What Thomas Jefferson Knew That Paul Krugman Never Learned

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And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.

Letter from Thomas Jefferson to John Taylor, May 28, 1816.

H/T to Robert Gore of the Straight Line Logic blog

Of course, Thomas Jefferson wasn’t an economist with a Nobel prize; so what did he know? He knew the risks ofdeficit financing, that’s what!

Well, that’s what I’m thinking. What are your thoughts?

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Thank You Janet Yellen: New Fed Regs Mean Negative Interest On Bank Deposits

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“This proposal, which is supposed to promote financial stability, actually does the opposite,” said Thomas Quaadman, a vice president at the U.S. Chamber of Commerce.

 

 

Remember when we used to earn interest on our bank accounts? Ben Bernanke put a stop to that by printing money like it was going out of style. And now Janet Yellen is one-upping him. Forget zero interest, welcome to negative interest.

New Obama Administration reserve rules mean you’ll have to pay the bank to store your money.

As the WSJ reports, far from paying for the privilege of holding other people’s cash (and why would they with nearly $3 trillion in positive carry excess reserves sloshing around) US banks – primarily of the TBTF variety – “are urging some of their largest customers in the U.S. to take their cash elsewhere or be slapped with fees, citing new regulations that make it onerous for them to hold certain deposits.”

The change upends one of the cornerstones of banking, in which deposits have been seen as one of the industry’s most attractive forms of funding, said more than a dozen corporate officials, consultants and bank executives interviewed by The Wall Street Journal.

Banks aren’t using their deposits to make loans anymore because the Fed’s trillions in excess reserves have made all that cash completely irrelevant.

And in a truly through-the-looking-glass paradox, the Fed says they’re pushing this thievery in order to make bank deposits “safer.”

U.S. banking rules set to go into effect Jan. 1 compound the issue, especially for deposits that are viewed as less likely to stay at the bank through difficult times.

The new U.S. rules, designed to make bank balance sheets more resistant to the types of shocks that contributed to the 2008 financial crisis, will likely have little effect on retail deposits, insured up to $250,000 by federal deposit insurance. But the rules do affect larger deposits that often come from big corporations, smaller banks and big financial firms such as hedge funds. Hundreds of companies and other bank customers with deposits that exceed the insurance limits could be affected by the banks’ actions.

Overall, about $4 trillion in deposits at banks in the U.S. were uninsured, covering more than 3.5 million accounts, according to Federal Deposit Insurance Corp. data

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The rule primarily responsible involves the liquidity coverage ratio, overseen by the Federal Reserve and other banking regulators. The new measure, finalized in September, as well as some other recent global regulations, are designed to make banks safer by helping them manage sudden outflows of deposits in a crisis. The banks are required to maintain enough high-quality assets that could be converted into cash during a crisis to cover a projected flight of deposits over 30 days.

Because large, uninsured deposits would be expected to leave most quickly, the rule will now require that banks maintain reserves that they cannot use for profitable activities like making loans. That makes it much less efficient or profitable for banks to hold these deposits.

And what will the banks use to maintain these new reserves? Why the very financial instruments you’d want to move your now unprofitable deposits into.

Some argue that while it is a good policy on its face, the rule potentially magnifies problems in a recession by encouraging banks to hoard high-quality assets, potentially paralyzing markets for these assets such as Treasury securities and some corporate bonds.

“This proposal, which is supposed to promote financial stability, actually does the opposite,” said Thomas Quaadman, a vice president at the U.S. Chamber of Commerce.

The Obama Administration doesn’t want “stability.”

They want your money in the stock market, to keep the Dow and Nasdaq and S&P indexes artificially high. The only thing holding their illusion of a “recovery” afloat is the bubble in equities. It’s gotta stay pumped up until Obama leaves office (in order to cement his “legacy”) regardless of the risk to individual savers like you and me.

Practically speaking, it means that before all is said and done, banks will be charging usurious rates of interest on even the smallest bank deposits, in a push to get every last “saver” to reallocate their wealth away from pieces of fiat paper into pieces of paper promises (held by the DTCC no less) to be paid by increasingly more cash-flow deficient companies.

