get back to it.

Scott Brown campaigned on small government, responsible fiscal and monetary policies, no national health care (he said he would be the 41st to vote the bill down). In the Democrat heartland of Boston he should have been hanged, drawn and quartered, but he won.

This is a game-changer. It is now very important the Republicans pick up the ball and run with it and not compromise.

The next big event is Mr Bernanke should NOT be confirmed in the FED Chairman position. Everyone (in the financial circles) says he saved the world and it was a brave thing that he did. How brave is it to print money and give it to the banks with the backing of the President of the United States?

The brave thing would have been to tell Hank Paulson and George Bush to go jump and not attend any “Plunge Protection Meetings” with the President. Did you notice that the Bank CEO’s sat this crisis out. They waited on the side-lines and let the government bail them out. If Mr Bernanke has said, ” Nop! I will not print money to save you from your stupidity”, they would have had to get together to work out how to solve their own problems.

Once Mr Bernanke had the monkey on his back the bankers all went sailing waiting for their banks to be filled with money again so they could trade the stock market and bank the balance with the FED and be paid interest on the printed money the FED gave them.

That’s why he has to go, leave, disappear and all his Keynesian mates who still believe that their job is to prop up economic bubbles using public money dropped from a helicopter until private money can take over again to increase the bubble and the risk even further.

He is supposedly the expert on the Depression and knows what was done wrong then. If my reading is correct he was not taught economics at university, but was indoctrinated with Keynesian theory. All economic history prior to Keynes appears to have been dropped from many universities. I thought universities were seats of learning not places of selective teaching and indoctrination.

We need Mr Volcker to return with a team of like-minded “young turks” economists who have been taught  and understand Austrian Economics as well as Keynesian economics and who believe the first step is the FED must really be independent from the White House and the Legislature and the Treasury. We need people who want the debt to be responsibly reduced, the printed money withdrawn from circulation, the dollar restored as the reserve currency and backed by gold, some form of Glass-Steagall act to stop deposit banks speculating with your money, and bankers to be held to account with sound banking and financial polices introduced. Mr Volcker may not want the job but he could certainly be an overseer.

If Ron Paul could rally the troops in Congress and the Senate he might carry the day at last and get legislation passed to audit the FED if not end it.

They could then pass laws that stop the US government giving tax payers money to the world bank and the IMF to redistribute to despots and dictators. Bringing back control over tax payer money to the nation would stop all these “do-gooder” internationalists creating financial authorities answerable to no national government or voters/tax-payers. It would kill the world government and world bank stone dead and wealth redistribution to other nations would end along with it.

Such moves back to responsible fiscal and monetary policies in the US would spread around the world like wild-fire. The entrenched Keynesian order would be swept away and pay-as-you-go and buy-only-what-you-can-truly-afford would become the order of the day.

The pendulum may just have begun to swing back from socialism and it only took a year for the US people to realise it. Thank God for the Internet which has allowed people to read for themselves what stupidity is being done to the wealthy nations. If these “do-gooders” ever manage to redistribute all our wealth where do they think they will get the next lot of money from? They have no long term view, only now counts as they may all be dead when the long term arrives. Our children will have the problem. Don’t let that happen.

Now is the time for the people to take back their governments and demand fiscal and monetary responsibility. Taking such action will help Baby Boomers secure their Nest Egg. Anything less will destroy it even further.

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We are constantly bombarded with financial programs telling us which stocks to buy and what funds are the best performers.

But in the scheme of things this information is useless as investment advice when you are a flea (investor) on the backside of an elephant (the money and credit system). In fact to take that analogy further think of yourself as a flea sitting on a pile of elephant dung that is just about to drop to the ground. You get the picture.

It is all cosy and warm and looks fine up there and you think you are in heaven but you’re going to hit the ground with a thud

Another way of looking at this is we need a “unified theory of everything financial”. You see when our governments create billions of dollars out of thin air and then spend that money we can never know the full consequences of it over the long term. But they don’t care about that.

