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  • The Fed: Dishonest or Incompetent?

    The Fed: Dishonest or Incompetent?

    by Eric Janszen

    August 26, 2006


    Today's Quick Comment notes the recent epiphany experienced by the mainstream press: the Fed has been lying about the housing bubble for years by claiming it didn't exist, just as it lied about the stock market bubble when Greenspan and company claimed that bubble didn't exist. Well, the mainstream press are not exactly stating that the Fed was lying. But they are running stories about the housing market that can only be true if the Fed had either been lying -- again -- or if the Fed was, collectively, dumber than a bag of hammers -- again.

    You decide.

    Get ready for a good six months of "It's just a house, stupid" stories like those below, reminiscent of the "There's no New Era, stupid" articles about tech stocks that came out of the mainstream press in 2001 a year after the collapse of the NASDAQ bubble and a basket case NASDAQ made it apparent that the bubble wasn't coming back. To wit:
    Forget the Mansion: Why Buying Bigger Doesn't Guarantee a Rich Retirement
    August 25 2006 (Wall Street Journal Online)

    It's among today's most popular retirement-savings strategies: Buy the big house, hope the real-estate boom continues and then trade down at retirement, thus freeing up home equity that will pay for years of early-bird specials.

    Sound appealing? Trouble is, you will fork over a heap of dollars -- and you'll end up with a surprisingly small nest egg.
    and
    Getting real about the real estate bubble
    August 25 2006 (Fortune)

    Fortune's Shawn Tully dispels four myths about the future of home prices.

    For the past five years, the housing bulls have been trotting out one rational-sounding argument after another to explain why the boom made perfect economic sense.

    Forget about a crash, they assured homeowners. Expect a "soft landing" where your three-bedroom colonial in Larchmont or Larkspur not only holds onto its huge price gains, but keeps appreciating at a "normal," "sustainable" rate of 6 percent or so into the sunset.

    Americans wanted to believe, and they did. Now, the giant popping noise you're hearing is the sound of yesterday's myths exploding like balloons pumped up with too much hot air.
    Why do the common sense articles that dispel obvious bubble myths come out each time a bubble ends? The answer is that the publishing business becomes an unwitting participant, dependent on the advertising revenue generated by the companies that are the "producers" in asset bubbles, along with everyone else involved: the CEOs, management and employees of the companies that are "producing" the object of speculation; the banks that finance them; the lawmakers who rely on the capital gains tax revenues from sales of securities; and the industry of brokers, consultants, advisors and so on that grow up both to make money off the bubble and who act as boosters to re-enforce and perpetuate it.

    It's important to note that during the tech stock bubble, the object of speculation was not the products that the high tech companies produced -- the computers, software and services -- but the securities that the companies issued. At the time, iTulip.com as a parody of a tech stock company made light of this by creating no products at all except bogus stock certificates, of which we sold hundreds. It's just as important to note that in the case of the housing bubble, products were built -- housing -- but again the object of speculation is not the house itself -- the product -- but the underlying security, the mortgage paper that is traded.

    Anyone who was part of the high tech industry and lived through the aftermath of the collapse of the NASDAQ bubble can tell you how devastating the collapse was to the high tech industry. There is still debate on how badly the collapse of the housing bubble will hurt the US economy. My position is that the damage will be slower but more extreme and widespread because, as Greenspan himself noted, housing represents 70% of household wealth, consumption which accounts for 2/3 of economic actitivity is closely tied to housing, and housing generated between 20% and 43% of private sector employment since 2002, depending on whose statistics you believe. By contrast, stocks represented less than 20% of household wealth and the high tech industry itself represented less than 2% of economic activity at the peak of that bubble.

    I doubt anyone seriously believes that the Fed did not see a housing bubble forming in nearly all regions of high population density around the US, creating from the standpoint of aggregate national economic impact a national housing bubble. Why did the Fed allow a housing bubble to form? A friend who runs a public company said it best, "Did they have a choice?" Meaning, the alternative following the stock market bubble collapse was a harsh recession, perhaps a deflationary depression like Japan's. I believe this is the reason, but still wonder, once the housing bubble got out of hand, why not at least speak to it publically and try to talk it down?

    One theory is that the Fed has decided that it can no longer constructively engage asset bubbles once they are underway, that the Fed winds up doing more harm than good when it tries.