The inevitable crash is going to be epic.

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Venezuela: Communist Dictator Blames Others for Failure of Communism

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As I have noted many time, leftists, whether they  call themselves communists or not, share the blame game with their fellow travelers.  When the Soviet Union’s beautiful collective farms failed to produce; causing the Soviet Union to go from being a food exporter to starving millions, someone had to be blamed.  Rather than admit that their bastions of equality and social justice were a steaming pile of rancid failure, they created scapegoats.  “Conspirators” with the “imperialist capitalists,” usually some poor slobs that the political commissars didn’t like, were rounded up, or “disappeared.”  It didn’t really solve the problem, but at least the people’s misery was redirected onto an imaginary “enemy.”  Yuri Bezmenov commented on this in his early 80’s interview…

Fast-forward to the present, and think about how long did the Administration and MSM blame President Obama’s failures of President Bush.  When the insurance companies followed the law, and cancelled plans that were illegal under ObamaCare, they blamed the insurance companies.  When the government ordered the banks to make bad loans, and the housing bubble burst, the banks were blamed for doing what the government told them to do!

When the plans of statists fail, it is NEVER because the plans are flawed, horrible, or ill-advised, it’s ALWAYS the fault of the statist’s political foes.  For the latest example of this, here is some news from Venezuela…

Heads are rolling and ministers are being shuffled as Venezuelan President Nicolás Maduro takes on the dangerous saboteurs that comrade Stalin warned us about. The country with the world’s biggest oil reserves can’t seem to keep baby formula in its stores, as sinister right-wing “mafias” have speculated Venezuela’s way into chronic sugar and milk shortages. Maduro identified the culprits in his first state of the union address as President, reports the BBC:

Speaking at the National Assembly in Caracas, Mr Maduro vowed to introducer [sic] tougher penalties against “sabotage and speculation”.

“How can you describe someone who hides [from the shelves] formula milk for babies? We cannot create a new euphemism for that. That person must be described as a criminal,” said President Maduro.

But Mr Maduro says his government is under attack from powerful right-wing sectors in the country.

“While the government makes a big effort to guarantee the quality of some services and the availability of products, the mafias speculate with other products and even medicines,” said Mr Maduro.

In the years prior to Hugo Chavez assuming room temperature, he nationalized many parts of the economy, and most have turned into fail.  They sell oil by the tanker, but have power problems.  They earn billions, but cannot get baby formula on the shelves.  The wealthy job creators are leaving, or going Galt, and Venezuela is suffering what all leftist states eventually suffer:  the entire place is turning into Detroit.

But don’t worry.  It’ll always be someone else’s fault.  They might fire some people, or maybe even jail some political opponents.  Life won’t get any better, but at least some otherwise innocent people will be blamed, right?

 

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NBER Reports That The Housing Bubble Was Government’s Fault, via the Community Reinvestment Act

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Since the financial collapse brought on by the housing bubble and the casino playing Too Big To Fail banks in 2008, many of us in the blogosphere put the blame government policies, which pumped air into the sub-prime mortgage market. The government of Barak Obama, of course, put the blame entirely on the Wall Street bankers and the unfunded wars of Bush II. Now, nearly five years later, the National Bureau of Economic Research (NBER) finished their review of what happened and puts the blame squarely on the Community Reinvestment Act (CRA). You are unlikely to hear about the NBER report from the MSM because it doesn’t fit with their liberal feel good agenda. But, paul Sperry at Investors.Com shares the news:

Democrats and the media insist the Community Reinvestment Act, the anti-redlining law beefed up by President Clinton, had nothing to do with the subprime mortgage crisis and recession.

But a new study by the respected National Bureau of Economic Research finds, “Yes, it did. We find that adherence to that act led to riskier lending by banks.”