You do care about the long term. You have been indoctrinated into believing you have to invest for the long term even though governments think only of the next election and play with the fiscal and monetary systems (no the FED is NOT independent as far as I am concerned)  in order to get voted back into power. They use the tax exempt carrot to get you to invest for the long term. In short you are being manipulated for their benefit.

The financial industry tells you to invest for the long term because they can only make their huge bonuses by having all your money at risk all the time in diversified investments that have a habit of going negative in sync just when you are about to retire. Failing that you can almost bank on a serious financial hit to your nest egg every 5, 7 or 10 years depending on which financial institution you talk to. In fact they tell you you can expect this to happen. But they tell you not to worry because you will miss out more by not being fully invested all the time and riding the investment roller-coaster.

You see much of the financial world is “gaming the system” using your money. They get paid bonuses to do just that. It should not just be about returns, especially if your up 10%,15%, 20% a year over three years and then you lose 50% of your capital plus your gains in just six months, every 5th, 7th or 10th year. And even worse if you lose it the year you retire. It should be about capital protection, avoiding large losses and consistent income for baby boomers. If that comes at the expense of high (risk) returns so be it.

Money moves like a wave out into the community. You, the poor dumb consumer (baby boomer) are the last in the chain. Right now there is a massive amount of printed money sitting in the banks. As you know the banks get first pick at the money and they are not lending it yet. When they do prices are sure to rise as that money flows through the economy, if all the theory about inflating the money base results in price inflation, is correct.

In my search for what I believe is the source of all our financial problems, the boom and bust cycles and why our nest eggs are destroyed every 5-10 years I have come across an eBook called, “The Great Credit Contraction” by Trace Mayer. I have watched him on video and read several articles on his web site, The Great Credit Contraction“. So far he makes a lot of sense to me. So much so that I have purchased his eBook and have added it to my Blog page permanently. You can find it down on the bottom right hand side. Or click on the image of the eBook above.

The eBook is a great primer for Baby Boomers to learn how the money and credit system works and what you can do to try to protect your nest egg and avoid large losses.

Trace Mayer tells us we need to;

• Understand monetary science and basic economic law
• Distinguish between money and fiat currency
• know how to protect your money with bailment instead of fractional reserve banking
• know the effect of Mr Bernanke’s “quantitative easing” on your retirement nest egg

You can read articles by Trace Mayer on each of these topics on his website before purchasing the eBook if you like.

You can also sign up for a mini course on “Monetary Science and Basic Economic Law”.

I’m part way through reading the eBook now and will write a post on it when I have finished it. So far it seems to represents a distillation of all my research and my thinking and I believe it can become the basis of learning how to avoid or at least minimise the damage done by governments and financial institutions to my nest egg.

I highly recommend you invest in this eBook. I should disclose I am an affiliate for this book and if you click on the image of the ebook on my Blog I will get paid a commission. If you believe my blog offers value then I would appreciate you buying the ebook from my blog. If not you can go directly to the website and buy from there.

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This is not right and is highly immoral.

It is a known fact that wealth creation and destruction moves in waves. When the great financial crisis began the focus was on the “too big to fail” institutions and they were rescued by Paulson and Bernanke using tax payers money.

As wealth destruction moved through to the”real” economy unemployment was the result. Private business suffered enormously because of what the financial industry did. So did their ex- employees.

Paying bonuses now just because they have paid back money to the government does not even begin to address the real wealth destruction. Once again this is the short term response when the long term issue is what matters. They need to be held accountable for what they did and be made to put it right. This could take years.

But if they were put under the gun to perform and be accountable we may find there are some great minds amongst them and they might actually get the economy moving again far more quickly than government stimulus packages. Instead they are using money they have begged, borrowed or stolen to bet on the stock market and have deposited the rest with the FED to get paid interest - all as far as I am concerned at the world’s expense.

