Daily Digest

Daily Digest - February 18

Thursday, February 18, 2010, 10:49 AM
  • U.S. Economy Grinds To Halt As Nation Realizes Money Just A Symbolic, Mutually Shared Illusion
  • The Shadow Inventory Of Troubled Mortgages Could Undo U.S. Housing Price Gains
  • Foreclosures Seen Still Hitting Prices
  • "Three Paths Forward" - Kansas City Fed on Current U.S. Fiscal Imbalance, Hyperinflation, Printing
  • Millions Of Britons Losing Money On Savings
  • Greece Loses EU Voting Power In Blow To Sovereignty
  • Generation Zero - Four Stars
  • David Cameron: The Next Age Of Government
  • Doing God's Work
  • South Carolina Lawmaker Seeks to Ban Federal Currency
  • Elizabeth Warren: 3,000 Small To Medium-Sized Banks Could Fail
  • Paper Hangars
  • We’re All Speculators Now
  • America: A Country of Serfs Ruled by Oligarchs
  • Smart Grid Promises Substantial Carbon Abatement
  • Peak Tuna


U.S. Economy Grinds To Halt As Nation Realizes Money Just A Symbolic, Mutually Shared Illusion (Humor) (various submitters)

"I've spent 25 years in this room yelling 'Buy, buy! Sell, sell!' and for what?" longtime trader Michael Palermo said. "All I've done is move arbitrary designations of wealth from one column to another, wasting my life chasing this unattainable hallucination of wealth."

"What a cruel cosmic joke," he added. "I'm going home to hug my daughter."

The Shadow Inventory Of Troubled Mortgages Could Undo U.S. Housing Price Gains (Robert C.)

In summer 2009, the seasonally adjusted S&P/Case-Shiller Home Price Index rose for the first time in virtually two years. Since May 2009, the index has risen by over 3%, suggesting that the necessary correction to U.S. residential home prices is nearing an end. However, in Standard & Poor's Ratings Services' view, the mortgage crisis may be far from over. The overhang of homes heading toward liquidation suggests more delinquencies and lower home prices are to come.

Foreclosures Seen Still Hitting Prices (Robert C.)

More waves of foreclosures will keep downward pressure on home prices in parts of the U.S. over the next several years, two new studies project.

The studies—by John Burns Real Estate Consulting Inc. and Standard & Poor's Financial Services LLC—both conclude that most efforts to modify loans with easier terms will delay, not prevent, the loss of homes to foreclosure.

"Three Paths Forward" - Kansas City Fed on Current U.S. Fiscal Imbalance, Hyperinflation, Printing (Denny J.)

That someone on the Fed would openly express fiscal concerns about Congressional spending and hyperinflation, while blasting the chief economist at the IMF is unprecedented.

Hoenig clearly hits the mark with concerns over "controlling budget earmarks, trimming subsidies to numerous economic sectors, and resolving our banking problems and the perception that Wall Street is favored over Main Street, all of which would otherwise foster mistrust and cynicism among the public."

Millions Of Britons Losing Money On Savings (pinecarr)

Rising inflation is eroding the spending power of savers’ cash and, combined with historically low interest rates, is leaving them with less money than when they started.

Greece Loses EU Voting Power In Blow To Sovereignty (pinecarr)

The European Union has shown its righteous wrath by stripping Greece of its vote at a crucial meeting next month, the worst humiliation ever suffered by an EU member state.

Generation Zero - Four Stars (Davos)

I didn't realize how close the country came to collapse during the dark days of September 2008. [Generation Zero] makes it clear how close we came to the abyss. The film opens and closes with video from CSPAN that reflects the anger of middle class America and how close we came to a complete and utter meltdown on September 18, 2008 when there was an electronic bank run that was hurtling out of control.

David Cameron: The Next Age Of Government (Davos)

Right political thinking with information revolution can remake government and create well being and simpler life.

Doing God's Work (Davos)

Goldman Sachs Group Inc. managed $15 billion of bond sales for Greece after arranging a currency swap that allowed the government to hide the extent of its deficit.

South Carolina Lawmaker Seeks to Ban Federal Currency (Davos)

As the Palmetto Scoop first reported, Pitts introduced legislation this month banning "the unconstitutional substitution of Federal Reserve Notes for silver and gold coin" in South Carolina.

In an interview, Pitts told Hotsheet that he believes that "if the federal government continues to spend money at the rate it's spending money, and if it continues to print money at the rate it's printing money, our economic system is going to collapse."

