Explaination of Current Economics

Ralph,
Yes, I would maintain that debt, in principle, is bad. Debt itself represents negative which is contrary to positive. I agree with you than in any currency based economy that some form of debt has to occur, so I will not try to argue that just because debt is bad that we should expect not to have debts within economic systems if we are going to have economic systems. Lets just say that you, Ralph, don’t want to be in debt and neither do I. As a nation we should not want to be in debt. However, the current crisis that we along with other countries are facing is the result of national debts which are the result of irresponsible spending habits of government entities using foreign money lenders.

The cause of the problem we face is that our government itself is issued money through a foreign entity at interest rates determined by that foreign entity and given limitless credit lines which must be repaid at interest to private banks that create fiat currency from nothing.
Let me be clear, fiat currency itself is not the problem, nor is creating it out of thin air. Anything can be used as currency if people agree on it. The problem is WHO makes the fiat currency and governs its use. The American government has the constitutional authority to create and issue its own money, whether fiat or standard (reserve) based. If our government created money, debt could and would exist within the American economy among individuals, businesses, and between state governments and the federal government, but the debt would not extend above the level of the federal government. All debts and collaterals would remain within the sovereign boundaries of our Nation. This also leaves ultimate authority in the hands of the federal government in times of economic crisis (which would not really occur under that system) to self correct and to adjust the economy by flexing or reducing interest rates (or other means) for the well being of THIS nation.

Under the current system the banking cartels have created huge privatized central banks which exist separate and independent of the nations and interests which they represent, who adjust and regulate currency creation, value, and distribution based on the maximum benefit of the shareholders and profiteers of the banks themselves. The bible says that the borrower is servant to the lender. The biblical principle is an experienced reality among all nations who have been stripped f sovereignty through debts to foreign banks. Throughout history this has always proven true. When you become indebted to someone under contract (whether fair or not) you become servant to them or lose all credibility making you insolvent for future credit.

Because our government is a customer of the European central bank, the Fed, instead of our own central bank, we have taken the national position as borrowers instead of lenders. Under this system we have promised to repay debt based on the good credit of America, with our nation itself being the eventual collateral for unpaid debts. The collection of national debts by the international central banks is the collection of national sovereignties themselves making government’s dependant and in debt to the men who sit on the boards of the private banks that make their money. It is well known (or documented at least) that the national income tax is merely the payment of interest on moneys borrowed by the federal government. With national spending habits which accumulate debt rapidly our national debt is in the trillions with interest rates which now themselves exceed the money collected through income tax. When the interest alone on a debt exceeds the amount of available money to pay the debt, the borrower is in serious trouble. We are in serious trouble. As a result of the realization by international governments and banks that America has over borrowed to the point that existing debt can never be paid, and that simple interest payments are no longer affordable, the international community is cutting ties with the American financial system, resulting in the decreasing value of the dollar, the decreased value of American bonds, and the move to start collecting actual assets in lieu of the monetary notes and paper securities before all of Americas creditors call in debts creating panic. In addition, with the emergence of new economic superpowers and new stable currencies in China and the EU, the need for American bonds has increased in light of more lucrative investment opportunities overseas. The fact that American corporations themselves are outsourcing and establishing themselves outside of America is a clear sign (especially to foreigners) that America is no longer a prime market.

Perhaps the biggest indicator of Americas decline and weak economy is the housing market. We were aware several years ago of the coming collapse of the housing market as a result of sub-prime mortgages, resulting in unavoidable defaults by insolvent borrowers, resulting in repossessions of millions of homes, resulting in a flood of available homes, resulting in the decreased values of homes due to a surplus in supply. Simultaneously the banking houses which lent the subprime loans are unable to gain collateral equal to the monies lent, causing them to lose billions, thus creating the need to raise adjustable rate mortgages to cover losses for payment of their own debts (to the central banks), resulting in remaining mortgage owners no longer being able to afford the increased rates causing them to default, resulting in more debt to the banks which then adjust interest rates in the PRIME market, causing middle class mortgages to begin defaulting and so on.