The Community Reinvestmentt Act was the brain child of Mr. Feel Good himself, President Jimmy Carter. But, like most things associated with Carter, nothing much happened. Presidents Reagan and Bush I also managed to keep a lid on CRA; but unfortunately, they didn’t kill it. Then came Mr. I Feel Your Pain, President Bill Clinton, and he with the help of the likes of Barney Frank had Fanny and Freddy put the CRA on steroids. Take a look at this graph:

 
And then there is this:

The strongest link between CRA lending and defaults took place in the runup to the crisis — 2004 to 2006 — when banks rapidly sold CRA mortgages for securitization by Fannie Mae and Freddie Mac and Wall Street.

CRA regulations are at the core of Fannie’s and Freddie’s so-called affordable housing mission. In the early 1990s, a Democrat Congress gave HUD the authority to set and enforce (through fines) CRA-grade loan quotas at Fannie and Freddie.

It passed a law requiring the government-backed agencies to “assist insured depository institutions to meet their obligations under the (CRA).” The goal was to help banks meet lending quotas by buying their CRA loans.

But they had to loosen underwriting standards to do it. And that’s what they did.

“We want your CRA loans because they help us meet our housing goals,” Fannie Vice Chair Jamie Gorelick beseeched lenders gathered at a banking conference in 2000, just after HUD hiked the mortgage giant’s affordable housing quotas to 50% and pressed it to buy more CRA-eligible loans to help meet those new targets. “We will buy them from your portfolios or package them into securities.”

{…}

Housing analysts say the CRA is the central thread running through the subprime scandal — from banks and subprime lenders to Fannie and Freddie to even Wall Street firms that took most of the heat for the crisis.

And, this little tid bit is interesting:

Banks that didn’t meet Clinton’s tough new numerical lending targets were denied merger plans, among other penalties. CRA shakedown groups like Acorn held hostage the merger plans of banks like Citibank and Washington Mutual until they pledged more loans to credit-poor minorities.

Even if Obama and friends refuse to admit the role of CRA in the Great Recession, one would think they would be very prudent about continuing to push for more sub-prime mortgages. One would be wrong!

Obama officials, who are cracking the CRA whip anew against banks, insist the law played no role in the mortgage meltdown.

“CRA loans performed substantially better than subprime loans, and the CRA has been around for decades,” argued senior Justice Department official Thomas Perez.

Yes, the same Thomas Perez that is now Obama’s nomination for Secretary of Labor.

It truly is an asylum in which we live. Reagan was right. Government isn’t the solution; it is the problem.

Well, that’s what I’m thinking. What are your  thoughts?

Original Post:  Asylum Watch

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Fractional Reserve Banking and Other Things About Banks That Confuse Me

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Fractional Reserve Banking

Where do bank profits come from? If we restrict ourselves to thinking only about commercial banks and forget about investment banks (many banks are both things), I think they make money primarily by making loans and charging interest. Although banks start out life with capital from their investors, they really make money by making loans of the money deposited by you and many other people or businesses. In other words, banks only maintain a fraction of the money deposited with them on hand as reserves to cover daily operations. So, if a bank has deposits (assets) of $100 billion, they may have only $5oo million on hand as a reserve to honor checks that their depositors have written or to cover the credit card purchases their depositors have made or to hand out cash to depositors via ATMs or in person if they come into the bank to make a withdrawal. In this case, the other $99.5 billion is in outstanding loans. This system has worked fine for centuries because it is very rare that all of a banks depositors would all want to take their deposits out of the bank at the same time.

The above paragraph does not reveal the whole story of fractional reserve banking. The practitioners of the Austrian school of economics would look at what I just wrote and say that with fractional reserve banking there would be nine or ten times more loans made on those same deposits. Because I have read some of the works of people like Ludwig von Mise, Murray Rothbard, Frederick Hayek and even Ron Paul; I thought I had a good understanding of what fractional reserve banking was and why it was a bad thing. The people I just mentioned had convinced me that banks were creating money out of thin air with their fractional reserve banking. But, then I came across a blog that had a graph taken from the Zero Hedge blog that made me question what I thought I knew. The graph plots both the deposits in US banks and the loans outstanding from the years 2000 to 2012. I expected to see that there were many times more money in outstanding loans than the banks had in deposits but that was not the case. I’ve included the graph further down the page. Please scroll down and take a look and you will see what I am talking about. The total mount of deposits is often more than the total of outstanding loans. Does this mean the people like Murray Rothbard and Ron Paul are wrong about fractional reserve banking? I was confused and because I am such a nice guy, I decided to see if I could confuse you too.

