Inflationieren - Das grosse Spiel

sammel - ein paar dingchen ausm netz und festplatte ueber das grosse spiel der inflation... mehr bild-lich als wissen-schaffend..

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Step 1 in "money" creation

The "Bank" of Rome

Fiat "money" creation begins when the "Bank" of Rome decides that the U.S. is ready for another bite from that old serpent the Devil. They instruct their American branch —the Federal Reserve Bank — to order Congress to raise the debt limit by $1 billion.

Step 2 in "money" creation

The U.S. Congress

Congress obeys the "Federal" Reserve Bank and instructs the U.S. Treasury to print $1 billion interest bearing bonds and sell them to the Federal Reserve Bank of New York.

Step 3 in "money" creation

The U.S. Treasury

The U.S. Treasury prints the$1 billion interest bearing bonds and sells them to the Federal Reserve Bank!! As security or collateral they offer the INCOME TAX collected from the taxpayers. The U.S. Treasury prints only the Principal . . . not the usury or interest.

Step 4 in "money" creation

"Federal" Reserve Bank of New York

The "Federal" Reserve or the Fed buys the usury bearing bonds and credits the U.S. Treasury for $1 billion. The government must now pay back the bonds with INTEREST. As the interest was not created, it can NEVER be repaid with "Federal" Reserve Dollars!!

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The "Federal" Reserve Bank loans the U.S. government their own "money" at usury or interest!!

The Federal Reserve Bank only creates the Principal - not the usury or interest that it lends to the U.S. government. Therefore the usury can NEVER be repaid and the end result is foreclosure and bankruptcy.

In 1765, the Bank of England demanded that the American Colonies pay taxes in British specie or coins which the people did not possess. If they had borrowed from the Bank of England to pay the tax, the end result would have been the same: foreclosure and bankruptcy with the Bank owning everything!!

It's the same fatal bite of that old Serpent the Devil and Satan which deceiveth the whole world (Rev. 12:9).

No wonder that usury is called nashak or the bite of a serpent in the Bible.

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This graph is an example of ONE Rockefeller billion placed in the bank in 1900 at 6% usury and compounded annually. At 6% interest the money doubles every 12 years. There is a rule called the Rule of 72 for calculating usury rates. Divide the usury rate by 72 and the quotient will give you the approximate number of years that it takes the money to double:

The rule of 72

Usury at 4% percent
72/4 =15 years approx.

Usury at 6% percent
72/6 =12 years approx.

Usury at 8% percent
72/8 =9 years approx.

Divide the usury rate by 72 and that will give you the approximate number of years for the money to double.

There is a more precise way to calculate usury using the computer calculator. Most computers have calculators. The formula to calculate principal plus interest for one billion dollars is this:1.000.000 multiplied by 1.06 raised to the power or exponent of 96 equals 268.759.030 billion dollars!! You can also cheat and go here: http://www.1728.com/compint.htm

Usury is the ONLY cause of inflation.
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Growth of usury on the Federal debt follows an exponential curve e.g., 2, 4, 8, 16, 32, etc, etc.

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Inflation robs a currency of its purchasing power until eventually it buy NOTHING. Before the fall of the Roman Empire, the government debased the currency by clipping the coins and adding less and less silver and gold. Inflation does the same thing to a paper currency as the paper becomes worthless and people lose all faith in the fiat. Eventual collapse can be postponed by printing more and more "money" but eventually the day of reckoning finally arrives.

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John D. Rockefeller (Mr. Usury) in 1872.

Federal Reserve Founder John D., said:

"Among the early experiences that were helpful to me that
I recollect with pleasure was one in working a few days for
a neighbour in digging potatoes—a very enterprising, thrifty
farmer, who could dig a great many potatoes. I was a boy of
perhaps thirteen or fourteen years of age, and It kept me very
busy from morning until night. It was a ten-hour day. And
as I was saving these little sums I soon learned that I could
get as much interest for fifty dollars loaned at seven per cent. — the legal rate in the state of New York at that time for a year—as I could earn by digging potatoes for 100 days. The impression was gaining ground with me that it was a good thing to let the money be my slave and not make myself a slave to money" (Ida Tarbell, History of the Standard Oil Co., p.41).

What a pity he didn't stay digging potatoes... The world would be a much better place today.

John D. Rockefeller was the founder of the "Federal" Reserve Bank. He was a typical usurer. Letting other people do the work and then reaping the benefits. It is a shame that the pious hypocrite NEVER heard a sermon on usury when he attended the Euclid St. Baptist Church every Sunday.