The current actions being taken by the central banks in bailing out the banks by auctioning $40billion is only an illusionary solution. Because that money is being pumped into a failing system whose active and projected defaults far exceed $40billion mortgages will continue to fail especially while subprime mortgages are not only being issued, but promoted in mass. Here are the statistical estimates reflecting this.
A subprime customer who received a mortgage in 2005-early2006 had adjustable interest rates equal to approximately 30% of their net income. (net generally = only 60-70% of earned income) This is already a big expense when 30% of income goes to mortgages alone. These subprime mortgages are almost always adjustable rate mortgages. As the banks increase interest to cover losses due to failing markets the average subprime mortgage payments adjust from 30% of net income to 90+% of net income by the latter end of 2007! It does not take a great economist to know that 90% of a persons after tax income on a single expense is unaffordable especially in the sub-prime market. If I make $20,000 per year after taxes then that means $18,000 per year now goes to mortgage payments which used to only cost me $6,000-7,000 per year. $2,000 barely pays for gasoline for a fuel efficient car for driving around town.
So, if the dollar is collapsing due to insurmountable debt and the housing market is collapsing due to adjusted mortgage rates to account for bank losses, then the economist must ask what can be done.

The true foundation of any economy is rarely revealed to people regardless of where one takes courses in economy. Most of the “greatest economists” of our day don’t even know the mechanisms behind economics. That being said, the bottom-most foundation of any economy is FOOD. All economies can exist only so long as people are getting fed. Likewise a nation which is in the midst of a national famine does not have a structured and stable economy. Look at any example around the world where widespread famine is an experienced reality and you can see this principle in action. Where food is abundant and distributed to populations effectively, that distribution of food is itself a staple of the economy which is almost always stable so long as food is available.

The exception to this is when a country is an import nation which relies completely on foreign entities for food. While these nations might be experiencing a stable economic status, it will almost always be an extension of the supplying country, not a self sufficient national economy. Most likely such a country will use the currency of the supplier country as its economic security, not its own national currency.
Under the U.N. GATT (General Agreement on Tariffs and Trade) all member nations of the U.N. are forbidden from withholding or stockpiling national food grain reserves. All member nations must export national food grain production to the newly established World Food Bank which then exercises supreme authority over redistribution of the food to nations AT COST at its own discretion. That was a monumental step towards forced globalization policies which as admitted by the UN leadership itself, must see a significant reduction in global population. An extremely large portion of the world population lives under conditions of famine. The only reason we don’t see much of them is because the first world grain cartels control access to the food, and consolidate famine areas into third world regions such as much of Africa and other regions internationally. However, almost all nations in the world are members of the U.N. The problem: most nations do not have stable food production. The mega producers such as the U.S., Mexico, and Australia export vast sums of grain while most other countries give little or none at all. Yet distribution of the grain by the World Food Bank is not rationed back out based on who gave the most. The grain is distributed to even the nations who cannot actually support their populations with their own production. The result:  Each year world food production falls farther and farther below world food consumption, resulting in the remaining World Food reserve to be depleted each year. In the next couple of years ALL food reserves WILL be depleted and the World Food Bank will no longer be able to distribute the food that it is able to distribute now from reserves confiscated by the GATT in 1998. This means that it is unavoidable that many of the nations being fed now will suddenly be cut off from food grains AND those countries which do receive grains will not be able to pay the exhorbant costs of importing food grains from the bank.

If you are not already familiar with the GATT or the United Nations programs for globalization, it is imperative to educate yourself on these realities in order to understand the solutions to the global crisis. We are well aware that most governments and politicians depend on problems in order to make solutions based political platforms. 9/11 and the war on terror is a prime example of how politicians and beaurocracies thrive and expand when fueled by conflicts or crisis. It is also not beneficial for any system of government or political platform to extinguish the “cash cows” (crisis and problems) thereby making their platforms obsolete. We see this time and time again around the world. Policies often times relieve effects of problems or portion the greatest benefits of these problems to the constituents most likely to win them more power in the future. For example, in today’s crisis of failing economic infrastructure, the greatest benefits of legislation go the upper-class constituents which placed the regime in power and who can then sway other blocks of the populations into voting for the current regime using mass media and access to communications unavailable to other “unplugged” candidates.