    The last time the Fed moved actively to end an asset bubble and said so was in 1994. As discussed in The Bubble Cycle is Replacing the Business Cycle, Greenspan is quoted in the FOMC minutes saying, "When we moved on February 4th, I think our expectation was that we would prick the bubble in the equity markets." The results were less than delux, "...while this capital gains bubble in all financial assets had to come down, instead of the decline being concentrated in the stock area, it shifted over into the bond area. But the effects are the same. These are major capital losses, which have required very dramatic changes in the actions and activities on the part of individuals and institutions." He went on, "So the question is, having very consciously and purposely tried to break the bubble and upset the markets in order to sort of break the cocoon of capital gains speculation, we are now in a position—having done that and in a sense succeeded perhaps more than we had intended—to try to restore some degree of confidence in the System."

    The Fed quickly reversed course in 1995 by changing reserve requirements and other rules as documented in What (Really) Happened in 1995? by Aaron Krowne.

    Since then, you will find no mentioned of asset bubbles in any FOMC meeting notes, with the single exception of President of the Federal Reserve Bank of Boston, Cathy E. Minehan, saying during the June 4, 1999 meeting, "We recently held a meeting of the Bank's Academic Advisory Council which, as you all know, includes two or three Nobel Prize winners and people from Harvard, MIT, Yale, and so forth. The discussion focused on issues related to productivity growth, labor market tightness, and asset market bubbles. The group was lively, to say the least. But some consensus was reached on the need for action that might take the wind out of asset markets, even in the absence of tighter monetary policy, perhaps through increased margin requirements or increased supervisory oversight on credit extended, particularly in the day trading operations."

    Nonetheless, the Fed did raise interest rates in 1999 and those rate hikes, by intent or not, did precipitate a collapse of the stock market bubble, and a series of 16 quarter point rate hikes up until last month have collapsed the housing bubble. The result will be worse than most expect.



    Remember the pictures of tourists walking out onto the drained ocean floor before the Asian Tsunami hit in 2004? They were lured by the miracle of a surprising opportunity to walk out onto the exposed ocean floor. Fish flopped on the surface. All you had to do was reach out and pick them up.



    Intuition might tell you, "Well, this can't been good. Whatever force has sucked the ocean away from the shore is probably going to send it crashing back in with equal positive force later." The sudden, peculiar appearance of the ocean floor that had for a thousand years been covered in 100 feet of ocean water says: head for higher ground. Those who failed to do so drown when the water surged back, and when it receded again it left heaps of destruction and human loss in its wake.



    Asset bubbles are like tsunamis except they are man-made, out of money instead of water, and instead of lasting for a few minutes they last for years. They draw people in, lured by apparently risk-less money. Just bend over and pick it up. What iTulip.com has been telling you for eight years is this: when you see apparently risk-less money -- financial fish flopping on the bare ocean floor -- head for higher ground. If you have the means and the risk appetite, maybe grab a few fish first. But in any case, head for higher ground. Don't stay too long and financially drown.



    During the stock market bubble, that meant heeding my warning to sell in March 2000 that the tech stock bubble was going to pop. In that case, you could run slowly to high ground, as stock markets are liquid and give you plenty of opportunities to exit. During the housing bubble, that meant heading my warning in 2004 that housing markets end by seizing up, and that you can get trapped, like the tourists on the beach. And I could not have been more explicit about how the collapse of the housing bubble was likely to unfold. (Apologies to long time readers for all this past history... this is for new members of our community.)

    When the tsunami of money recedes it leaves behind heaps of economic destruction within the industry that is the focus of the bubble. The technology industry has never recovered from the collapse of the NASDAQ bubble. The real estate industry won't return to normalcy, that is, to grow at the rate of inflation, for ten years or more.



    The US appears to be on a continuous treadmill of asset bubbles. The Fed needs to allow them to happen and can't stop them, can't even admit that they exist and has to lie about them. Bill Gross in his August 2006 article The End of History and the Last Bond Bull Market appears to think this series of bubbles, of which housing is only the most apparent, will terminate with the end of the current bubbles, creating one last bond bull market, a period of deflation presumably followed by a crushing inflation, much in line with our Ka-Poom theory.