It should be the responsibility of the financial industry to provide unemployment benefits to the people who lost their jobs due to their negligence. The bonuses should be used for this task. All bonus money should be paid into a fund charged with the responsibility of getting all those who lost their jobs as a result of Wall Street’s stupidity, back to work and to compensate them for lost income.

If these financial wizards are such great creators of wealth then it should be a “no-brainer” for them to invest in the small businesses they wrecked and help ensure those business grow and survive and take back their employees.

There should be no bonuses until they have righted the wrongs they have committed. The only measure is unemployment. When the unemployment percentage is back to what it was BEFORE the financial crises then they can go back to their bonuses.

But those bonuses should never again be determined by anyone except the shareholders, the rightful owners of a company.

A law should be passed that if any financial person who was employed in activities that caused the financial crises leaves the US to take a higher paying job in the same industry overseas, they will be taxed as if they are working in the US, but at a rate enough to deter them from such low-life practice. In fact if they don’t stay and rebuild the financial industry it is almost an act of treason. If they try to “sneak out” then they should lose their citizenship and/or never be allowed back into the US. There has to be a cost to them for what they did. (This should apply to all nations too)

Some will say this is unfair. I say what about all the unemployed? Is it fair they lost their job when they might have been a thousand miles from Wall Street just doing their job? They were looking after their families, paying their taxes and being good citizens. If anyone in the financial industry where high risk business was being conducted says they were not responsible, I’d say they are liars. If they did not “feel” what was being done by themselves or others was not right then they have a serious ethics problem and should be barred from the financial industry for life.

The shareholders - YOU should have a vote on how much the bonuses should be. That does not mean the fund managers who hold your retirement money and have invested it in a corporation. It means you. The technology is there to make this very easy to do. You are disenfranchised as a share holder if your fund manager votes on your behalf and often doesn’t even notify you they have done so. This is criminal.

The management will tell you, you are not qualified to determine the salary and bonus of the managers of your own company. Yet you are qualified to lose your money when the management destroys the company through high risk financial dealings. When was this allowed to happen? Have the management done such a good job of protecting your company? The answer is a resounding NO!

If you were a share holder in many of Wall Street’ failed banks you LOST your money. The government were very quick to say the shareholders would NOT be bailed out. As if they were the culprits and as such the evil capitalist owners and should lose their money. Don’t you know that is YOU, you are the evil capitalist? You were probably a shareholder through your retirement funds. Why did you not march in the streets and demand a bailout of your shares as the owner of the company?

Share holders are the legal owners and have been disenfranchised from controlling their own company where the managers hold sway and appoint “independent arbiters” to determine their compensation packages. You have no rights but take all the risks.

Bonuses for the financial industry are perverse.

The financial industry is not like a manufacturing company. For instance a commercial bank has the right to create wealth out of thin air using the fractional reserve banking system and should not be rewarded for leveraging your bank deposits up to 10 times their value and receiving a bonus for each loan they make.

If I could build a car and then somehow create nine more out of thin air then I too could garner enormous unearned bonuses.

There is nothing right about being employed as a financial trader and then being given the latest technology at shareholder expense to then, with a few keyboard entries, loan out billions of dollars, or sell billions in collateralized debt and three months later get a fat bonus for being a glorified typist.

Now some will tell you these people are worth every penny but in the scheme of things very, very few have what it takes to create real wealth. Most just catch the momentum of financial leverage and take risks they would never take with their own money.

As a Baby Boomer you need to realise that nothing has changed. Even if Bernanke regulates it will be a regulatory sieve. There is a revolving door between Wall Street and the Governments. They won’t want that destroyed. It’s the FED that has to go and Banks should be allowed for real change.

Also how do you expect a finite number of tax payer funded regulators on government wages to police the Wall Street wizards being paid $500,000 to $10Mn just in bonuses this year even after all the wealth destruction they caused? These wizards are paid to find ways around regulations. Many will have worked for the government to establish the regulations and then will be poached by Wall Street to work around the very regulations they created.

