vigilant or surprised?

vigilant or surprised?

Consider that whenever something changes, various people may recognize at varying times that it is happening. Some notice earlier than

End the Fed

End the Fed (Photo credit: r0b0r0b)

most, some later than most, and some may not notice at all. It’s the nature of all “news” that it spreads- sometimes quickly and somtimes slowly- but always spreading across time, eventually to more and more people.

When your mother was pregnant with you, certain people learned about it very early, while some still do not know about it as of now. The smallest kids in your family may even be shocked to see pictures of their ancestors as children. “But that can’t be grandpa. He’s old! No, really, who is this in the picture? Yeah, and what’s with those weird-looking clothes?”

Have you been extremely confident in something, then were surprised when it did not happen? “I was clear that it had been consistent time after time before, so when something else happened instead that time, I was literally shocked.”

Or have you ever been warned about something, yet were still surprised when it actually happened? “I knew that it could be possible, but it just seemed so… you know!”

Sometimes, when we learn of some particular news, we adjust immediately. Sometimes, we freeze, perhaps waiting to see what other people do. Sometimes we may resist the possibility that something actually is happening: “yeah, but that really shouldn’t be true” or “yeah, but that would be a major interruption to my plans, so isn’t there some way that we can change it back to how it used to be? Who’s fault is this anyway?”

You may recognize the classic “stages of denial” of the language of psychology: shock, rage, negotiation, grief, acceptance and so on. Freezing is the reflex of shock. Blame is the reflex of rage. Seeking remedial intervention is the reflex of negotiation. Co-miseration is the reflex of grief. Finally, adjusting personally is the last resort when all else fails.

We are in the midst of an enormous transfer of wealth from the desperately indebted middle classes. I say desperately indebted because the aggressive borrowing habits of the middle class have been the only way for some of the middle class to avoid bankruptcy. After getting huge real estate debts and auto financing, much of the middle class had little choice but to go deep into credit card debt to cover their prior debts. With huge monthly minimums for auto and home loans, and with no savings from current revenues after current expenses, it was a matter of time before any prior savings were exhausted. At that point, the alternatives were to go deep into credit card debt or simply file bankruptcy.

Since there is a cultural presumption that all debts can be paid and in fact should be paid, filing bankruptcy is considered by some to be the next worst thing to do besides outright crime. Bankruptcy is considered shameful by many.

Let’s imagine that a certain tax rate is raised. Suddenly, there is more tax liability than before, but has the amount of money available to pay those debts increased?

Or, let’s imagine that a new activity is criminalized and new fines are imposed. One day it is legal to drive without a seatbelt on, then it is illegal and getting caught results in a fine. The amount of debt to courts thus increases, but what about the amount of money available to pay those new debts?

The fact is that whenever a government increases the debts of its population to the government- whether punishing a specific violation or punishing the activity of receiving income or simply requiring a fee to be paid for something that before was free- then all other debts are less likely to be paid. Each new debt (except those that also create new money) actually reduce the value of all other debts.

Federal Reserve Police

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I know many people who think that the Federal Reserve system of monopolized lending is a method of creating money. It’s not- or not exactly. It is however a method of creating new accountings of debt (AKA invoices or accounts receivable). All new debt is not new money. Only debts of US Treasury bonds create new money, and yes the Federal Reserve is an operation involved in the debts of the US Treasury, but not how many people may think.

So, a new tax debt does not create any new money. A new civil fine debt does not create any new money either. Even a new mortgage debt does not create any new money- or not inherently. REPEAT: Each new debt cntract (except those that also create new money) actually reduce the value of all other debts (by reducing the likelihood that the other debt contracts could ever come close to being discharged.

Only the US Treasury can sell the future productivity of it’s underwriters, the US Citizenry. That is how the US Dollar notes of the the Federal Reserve are created- by the US Treasury selling the future productivity of it’s underwriters. The US Treasury sells or borrows against the future productivity of it’s underwriters and the only operation through which it receives loans from private investors is the Federal Reserve.

The Federral Reserve has a monopoly on the borrowing of the US Treasury. No investor can lend money to the US Treasury except through the Federal Reserve. That is what they do. While that may not sound like much, it is actually huge.

The Federal Reserve holds the purse-strings as to the US Treasury entering new debts.The US Treasury can only enter new debts when two conditions are present: first, there is a private investor willing to lend to them against the collateral of the underwriters of the US Treasury and second, the Federal Reserve has to approve the new debt contract.