Elizabeth Warren: 3,000 Small To Medium-Sized Banks Could Fail (Davos)

Paper Hangars (pinecarr)

At a time when more and more offices are going paperless, governments in most of the developed world are doing the opposite. Finance ministers from Washington to London, Tokyo, Madrid, and, most pointedly, Athens, are attempting to paper over gaping financial chasms in the global economy by issuing ever greater quantities of currency and debt. But paper can only stretch so far.

We’re All Speculators Now (pinecarr)

As I watch the drama of the financial markets and consider the enormous impact they have on every aspect of our daily lives, I am amazed by the vast difference of opinions held by the public. Now, I don’t mean the financial press or the press in general; what I am talking about is our basic understanding of the very financial world that we have grown to take more for granted with each passing day.

America: A Country of Serfs Ruled by Oligarchs (hucklejohn)

Policymakers who are banking on stimulus programs are thinking in terms of an economy that no longer exists.


Smart Grid Promises Substantial Carbon Abatement (Samuel A.)

The Pacific Northwest National Laboratory has issued a report in which carbon savings from introduction of smart grid technologies are estimated, looking ahead to the year 2030. PNNL, located in Richland, Washington and operated by Batelle for the U.S. Department of Energy, puts direct carbon savings from equipment like smart meters at 12 percent, and indirect savings from things like stronger grid support for renewable electricity generation at 6 percent.


Peak Tuna (Ben Johnson)

The world has fished past the point of "peak tuna." A half-century ago, much of the Atlantic bluefin tuna that found its way into fishermen's nets was thrown back or used for cat food. But when the modern sushi craze took root in Japan - and spread to sushi aficionados worldwide - demand for tuna meat skyrocketed. And tuna populations dwindled. Scientists estimate that because of overfishing, the tuna populations in the Gulf of Mexico and Mediterranean have shrunk to less than 10 percent and 15 percent, respectively, of their pre-fishing size.

Please send article submissions to: [email protected]


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Re: Daily Digest - February 18

"The International Monetary Fund said Wednesday it was ready to sell 191.3 tonnes of gold on the market in a bid to reduce its dependence on lending revenue.

At Wednesday's market price of about 1,120 dollars an ounce, the gold to be sold would be worth nearly 6.9 billion dollars."

"States may be forced to reduce benefits, raise taxes or slash government services to address a $1 trillion funding shortfall in public sector retirement benefits, according to a new study that warns of even more debilitating costs if immediate action isn't taken.

The Pew Center on the States released a survey Thursday of state-administered pension plans, retiree health care and other post-employment benefits in all 50 states that blamed a decade's worth of policy decisions for leaving them shortchanged.

The result for some states will be "high annual costs that come with significant unfunded liabilities, lower bond ratings, less money available for services, higher taxes and the specter of worsening problems in the future," the study said.

The cost of the trillion-dollar shortfall, which will be paid over the coming decades, is about $8,800 for each American household. The study did not include many city, county and municipal pension plans, which are thought to have similar underfunding."

  • 3) Debt-tastrophe       (sort of a repost of the news above in the Digest that was sent in by Denny J.)

"When I was named president of the Federal Reserve Bank of Kansas City in 1991, my 85-year old neighbor gave me a German 500,000 Mark note.

He'd been in Germany during its hyperinflation and told me that in 1921, the note would have bought a house. In 1923, it wouldn't even buy a loaf of bread. He said, "I want you to have this note as a reminder. Your duty is to protect the value of the currency."

Many say hyperinflation could never happen here in the United States. To them I ask, "Would anyone have believed three years ago that the Federal Reserve would have $1 1/4 trillion in mortgage-backed securities on its books today?" Not likely. So I ask your indulgence in reminding all that the unthinkable becomes possible when the economy is under severe stress. "

(Thomas M. Hoenig is president of the Federal Reserve Bank of Kansas City.)

"South Carolina will no longer recognize U.S. currency as legal tender, if State Rep. Mike Pitts has his way.

Pitts, a fourth-term Republican from Laurens, introduced legislation earlier this month that would ban what he calls “the unconstitutional substitution of Federal Reserve Notes for silver and gold coin” in South Carolina.

If the bill were to become law, South Carolina would no longer accept or use anything other than silver and gold coins as a form of payment for any debt, meaning paper money would be out in the Palmetto State.

Pitts said the intent of the bill is to give South Carolina the ability to “function through gold and silver coinage” and give the state a “base of currency” in the event of a complete implosion of the U.S. economic system.

“I’m not one to cry ‘chicken little,’ but if our federal government keeps spending at the rate we’re spending I don’t see any other outcome than the collapse of the economic system,” Pitts said.

But one legal expert told The Palmetto Scoop that, even if it were passed, Pitts’ bill would quickly be ruled unconstitutional."

"I am surprised China has not dropped more," Rogers told CNBC.com.