Even though the "Federal" Reserve Bank has the name FEDERAL in it's title, it has no connection with the Federal Government except that it OWNS the government.... The President of the U.S. and Secretary of the Treasury do not sit on its board!! The Chairman is appointed for a period of 14 years. The President does appoint him but that is just a formality as the Fed can easily ruin an uncooperative President by causing a recession or depression.

Albert Einstein said:
"Compound interest is the eighth wonder of the world"

Thomas Jefferson said:
"I believe that banking institutions are more dangerous to our liberties than standing armies."

Maier Amschel Rothschild said:
"Permit me to issue and control the money of a nation and I care not who writes its laws"

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The Depression of the 20s was an emergency the scale of which could only be matched by a war. To combat this, FDR resorted to deficit spending in order to bring relief and recovery in the economy.

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Critics such as Huey Long proposed the idea that the New Deal was not providing enough help for the needy. His "Share the Wealth" program promised a guaranteed income, home, and college education for all.

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The Banksters run the Federal Reserve to their own self-interest. They have a monopolists' control on what you pay to borrow money. The profits, your interest payments, go into their banks' coffers with no accountability to the People or to Congress.
They pay no income taxes, as credit card losses are writeoffs, subsidized by taxpayers.
That's why you get so many credit card apps in the mail. Bad credit losses just come off their taxes.

We are starting a People's Movement to Nationalize the Federal Reserve System, which is no more "federal" than Federal Express.

START:
(A) The Blue is where money for your loan is created by the BANKSTERS;
(B) The Gold is where your DEPOSITS and PAYMENTS go; Take note that none of your deposits are loaned out !!!

All money is created by banks as loans.

The proceeds of loans are spent in pursuit of some commercial venture, or for purchases by individuals.

Some of this created money remains in circulation to be used as a medium of exchange. Some of it is sucked out of circulation and placed into longer term assets. This portion of the money stock is being used as a store of value by those who are receiving an income stream in excess of that which is necessary for living expenses.

For all practical purposes this portion of the money stock is owned by the extremely wealthy. Kevin Phillips, in his book "Wealth and Democracy" documents the transfer of wealth from the poor and middle class to the wealthy.

The data shown- in the accompanying graphs, taken from Federal Reserve published data shows how this transfer of wealth has accelerated in recent years.

M3-M1 is money that originated as M1 and has been sucked out of circulation by the wealthy.

If M1 increases from one month to the next, that increase is the net increase, after the wealthy have sucked out their monthly take.

Using statistical data from the Federal Reserve System, I calculate that total consumer debt--revolving and nonrevolving, but not including mortgages-- grew at a rate of about $308 Million/year from 1943 to 1981 and $1.849 Billion/year from 1981-2000, and from 2000 to 2002 it grew at a rate of $122.36 Billion/year from 2000 to 2002.

I believe these figures represent mostly credit card debt that does not involve bank loans and deposit expansion

INFLATION - GAME BOARD
RUDY COPELAND - FORT WORTH, TEXAS - 1936

Read the book by Ralph Anspach to understand the importance of "inflation"to monopoly's game history: http://www.antimonopoly.com

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[B] N F L A T I O N
- COPYRIGHTED 1936 -
RUDY COPELAND
FORT WORTH, TEXAS

_______________________________________

I N F L A T I O N
TRADE MARK

The NEWGame

INTERESTING
THRILLING
INSTRUCTIVE

Price $1.50

-

THOMAS SALES CO.

New York, N.Y. Fort Worth, Texas [/B]

--------------------------------------------------------------------------------

I N F L A T I O N
For Two or More Players

-

R U L E S

The object of the game is not only to afford amusement to the players but also to illustrate to them how proposed Share-the-Wealth Plans, Excessive Old Age Pension Plans, etc., will increase taxes and place a heavy burden on all citizens and, at the same time, make it possible for the shrewd manipulators to gain a dominating position in economical affairs of the country.
At the outset, let it be understood that before the Government can bring about a share-the-wealth program it must own all properties and all monies. Under a share-the-wealth scheme it is proposed that the Government shall make every man a king and give each person an equal share of the money, after which time each must take care of himself. If a man has good luck and is a shrewd manager, he may beat the game of "inflation." If he isn't, he will be no better off than theretofore and distribution of the wealth of the country will not have availed him anything.