    There is a darker explanation than either mere Fed dishonesty or incompetence. A reader recently pointed me to the web site of Catherine Austin Fitts, the founding director of Solari, Inc. who previously served as Managing Director and Member of the Board of Directors of the Wall Street investment bank, Dillon, Read & Co., Inc; served as Assistant Secretary of Housing/Federal Housing Commissioner at HUD in the first Bush Administration; and was the President and Founder of The Hamilton Securities Group, Inc., a broker-dealer/investment bank and software developer. In a long series of writings, she states:

    "The supremacy of the central banking-warfare investment model that has ruled our planet for the last 500 years depends on being able to combine the high margin profits of organized crime with the low cost of capital and liquidity that comes with governmental authority and popular faith in the rule of law. Our economy depends on insiders having their cake and eating it too and subsidizing a free lunch by stealing from someone else. This works well when the general population shares in some of the subsidy, grows complacent and does not see the “real deal” on how the system works. However, liquidity and governmental authority will erode if the general population becomes aware of how things really work. As this happens, they begin to understand the power of innovative technology and re-engineering of government resources to create greater abundance both for themselves and other people. As this happens, they lose faith in the myth that the current system is fundamentally legitimate. This jeopardizes the financial markets that depend on fraudulent collateral and practices to continue to work. It also jeopardizes the wealth and power of the people who are winning with financial fraud."

    Her take on the series of asset bubbles can be summed up as follows:

    "This consensus is made all the more powerful by the gush of growing debt used to bubble the housing and mortgage markets and manipulate the stock, gold and precious metals markets in the largest pump and dump in history — the pump and dump of the entire American economy. This is more than a process designed to wipe out the middle class. This is genocide — a much more subtle and lethal version than ever before perpetrated by the scoundrels of our history texts."

    Strong words, indeed. I'm still digesting the contents of her web site and am interested to hear comments from the iTulip community on it. Give yourself an hour to read it.

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    Last edited by FRED; 09-28-06, 04:10 PM.

  • #2
    Re: The Fed: Dishonest or Incompetent?

    Many of us are educating people at an "alarming" rate (alarming to the elites). I am absolutely amazed at how fast the word is taking hold. Many "common man on the steet" types already are aware of Aaron Russo's msg in "America: From Freedom to Fascism" even before it's release. The Elites are fighting a force they've never had to contend with before and it's called the Internet. Therefore you can expect a full court press to control and then subvert the internet. Jeff Chester of The Nation puts it well here:


    "The nation's largest telephone and cable companies are crafting an alarming set of strategies that would transform the free, open and nondiscriminatory Internet of today to a privately run and branded service that would charge a fee for virtually everything we do online.

    Verizon, Comcast, Bell South and other communications giants are developing strategies that would track and store information on our every move in cyberspace in a vast data-collection and marketing system, the scope of which could rival the National Security Agency. According to white papers now being circulated in the cable, telephone and telecommunications industries, those with the deepest pockets--corporations, special-interest groups and major advertisers--would get preferred treatment. Content from these providers would have first priority on our computer and television screens, while information seen as undesirable, such as peer-to-peer communications, could be relegated to a slow lane or simply shut out.

    Under the plans they are considering, all of us--from content providers to individual users--would pay more to surf online, stream videos or even send e-mail. Industry planners are mulling new subscription plans that would further limit the online experience, establishing "platinum," "gold" and "silver" levels of Internet access that would set limits on the number of downloads, media streams or even e-mail messages that could be sent or received.

    http://www.thenation.com/doc/20060213/chester

    Comment


    • #3
      Re: The Fed: Dishonest or Incompetent?

      1. re the internet: with senator ted stevens, famous for his observation that "the internet is not a dump truck; it's a series of tubes," in charge of net neutrality, why worry?