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That just happened today and I have spent considerable time reading and absorbing much of the information I have found.

It started off quite normally with me wanting to catch up on some stuff from Ron Paul. I started at the Mises site where there are many FREE ebooks by current and long forgotten economists and economic writers (philosophy too. I know,  why don’t I get a life, but I like reading this stuff )

It was there a noticed a link to an article by Garet Garrett called, ” The Revolution Was“. In the 1930’s Mr Garrett was well-known and was a great critic of President Roosevelt’s New Deal. This article is an indictment of it and much of what he says in the article rings true today. Read it as a primer to reading his great book, “The Bubble That Broke the World“.

One thing caused me concern and that was why did government’s all around the world begin doing exactly the same things that were done from the 1930’s to the 1970’s, at the turn of the century? Mr Garrett’s book, written in 1932 and many similar ones plus the general state of the world economies in the 70’s clearly showed how Keynesian economics had failed and deficits really killed wealthy economies.

You might recall stagflation and many other economic ills in the 1970’s.

It was then I came across a link to a site called, “Generational Dynamics“. This site is owned and written up by John J. Xenakis. He explains Generational Dynamics as follows,

“That societies and nations make mistakes and then learn lessons from those mistakes. But generations grow older, retire and die, and are replaced by new generations who are too young to remember those mistakes and those lessons. When that happens, the mistakes are repeated.”

He claims the older generation who lived through the worst of the Depression and the War learned some lessons but the Baby Boomers now in charge have not had anything really bad happen to them as a whole. So they are not so risk averse.

Mr Xenakis does a great job of reviewing the book, “The Bubble that Broke the World” and relating it to our current economic situation.

“Mass delusions are not rare. They salt the human story. The hallucinatory types are well known; so also is the sudden variation called mania, generally localized, like the tulip mania in Holland many years ago or the common- stock mania of a recent time in Wall Street. But a delusion affecting the mentality of the entire world at one time was hitherto unknown. All our experience with it is original.

This is a delusion about credit. And whereas from the nature of credit it is to be expected that a certain line will divide the view between creditor and debtor, the irrational fact in this case is that for more than ten years debtors and creditors together have pursued the same deceptions. In many ways, as will appear, the folly of the lender has exceeded the extravagance of the borrower.”

The above sounds very familiar. It’s similar to things that I and many other people have written about the debauched use of credit today.

But this wasn’t written today. It appeared in a 1932 book that a web site reader recently alerted me to.

You can jump to specific content below;

Features of the “Universal Delusion”

“Global savings glut” in the 1920s

The financial services industry

Deflation following the crash

Financial collapse of central Europe

Saving Europe

Saving Germany

The securitization of credit

Foreseeing America’s future with China

I believe he has got something and it is worth reading what he has to say. Basically people may learn from history but generations don’t. I think that is the gist of it. So we are doomed to repeat it.

Where does this leave the Baby Boomer like you?

I have said many times we need to understand what happened to we can try to protect our nest egg in the future. It sure looks like the 1930-170 period of economic chaos and stupidity is about to be re-launched under a new generation.

Once again I leave it up to you as to whether generational dynamics will be of use to you in forecasting America’s destiny and your’s and protecting your nest egg. But you can read an online draft of Mr Xenakis’ book, “Generational Dynamics for Historians“.

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When the government changes the rules at their whim, or creates huge national debt and massive spending along with potentially large increases in tax there are just too many unknowns on which to plan a new investment.

This is made worse when governments do these things throughout the period of a business investment. Any one of the government changes could make an investment unviable after a business has committed significant resource to it.

Add to that banks are not lending to small business because they have no confidence either and because their money (much of it taxpayers money) is safer in their hands speculating on the stock market or deposited at the FED where they can get paid interest.

One last problem is many business may be waiting for “their turn for a government handout” so they may not invest in a new venture until/unless the government subsidises it and them.

The basis of our financial system is flawed  and so nothing will be fixed until governments have the guts to change the system. It is inherently unstable to begin with.