T H E G A M E

Players.
Two or more persons can play.

Playing Material.
Inflation playing material consists of:
The board.
The box with bottom so arranged as to form a treasurer's tray for use of the Treasurer while game is in progress.
This treasurer's tray also affords a receptacle for the Jack Pot.
Two dice.
Tokens of various designs for playing pieces.
Twenty blue pieces representing cottages.
Ten red pieces representing apartments.
Certificate of ownership cards for every piece of property.
Boloney money of various denominations.
Note: It is presumed that a building boom is accompanying the return of prosperity, with a consequent shortage of cottages and apartments, so there is purposely provided an insufficient supply of cottages and apartments to supply buildings for all property. This is also intended to encourage rapid improvement.

The Treasury.
The treasury is custodian of all money, all unsold property, all houses and all apartments. Players select their own treasurer. He may or may not play in the game but if he does play, he must keep his personal funds separate from those of the treasury and keep Jack Pot funds in space provided in treasurer's tray.

The Board.
Design of the playing board contains 39 circles numbered consecutively. Eighteen of the circles are property spaces, that is, spaces which players can buy. On two of these - Roosevelt and Wall Street - improvements have already been erected. Purchasers of the others may erect cottages and apartments. There are three Inflation spaces. Remaining circular spaces provide either penalties in some form of taxes or rewards in some form of sharing-the-wealth. In the upper right hand corner is a space for the red "Share?the?Wealth" cards and in the lower left hand corner one for the blue "Tax" cards.
Property spaces, other than Wall Street and Roosevelt, are, for playing purposes, as explained later, grouped in alphabetical series as follows: three A's, three B's, two C's, three D's, three E's and two F's.

T O P L A Y I N F L A T I O N
Place the board on a table, shuffle the red share?the wealth cards and the blue tax cards and put them on their allotted spaces.
Each player select a token to represent you on your travels around the board.
Treasurer count $4,000 out to each player as follows:
....http://tt.tf/gamehist/rules/infl-r.html

Links:
http://www.reformation.org
http://www.fog-lights.ch/content_us_core_inflation.html
http://jamesgoulding.com/bookmarkhistory.htm
http://65.40.245.240/money/
http://www.miprox.de/Graphiken.html

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"I Was Merely Doing My Job, Your Honor -- Everbody Knows America Has Declared War on Inflation"
Reprinted from the November 15, 1974 issue of Muhammad Speaks Newspaper

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Europe, 1988
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Inflation, Belgrad

...

Welcome (to the Thrust) !

Alan Greenspan stößt an seine Grenzen
von Marc Faber [Blockierte Grafik: http://www.welt.de/tplpix/welt/logo_bottom.gif]

Verzweifelt hat Herr Greenspan seit dem Jahr 2000 mit seiner höchst expansiven Geldpolitik versucht, durch Kurserhöhungen an der Börse und Preiserhöhungen am Immobilienmarkt den Konsum der Haushalte, dank einer wachsenden Verschuldung, künstlich zu fördern. Das ist ihm auch weit gehend gelungen, aber dieser Verbrauch der Haushalte, der ausschließlich durch eine Finanz- und Sachwertinflation belebt wurde, hat nicht nur eine begrenzte Haltbarkeit, sondern er hat auch die Ungleichgewichte in der Weltwirtschaft wesentlich vergrößert. Seit dem Jahr 2000 ist das Wachstum des amerikanischen Konsumentenverbrauchs nur auf Grund steigender Immobilienpreise und Steuersenkungen ermöglicht worden und nicht durch steigende Realeinkommen der Beschäftigten. Tatsächlich sind in den USA - sowie in Europa - in den letzten Jahren die Erwerbseinkommen vor Steuern weniger schnell angestiegen als die Lebenskosten, was zu fallenden Realeinkommen geführt hat.