      2. i came across references to catherine austin fitts a year or two ago. if you search for her name along with the phrase "enemy of the state" you get, e.g., http://www.ratical.org/co-globalize/CAFmrl.html , and http://www.scoop.co.nz/stories/HL0208/S00055.htm , and
      http://www.scoop.co.nz/stories/HL0203/S00066.htm . [the first two are mirrors, and i list both in case one goes down - you never know.] i read her story with fascination and alarm. you don't get e.g. former undersecretaries of housing writing conspiracy theory. [i take that back- i recall that pierre salinger, former white house press secty, got into the idea that a twa flight that exploded was deliberately shot down over long island.] but getting back to fitts' story: it scared me silly. it so threatened my view of the world as a relatively organized, relatively understandable if very complex place in which impersonal processes govern at the highest level, that i put it aside. the alternative was to bring out the tinfoil hat that bart likes to refer to. frankly, it makes me anxious [nervous, not eager] to contemplate reopening my mind to these matters, but i am prepared to do so with a forum such as this in which to discuss it.

      put on your tinfoil hats and read what's at those web sites.


      [for other articles, see http://www.solari.com/gideon/articles_about.html .]
      Last edited by jk; 08-26-06, 06:48 PM.

      Comment


      • #4
        Re: The Fed: Dishonest or Incompetent?

        Right!

        There are people in high places now coming out, willing to risk a lot in order to expose this corruption. Lee Hamilton the co-chair of the 911 commission came out last week with a stinging critique of the 9-11 report and disclosed new information about Pentagon coverups and malfeasance that the "commission" chose not to publish.

        Oddly enough it may take a bunch of women the likes of Catherine Fitts who finally create a loud enough rallying cry. For some reason men are quite asleep and afraid these days. We aren't talking about solutions... just which investment vehicle will enable us personally to survive while the country burns.

        Comment


        • #5
          Re: The Fed: Dishonest or Incompetent?

          I already have my tinfoil hat on so it didn't take much.

          Basically, I agree with her views and documentation, even though I can't comment on the 100% accuracy of a number of the specifics. It aligns quite well with other sources and my own research, as well as a number of the public charts on my site.

          John Perkins and his "Confessions of an Economic Hit Man" book covers similar areas.
          Here is an interview that Jim Puplava did with him last year. http://www.commondreams.org is Perkin's site.

          The bottom line for me is that most people are good folk, and to have stuff get as messed up as it is today doesn't happen by accident or coincidence... it takes intentional actions. And "evil" people do exist, in spite of what some namby pamby dilettantes, etc. want folk to believe.

          If that makes me a real tinfoil hat person in all the negative senses to some, then so be it. I see what I see, and its not pretty. Most of this stuff does not involve smoke filled rooms and Snidely Whiplash type evil laughs but rather is about a few "very best people" - who aren't.

          And yes, it has been very upsetting at times to me over the last two years as I've been looking and researching - despair has not been an unknown state.

          But to have isolated things like the very high correlation between various actions of the Fed and the level of the US stock market - well, I just don't view it an unrelated and do view those Fed actions as causative. Other central banks, to the degree that I've reseached them, show similar actions. My web site is my own vehicle for exposing a few of the actions of the small group of anti-social control freaks, and is something I can actually do about it.

          More power to Catherine Fitts and others like her!

          One of my favorite sound bites:
          http://www.nowandfutures.com/grins/oz_curtain.wav
          Last edited by bart; 08-26-06, 06:42 PM.
          http://www.NowAndTheFuture.com

          Comment


          • #6
            Re: The Fed: Dishonest or Incompetent?

            We've been conditioned to fear the phrase "conspiracy theory" and associate it with social ostracism. Once you get over that emotion and look at things logically and rationally it becomes obvious that events are designed. It's foolish to believe the world is accidental.

            Unlimited power and money are available to the smart, patient, and ruthless. With tools like control over the money supply, planning and implementation is near trivial. The only difficulty is in keeping the masses asleep.

            You're a fool if you believe there aren't people actively working to control the masses.

            You're a fool if you believe the most powerful institutions on earth (central banks) are left to be run by idiots.

            Far too much at stake.


            Some videos:
            http://video.google.com/videosearch?...the+self&hl=en
            http://video.google.com/videosearch?...ghtmares&hl=en
            http://video.google.com/videosearch?...+reserve&hl=en


            Books:
            http://www.amazon.com/gp/product/0882791346/
            http://www.amazon.com/gp/product/074532309X


            This battle has been fought for hundreds of years. The one difference today is the Internet and the ability to share ideas freely without censorship.

            Comment


            • #7
              Re: The Fed: Dishonest or Incompetent?

              Originally posted by Charles Mackay
              Right!