Asked if the US should be worried about this trend, Rogers, who does not hold US Treasurys, said: "Of course. The US should be worried about everyone lightening up – not just China."

The cut in foreign holdings could force the government to make higher interest-rate payments, just as it is struggling with big budget deficits.

Asked if the trend of unloading US government debt was likely to continue, Rogers said: "Probably after this euro scare is over – which may take a good while.""

"Many Japanese investors are now worried about the fiscal health of the U.S. They also face the risk that the dollar will weaken against the yen, reducing the value of their holdings in yen terms.

"Fears are growing that the U.S. fiscal health will worsen further as [President Barack] Obama hasn't been able to offer details on how to rebuild government finances," Mr. Nishida said. "Many now expect the U.S. government won't cut public spending or raise taxes ahead of November's midterm elections."

They also worry about the near certainty that the U.S. Federal Reserve will tighten monetary policy sooner than Japan's central bank, which could lead to a drop in bond pricing. "

"Feb. 18 (Bloomberg) -- Credit-default swaps on sovereign debt rose on investor concern that Greece may be unable to borrow unless it gets a pledge of financial support from the European Union.

Greece needs to raise 53 billion euros ($72 billion) this year and faces about 16 billion euros of bond redemptions by May as it struggles to narrow a budget deficit that’s more than four times the EU limit. A political ally of German Chancellor Angela Merkel said yesterday that “not a single euro” should go to help Greece.

“It feels a bit like we are in the Twilight Zone,” Jim Reid, head of fundamental strategy at Deutsche Bank AG in London, wrote in a note to investors. “We are left with a stand-off that probably has to be resolved before Greece next comes to the market.”"

............................7A) EU debt promise could trigger risk reappraisal

"LONDON (Reuters) - The implicit guarantee from the European Union to prevent a default of Greece and other debt-laden members may do more harm than good for the euro and may even start hurting the bloc's benchmark bonds."

"Sterling lurched towards a nine-month low against the dollar on Thursday as concerns mounted over the state of the UK’s public finances.

Data revealed the UK public sector posted a deficit of £4.3bn in January, usually a month in which heightened tax revenues ensure a surplus. Indeed, this was the first January shortfall since records began in 1993.

Jonathan Loynes at Capital Economic said the figures were “truly dreadful” and underlined the need for much more decisive action to improve the UK’s fiscal position.

The UK’s deteriorating fiscal position, and related concerns that it might prompt a downgrade of UK sovereign debt, have weighed on the pound in recent months. "

"“Monetary policy isn’t aimed at fiscal funding,” Shirakawa said at the news briefing. “It’s aimed at achieving sustainable growth under stable prices. It’s important that governments respect this stance and markets have faith in it.”

Prime Minister Yukio Hatoyama’s government has yet to outline any plans to repair its finances since Standard and Poor’s warned last month that it may cut the nation’s AA rating.

Some analysts say the closer scrutiny of Europe’s debt woes may shift attention to Japan’s as the government prepares to sell a record amount of bonds to fund its largest budget ever for the year starting April 1.

“If investors shift their attention to Japan’s worsening finances, that may lead to higher yields,” Makoto Noji, a senior market analyst at Mizuho Securities Co., said yesterday in an interview. As long as the market stays focused on sovereign-debt risks, Japan’s bonds may face speculation that the nation will be “next Greece,” he said."

"Gordhan is aiming to trim the fiscal deficit to curb government debt, which will soar to 44 percent of GDP in the 2016 fiscal year from 23 percent last year.

“Several countries are facing the real threat of default, making international markets particularly nervous about sovereign debt accumulation,” the Treasury said."

"The deficit was also worse than the government's target of 290.2 billion pesos for the year, and far larger than the 68.12 billion peso deficit in 2008.

Finance Secretary Margarito Teves said he fears that unless Congress and the incoming administration pass new revenue-raising measures, the 293.2 billion pesos target budget deficit for this year may also be overshot."

"The foreclosure crisis poses the biggest threat to U.S. economic security in the nation’s history, and is now forecast by Housing Predictor to impact more than 20-million mortgage holders. The crisis is a clear danger to the U.S.

The epidemic of foreclosures has broadened to include consumers at every level of the economy, triggered a domino effect of problems, including higher crime, a drop in city, county and state revenues, increased homelessness and left more than 2-million residential properties vacant in the U.S.

The American Dream of Homeownership has transformed into a nightmare for millions of Americans, who are either at the risk of being foreclosed or have already undergone foreclosure. An estimated 3.5-million mortgage holders are forecast to be foreclosed in 2010 alone."

"The gloomy prediction is the result of a shrunken labor market caused by recession and the temporary freezing of EI premium rates until December 2010.