Somit ist also eine zusätzliche Steigerung der Verbrauchsausgaben völlig von weiteren Immobilienpreiserhöhungen abhängig, die aber ihrerseits aus folgenden Gründen in Zukunft nicht eintreffen dürften.
Damit Immobilienpreise weiter ansteigen können, muss die Geldpolitik, wie bis vor kurzem, sehr expansiv weiter betrieben werden. Das Inflationsgespenst ist aber sehr beweglich. Falls wir Inflation als eine Erhöhung der Geldmenge verstehen, kann dieses Gespenst Kurssteigerungen an den Aktienbörsen auslösen, wie das der Fall bis zum Jahre 2000 war, dann kann es, wie in den letzten Jahren, zu steigenden Immobilienpreisen kommen. Und schließlich kann der Inflationsgeist auch zu steigenden Konsumentenpreisen und Löhnen führen. Dass die Löhne stark ansteigen werden, ist kaum anzunehmen, denn die Geldpolitik extrem niedriger Zinssätze hat einen Anlageboom in China und Indien zur Folge gehabt, bei dem immer mehr Produktion und Dienstleistungen, auf Kosten der amerikanischen Einkommensempfänger, in diese Niedriglohnländer verschoben werden. Der Konkurrenzdruck aus dem Ausland wird deshalb weit gehende Lohnerhöhungen im Westen unmöglich machen.

Dagegen scheint es aber, als ob die Konsumentenpreisinflation sich in einer Beschleunigungsphase befindet, die nicht nur fallende Realeinkommen zur Folge hat. Sie wird auch verhindern, dass die Zinsen noch wesentlich fallen werden - fallende Zinsen, die ihrerseits zu den Preissteigerungen am Immobilienmarkt und dem höheren Verbrauch geführt haben. Wir sehen hier also ganz deutlich, dass die Grenzen einer Geldpolitik, deren Ziel künstlich niedrige Zinsen sind, dann erreicht werden, wenn die Inflationsrate sich beschleunigt. Und so nicht nur fallende Realeinkommen zur Folge hat, sondern auch zu einer Verknappung der inflationsbereinigten oder "realen" Geldmenge führt, die sich dann wie eine Verknappung des Geldes durch den Marktmechanismus - und wohlverstanden nicht als Folge einer restriktiveren Geldpolitik - bemerkbar macht. Dass eine Verknappung des Geldes durch den Markmechanismus in Verbindung mit fallenden Realeinkommen sich früher oder später negativ auf die Preise von Vermögenswerten wie Immobilien und Aktien auswirkt, dürfte klar sein. Und nachdem der amerikanische Verbrauch ausschließlich durch diese Vermögenswertinflation in den letzten Jahren getrieben wurde, erwarte ich, dass innerhalb der nächsten sechs Monate das amerikanische Wirtschaftswachstum und die Unternehmensgewinne ganz deutlich enttäuschen werden.

Artikel erschienen am Sa, 7. August 2004
http://www.welt.de/data/2004/0…rch=faber%2B&searchHILI=1

zurueck zu 2000 = -50%

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this excludes contingent liabilities such as social security, government pensions and Medicare. The economy is 2-3 times more debt-dependent - with at least $21 Trillion DEBT EXCESS - - compared to the 1950s

Total American Debt is defined as all U.S. debt (federal and state & local governments, international, and private debt, incl. household, business and financial sector).

The chart shows the debt in 1957 was $693 billion (the left bar in the chart) - - or about $4,000 per capita

Today's debt has grown above $37 trillion (the right bar in the chart)- - 36 times higher - - to $128,560 per man, woman and child - or $514,240 per family of 4.

65% ($24 trillion) of today's debt was created since 1990.

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America's total debt (the red line, reaching $34 trillion) vs. growth of the economy a measured by national income (blue line), adjusted for inflation in today's dollars.

America's Total Debt is here defined as all U.S. debt (sum debt of federal and state & local governments, international, and private debt, incl. household, business and financial sector, including federal debt to trust funds).

Note from 1957 to the early 1970s each curve approximately doubled - meaning about the same ratio of debt was supporting national income growth, despite paying on old WW II debt and covering Korean and Vietnam wars.

Had the economy become less debt dependent after that we would have expected debt to slow down. But, instead, it took off.

In just the 1990s real debt increased more than two times faster than growth of the total economy - - despite zero cold wars.

Other charts show the driving culprits were not only federal government debt ratios (which stopped falling in early 1970s and reversed strongly to the upside - growing 2x the economy) - but, not to be left out, other main culprits were accelerating household debt (growing nearly twice the rate of the economy, and domestic financial sector debt growth (at rates 4 times faster than general economic growth).

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If total debt in America had not grown faster than the economy then the two bars on the chart would be the same height. But they are not the same height, because the debt ratio to economy size in that period increased over two times faster than growth of the economy - - indicating more than a 100% increase in debt dependence - - as it jumped from 186% of national income to a 427% debt ratio.

Stated another way, if 2003 debt had been at the 1957 ratio then 2003 debt would have been $16 trillion, not $37 trillion - - meaning an excess debt in America today of $21 trillion.