That is part of another subject altogether but it relates to the global food crisis all the same. The 2007 USDA World Agricultural Report overwhelmingly proves that the world food market is nearing collapse as demand far outpaces supply and growing conditions of famine are sprouting up where famine has not historically existed. This also is easy to understand. All cattle/beef and poultry markets rely on grains to feed and harvest meat stocks. Over the past few years as famine has expanded past the boundaries of sub-Sahara Africa, and a great strain has been put of the World Food Bank by countries seeking import grains, the market adjusts by restricting rations to all member states. As a result of decreased supply in the face of growing demand, the portion of grains which used to go into feeding livestock now goes into human foods in order to stem possible panics. The end result is that an increasing number of small farms began losing access to grain markets which were set to the cost of human consumption rather than wholesale livestock prices. The cattle and poultry on the farms began to die of starvation. As of 2006-2007 the decrease in world grain production has grown monumentally, as a result the 2007 agriculture market received only a portion of necessary grains. Again millions of cattle and chickens die resulting in a decrease in meat foods. To compound matters, 2006 and 2007 saw a new wave of destructive weather patterns never before seen. Whole portions of the Midwest and southeast were struck by fires, drought and destructive snow storms which eliminated millions of cattle and decimated the already flailing U.S. grain crops. The result in these great blows to our production, 2008 will see an even more drastic reduction in grains while populations continue to grow where famine has not already capped reproductive capacity. As a clear result of worsening conditions, in October of 2007, the United States of America begged the World Food Bank, for the first time in history, for access to more food reserves stating that the US is no longer capable of supporting its own population based on its own production for 2008. We will see the impact of this in grocery stores in 2008 (and already are in some areas) as food prices double and many of the products now on shelves will no longer be available to consumers by late 2008.
With the global food situation having been explained, it is now obvious that in the face of a collapsing currency and housing markets that the U.S. will not have the resources necessary to dig itself out of the hole it has paid others to dig. Once this years grain crisis begins hitting consumers in the U.S. in 2008 and the government has to come out in the open with its negotiations for more food imports it will become necessary to begin implementing restrictions on access to food. This will be done in a similar manner to current restrictions on water in drought areas. These restrictions could be in place as early as late 2008 and early 2009. The common knowledge that food has grown scarce will skyrocket prices over a decreased dollar causing millions of Americans to be unable to afford the food that is available. You can see how the snowball effect could manifest out of these conditions.

That is enough information to back up the beliefs espoused in the article I sent you. I know that it could have been a short response, but your question could not be answered so long as we were working under the assumption that the current world infrastructure had the capacity to address the problems raised. I have shown you that I believe that the solution to our woes cannot be addressed under a system designed to profit from limited resources.

My Solution:

In order to restore balance and solvency to the economy several actions must be taken.

1)          People must be aware of the problems facing us, which are disguised by media and propaganda.
2)          People must understand the nature of the problems facing us and how they have been allowed to manifest.
3)          Groups of private individuals must begin implementing properly applied principles of life and living so that the results of correct application can be witnessed by people aware of the problems facing us.
4)          Those who have learned these properly applied principles must be put in places of authority and influence internationally so that policies can be set in place to begin curving the consequences already facing us.
5)          People MUST become active in resolving personal debt and finances/prevention FIRST, thus setting an example for positive growth and development.




This has now become and is still becoming an experienced reality. Economics itself is an incredibly simple system. It’s the manipulation of economics while trying to hide those manipulations that make the pseudo-economics taught in schools and universities seem so complex and unrealistic. We can look at what the system is today and know exactly what will happen in the future while most economists actually have no understanding of how real economics work, and believe in things like the business cycles as phenomenon’s which occur out of natural market conditions. The reality is that everything which occurs within the markets are directly manipulated by whomever has the power to issue currency and loan it at interest and who can then manipulate markets by directing control over interest rates. This is nothing new. It has happened for thousands of years to various extents.

C.L. Luce
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