• Booms and Busts will continue until the world bans the fractional reserve banking system, and creates a free banking system.
• Booms and Busts will continue until central banks are removed and private banking made accountable for bad investments and over-leveraging and are allowed to fail. At the very least they should be forced to allow interest rates to float and find their “natural level” for the economic climate at the time.
• Booms and Busts will continue whilst ever governments believe there are votes in forcing banks to make below market interest rate loans to people who cannot afford them.
• Booms and Busts will continue until governments stop believing that printing money is actually protecting their nation from the downside of a boom and accept business that do bad things or make mistakes have to fail so the capital can be freed up to go where it can do the most good.
• Booms and Busts will become bigger, faster and more frequent due to technology. We have just seen how massive liquidity from printed money (doubling the money supply) has fuelled a stock market rebound that no one predicted. Even though it may be short lived savvy speculators have made a fortune including the banks saved by the tax payers.

• Whilst ever governments try to re-ignite the boom and prevent the bust tax-payer money will be spent and billions will disappear in an effort to defy economic gravity.
• Even if the great Keynesian experiment of spending our way out of a recession works, the cost of the debt will have such an adverse affect on the economic growth over the long term, as money that could have been invested goes to pay off the debt and as the people are taxed more to finance that debt. Or more money is printed to inflate the economy out of its debt and cheat the bond holders including China.
• As the IMF becomes a world bank with no accountability to any national government or law we can expect even bigger financial crises as they create money through the use of SDR’s ($250Bn created this year so far) and redistribute the wealth of the west to nations that have no or few laws, no or little government infrastructure, and many of whom’s biggest industry may be creating corrupt politicians.
• Price has been perverted. We can no longer rely on the price of major items. What is a “fair” price? If you buy now is it going to be significantly cheaper tomorrow or is the government going to offer a subsidy? Houses, cars, and even investments have all had their price grossly manipulated in an effort by governments to “protect the economy” and jobs.
• Mortgage Contracts have been broken, original house prices changed on mortgage documents, money given to people to purchase new cars. All these distort the true price. How can GM work out it’s true profit when the government has bailed it out and then offered it’s customers tax payer money to buy its cars? Contracts don’t mean anything anymore.
• “Too Big to Fail” will continue to be the business model for powerful financial institutions in bed with government and will result in always destroying the peoples’ wealth to preserve the corrupt and fraudulent banking system.
• Until all the Universities teach all branches of economics including Austrian and the full history of economics we cannot hope to have the majority of economists think that spending to get out of debt is irrational. Universities are no longer a place of learning and discovery, they are a place for brainwashing and imposing one view.
• Fannie and Freddie now have an open credit with the government for as much money as they need. They own or control 95% of US mortgages with the Treasury and the FED buying up the mortgage backed securities. This is all toxic debt. Fannie and Freddie are one big black hole for taxpayer money for years to come.
• Major parties in most democratic countries have fought for the middle ground which includes using taxpayer money to finance people who don’t work, people who do work but pay no tax, but all are voters. Many of these people will continue to vote for those politician as that give them the most benefits for FREE. We are at a tipping point where they will be more “have not’s” than “have’s” so winding back the welfare and handouts might be almost impossible.

So without a stable economy and a government that does not change the rules and does not bailout whole industries using tax payer money, and stops breaking contracts and upholds bankruptcy laws we can be sure of one thing - UNCERTAINTY. In such an environment investment in anything is a risk. But in such a risky environment, speculation can have huge rewards because of the high volatility.

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I did sign up and my subscription started on 1st March 2009. I received Peter Schiff’s book within about 2 weeks I think.

As expected I began getting Money Morning Reports and Money Map Reports. Many were just sales pitches to buy more stuff but that was not a problem.

The problem was I began getting subscription renewal notices only TWO MONTHS after the annual subscription began.