Stated differently, in 1957 there was $1.86 in debt for each dollar of national income, but today there is $4.27 of debt for each dollar of national income. It also means that this extra $2.41 of debt produces zilch relative national income.

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If the years after 1957 required no more debt per dollar of national income, then the black curve in the chart would have remained flat - at the 186% level. But, as the years went on, especially after the late 1960s, it took more debt each year than the year before to produce a dollar of national income.

By 2003 Total America debt reached a historic peace-time record at 427% of national income - - more than double the share of economy that was debt laden in 1957. This picture makes quite clear that today's economy is over 100% more debt dependent (leveraged) than before.

Restated - - in 1957 a dollar of debt produced 54 cents of national income; but today's dollar of debt only produced 23 cents of national income - or 57% less economic growth per added dollar of debt.

The black line is our data. The red dashed line is the exponential trend line. Note in the more recent years, not only has the black line increased at a faster rate, but it is now growing at a rate above the red exponential trend line.

And, this faster debt ratio climb is occurring despite so-called higher levels of economic growth in the 1990s, and record tax collections.

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America's Total Debt restated as inflation-adjusted per person - - 4.6 times too much.

This chart shows total total debt allocated on a per capita basis, adjusted for inflation. The left bar shows 1957 debt nation-wide (in today's dollars) was $26,381 per man, woman and child.

If national debt per person were only adjusted for inflation over the 45 year period, the right bar (2003) should have remained the same size as the left bar (1957) at $26,381 per capita.

BUT- the right bar shows 2003 debt was $128,560 per man, woman and child - - 5 times higher per capita than in 1957.

Adjusted for inflation, this data shows inflation-adjusted total debt load per person increased $102,179 - - equivalent to an increase of $408,716 per family of 4.

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Per capita real debt has increased from $26,381 in 1957 to $128,560 today - - 5 times more debt per person, adjusted for inflation.

Note the very steep upward thrust of the curve for more recent years - -
- - as if current debt trends are up faster than a rocket boost from Cape Kennedy.

Note: all debt data is from the Federal Reserve, except the data for the federal government portion of the total is from the Dept. of Debt at the Treasury Dept. which also takes into account federal debt owed to the trust funds. National income data is from the Bureau of Economic Analysis.

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This chart looks at the $37 Trillion of total debt in America today (the left bar in the chart) and asks the following question > >
What would be the size of today's debt had the economy operated at the same debt ratios (to national income and per capita, adjusted for inflation) today as it did in 1957?

The chart's middle bar displays the excess based on % national income method: today's (2003) debt would have been $16.32 Trillion if the economy and been no more debt-dependent than it was at the 186% debt ratio to national income of 1957.

But, actual debt was $37.42 Trillion - - more than twice as much. The difference between the two bars is an Excess Debt in 2003 of $21 Trillion ($37 less $16). This excess alone is equivalent to $72,000 per man, woman and child - - in excess debt load - - or $288,000 excess debt load per family of 4.

The chart's right-hand bar displays the answer for per capita debt excess: today's debt would have been $7.21 Trillion if today's debt per capita had been the same per capita ratio as 1957 - - both in constant 2003 dollars. But, it was $37 Trillion, or 5 times more.

The difference using per capita measurements indicates 2003s excess debt was $30 Trillion ($37 less $7) too much.

That's an excess of $103,000 per man, woman and child in excess debt load - - or $412,000 per family of four excess load.

SUMMARY: this chart shows that total debt in America in 2003 carried an excess between $21 and $30 Trillion too much - - or $72,000 to $103,000 per person too much - - or $288,000 to $412,000 per family too much.

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AMERICA'S DIMINISHED DEBT PRODUCTIVITY

If America was more efficient in real productive employment of new debt
then less debt would be needed for each dollar of national income.
But - - the reverse is true. We are less productive regarding debt than ever before.

Each dollar of economic growth requires more debt per dollar than before - now over twice as much and, the national income achieved per dollar of debt dropped 57%

The chart above shows that in 1957 there was $1.86 of outstanding debt for each dollar of national income.

But, today's economy needs $4.27 in outstanding debt for each dollar of national income.

That's double the outstanding debt load per dollar of national income.

That extra $2.41 of debt produced zero national income.

