The Purpose of Bailouts

What is money? If we look to history we will see that a wide variety of things have functioned as money. Shells, salt and a long list of various and differing things have been utilized at different places and different times. Our money today is nothing but paper. It isn’t in reality worth as much as plain paper, because it has already been used, written upon. Yet despite its real non-value, it represents value, or we can think of it as an IOU. This way if I have a cow and you a pair of shoes for sale, I don’t have to give you my whole cow for a pair of shoes that are only worth a few pounds of my cow. Money enables us to exchange and circulate goods.
At one time paper currency was redeemable for gold. Gold because of its scarcity always has value. Although even gold can be less costly when it is more abundant and not in demand. Today gold is in demand, so much so, that you can hardly buy it if you want to, and it is in consequence that it has seen an extraordinary increase in price. This is because of the increased demand for gold, in our current world wide economic crisis. Gold holds it value, when paper money has been made worthless by government! This is because paper money is no longer backed by gold or anything of value. Paper money is merely supposed to represent a value.
It is true that when gold was the currency, government at different times found ways to devalue or debase the currency, but at least there was something real and tangible that currency was based upon. Today if we had a gold standard upon which our currency was based, I imagine that the vault would be empty. This is because adding in the latest bail out, we now owe as a nation over 11 trillion dollars in government debt. This does not include individual and corporate debt of the people who make up our nation. This present crisis was only allowable by having a currency based upon nothing but paper. How much easier to devalue and debase a currency, that is based upon the invisible, and intangible.
Let us just examine a gallon of milk. Milk has doubled in price over the last year. Inflation is usually calculated at 3% per year. Your wages should go up accordingly. The fact is your real wages have gone down, you have less purchasing power. Ron Paul says that your dollar today is worth about 4 cents compared to the dollar of 1913.
The government of this country created the Federal Reserve back around 1914.During the Hoover administration they came up with the foundation of what was to become Fannie Mae. There were also high tariffs, and price controls. Roosevelt built on these and expanded. It was during this period known as the Great Depression that government began to pay farmers to destroy their crops. Of course that didn’t sit to well with the public as many people were very hungry at the time. Roosevelt changed his policy, they wouldn’t pay farmers to destroy their crops; instead they would pay them not to plant or raise livestock on their land. This is an artificial way to keep prices high and food scarce. When anything is scarce it makes it more valuable. We are still paying farmers not to work, to do this day. These are just a few of the many programs, which today we call the “New Deal”. According to unemployment standards at that time unemployment was 14% at the beginning of the Great Depression. Hold on to your pants folks. If we were to use the same high standards and measures today, our current unemployment rate today is not around 7% but is in fact 14%. It is somewhat like education standards. Of course there was no public education as we know it in 1914, but the same way that government has lowered education standards so we don’t feel so stupid, well so have unemployment standards been lowered, so we don’t feel so bad. Do you feel warm and fuzzy inside yet?
Comparing today to the time of the Great Depression, well let me just say that, today we have a trade deficit, then we had a trade surplus. That means that then everyone owed us money, instead of us owing everybody else. The statistics aren’t pretty and don’t bode well for our future. I should mention that it was under Roosevelt, that the government took away the people’s gold. I call this stealing, but I am not sure why we never hear about that. Well, we have already established our government doesn’t have any gold today.
Now we have something new in the mix, our homes, and our property. Fannie Mae and Freddie Mac have provided 50% of all the mortgages in this country. Banks nationwide were forced (blackmailed might be a better word) because of politically correct policy to give loans to people who would not normally have been able to obtain a mortgage. Fannie Mae and Freddie Mac being the governments own offspring were able to borrow directly from the U.S. Treasury and were subsidized by our benevolent government. It is because of this special relationship to government that investors believed this was a sound investment. Alas, it was not so! Like governments have devalued and debased gold, and currencies in the past, so the government has now devalued and debased the value of property. Fannie Mae and Freddie Mac have never been subject to the rules, regulations or accounting practices of private institutions, after all when is government ever accountable to the same standards as private individuals, institutions or industry. How many hundreds of dollars was the military spending on a toilet seat? At any rate when more regulation and oversight of Fannie Mae and Freddie Mac has been proposed and it has; since 1992, at least, it has been known to be a serious problem. Various congressman and even Alan Greenspan have brought the need for more regulation and oversight of the same before congress and it has been rejected time and time again. Why? Because men are corrupt and greedy, they have received monies (bribery), they have received special benefits such as lower than normal interest rates on their personal mortgages (bribery), and of course if they were to actually have responded to the concerns of an impending crisis and done something, well they would no longer be getting the money or benefits they had been. Then of course, too, I am sure that those high paid executives of Fannie Mae and Freddie Mac would want to make sure that the congressman who benefitted most from their prestigious positions wouldn’t be taking the fall all by themselves, and would be sure to point the finger at some of our more illustrious congressmen (blackmail). These (not) so honorable congress people simply turned their backs and ignored all the dire warning signs.
Then cometh, the 850 billion dollar bail out. Fannie and Freddie are not being disbanded; the doors are not being shut, even though they have caused a global economic disaster. No, our benevolent government is buying 25% of preferred stock from the most prestigious banks in the country. Now it may seem trivial, but when the bail out failed in the House of Representatives the stock market rose, when the bailout was insisted on and passed the stock market went down and continued to plummet after the bail out. Let me just say, that the successful business and industry owners of Nazi Germany, became mere managers under Hitler. Well, we just got a very similar deal, and I am sure the movers and shakers of finance and investment can’t help but have noticed.
Regardless of the fact that it was government that created this mess, it has refused as usual to admit its error; and is now going to fix this. Heaven, help us!
It seems obvious to me that government through its mortgage arm has created the housing crisis. It created the illusion of a real estate boom-scarcity of real estate-making prices go up to an artificial high, people took out loans and refinanced due to unnaturally low interest rates, and now that the illusion can no longer be sustained, people are upside down in their mortgages, they owe more than their property is worth.
This to me is quite interesting. Who benefits from this? Who becomes the owner of this property, when individuals default? Well, now that government owns 25% of preferred stock in the biggest and best financial institutions, who do you think benefits? Government now will own property that should have belonged to private individuals and enterprises. That is the free market, the capitalist way. This will not ever be the case again, they won’t fail, government didn’t let them and won’t let them.
I believe there is a good reason behind this and it is not to save Main Street, but rather it is to own Main Street!
Private property is a relatively new idea and concept in the history of man and our world. Always until this nation, only the anointed, the Kings, the pharaohs, the Tsars, the emperors had such a right. The land and the people belonged to the ruler. The common man never had such a right or made such a claim.
When Jefferson wrote the Declaration of Independence, he was putting into words the ideas of John Locke, Adam Smith and others. Men understood that property was essential to the exercise of all his other inalienable rights. Men such as Marx, Lenin, Stalin, Mao, and Hitler never liked this new thinking, they were caught in the old mode of thought, they simply wanted a new and different royalty, a new and modern type, anointed and exalted in charge and control. Which I might add was for the most part them!
As of this writing, we are seeing our government transform itself into an exact replica of all the earlier and more primitive forms of government that have always been the norm!
When you no longer have a place to stand which is your own, when you are trespassing on land owned by the government what right have you to even exist without permission from the government? You will be in the very position of the serf, the slave. You will have NO RIGHTS-Your government owns you!
For those who believe that things can only get better, that what the government is doing through the bail out and stimulus is good and benevolent. I say, it may give the illusion of better, making you feel safe and secure, but trust me, it will only be long enough to get you trapped safely in their net. Then, my friend, not only will the government own all the property, they will own you!