Let’s see if we can create a very simple way to follow a single $10,000 deposit through the process of fractional reserve banking. Here are the assumptions we will use:

  • The initial $10,000 is deposited in Bank One
  • All the banks are very prudent lenders and all loans are collateralized
  • What ever the deposit the banks always keep $1,000 in their reserve accounts
  • Those taking out loans are creditors and are identified by the letter “C” and a number.
  • Every time a creditor spends the borrowed money, it ends up getting deposited in one single bank
  • All  loans are to be paid by one lump sum in one year of the principle plus 5% interest

Please look at the following table and then I will talk you through it.

Deposits                 Loans               Held in Reserve

Bank One                   10,000                 9,000(C1)                         1,000

Bank Two                     9,000                 8,000 (C2)                        1,000

Bank Three                 8,000                  7,000(C3)                         1,000      

*

*

Bank Nine                     2,000                 1,000 (C9)                          1,000

Bank Ten                        1,000                      0                                        1,000

Total                                                               45,000                                  10,000

Please understand that what is shown in the above table could not happen in the real world, but I think it serves to help us understand what happens under fractional reserve banking. So, let’s walk through it.

Ten thousand dollars is deposited in Bank One whose management decides they can safely lend $9,000 and put $1,000 in their reserve account. And, that is what they do. They lend $9,000 to creditor C1. Creditor C1 then buys something for $9,000 and the sellers deposit that amount in Bank Two. The Bank Two management decides they will  put $1,000 in their reserve account and loan $8,000 to creditor C2. Creditor C2 then buys something for $8,000 and the sellers deposit that money in Bank 3. This process continues until Bank Ten receives a deposit of $1,000 and puts it all in their reserve account.

If we look at the Total line, we see that the original $10,000 deposit is now in the reserve accounts of ten different banks. In the process nine people borrowed and spent a total of $45,000. So, does our little exercise prove the Murray Rothbard is right in saying that fractional reserve banking creates money out of thin air. If so, why does the Zero Hedge graph not show total loans outstanding many times greater than the total of deposits? Instead the graph shows that from 2000 to 2008 the loans and deposit are essentially in balance. Is it possible that Ludwig von Mise and a Murray Rothbard and Frederick Hayek and Ron Paul are all wrong? In our little exercise, all the loans will be paid back with interest after a year. So, maybe when one considers that there hundreds of millions of people making transactions with banks every day; some making deposits, some making withdrawals, some taking out loans and others paying back loans and in the process of so many transactions it all smooths out and there is no money being created out of thin air. I don’t know. A few days ago I thought I agreed with the Austrian economist. Now I am confused. And, there is more about this graph that confuses me. Please keep reading.

Source: Federal Reserve Board weekly H.8 report

If you look at the far right side of the graph, it shows that at the end of 2012 US banks had $2 trillion more in reserves than in outstanding loans. We said earlier that banks make money by earning interest on the loans they make. So, why haven’t they loaned that extra $2 trillion in reserves they have? This is not where my confusion comes from because several people, including John Galt at America’s Chronicles, know why. The reason, as is so often the case, is that central planning seldom if ever works. Hers is what is happening. One central planning entity, the Federal Reserve, has set interest rates at near zero in part to drive down home mortgage interest rates so more people will buy houses. But, another central planning entity, the Congress, passed the Dodd-Frank bill to keep banks from making sub-prime loans and apparently banks are having a difficult time finding qualified borrowers under the new rules. Therefore,we have  one central planning entity cancels out the effort of the other and that is why banks are not lending as much as they could. My confusion comes from the fact that banks are making record profits when they are lending less. How do they do that? Are they making high risk bets at the Wall Street Casino again? Do you have a better explanation?