I first got a renewal notice in May I think. In the second paragraph of the letter it said,

“However,  our  records  indicate  that  your  subscription   is coming  up for  renewal  soon.  And  I’m sure  you’d  like to continue  enjoying  the  gains  realized  by following   the  recommendations    of  knowledgeable    insiders  who  are  constantly   following   the  money  all over  the world.”

So after just 2 months my subscription needed to be renewed! I’d call that forward financing at best

My records show I was only two months into my annual subscription period.

I thought it was a mistake so I emailed them,

“Sent: Friday, May 22, 2009 10:15 AM

To: CustomerService@moneymappress.com

Subject: The MoneyMap Report Subscription

Hi Customer Service,

I am a little concerned to receive a yearly subscription renewal for the Money Map Report within a few weeks of signing up for it.

Today I got a subscription renewal letter in the post. Apparently my “subscription is coming up for renewal soon”.

The letter fails to mention the date the subscription is due.

It was my understanding that when I subscribed I got 12 months of the Money Map Report as part of the deal.

So why am I being sent a renewal notice possibly 10 months before it is due and why is  there no information about my subscription on the letter?

Am I missing something here?

Regards,

David Bates”

Their response was,

“Thank you for your inquiry. You will only receive another notice one month before your subscription expires.

Ian
Member Services ”

They failed to answer my request for the date of my subscription so I sent another email. Ian responded (with an email address from the oxfordclub.com),

“Your current subscription began on 3/1/09 and will expire on 2/10/09.”

And again added,

“We apologize for the early receipt of a renewal notice, you will not receive another one until one month before your subscription expires.”

I didn’t notice the second date was incorrect at the time.

Then in June I get another Renewal Notice with the same text in the letter as above. I sent another “please explain” email,

“Hi Ian, Members Services,

I have had a second subscription renewal notice dated 16^th June,  sent to me despite being informed I should not get one until one month before my subscription expires.

I am a little suspicious now of why they are sent out within 7 and 5 months for the renewal date. Especially when there is no subscription date on the renewal form. It’s too easy to pay a second time. I’ll keep this renewal notice to compare with any future notice to ensure I do not have multiple accounts with Money Map.

Can I ask you again to ensure I get a renewal notice one month before it is due and can you please add the subscription anniversary date to the form, so subscribers are reminded of that date when paying?

Thank you.

David Bates”

I again requested the subscription dates be clearly stated on the renewal notice.

This time I got a response from Ryan who said,

“Hello,

Your subscription will expire on February 1, 2010, and I have set up your account to receive just one renewal notice before your renewal it due.

Thank you for your time,

Ryan

Member Services”

Again my request to put the period of the subscription on the renewal notice was ignored so I asked again,

“Hi Ryan,

May I ask you to respond to my request below please?

It concerns me that the subscription renewal does not have the expiry date on it. It also appears there might be different organisations involved in chasing subscription renewals. So it does appear to me that subscribers can pay more than once unless they keep good records on their subscription services.

Regards,

David Bates”

I got no response and just gave up.

But then despite being told I would only receive one renewal notice one month before it was due I have now received notices on August 16th 2009, October 12th 2009 and November 11th 2009.

This is downright annoying and poor service at best. I wonder if I did subscribe would the renewal’s keep coming?

It makes me suspicious too of why they would keep sending the renewals, even after telling me twice they would not do so.

I don’t appear to have got a renewal for December. Maybe they finally updated my record. But what about those people that have not complained?Are they still getting renewal notices every month from the date of their initial subscription?

Why are Subscription Services allowed to send out renewal notices WITHOUT the subscription renewal day printed clearly on them?

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What I heard in that interview is nothing short of frightening when you consider what this guy believes about economics.

Much of the interview was on the Climate Change Summit and the need to finance the underdeveloped countries to fight climate change effects on those countries. As you may know Clinton has offered to give them $100Mn of your US Dollars as an initial payment.

However this is not a one time thing. It is likely to be paid every year into the future and is likely to increase as all payments to these institutions tend to do.