              There are people in high places now coming out, willing to risk a lot in order to expose this corruption. Lee Hamilton the co-chair of the 911 commission came out last week with a stinging critique of the 9-11 report and disclosed new information about Pentagon coverups and malfeasance that the "commission" chose not to publish.

              Oddly enough it may take a bunch of women the likes of Catherine Fitts who finally create a loud enough rallying cry. For some reason men are quite asleep and afraid these days. We aren't talking about solutions... just which investment vehicle will enable us personally to survive while the country burns.
              Although the site covers investment suggestions with disclaimers, being an ex-investment banker and finance expert with more than 25 years' experience, her Solari Portfolio Strategy (PowerPoint presentation) for asset allocation is very specific. Some of the items in it are mysterious.

              She breaks them up into four types: local liquid, local non-liquid, global liquid and global non-liquid. She uses a $1 million total net worth in her example, which reads as though this is how she has her assets allocated, although one gets the idea she has a significantly higher net worth...

              Local Non-Liquid $550k
              $300,000 - 30 acre farm in farm community with improvements (no debt)
              $95,000 - Mortgages financing homes for my sister and a neighbor
              $5,000 - Refinancing of cousin's credit card debt (warning/disclaimer)
              $150,000 - Reserved for direct local investment and to pool with Solari Investor Circle:
              • Financial investments
              • Networking, lobbying, asset mapping/databank
              • Learning and intellectual mastery
              • Donations/tithes
              Local Liquid $75k
              $5,000 - Checking account/money market at well managed local community bank
              20,000 - CDs at well managed local community bank
              10,000 - Cash, silver and gold coins in deposit box 10,000 Cash, silver and gold coins at home
              25,000 - Publicly traded stocks for companies based in my area or region with leadership and products personally known to me or to people I trust
              5,000 - Local tax-exempt bonds of municipal agencies run by people we know and respect doing things that we believe raise our Popsicle Index*

              Global Non-Liquid $200k
              $100,000 - Gold and silver bullion in depository in Europe
              $90,000 - Investment in land and cottage next to cousin's in-law's farm in Central America (High Popsicle Index, Low Cost)
              Expected - $25,000 Reserve for improvements to land and cottage (Currently held and counted in interest bearing accounts under Global Liquid)
              Expected - $25,000 Micro equity – Reserve to invest in cousin's in law's business and local businesses (Currently held and counted in interest bearing deposits at local bank in Central America under Global Liquid)
              $10,000 - Angel investment in college roommate’s wind farm company

              Global Liquid $175k
              $25,000 - Digital Gold and Silver
              $75,000 - High Popsicle Index Places
              $25,000 - Basket of Local Stocks and Local Bank CDs
              $50,000 - Small and Mid-Cap Stocks – Focus On:
              • Decentralizing, sustainable solutions
              • Products & services that lower monthly expenses and/or increase self-sufficiency, promote good health, save time, make fresh food more available/affordable
              • Operations that are excellent on sustainable basis
              • Stocks of above available on an economic basis
              I get the money and PMs in the EU bank accounts but what's with the land and cottage in Central America? Where? Costa Rica? Why? A place to get away to if the shit hits the fan?

              * Note on Popsicle Index: To help people understand how the global financial system affects their neighborhood, I came up with a very simple quality of life index based on one question:
              • “What percentage of the people in your place believes that a child can go to the nearest place to buy a popsicle or other treat, and return home alone safely?”
              Your answer gives you the Popsicle Index or Solari Index of your place. For example, if you think 50% of your neighbors believe a child in your neighborhood would be safe, then your Solari Index is 50%. The Solari Index is based on gut level feelings of the people who have intimate knowledge of a place, rather than facts and figures.

              Comment


              • #8
                Re: Newpapers and the Fed honest or dishonest

                The Newspaper Industry has been happy to have the Real Estate Bubble - it is the only positive Revenue story in the Newpaper Industry. Can you imagine the Classified section of the Newspaper without Real Estate....will the Death of the Real Estate Bubble deliver the final blow to a dying Industry.

                Or perhaps the Page Six Girls of the UK will be appearing regularly in the New York Times, Boston Globe, and the Washington Times. Got to give the folks some reason to by this by-gone News distribution paper.