Well, now you know what I’m thinking. What are your thoughts?

Original Post: Conservatives on Fire

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We Live In A Dysfunctional World

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America is seizing up  before our eyes, and the action necessary to reverse the  sclerosis is  stymied at every turn by rapacious unions, government  micro-regulators,  dependency-spreading social engineers, and crony capitalists  who know  how to weave their way through the bureaucracy. _ Mark Steyn

Maybe Mark Steyn was just having a bad day when he wrote those words. Can things really be that bad? Dr. Nouriel Roubini, a world-renowned economist and also known as “Dr. Doom” for correctly predicting the 2008  burst of the housing bubble and the world-wide recession, is now seeing My ‘Perfect Storm’ Scenario Is Unfolding Now.

In May, Roubini predicted four elements – stalling growth in the U.S., debt troubles in Europe, a slowdown in emerging markets, particularly China, and military conflict in Iran – would come together to create a storm for the global economy in 2013.

And then economist Carl Weinberg says it is Time to Throw in Towel on Euro Crisis.

“What Euroland needs is a king to knock together heads of all the princes of all the provinces, or rather nation states, to do the right thing for the kingdom. No King is apparent, so no hope of an orderly end to this mess is likely,” Weinberg said.

Last Friday I wrote a post about how the word’s biggest banks were manipulating the LIBOR interest rates.  Now we learn from CNBC that these same banks have probably been manipulating the prices of gold and silver.

“It is effectively an intervention in two ways; one would be the fact that for central banks, gold and silver going up doesn’t make their currency look any good, and secondly a number of the big commercial banks have very large short positions which they like to manage and make easy money from,” he said.

And, just to show that it is not only the Big Boys that are screwing us around, there is this story from Breitbart. If you are hurting for money, you nay want to consider moving to Wisconsin where you can make $90,000 a year baby-sitting from the “Wisconsin Shares” welfare childcare program.

In one instance, research conducted by the Milwaukee Journal Sentinel found that four sisters with 17 children bagged $540,000.00 in taxpayer monies since 2006 by simply staying home and babysitting for each other.  The most shocking part: it’s perfectly legal.

The world really is a screwed-up place. Maybe it always has been. It is amazing that good honest people are sometimes able to succeed when the system is being gamed by so many at the top and the bottom.

Well, that’s what I’m thinking. What are your thoughts?

Original Post: Conservatives on Fire

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#Occupy Uses Feces and Urine as Protest Tools?

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Apparently, the answer to that question is yes.  No matter what one thinks or feels about the big banks, one thing is clear-that since the occupods don’t like them, no one can use them.  So what do they do?  They dump human waste into banks!   However, they forgot that banks have cameras.  Here is the footage, via The Blaze…

The Blaze also has some coverage…

Security cameras and witnesses were vital in helping police identify and arrest a suspect.

NBC-NY reports:

Police said Occupy Wall Street protesters were captured on surveillance video dragging a large receptacle of human urine and feces to an open-air plaza at the corner of Nassau and Cedar streets last Wednesday evening, just before 8 p.m.

They then poured the waste down a set of stairs there, police said.

Then, the story takes a rather sick turn…

In a bizarre twist to the story, it seems that Mr. Amos’ van was also used to haul food for the Occupiers. Also in the NY Post story:

Amos was in charge of bringing food for protesters at 60 Wall St. and his white van was caught crossing the Brooklyn Bridge several times.

Kindly categorize that under, “ick!”

OK what do we make of this, other than a juvenile act of vandalism?  It goes along with my conclusion in  yesterday’s post.  #occupy is a tiny fraction of 1% of the population, but they have endowed themselves with the authority to tell all 300,000,000 plus Americans where we can deposit our money.  Of course, they won’t stop there.  It’s the nature of any totalitarian movement to dictate to the people.  They’re simply performing as expected.