However, the CFIB cautions against hiking EI premiums at this point because it could remove 200,000 jobs as short-term impact and cut wages by 1.5 percent as long-term impact."

"AIG has shelved plans to sell the whole of its derivatives portfolio, which nearly destroyed the insurer in 2008. It believes that keeping up to $500bn worth of complex positions could help it to survive as an independent entity and repay US taxpayers.

The decision underlines the management’s confidence in AIG’s future but could prove controversial in Washington, where officials have baulked at the cost of the US government bail-out of the insurer and scrutinised its use of derivatives."

"Washington Gov. Chris Gregoire wants a total of $605 million in higher taxes to help fill the state's budget deficit, including larger levies on oil products, bottled water, pop, candy and cigarettes.

Gregoire's tax plan, released Wednesday afternoon, is an opening bid in the public debate over hiking taxes amid a fragile economic recovery. The Legislature's majority Democrats are planning to raise taxes and cut spending to solve the $2.8 billion budget gap, but haven't yet revealed detailed plans."

"The states’ total debt climbed for the first time above 500 billion euros, Bavaria being the most affected by financial turmoil because of its rescue package for Bayerische Landesbank, according to the report. "

  • 17) Headlines

Okla. lawmakers to deal with 20 percent budget dip

City's 2011 budget outlook is even grimmer | Philadelphia Inquirer | 02/18/2010 ($150 million deficit)

St. Louis police budget woes could pull officers off streets (220 officers)

Next state budget needs another federal bailout, lawmaker says (Oregon)

DeKalb faces $100 million deficit

Tulsa Public Schools seeks record $354000000.00 tax

Layoff notices issued to 105 teachers (RI)

Gorman: Up to 880 CMS jobs could go (Charlotte)

MSU study suggests programs merged (390 layoffs)

McDonnell's Deep Cuts Send Shock Waves in Virginia (500 layoffs)

130 to get layoff notices from PVUSD (Pajaro, CA)

How will county cope in fund crisis? (Sierra Vista, AZ)

San Bernardino City Unified looking to trim 90-plus jobs

D-11 unemployment benefits expected to triple (Colorado)

San Marino Unified could lay off nearly one-third of its teachers

Colton school board weighs sending layoff notices to 141 teachers

524 faculty voluntarily leave Tennessee universities

Look at the results and notice how many want to use a 4 day work week

"The U.S. Postal Service could become insolvent if Congress doesn't approve five-day mail delivery and change the way the agency funds its retiree health benefits, according to the agency's top financial official.

"We will need [some assistance from Congress] or we will have difficulty paying all of our obligations this year," said Joe Corbett, the Postal Service's chief financial officer. "And going into next year, we might not have enough cash to operate. ... We are dangerously close to running out of cash."

"The seldom-used part of U.S. bankruptcy law gives municipalities protection from creditors while developing a plan to pay off debts. Created in the wake of the Great Depression, Chapter 9 is widely considered a last resort and filings under it are more taboo than other parts of bankruptcy code because of the resulting uncertainty for everyone from municipal employees to bondholders.

The economic slump, however, is forcing debt-laden cities, towns and smaller taxing districts throughout the U.S. to consider using Chapter 9. As their revenue declines faster than expenses, some public entities are scrambling to keep making payments on municipal bonds. And that is causing experts to worry about the safety of securities traditionally considered low risk."

"VICTORVILLE • Staff has looked into the implications of filing bankruptcy and is not recommending it as an option to keep the struggling city solvent, according to City Manager Jim Cox."

"CARSON CITY -- Democratic legislative leaders want businesses to pay voluntarily hundreds of millions of dollars in taxes and fees to cover part of the state's $887 million revenue shortfall and reduce a planned $200 million cut to public education.

Mining, gaming and other private industries "must be part of the solution," said Senate Majority Leader Steven Horsford, D-Las Vegas, on Wednesday. "Our schools are at peril, and we are looking at thousands of layoffs. They need to offer a meaningful solution.""

"Continuing claims held at 4.56 million in the week ended Feb. 6. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.

The number of people who’ve used up their traditional benefits and are now collecting extended payments rose by about 274,500 to 6 million in the week ended Jan. 30. "

"ATHENS, Feb 18 (Reuters) - Greek opposition lawmakers said on Thursday that Germans should pay reparations for their World War Two occupation of Greece before criticising the country over its yawning fiscal deficits."

"Merkel's stance is backed by opinion polls showing that a vast majority of Germans oppose a bailout, and Germany's biggest selling daily Bild has lambasted Greece as a nation of lazy cheats who should be "thrown out of the euro on their ear"."

"Responding to criticism that Greece fiddled its figures to get into the euro in 2001, communist MP Nikos Papaconstantinou asserted that Germany was not above using such tricks itself.