The IMF is hoping to get it’s hands on this money so that it can dole it out in the form of SDRs (Special Drawing Rights) to the underdeveloped countries.

SDRs are IMF currency and basically give these underdeveloped countries a gift of your money because they can use SDRs to exchange for one of four currencies in the SDRs that are freely trading in the foreign exchange markets. This is to help them out because their own currency may not be tradable or may not be worth much against the major currencies.

Note SDRs are fiat currency and are just printed by the IMF at the direction of the US government. Just like the FED and central banks they can create money out of thin air. Until recently they only printed about $25Bn SDRs but then got approval to print $250Bn to help poor and stressed countries through the financial crisis.

Back to the interview. Mr Strauss-Kahn’s opening remarks are,

“Almost everyone recognises that this question of climate change is one of the biggest challenges mankind ever faced and at the same time nobody is happy with tax. The problem is we need resources (read  YOUR MONEY) to face this problem and if it is time and I believe it is true that future of our children and grand-children at stake. The question is that if we will be happy with a new tax.”

He then considers the fact that the developed world is in the middle of a financial crisis,

“On the other hand the questions of taxes jeopardising the recovery cannot be solved as such. It depends what you do with the money. When you send it we can eventually argue exactly on the opposite side.”

This is somewhat confusing but let’s move on. This is the important bit and why you should be concerned,

“It is a very well known argument in public finance that tax collected by the government and spent finally (I think he means fully spent here) has more affect on growth than in the private sector.

What? Is he telling us that governments spending our money are more efficient at growing the economy than the private sector? This is just plain stupid. Has he not seen the demise of the communist bloc where such logic caused their downfall?

Strauss-Kahn is in charge of the IMF and is about to become the global central bank and become very powerful with billions of your dollars given to him to redistribute by your government.

And here is his “reason” for saying that,

“Just because the private sector you have a part of it that is saved as when it is collected and spent by the government - totally spent.”

He’s right about one thing. Governments spend your money. The private sector invests your money. The private sector aims to make a profit (I think that might be his “part of it that is saved”) so the investment can be maintained and grow.

Governments spend all the money they get and so will keep wanting more and more. You can bet the money will go to these underdeveloped countries and much of it will either be misallocated, misspent or disappear into someone bank account. You won’t even get to supervise all the money you are giving them.

Mr Strauss-Kahn likens the $100Mn to,

“… a stimulus but not a one off. It will be helpful for the global economy and the new growth model we have to build ….”

Note that statement - a new growth model - that is IMF-speak for redistribution of your wealth.

He mentions Soros who favours using SDRs to redistribute your wealth.

Now he does see a problem with printing all this money - inflation,

“…. inflationary effect but maybe this is the price for people to pay for the world to address this problem. It needs more study, but traditional finance will not be enough”

Traditional finance might be actually using money donated to the IMF through taxes created out of wealth and not printed out of thin air. He wants to create new money using SDRs I think - That’s non-traditional.

This is probably the most dangerous thing to your nest egg. If the IMF is able to create inflation on a global basis through printing SDRs then the poor and those on fixed incomes (Baby Boomers especially will feel it) will be the ones to suffer most. The rich, the bankers and those with secure jobs will benefit from inflation through taking out loans and using debt to offset inflation.

So you can almost guarantee that $100Bn will soon balloon to $1 Trillion as inflation takes over. Don’t all government programs end up costs 10 to 100 times the original estimate?

Until now most “foreign aid has been a very small percentage of your wealth. But as with Obamanics in the US where all government spending has to be massive this will apply to the world.

I’m not sure where growth will come from if 5-10% of the developed world’s GNP is hived off and given to the underdeveloped world and just spent. That means much less money will be available to invest and grow the world economy.

Not to mention what effect replacing the US Dollar with SDRs is going to have - Long term unknown and as usual will not even be considered.

Get your Nest Egg ready to take on inflation. That means using other people’s money like the rich do.

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