Linked at the Conservatory, and King Shamus.  Thanks!

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Occupy Portland Shenanigans: Children as Human Shields, Urinating on Banks, and the First Breadstick War

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Apparently, Occupy Portland got jealous of all of the criminal behavior at NY and Oakland, and decided to kick it up a notch.  Here are three stories that show us, once again, what the Occupy movement is all about.

Children as Human Shields:

If they are willing to do this with their own children, what would do to your’s?

Apparently, they want the child to be hurt so they can garner support.  Isn’t that charming?

Organizers Have to Remind the Occupods to not Urinate on the Bank- the ‘pods do it Anyway:

Now, the occupods insist that there are “infiltrators,” bad apples, DHS agents, or Breitbart employees causing all of the problems at their protests.  Yet, they have to remind them not to urinate in public?  And, they do it anyway…

Remember when all of the Tea Party had to remind patriots not to take a whiz on local businesses?  That’s what I thought.

Better not run out of Breadsticks when Occupy Portland Comes a’callin:

What says, “sense of entitlement” like threatening a resturant-for running out of Breadsticks?

“Occupy Portland protesters became enraged when Pizza Schmizza ran out of breadsticks to accompany their entree order. They threatened to assault employees and vandalize the restaurant.”

A police spokesman told TSG that the incident Sunday evening involved a man and woman who became upset when they were told that the pizzeria had temporarily run out of breadsticks and that they would have to wait 15-20 minutes for a new batch. The customers, cops noted, told a Pizza Schmizza employee, “Your job is bullshit, you know you work for a big corporation.”

When asked to leave, the male customer threatened “to come back with a group of people when the restaurant closes,” police noted.

It’s a wonder that they didn’t insist on getting their meal for free!

One day, three stories, one camp.  That’s just the ones I decided to report.  There are several more.  Getting the point about the Occupods?

 

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Some Thoughts on the "Occupy Wall Street" Protests

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I’ve been following the moonbat fest in New York, as well as in other locations, though I haven’t written about them until now.  It really started as a non-story, though the MSM and the union bosses seem to be building them up.  So, here are some of my thoughts about them.

I get the impression that they’ve been coached to be very careful about what they say to the media. Let’s look at some general statements, and the CH 2.0 translation.

“Greed”= Communism

“A more equitable system”=Communism

“Democracy”=Communism

“Evil Corporations”=Communism

Am I overgeneralizing?  Perhaps, but from what I have seen and read, these are mostly young, terribly misinformed, and horrifically misguided people.  They either know what they want, and are choosing not to say it openly, or they are the most useful of the useful idiots.  That, and no one is going to take them seriously, other than other misguided and misinformed, useful idiots.  I wonder if they realize that most of them will be killed if they actually get the “more equitable democracy” that they desire?  Obviously not.

They are setting the stage to justify violence by engaging in typical leftist tactics.  They are blocking traffic, trespassing, and generally making a nuisance of themselves.  Then, when the police come to arrest them, they make it as difficult as possible. As soon as the police do a thing, they cry brutality.  Then, they can use this as a justification to gain more followers, as well as for the eventual violence.

Will violence occur?  I’m not sure.  However, I have spotted some anarchists in their midst (not that it’s that hard).  As we all know, anarchists are well known for their violence.  Also, big labor is now supporting them, and they are very well known for violence.  So, all the parts are in place.  All they need is the match to light the fire.  As I pointed out previously, there seems to be buildup for violence.  The only question is if it reaches critical mass.

There have been a lot of pundits being very dismissive of these protests.  They mention the lack of showers, that some of them have no clue as to why they are there, and that they seem very disorganized.  All of these are at least partially true.  However, we cannot judge them as we judge ourselves, as they are not at all like us.  Most of the readers here are adults, who have families, careers, and a desire not to lose what we have worked so hard to earn. Also, we have a vested interest in human freedom.  We actually believe in the promise of our Republic, and that if it falls, it might be centuries before humanity recovers.  In the end, they aren’t going to understand the need to maintain freedom, and would unwittingly, and gladly give away our freedom to achieve their rather amorphous ends.