"As if we didn't know that Germany inflated the value of its gold reserves to get into the euro," he said."

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Jobless Claims, Inflation Jump as Economy Wobbles (CNBC)

"Initial claims for state unemployment benefits increased 31,000 to 473,000..."

"The labor market, hardest hit by the worst recession in seven decades..."

"...it seems inflation is now back on the table..."

Full blog post.

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South Carolina Lawmaker Seeks to Ban Federal Currency

South Carolina Lawmaker Seeks to Ban Federal Currency


I thought this story was more curious than anything.

But Pitts maintains that his state is better off with something he can hold in his hand and barter with as opposed to federal currency, which he described to the Scoop as "paper with ink on it." He says he resents what he considers the federal government's intrusions on states' rights.

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Re: Daily Digest - February 18

Here's what I don't understand.


If money is created by the Federal Reserve, by indirectly buying whatever isn't bought in the bond market auctions, of the Federal Securities (BONDS, et al.) and then transforming that into currency to lend out, then I can understand, the reasoning behind FEDRSV telling GOV, that they have to BORROW AGAIN to get the money off the Treasury's press, and into their accounts, to then spend.


I'm sorry, but if there was a simpler way of explaining THE BASIC MECHANICS behind FED/GOV interaction...then maybe we could demystify "The National Debt"...which,boiled down, is nothing but BOND TRANSACTIONS....


If each cycle of the monetary process must start with GOVT, issuing BONDS(of whatever sort) in all directions...then in that aspect, the "NATIONAL DEBT" will never be paid off. 


Imagine a little doggie feverishly trying to hold up the Leaning tower of Pisa, to keep it from falling, and (in that little doggie's mind...) hopefully straighten it... It's nice to take a picture of...Ain't that little doggie so cute? Great for the tourists...but it all just show....


In a debt-based monetary system...DEBT gets transformed into "money" by certain processes, either at the local bank level, higher bank levels, or at the CEntral Bank level...it's all Promissory notes, being passed, and then converted back, along Fractional Reserve lines....



Allow me to continue my understanding of the Basic process later, because I wanted to forward an idea...because of the way things function in the system...it makes TAX COLLECTION appear to service all the BONDS, and the BONDS appear to service all the expenditures...


And the more BONDS....the more TAXES upon the people, in the end....because producers find ways to pass along TAX COSTS to consumers, of which some are BOND HOLDERS.

So basically...in my mind, for domestic buyers buying domestic bonds (individuals, to small-cap corporations) what they are really purchasing is their own TAX increases, through the prices they have to pay at the store, it really negates all that bond yield they get.


because one way or another...Gov't Taxes YOU...the problem being is, gov't has to service all those bonds, as well as the Fixed costs...


Tell you what, here's another way.


If we understood the POSITIONING the FEDRSV is within the economic spectrum ("Private" vs. "Public" side) we have to appreciate the fact that the FEDRSV has the best of both worlds.  it's 100% a private entity, but 100% a Govt. Entitiy at the same exact time, because the only way they can "Make the money" is by working with the government...And that they're the only ones by law....that can "create money out of thin air" and loan it...to gov't, or whomever....


but that "thin air" idea is a misnomer...because it has to "pay" for all those bonds it purchases in the bond Market, somehow...and I'll bet it usually it comes from all the interest payments it collects from the banks, and other financial institutions....and it gets those bonds that doesn't initially get sold in auction at proabably, a HUGE DISCOUNT from the "Half the Face Value" initial price...probably worked out in advance...before auction time.


But in my mind, that puts the TAX POWER of the GOVT, at a huge Underutilized capacity.  Here's why.


If Gov't has to tax EVERYTHING IT CAN (commodities, services, labor, whatever except BONDS) in order to service the existing bonds out there, then, turn around and emit MORE bonds out into the market...then the tax Power is wasted, as it will effectively always be behind the curve....


how can Gov't attempt to reduce the amount of debt, on the one hand....and keep spitting bonds out on the other hand...it doesn't make sense...all it will end up doing is slowly raise prices...which weakens the dollar's strength domestically...


And for a foreign bondholder, purchasing a govt' bond, Sure...just like the domestic purchaser, he'll get the yeild, and the full face at end of term....but the quality of the money is weaker, compared to his initial purchasing...


Why not try something diffrent?  Knowing that you have an entity on the private side, that is as sturdy as a Gov't entity (and why not? Gov't created it to run self-sufficent on private side, as a check and balance against govt' messing with money for political purposes, ergo...money stays "clean")


But the Tax power is wasted...because everyone tries to LOWER their TAX Burdens, which makes revenue less...which causes gov't to always stay in the hole...because it has to auction more bonds to cover the difference...