COMPONENTS OF AMERICA'S TOTAL DEBT

IDENTIFYING THE PRIME DEBT-GROWTH CULPRITS

The Prime Debt Culprits are:
Federal Government - Financial sector - Household sector - Business sector

Following is a very revealing chart, compressed to show just the past 29 years (1972-2001). It shows 5 major components of debt in America - the debt amount of each as a ratio to the size of the economy's national income.

The 5 lines include State & Local government, Household debt, Business Sector debt, Domestic Financial Sector debt and the total federal government debt. Not shown is international debt

We know from the above charts that total ratios are up exponentially. This chart identifies those components driving the upward trend in debt ratios in all government and private sectors.

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Look for the lines that are rising - - like the red line (exploding financial sector debt), the blue line (rapid increases in Household debt ratios), the black line (Federal Government) and the yellow line (business sector). The fact these 4 lines rise means debt in these sectors increased significantly faster than the economy was growing. These are the driving force now threatening the American economy with sky-rocketing debt-dependence.

The most dramatic & scary is the red line, which is Financial sector debt (today at $11.4 trillion) - a very scary trend!!! (Although much of the financial sector debt is also included in the other categories, most also agree that the business debt category understates its own debt, as evidenced by off-balance sheet debts of the likes of Enron, etc.- - an area of hidden debt still coming to light. Therefore, it is instructive to include financial sector debt).

As shown on the chart's red line, the financial sector's debt ratio zoomed from 5% of the economy's national income in 1957 to 130% of today's economy - a debt ratio growth rate 26 times faster than general economic growth - and, pointing upward faster and faster.
A separate chart on this component follows below, which shows its trend line is upward exponentially.
The next largest rapidly rising component is the blue line, or Household debt ($9.4 trillion) - from 43% of national income to today's 101%, more than double the prior ratio - meaning it, too, is growing much faster than general growth of the economy.

Household debt is made up of consumer debt plus mortgage debt. The Family Income Report shows real median family incomes stopped growing in 1970, and thereafter families tried to keep up by going deeper and deeper into debt ever since - at near twice the rate of total economic growth - to an all-time high today. Consumer debt payments % disposable income are at historic highs. The Family Income Report cites the reason, with dramatic pictures.

The fact household debt ratios have reached historic highs during the so-called boom years of the 1990s proves that the economy was more driven by debt than anything else - - and households have excessive debt instead of reduced debt at end of an expansion period.

Next there is the black line, the Federal government sector debt ratios -

We have seen this before. It was pointing downward 1950s to mid 1970s
- a period of strong real median family income growth, stopped dropping in 1974, oscillated, and then took off upward - under the pressure of consumptive social spending rising 12 times faster than the economy as reported in the Federal Spending Report (as family incomes ceased to climb).
Today's ratio (80%) is double that of 1972 when the Vietnam war and the cold war were in process. The recent short down turn was due to record tax revenues, and a dramatic lowering of national security expense ratios to a near record low as a share of the economy - - but, now reversing to the upside as the depleted military is re-built.
Some of the reasons are in the Social Security Report, which shows how the general government dips into trust fund surpluses, siphons such off for non-pension spending (leaving behind a few worthless IOUs), and then does not account for such spending in the way the budget deficit is calculated. The same siphon and spend approach occurs in other trust funds, such as the federal employee pension trust fund. Together, $2.6 trillion has been siphoned from trust fund, with zero budget to reduce other general government spending to repay.
The business sector debt (yellow line) of $7.4 trillion increased twice the speed of the economy, increasing from 44% of national income in 1957, doubling to over 84% today - an all-time high.

The green line (debt of state & local governments) is the only component not rising. Although its debt may have moderated, the State & Local Government Report proves spending and headcount ratios are way out of line, compared to the past, and this sector needs major attention.

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HOUSE-HOLD DEBT

The left chart shows the trend of household debt as a share of national income from 1963 to present. If household debt were not growing faster than the economy's own growth then this chart would show a flat, horizontal line. But, the chart plot is straight up in recent years, meaning household debt is soaring faster than the economy.

Household debt is primarily made up of mortgage debt and credit (credit cards, auto loans, etc.). In 2003 household debt was up 11% over the prior year to $9.4 trillion, incl. $6.8 trillion mortgage debt and $2 trillion credit debt.

Note the left side of the chart for the first several years where the debt ratio did not increase, until the late 1970s.

It then started upward, slowly - and then upward like a rocket - to new all time highs today.

Debt has risen at rates much faster than growth of the economy, suggesting real equity is not the driving force of economic size - - it is debt driven.