Note by the way, that the Federal Reserve’sUS Dollar notes are in fact contracts issued by the Federal Reserve. Obviously, no one can

Description: Newspaper clipping USA, Woodrow W...

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lawfully issue contracts of the Federal Reserve except the Federal Reserve.

How is this important? I will spare you all the history and simply note a principle from the average business. If you have to go to the boss to get any new contract approved, then the boss is responsible for choosing to enter any new contract and can stop doing so at any time. By the way, in this analogy, the Federal Reserve is the boss.

No one except the Federal Reserve can simply stop the issuing of new debt against the US Treeasury. Private lenders can slow down or speed up the issuing of new debt against the US Treasury, simply by being more or less aggressive in offering to lend money to the US Treasury against the collateral of future (and current) assets of it’s underwriters. However, no single operation has nearly the influence of the Federal Reserve.

Private lenders of course have influence on the creation of new currency, but all of them have influence only through the monopoly channel of Federal Reserve. Practically, the Federal Reserve has allowed for the gradual inflating of their currency, the US Dollar note. Functionally, the Federal Reserve is the guarantor that guarentees to those who lend to the US Treasury that those lenders will be re-paid.

That is all the Federal Reserve is, but again, that is quite an immense concentration of influence. By the way, for those who do not know, the Federal Reserve is not only a private copany, but is basically an insurance company. They insure that the US Treasury will pay it’s debts by collecting from the underwriters of the US Treasury. Ultimately, that is the sole function of the Federal Reserve.

Now, we return to the issue of the desperation of the middle classes in developed nations like the US. They have entered into excessive debts, then even more. At some point, this can become a point of concern for the other parties in the currency contracts, including the insurance company (the Federal Reserve). Note that the Federal Reserve could also be described as the collection agent with the debtor being the US Treasury (AKA the underwriters of the US Treasury: US Citizenry).

By the way, at the risk of blowing you mind, let’s look at what the United States District Court of Appeals has ruled about the word Citizen: “Citibank is deemed a citizen of any state in which it physically maintains branches, see 28 U.S.C. § 1348; Wachovia Bank v. Schmidt, 388 F.3d 414, 416 (4th Cir. 2004).” That quote is cited from NANCY ISAAC BURGOS v. CITIBANK, N.A.

Most people do not know what the legal definition of Citizen is. Most people also do not know the function of the Federal Reserve. It functions to systematically extract the wealth of the US Citizenry and transfer it to the creditors owed money by the US Treasury. That is what underwriters do. They pay the debts of the party whose debts they insure.

What company makes sure that the debts get paid by those who are contracted to cover them? We could call it a variety of things from the collection agent or the insurance company, but the point is that there may be a company devoted to enforcing the debts of the detbor(s).

I am not condemning or condoning that function. I am simply acknowledging it.

I can pick up a physical US Dollar bill and show you the parties on that contract, show you the signatures of the authorized agents of those parties, and also tell you the history of those contracts, which are approaching their 100th anniversary. Could that be a significant date?

Most people fundamentally misunderstand the dual apparatus of inflating and deflating currency. What if the entire purpose of inflation is to produce sudden deflation-like slowly inflating a balloon, one breath after another, and then suddenly allowing for the balloon to deflate quickly?

Many have no knoweldge of the mechanism of deflating currency. The result of deflating of currency is that virtually all debtors transfer all their assets to the creditors.

If, at some point, the creditors lose faith in the idea that their debtors can cover all of their debts, there may be an intervention. Generally speaking, such an intervention is what happened in 1933 when the US government criminalized the ownership of gold by US Citizens. Citizens were forced to turn in their gold and their US Notes payable in gold in exchange for Federal Reserve Notes denominated in US Dollars.(payable in US Dollars). However, US Citizens were allowed to keep their other assets and the “losers” in that intervention were not so much the US Citizens as the holders of the Federal Reserve’s US Dollar Notes, which functionally dropped in value 41% overnight on January 31, 1934.

However, some news travels slowly. Not all holders of those US Dollar notes knew about the overnight devaluation. Eventually, that devaluation spread across all market prices for purchases involving US Dollars.

Deflation is a correction which reverses excessive perceptions of inflation. Deflation is not so much real as a phenomenon of correcting the error of an excessive devaluation of a currency because of a misunderstanding of inflation.