Why not just have IRS impose a tax obligation on the FedRSV Directly? Make it HIGH ENOUGH, so that it would be impossible to pay it all in one lump sum...I would say 100 times the Holdings of the FED, make the FED (and not the PEOPLE inside the entity, nor the People outside) beholden to the TAX...You're taxing the ENTITY itself...


now...before GOV(irs) is ordered to go collect, make FED issue a promissory note to the Treasury, that will keep the TAXMAN from the FED's door.   Make the Term be 1000 years. Inside that term, make fed agree to the following stipulations. 


(1) that the tax imposed is VALID and FED is Obliged to pay, all the tax, plus penaties and simple interest,


(2) that FED accepts GOVT's stipulation that they will only accept payments, to lower ORIGINAL BURDEN in the form of "TOXIC ASSETS" deemed "TOXIC" by certain panel delegated by JUDICARY BRANCH to man it.


(3) all penalties and intrest imposed is VALID, set at determined rate. and will be credited in form of "money" to account created BY FED, for GOV to use and expend on periodic basis, under terms of "USE IT OR LOSE IT" fashion, meaning, whatever gets left over at end of period, disappears, unless arrangement made to LOAN OUT THAT LEFTOVER into ECONOMY at certain rate UNDER 10% Ceiling through FEDRSV,


(4) FED also accepts GOV't STIPULATION that if Toxic Assets brought to PAnel to tender for payment toward Original Burden, does not meet a certain set periodic threshold, then GOV will TEMPORARILY ACCEPT PAYMENT, so that FED CAN Write EXPENSE off in BOOK, but then ADD that TOTAL to ORIGINAL BURDEN, (effectively de-toxifying asset on paper, allowing Insurance companies to rebuild/replace asset, and/or initial BANK to rearrange asset to sell, under diffrent financing terms to another or same borrower, if still credit worthy)


(5)  FED also accepts advance of THREE (3) Penalty/Intrest Impositions, So that Gov't can retire a percentage of BONDS, and for other purposes....


(6) That Fed agrees to accept a Currency Token from Government, in exchange for this promissory note, entered in.


And with that...Treasury puts that into it's Vault, and walks over to mint, and orders them to fashion a currency token (A COIN) that is equal to the amount of the ORIGNIAL BURDEN, plus any calculated penalties and intrest if no tendering is made, and puts that into the FED's VAULT...and takes out all the GOV't ISSUED BONDS FED holds and walks them over to the shredder.....effectively starting the process of PERMANENT BOND RETIREMENT, and effectively transforms all the "PAPER Currency" from reciepts of debt, to reciepts of "THAT COIN" held in the FED's VAULT, which is VALID, because of the TAX IMPOSITION placed on FEd's Shoulders, and THe PROMISSORY NOTE placed in Treasury's VAULT, and...It's all backed up by LAW (UCC, and, CONSTITUTIONAL)

What you're effectively doing, is turning the tables.  You are making the FED become the Nation's "TAXpayer," as well as the nation's central bank!  You can then LOWER the TAX BURDEN PLACED on the PEOPLE...down to a PENNY per tax imposition. ...but hold on...I'm not done yet...

The Taxation apparatii stays on the people...and here's why...

It has long been held, the view, that people don't save their money. They spend faster than they take in, (other wise, "credit" cards would never be needed.) What I intend to do...is transform that apparatii, from a collection to pay bond-holders off (as well as all the other things) into a SAVINGS MECHANISM.....and here's how that would work....

Whether it's payroll tax, sales taxes, or corporate taxes...whatever of the 4000 federal taxes that uncle sam collects upon from the people....gets legally reduced down to a penny. HOWEVER...even though pennies add up...DOLLARS ADD UP, as WELL! 

Imagine...all the cash registers in America, becoming possible SAVINGS DEPOSIT ACESS POINTS...where you could then ask to put more down on each purchase....going solely toward putting in to the "kitty"...and  you then take that reciept and turn it into the Local GOV house, for them to issue that into a token to put into the "kitty"....sowing seeds of possible altrernate currency circulation, but all GOV created...and with strict limitations...initially....

And since I have taken away the MAIN way FEDRSV would manage the interest rates, I have to replace it with something ELSE.

While every single transaction the Gov has to TAX(in some hidden way shape or form, to make final O-T-C price), to collect upon today...what would happen, if each all the way along the supply line decides...instead of JUST PAYING THE LEGALLY OBLIGATED PENNY, to paying what today is the "normal" rates(or somwhere around that range)....and everything that is collected goes into a special fund, broken down along personally designated savings banks...the more you put in, the more your savings account (that you can't really DIRECTLY TOUCH, but it's THERE) grows...and the more you put in...the more POINTS that you can recieve, even and up to Gov't Matching those funds, at certain levels....accumulate enough points, and you can even have gov't reward you with ALL THE TAXES you've ever paid into the SYSTEM (NEW or OLD) all your life...