If today's debt ratio (101% of national income) had been the same as in the earlier years, the chart's curve would be horizontal instead of soaring upwards, and then today's debt in dollars would have been $5 Trillion less than it was in 2003. In other words, 2003 household debt would have been $4.3 Trillion - - not the $9.4 Trillion that did occur.

This shows that the economy is more leveraged by household debt than ever before. And, households are even more at the mercy of credit and mortgage interest rates than ever before.

Auto loans > In addition to soaring home equity mortgages which consume owner stakes in their homes, according to USAToday (2/16/04) the average automobile loan today is for 63 months, with some going as high as 80 months, compared with an average of less than 48 months five years ago - - and about 24 months in the 1950s. In 1997, banks financed an average 89% of a new vehicle's price. Last year, it was 101% since consumers borrowed to cover the amount they were upside down on their trade-in. And get this…40% of all trade-ins involve upside-down car loans. (this author recalls when he entered the workforce in the late 1950s normal down payment was on-third cash for a car, with 18 month financing for the balance. Quite a contrast to current times.)

Credit Cards > A massive 42% of Americans are making just minimum payments or no payments on their credit card balances, according to the Cambridge Consumer Credit Index in March 2004. Of those respondents surveyed with revolving balances on their credit cards, 39% made only the minimum payment due and 3% made no payments at all last month. Another 39% paid less than half the balance owed but more than the minimum, while 19% paid more than half their balances. In 2003, the average credit-card debt of US households with at least one card was $9,205, up from $2,966 in 1990, according to the research firm CardWeb.com - - that's 310% higher.

INTERNATIONAL OWNERSHIP OF U.S. DEBT

Foreign investors own a larger and larger share of America's debt instruments.

43% of U.S. government Treasury bonds, 24% of corporate bonds and 14% of government agency debt (Freddie Mac, Fannie Mae) -
Total of these three areas: $3 Trillion, and GROWING RAPIDLY.

Debt is like drugs - - one needs more and more and more to 'survive.' America, like a debt-junkie depending on support from others, is less and less in control of its own economic conditions looking forward - - becoming more and more dependent on the willingness of foreign interests to finance the destructive and escalating habit.
Foreign Ownership of Federal Government Treasury bonds and bills

Nearly 42% of the total, and a new record high.

The Debt ratio doubled during the past 8 years.
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This graphic is from the Grandfather Federal Government Debt Report

If foreign interests have been financing this rising trend of our federal government debt during the latter 1990s, now at 42% of the total, from where will come the needed additional funds to finance the huge spending plans for national defense and homeland security?

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Foreign investors now own 24% of all U.S. corporate bonds.

The foreign investment community was one major support to the corporate capital spending boom of the late 1990's.

On an absolute dollar basis, over the last seven plus years foreign investors have almost quadrupled their commitment to US domestic corporate debt.

From close to 14% in 1995, the foreign community now owns approximately 24% of total US corporate debt. Do you think they have a vested interest in the integrity and quality of US corporate accounting? Just what do you think would happen if foreigners decided to sell just 25% of their holdings of US corporate debt? Do you really need us or want us to answer these questions?

Through the recycling of trade driven dollars into US financial assets such as you see above, the foreign community played a major role in financing the US "new era" of the latter 1990's, to say nothing of corporate debt driven stock buybacks. Source: ContraryInvestor.com, July 2002.

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Foreign investors financed 14% of Government agency debt, called the GSE's (Freddie Mac, Fannie Mae) - - which is by and far the main driving force in the U.S. home real estate mortgage market.

Foreign community has been a key support to the US mortgage market. In essence, a key support to US household confidence.

Over the past seven and one half years, foreign ownership of US government agency debt has quintupled. The foreign community now commands ownership of over 14% of the total government agency market. To suggest that foreigners have supported mortgage credit expansion in the US is simply an understatement.

Should the foreign community even begin to question the soundness of the US mortgage markets, the impact on mortgage credit creation in the US vis-à-vis a potentially higher interest rate structure would change the game in a big way.

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A CAUSE OF AMERICA'S DEBT BUILD-UP

One can ask > what is a major driving force for unprecedented debt growth in all sectors? An answer > the financial industry depends and feeds on a nation addicted to more and more debt, which is organized by its agent, the powerful central planning monopoly Federal Reserve. The following 46-year trend chart helps tell that story.

