Fraudulent debt ... The only way out.. - Posted by Linda jason

Posted by Wayne Wymore on September 28, 2011 at 16:19:39:

“The bitter irony of these companies and their galloping greed is that they ended up victimizing each other by selling junk to each other and extracting all the real value in salary and bonuses.”

Bitter Irony is right - while these criminals were busy stealing every penny from us, they did SUCH a job on us that they are stuck with worthless paper dollars. Oh, but now they want to buy up all the real assets with the worthless paper before we KNOW it.

Watch “The American Dream” (animated Full Length HD) for how they did it to us. Great to forward to those who have yet to wake up. http://waynewymore.posterous.com/the-american-dream-full-length-hd-director-in

Fraudulent debt … The only way out… - Posted by Linda jason

Posted by Linda jason on September 23, 2011 at 21:44:49:

We hold this to be self-evident: When Debt is Fraud, Debt
Forgiveness is
the Last and Only Remedy.
Today I present an important guest essay by long-time contributor
Zeus
Yiamouyiannis, who suggests that when debt is essentially
fraudulent,
then debt forgiveness is both the logical and the only remedy. In
case you
missed his previous analyses on oftwominds.com, I list some of
Zeus’s
previous essays at the end of the entry.

Introduction

Finally serious economists are considering a position I have been
maintaining and writing about since the 2008 financial meltdown.
Whatever its name? erasure, repudiation, abolishment,
cancellation,
jubilee?debt forgiveness, will have to eventually emerge forefront in
global efforts to solve an ongoing systemic financial crisis.

?On a grand scale the only way to erase counterfeit money and
(counterfeit) assets of hundreds of trillions of dollars is to erase the
debts
associated with those fake assets. (Let me underscore again, these
are
not ?toxic? assets, they are fake assets.)? Forgiveness in general,
and
forgiveness of debt in particular, stand as virtues if they free us up
to
acknowledge, address, and learn from our culpability, start anew,
and
create forward.? ( The Big Squeeze, Part 3: The Quiet Rebellion:
Civil
Disobedience, Local Markets, and Debt Erasure (January 29, 2011)
Debt forgiveness, therefore, accomplishes two important things. It
eliminates the increasing and outsized portion of productive
enterprise to
pay off unproductive obligations, and it clears the ground for new
opportunities, new thinking, invention, and entrepreneurialism. This
is why
the ability to declare bankruptcy is so essential in the pursuit of both
happiness and innovation.

Currently we are mired in a ?new normal? and calls for ?austerity?
which
are nothing more than the delusional efforts of a status quo to avoid
the
consequences of its own error and fraud and to profit evermore. So
bedazzled by the false wealth created by debt multiplication and its
concomitant fantasy of ever-higher returns, this status quo
continues to
be stupidly amazed that people are not spending and that the
economy is
not picking up. But how could it be otherwise?

Productive wealth has been trapped in a web of parasitic theft,
counterfeiting, liability evasion, non-regulation, and prosecutorial
non-
accountability. All the fundamental attributes of a functioning
exchange
economy have been warped to reward creative criminals. I spoke
extensively about this in my posts from 2008. ( Imaginary Worth,
Empire
of Debt: How Modern Finance Created Its Own Downfall (October
15,
2008)

The unsustainable nature of debt

Two observations: 1) Fabricated/parasitic so-called ?wealth?
destroys value
by diluting the value of productive wealth. 2) Debt/credit that cannot
be
paid back is never an asset and is always a hot-potato liability
(needing to
be foisted to a greater fool to garner ?profit? and transaction fees):