Simply, people tend to think that more debt equals more money. Again, that is simply not true. Each new debt actually decreases the functional vlaue of all prior debts, and decreases the likelihood that any particular debt will be “repaid” in full, because not all debts can be paid. There is just not enough currency in circulation to cover all the debt contracts accounted as legally enforceable.

By the way, the term “re-pay” is technically inaccurate in the case of most debt, because debts are created by an act of legal declaration, specifically an invoicing or charging of a party by another, such as a court. Even the term indictment is a commercial term involving the formal recording of a charge (an accounting of debt).

Borrowing is simply one of many ways for a debt to be legally created. Not all legal debts may result in the creation of new currency (liquidity), even if they result in new accountings of accounts receivable (debt charges).

For instance, one business may order $100 of supplies from another business. Both businesses enter into their accounting ledgers that a debt of $100 is owed from one party to the other. The supplies may be shipped and delivered. The invoice may say that the debtor has 30 days to pay before interest will be charged.

Now, no matter how much debt is recorded by the accountants- even if huge amounts of interest are recorded as legally collectible beyond the initial $100 debt- how much new currency has been created from all this new accounting of debt? None at all, right?

So, systematically, among the acountings of households and pbusinesses, a vast misunderstanding of the function of currency is about to be corrected. A vast undervaluing of the finite number of currency units is about to be recognized by the mainstream businesses and households. Thus, the removal or correction of that mistaken undervaluation is called “deflation,” which is accounted as an increae in purchasing power of each finite currency unit. That recotgnizing of a new higher appraisal of purchasing power results from the deflating or imploding of the debt bubble, that is, a sudden decrease in the availability of new lending as the Federal Reserve fulfills it’s ultimate and predictable function by tightening it’s purse-strings, reversing decades of inflation into a sudden deflationary collapse, producing a huge transfer of wealth away from middle class debtors to the creditors who lent to the US Treasury against the collateral of the full faith and credit of the underwriters of the US Citizenry, which by the way includes Citibank and other corporate citizens. This time, the entirety of the assets of the entire citizenry, including corporations, is subject to a communist appropriation (government seizure) which may be called a sopcializing of real estate, industry, and property in general.

Consider that whenever something changes, various people may recognize at varying times that it is happening. Some notice earlier than most, some later than most, and some may not notice at all- or only notice the results of it. What is there to do about the emerging developments? How is there to be about it?

The Federal Reserve Bank of Dallas building.

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One who has been repeatedly surprised lately (or while reading this) can either be motivated to be vigilant or can continue being surprised. Those who are vigilant may even be able to benefit from change.

By noticing change early, one can minimize risk or avoid loss completely. One may even position one’s investments to receive a portion of the sudden transfer away from the bulk of surprised middle class debtors.

In addition to forecasting various economic and political changes (and noticing the early stages many years ago, while many still have not), I have developed some skills relevant to the changes emerging. One thing is the separating of one’s liabilities from one’s assets and revenues. Liabilities associated with each “natural” US Citizen and it’s Social Security Number (which underwrites all the debt of the US Treasury) can be concentrated under the SSN, while assets and revenues (at least “1099” revenues) can be routed through a different accounting channel (such as a Trust or LLC with a EIN rather than an SSN), as well as offshore (out of jursidiction) shelter entities.

Another adjustment is the aggressive settling of all debts. The top officers of the lending institutions may generally understand the mechanisms of inflating and deflating currency, plus the consequences of a planned deflationary redistribution, as well as the regulations of bankruptcy law (which is also changing, by the way- not without the lobbying influence of certain commercial interests). Thus, the lenders tend to be open to various discountings of debts, from short sales of real estate to settling of credit card debt for dimes on the dollar.

Note that services that are relevant to a deflationary transfer of assets will also tend to prosper, while many debt-financed industries are subject to severe contraction or even collapse. In addition to financial sheltering and debt re-negotiation, there is also the matter of prudent investments appropriate to market conditions of currency deflation. Certain invesments will rise in value hundreds of percent quickly- rather like flipping real estate on a $10,000 down payment could produce quick gains of several times that in years not so distant. Sometimes a quick rise of hundreds of percent is available in months and sometimes much faster (or much slower).

Whenever there is a rapid transfer of wealth, the possibility of quick gains is concentrated into certain specific investments. The capacity to forecast which investments are appropriate at a particular time is perhaps one of the most valuable of all financial competencies. Whenever there is a huge transfer, there is a lot to spread around among those well-positioned to receive the benefits of the sudden transfer. Contact me for specifics.

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