Like I said, It's an savings account you cannot DIRECTLY TOUCH....BUT...you CAN borrow against it, using IT as the collateral....and depending on certain circumstances, you can even MAKE PAYMENTS with the points you GATHERED...but more on that later....

And the whole Idea is....The more the "Kitty" grows....the less the intrest rate the FED sets.

And if there is more people skirting by with "Just the Penny"...then the higher the FED has to set... 

Either way....the interest payments collected by the FED in the long run...goes to pay off all the bonds, instead of GOV'T having to forever tax you to make good on bonds that it forever has to keep spitting out on each cycle...

Because with Gov't Taxing the Bank, directly, with the promissory note in place at the Treasury, and the "Coin" in place at the Fed's Vault...and with Government expending the funds off the Penalties and Interest credits, placed into the account, then Gov't doesn't need to emit bonds to fund anything anymore.....effectively stopping the growth of the DEBT.

and if you REALLY WANT a BOND to sit on to collect your yield, and your maturity all TAX FREE....well, either you go get a Corporate Bond, or, a Muni bond, OR,  through letting your Gov get a small cut, a FORIEGN BOND...Let the AJAD or China, or the other foreign entities or individuals SWEAT OUT HAVING TO PAY YOU, instead of you having to pay THEM....and let that cut that the government gets ALSO go to retiring the bonds that are already out there...

Plus...since the basic idea is "money has to circulate" the banks now have ample funds to loan out to you, for the "normal" loans and Fractional Reserve doesn't have to get borderline dangerous.....Fractional reserve is a great idea as a money-multiplier, but it must be based on FUNDS in the bank, or at the bank's disposal, and not necessarily through each promissory note transformed into money.

Turn the tables around.  Stop letting those in Washington keep you on a long slow march to a socialistic new world order, through your own monetary system.

 Hey domestic bondholders...are you ready to take the advice Tony Montana got from the retiring kingpin in the Movie "Scarface?"  "Don't Get high, off your own supply!"  Are you ready to try something new?

 Domestic End Bondholders, how can some of you complain about "the National Debt" when you're buying all these bonds in the first place?  Are you going to sit there and tell me "Uhh, well, at least we're BUYING AMERICAN!!!"???  how much plethora of excuses are you going to use?  Don't sit back and tell me, I've heard them all.  All your Bond buying is going to do is raise up your prices at the store, as well as probably raise your payroll taxes....

 If glenn beck is right when he says the "Day of reckoning" is coming....then we can do something about this....

 Adopt my proposal,...STOP SELLING THE T-BONDS....YOU STOP BUYING THE T-BONDS...and if you really want a BOND, buy foreign or CORPORATE Bonds, and not foreign commodities, per se...

 Let me add the following incentive...for every foreign BOND you buy (either DIRECTLY, or through Bundles sold by Brokers) send that receipt to the Gov't, to get credit to raise up your savings account, or your part of the "Kitty", that you can use as a personal asset to use as collateral for loans....

 Well...that's all I've got to say for now...

 This comprises most of the bulk of my "ONE COIN SOLUTION," and folks, if you liked it....could you please respond back with some questions...I love answering questions...


rickets's picture
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Posts: 238
Re: Daily Digest - February 18

I am a believer that the most simple system is almost always the best.  Why not just 1) stop issuing debt  2) have the treasury print money that we have (backed by the same full faith and credit of the US that our currency and debt has backing it now), and then loan it to banks that want it.  Further, on schedule, pay down our existing debts.  Quite quickly, we will dramatically reduce our debt and interest payments, and quite quickly those interest payments will turn into interest reciepts.  3) increase reserve requirements at banks, forcing them to reduce leverage and increasing the amount they need to loan from the treasury.

We dont default on what we owe to anyone, we simplify, and we move the interest from the hands of the fed and the international banking cartel and move it to we the people.

Like all government fiat or commodity backed currency, there will have to be some limitations placed on the treasury - but that fact is inherent in all currency systems I think.


I think this goes to much of what you just said perhaps....although it removes the Fed completely.


Damnthematrix's picture
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Posts: 3998
Re: Daily Digest - February 18
rickets wrote:

I am a believer that the most simple system is almost always the best.

If only it were that simple...


Johnny Oxygen's picture
Johnny Oxygen
Status: Diamond Member (Offline)
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Posts: 1443
Re: Daily Digest - February 18

I am a believer that the most simple system is almost always the best.  Why not just...