                People and Organizations happily tolerate myths that allow them to succeed/make money. Neither the Federal Reserve nor the Mainstream Media had any economic interest to shine light on the Real Estate Myth of the last ten years. Both organizations had incentives to keep it going.....and going...

                Comment


                • #9
                  Re: The Fed: Dishonest or Incompetent?

                  Originally posted by fogger
                  You're a fool if you believe the most powerful institutions on earth (central banks) are left to be run by idiots.

                  Even if they're the biggest geniuses in the world, if their models[*] and understandings are eff'dup they will do no better than idiots.

                  EDIT: what I'm saying is they're not lying or incompetent or idiots - for reasons that appear good to them, they've made the wrong choice of models to use, a la LTCM.
                  [*] hope your models break, bet that beard is fake. I LOVE that.
                  Last edited by Spartacus; 03-12-08, 05:21 PM.

                  Comment


                  • #10
                    Re: The Fed: Dishonest or Incompetent?

                    Originally posted by EJ
                    I get the money and PMs in the EU bank accounts but what's with the land and cottage in Central America? Where? Costa Rica? Why? A place to get away to if the shit hits the fan?
                    My best guess - yes, its a SHTF fall back position primarily and an investment secondarily. And either Costa Rica or Panama.
                    http://www.NowAndTheFuture.com

                    Comment


                    • #11
                      Re: The Fed: Dishonest or Incompetent?

                      Originally posted by EJ
                      The Fed: Dishonest or Incompetent?

                      by Eric Janszen

                      August 26, 2006




                      There is a darker explanation than either mere Fed dishonesty or incompetence. A reader recently pointed me to the web site of Catherine Austin Fitts, the founding director of Solari, Inc. who previously served as Managing Director and Member of the Board of Directors of the Wall Street investment bank, Dillon, Read & Co., Inc; served as Assistant Secretary of Housing/Federal Housing Commissioner at HUD in the first Bush Administration; and was the President and Founder of The Hamilton Securities Group, Inc., a broker-dealer/investment bank and software developer. In a long series of writings, she states:



                      "The supremacy of the central banking-warfare investment model that has ruled our planet for the last 500 years depends on being able to combine the high margin profits of organized crime with the low cost of capital and liquidity that comes with governmental authority and popular faith in the rule of law. Our economy depends on insiders having their cake and eating it too and subsidizing a free lunch by stealing from someone else. This works well when the general population shares in some of the subsidy, grows complacent and does not see the “real deal” on how the system works. However, liquidity and governmental authority will erode if the general population becomes aware of how things really work. As this happens, they begin to understand the power of innovative technology and re-engineering of government resources to create greater abundance both for themselves and other people. As this happens, they lose faith in the myth that the current system is fundamentally legitimate. This jeopardizes the financial markets that depend on fraudulent collateral and practices to continue to work. It also jeopardizes the wealth and power of the people who are winning with financial fraud."



                      Her take on the series of asset bubbles can be summed up as follows:



                      "This consensus is made all the more powerful by the gush of growing debt used to bubble the housing and mortgage markets and manipulate the stock, gold and precious metals markets in the largest pump and dump in history — the pump and dump of the entire American economy. This is more than a process designed to wipe out the middle class. This is genocide — a much more subtle and lethal version than ever before perpetrated by the scoundrels of our history texts."



                      Strong words, indeed. I'm still digesting the contents of her web site and am interested to hear comments from the iTulip community on it. Give yourself an hour to read it.




                      It took me about FOUR HOURS to read Ms. Fitts' story, but it was worth it and supports my opinion, that took me 40 years at which to arrive, that to accept the notion that voting in the US is a privilege and duty, or that participation in politics with hope for the commom good is pure horseshit.
                      Last edited by Jim Nickerson; 08-29-06, 01:38 AM.
                      Jim 69 y/o

                      "...Texans...the lowest form of white man there is." Robert Duvall, as Al Sieber, in "Geronimo." (see "Location" for examples.)

                      Dedicated to the idea that all people deserve a chance for a healthy productive life. B&M Gates Fdn.

                      Good judgement comes from experience; experience comes from bad judgement. Unknown.

                      Comment


                      • #12
                        Re: The Fed: Dishonest or Incompetent?