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The left chart shows America's Total Debt (blue line, left scale) 1957-2003 plotted vs. the Federal Funds Interest rate (red line, right scale).

1. The upward sloping blue line is the debt growth curve we have shown before, that of America's Total Debt soaring upward, reaching nearly $35 trillion in this chart, which includes debt of government, households, business and the financial sectors, but excludes government trust fund debt (over $37 trillion if trust fund debts are included).

2. The red federal funds interest rate data plots show a 24-year rising trend toward 19% in 1981 and thereafter a 22-year declining trend to a mere 1% rate in 2003. This is not an interest rate established by a free market - - its a centrally-planned rate created by the Federal Reserve with monopoly power for its own purposes, which we discuss below.

This graphic clearly demonstrates a huge catalyst for exploding debt (blue line) in all sectors since 1980 can be attributed to long-term declining federal fund interest rates (red line) set by the Federal Reserve - - to but 1%, which is a historic 'give-away, free-lunch, debt-promoting' rate, a historic 'teaser' rate for more and more debt to fuel more and more consumption including more imports, and less and less savings.

This chart makes the case that the cheaper and cheaper it is to go into debt (declining interest rates) the more will do just that. Its the 'free-lunch', wishful thinking syndrome to which many worship and the Federal Reserve nurtures.Why consume less today in order to save for tomorrow when one can so cheaply borrow from tomorrow and consume today? Record low interest rates can cause record indebtedness - - which is the case today. This chart indicates the Federal Reserve, a non-government agency run by un-elected officials, that is beholden to the banking industry - - centrally-plans the climate for huge indebtedness.

Previous charts in this America's Total Debt Report chapter proved about 1981 America's Total Debt ratio (to national income) of all sectors started exploding upward. For the 24-year period 1957 to 1981 America's total debt did not grow faster than the economy, as debt oscillated around 186% of national income. This chart shows the federal funds interest rate increased over that period. However > during the next 22 years (1981-2003), as the federal funds interest rate was driven south, the total debt ratio exploded upward many times faster than economic growth - - to today's record high 427% ratio. This is a period we term 'negative debt productivity.'

No matter how cheap adding debt is made to appear it takes an individual to make the decision, for himself or his firm, to go deeper into debt - - increasingly mortgaging his future and his retirement life style. He does not have to fall for the 'free-lunch, debt-debt' commercial to borrow more and more and more from tomorrow to support consumption today. He has a choice. But the financial sector is most sophisticated regarding commercials to push more debt, and its success is proven by debt ratios soaring to produce the largest debtor nation in history with record debt ratios. Just as the food industry is sophisticated in promoting fat-free foods when actually what happens is more people consume more than ever and driving the national weight ratio (pounds per capita) to world records.

America now depends on more and more debt creation to drive a given dollar increase of GDP - - called Debt Productivity. Like a druggie, we need more debt each year than the year before. Additionally, as reported in the International Trade Report, the explosion of debt has generated consumption so far beyond the nation's means (own production and savings) that soaring imports created record trade deficits - - threatening economic independence and national security. It is clear GDP has been driven by more and more debt (instead of production and savings) and this debt explosion was facilitated by centrally planned interest rates. Such rates now are at record lows, as shown on the chart - - and, there does not appear anywhere for the Federal Reserve to go from here to further lower interest rates to drive even more debt creation to keep the debt-economy growing.

A look at that chart makes one wonder > with interest rates unable to continue their decline as in the past 2 decades - - what happens now? Most likely its 'game-over' unless powers-to-be have decided to centrally-plan ramping-up inflation to all time highs for the next 2 decades while continuing to change how they measure and report inflation to mis-lead the general public. Time will show.

Why do you think centrally planned economic policy appears aimed at debt-debt-debt, with debt growing faster than the economy, including exploding trade deficits - - instead of a policy aimed at savings, domestic production and balanced current trade accounts to meet our needs and protect our independence from others, as was the case in our past? Is this debt-drug policy good for America looking forward? Can we argue that, as a clear expression of intent to have free markets unhindered by central planning monopoly control, the Federal Reserve should by law be denied the power to peg the federal funds interest rate - - and thereby remove it from being an obvious major driving force for America's unprecedented debt explosion?

ganzer Text von heute: http://mwhodges.home.att.net

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... auf dass wir nicht so verdutzt schaun wie die junge Dame hier ausm Jahr 1921,
kurz nach Losloesung vom "Gold-Vertrauen",
wenn der letzte Dollar weg ist.