Because bankers don't like slow, steady and dependable economies. They like boom and bust economies because they make more money creating booms then choking off credit to create a bust. Then collecting all the defaults of hard assets.

Other than that your plan would work perfectly. Smile

idoctor's picture
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Posts: 1731
Re: Daily Digest - February 18

Fed Raises Discount Rate to 0.75% From 0.50%

“I'm shocked. Completely shocked,” Todd Schoenberger, managing director of LandColt Trading said of the Fed’s move to raise the discount rate. “It makes me wonder if the CPI number coming out tomorrow is going to be just absolutely horrible—maybe they got wind of something,” he said.


Damnthematrix's picture
Status: Diamond Member (Offline)
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Posts: 3998
Re: Daily Digest - February 18

''I have talked to energy executives who are very fearful about what
will happen even if you get past 1000 vehicles,'' ...

California gets all wired up for electric car surge
February 19, 2010


SAN FRANCISCO has adopted building codes that require all new homes and
offices to be wired for electric car chargers, in an attempt to position
itself as America's environmental car capital.

The move comes before the release this year of the Nissan Leaf and Chevy
Volt, which promise to deliver driving distances of 65 kilometres or
more on a single battery charge and are being marketed to middle-class

Local authorities are starting a lending scheme next month to encourage
homeowners to install their own charging stations.

''If you want to put an electric charging station in your home in
anticipation of all these electric vehicles, you can do it through this
green financing program,'' San Francisco's mayor, Gavin Newsom, said.

Damnthematrix's picture
Status: Diamond Member (Offline)
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Posts: 3998
Re: Daily Digest - February 18

The pain in Spain falls partly on Britain
February 19, 2010


BRITAIN'S exposure to the financial turmoil sweeping through southern
European economies could be far greater than previously thought.

Despite relief that Britain's decision to stay out of the euro has
avoided the kind of budgetary crisis brewing in Mediterranean nations,
figures showing that UK sales to Spain, Britain's seventh largest
trading partner, plunged by 31 per cent to £7.74 billion ($13.5 billion)
in 2009 reveal how exposed are the balance sheets of some of Britain's
biggest companies.

Top-selling brands such as Vodafone, Burberry and British Airways are
suffering from Spain's shrinking economy - which accounts for twice as
many British exports than China.

Barclays is also suffering from low savings and lack of investments. In
a rare piece of bad news from the bank, it said that its impairment
charges in global retail and commercial banking across Western Europe
rose sharply, largely driven by losses in Spanish commercial property,
construction and small business loans.

With 4 million - almost 20 per cent of the workforce - unemployed,
Spaniards are cutting down on their spending. Consumers are leaving
bills unpaid, forcing companies such as Vodafone to sell lists of unpaid
accounts to businesses that specialise in recovering cash. The phone
giant recently reported a 6.8 per cent sales decline in Spain, where it
generates an annual £1.3 billion of service revenues.

The business of recovering money has grown so popular in Spain that it
advertises in top venues such as Barcelona's football stadium, grabbing
millions of TV viewers. Even the treble-trophy winning Barcelona is
tightening its belt. The club has put on hold a multimillion-dollar
redevelopment project of its 100,000-capacity Camp Nou stadium, a
project assigned to the English architect Norman Foster.

TNdancer's picture
Status: Silver Member (Offline)
Joined: Aug 20 2008
Posts: 127
Re: Daily Digest - February 18

If the bill were to become law, South Carolina would no longer accept or use anything other than silver and gold coins as a form of payment for any debt, meaning paper money would be out in the Palmetto State.

Pitts said the intent of the bill is to give South Carolina the ability to “function through gold and silver coinage” and give the state a “base of currency” in the event of a complete implosion of the U.S. economic system.

But one legal expert told The Palmetto Scoop that, even if it were passed, Pitts’ bill would quickly be ruled unconstitutional."


Apparently the "legal expert" is somewhat familiar with the interstate commerce clause of the Constitution ( but not the blatant mis-use of it ), but hasn't managed to read Sec 1, Art 10.....which clearly says:


"No State shall... emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; "


Meaning States are NOT ALLOWED to use anything but gold or silver to pay State debts.....the Feds can make anything they want "money"....technically the wording IS "coin", not print....since Congress has the power to "coin money and regulate the value thereof "......but assuming you stretch the word "coin" to include print paper, so what ?

The States can't use it.  They are CONSTITUTIONALLY BOUND to pay their debts in gold and silver.

What I don't understand is WHY doesn't a State employee, or a vendor that supplies a good or service to a State simply demand payment in Constitutional money ??   Just simply refuse any other form of payment, and then sue in Federal court if not paid in gold or silver.

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