                        Originally posted by Jim Nickerson
                        It took me about FOUR HOURS to read Ms. Fitts' story, but it was worth it and supports my opinion, which took me 40 years at which to arrive, that to accept the notion that voting in the US is a privilege and duty, or that participation in politics with hope for the commom good is pure horseshit.
                        I have no reason to question Fitt's assertions and her story does explain quite a lot about Fed policies toward asset bubbles that otherwise do not make sense. But it does raise several questions.

                        The end of housing booms have always resulted in serious economic consequences, such as documented in this piece A Look At The Collapse Of The 1980's Real Estate Bubble Through The Eyes Of The New York Times. That housing correction lasted from 1988 through 1995, the year I bought my first home, at the bottom of the market. Two years in, we started to see bank failures...

                        Savings Agency Ordered to Sell Real Estate Fast
                        January 4, 1990, Thursday
                        By NATHANIEL C. NASH, SPECIAL TO THE NEW YORK TIMES (NYT); Financial Desk
                        Late Edition - Final, Section A, Page 1, Column 2, 1779 words
                        http://select.nytimes.com/gst/abstra...A80894D8494D81
                        The new agency created to manage the huge savings and loan bailout was instructed today to sell the real estate it inherited from hundreds of insolvent institutions as quickly as possible. The directive from the Bush Administration raised concerns among bankers that the properties could be ''dumped'' in...


                        And that boom was almost imperceptable compared to the bubble that we have seen over the past five years, as this piece Menace of an Unchecked Housing Bubble by Center for Economic and Policy Research points out.

                        One of the other points I make in The Big Bet is that The Boys are once again taking it too far, as they did in the 1920s, and that after the Dump that comes follows the Pump, the US may find itself with as many people unemployed and angry as in the 1930s, forcing a regime change. The worry, of course, is that the regime will change from the merely greedy and corrupt to something considerably worse, if the anger of the bankrupt and unemployed can be channelled away from constructive approaches like Fitt's (albeit impractical... we can't all live on a farm and own a home in Costa Rica) to something even more fascistic and oppressive.

                        Given that the money will all be in the hands of the guys running the Pump and Dump, it's not unreasonable to expect that they alone will have the means to control the crowd, much as they have convinced working class families to send their kids to Iraq and Afghanistan to fight for freedom while their kids attend Harvard and Yale. Presumably if the families of the kids attending Harvard and Yale really felt that the nation was in a fierce battle for its survival, they'd be lined up outside the local armed services recruitement office along with everyone else. You may have noticed that, overt expressions of patriotism and nationalism is now largely related to class; the more likely you or your kids are to be a called up to fight in war, the more likely you are to have a flag across the back of your pickup truck. How often do you see an American flag across the back of a Mercedes-Benz GL450?

                        The successful suppression of even a nascent class-based political movement in the US is a stunning achievement by The Boys and one you can expect to continue if not intensify following the Dump. I'm not sure Fitt's agenda has a prayer.
                        Ed.

                        Comment


                        • #13
                          Re: The Fed: Dishonest or Incompetent?

                          p.s. It's Sunday. My turn to be "Fred". -EJ
                          Ed.

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                          • #14
                            Re: The Fed: Dishonest or Incompetent?

                            Originally posted by EJ Regarding asset allocation of Ms. Fitts, post #7 above

                            Global Non-Liquid $200k
                            $100,000 - Gold and silver bullion in depository in Europe

                            Global Liquid $175k
                            $25,000 - Digital Gold and Silver
                            How does one here own gold and silver bullion deposited in Europe?

                            What is "Digital Gold and Silver"?
                            Jim 69 y/o

                            "...Texans...the lowest form of white man there is." Robert Duvall, as Al Sieber, in "Geronimo." (see "Location" for examples.)

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                            • #15
                              Re: The Fed: Dishonest or Incompetent?

                              Originally posted by Jim Nickerson
                              What is "Digital Gold and Silver"?
                              there are a number of outfits, e.g. goldmoney.com , where you can buy gold over the internet, such gold stored in some depository. i haven't dealt with any of these because it isn't clear to me whether you can trust any of them. i'd appreciate info from anyone on this board who feels they've done a reasonable due diligence on any of these outfits. similarly, i too would appreciate info on buying/owning/storing pms in europe. [iirc we've had a discussion here touching on this. search for "perth mint" to get the correct thread.]

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