Sadly, the protesters have apparently fallen into the trap of believing in the all-powerful state.  To achieve the more “equitable” system that they desire, an immensely powerful government will be needed to confiscate from others to redistribute to others.  There is no other way to accomplish this level of theft.

Also, the protesters do not state what they would do with the individuals that they rob or strip of their freedom.  People will not be willing to give up what they have built or created.  What will be done with them?  Others will not submit to an all-powerful nanny state.  What will the new “order” do with the new “refuseniks?”  What will this new “system” do with people that speak out against the system, or point out the inevitable failures of that state? Any government, given that level of power, will become abusive. History tells us what will happen.  There will be death on a scale that this nation has never seen.

I have seen some suggestions out there as far as infiltrating these protests.  I think that is a fine idea. However, it should not be done in the same way that leftists did when they infiltrated the Tea Party.  Their efforts were false flag-sending in activists to say racist and other outrageous things, so Think Regress could make videos of them.  We don’t need to say outrageous or strange things.  They are doing that all by themselves.  We have no need to help, nor do we need to stoop to their level.  The reason that I suggest infiltration at all is that they are, in my opinion, being very careful with their message.  However, someone wearing a hidden camera or a microphone would be able to get into private conversations with protestors, and record more candid thoughts.  That, my friends, might be a great way to get to the core of these protests.

Well folks, those are my thoughts on the issue.  As always comments are always welcome.

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Obama Pressuring Banks to Give High Risk Loans to Poor and Minorites

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As we learn more about the financial meltdown of 2008, it becomes increasingly apparent that one of the main causes for this economic disaster was government policy that forced banks to extend loans to those people who were unable to pay those back. Government agents put pressure on banks and government banking institutions like Freddie/Franny to give loans to people who under normal circumstances would be unable to pay back these loans and who were especially unable to protect themselves from the exposure to risk that these loans entailed. Misguided government policies ambushed innocent people who believed the dream that politicians peddled and banks were coerced into following, and in 2008 the house of cards came crashing down and peoples lives were ruined. It was not the failure of the markets, the lack of government policy on the issue, evil rich people, George W Bush, or the Republicans who were the minority party in Congress at the time- it was government policy that put pressure on banks that led to the collapse in 2008. And the lesson apparently was not learned by the Democrats. From Townhall’s Bob Beauprez comes this stunning mind-blowing information:

The Department of Justice is executing a “Witch Hunt” against banks. Through the DOJ’s Civil Rights Division, Attorney General Eric Holder is forcing banks to “relax their mortgage underwriting standards and approve loans for minorities with poor credit as part of a new crackdown on alleged discrimination,” according to a published report by Investor’s Business Daily after reviewing court documents. The DOJ has already extorted $20 million for weak and poor credit loans from banks that “settled out of court rather than battle the federal government and risk being branded racist.” The DOJ admits another 60 banks are already under “investigation.” Holder’s demanding the banks sign “non-disclosure” settlement agreements barring them from talking while allowing the DOJ to operate behind a curtain of secrecy. The settlements already extracted from banks force them to make “prime-rate mortgages to low income blacks and Hispanics” with credit problems, even if they are living on welfare. According to IBD, the DOJ has ordered banks to advertise that minorities cannot be turned down for a loan “because they receive public aid, such as unemployment benefits, welfare payments or food stamps.” No job; no problem! In other words, the DOJ is forcing banks to make loans to people that they know don’t qualify for them and likely won’t be able to afford to repay them, which is precisely the kind of failed public policy that precipitated the financial collapse and recession in 2008.

Can you believe it? Obama took an economy that was going through a usual recession, killed the recovery, set us up for a double-dip recession, and is now working on creating another epic economic collapse! Read the whole analysis– it’ll really scare you! Original Post:  A Conservative Teacher

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