?The models [modern debt are] based upon had no contact with
reality.
They assumed unlimited growth and ability to pay. When matched
against
the reality of people paying ten times their salary for mortgages that
actually added more money owed to their principal (i.e. with
negative
amortization), required no money down, and set up ?balloon
payments,?
large step-ups in payments after a few years) there is no possible
way
they could NOT default in a predictable span of time.? ( Part II: How
the
Credit Default Swap Scam Works (October 13, 2008)
Systemically, all debt that charges a percentage (?usury?) originates
in
delusion. Debt grows exponentially indefinitely, growth (income and
otherwise) cannot. This leads to a widening condition where the
fruits of
productive ?growth? devoted to interest payments increase until
those fruits
are entirely consumed. (The Elephant In The Room: Debt Grows
Exponentially, While Economies Only Grow In An S-Curve
(Washington’s
Blog)

Once this happens, stores of wealth (hard assets) begin to be
cannibalized to make up for the difference. You see this in Greece
with its
sale of public assets to private companies, and in middle-class
America
where people are liquidating retirement accounts to pay for their
cost of
living.

This problem is compounded by a private Federal Reserve that
lends
money into circulation at interest, and then allows the multiplication
of this
consumer debt-money liability through fractional reserve banking.
The
money in circulation today could pay only a small fraction of the
total
private and public debt. That fact alone is evidence of a kind of
systemic
fraud. ?If you just work hard enough, save, and make sensible
decisions,
you can get out of debt? could only physically work for a bare
fraction of
the population, given the money-to-debt ratio. The rest would have
to
simply default to clear the boards.

This is why debt forgiveness makes not only moral but rational,
mathematical sense. Finances require balancing to be coherent.
There
must be some way to redress systemic imbalance. One has to be
able to
?zero the scales? to get an accurate weight of value and to re-
establish
healthy value creation.

Voices in the debate

Some analysts are beginning to see the forest through the trees in
terms
of debt forgiveness. Steve Keen, Australian economist and current
deflationist, and Michael Hudson, American economic contrarian
and
prescient essayist, are both using clear-sighted reality-based
financial
analysis to debunk accounting games that obscure the untenable
debt
situation and to call for debt forgiveness.

How can selling sovereign assets and imposing austerity on Greek
citizens (taking money out of their hands through higher taxes and
lower
benefits) do anything other than hollow out value and contract the
Greek
economy in the face of a deep global recession? Michael Hudson: It
can?t.
Greece?s debt needs to be written off.

?It seems unreasonable and unrealistic to expect that large sectors
of the
New European population can be made subject to salary
garnishment
throughout their lives, reducing them to a lifetime of debt peonage?
(T)he
only way to resolve it is to negotiate a debt write-off?? ( The
Coming
European Debt Wars: EU Countries sinking into Depression
(Michael
Hudson, Global Research, April 9, 2010)
( “[We?ll Have] a Never-Ending Depression Unless We Repudiate
the
Debt, Which Never Should Have Been Extended In The First Place”
(Washington’s Blog)

Why isn?t ?quantitative easing? and flooding the U.S. economy with
debt-
money working to prime borrowing and lending? Steve Keen:
Because the
money is going into deleveraging in a time of overextension:

?Bernanke is throwing (a) trillion dollars into the system. Rather than
that
leading to ten trillion dollars of additional credit money, creating the
inflation people are expecting, that trillion dollars is all that goes in,
and
people deleveraging actually reduce their level of spending by more
than
a trillion dollars by trying to pay their debt down, and it cancels out
what
the government is trying to do? We need a 21st century jubilee.? (
On the
Edge with . . . Steve Keen (Max Keiser, video)
Other well-known commentators are not seeing the debt forest at
all. In
their contentious debates over deflation and inflation, neither Rick
Ackerman nor Gonzalo Lira seem to be aware of the
overwhelmingly
fraudulent nature of present global debt-- including the 600 to 1,000
trillion
dollars of fabricated notional wealth represented by the derivatives
markets, fraudclosure, and a host of other sources.

Rick Ackerman: ??Ultimately, every penny of every debt must be paid
? if
not by the borrower, then by the lender.? Inflationists and
deflationists
implicitly agree on this point? and we differ only on the question of
who,
borrower or lender, will take the hit.? (Let?s Think This Through
Together…)

I posted a pithy response in the comment section:

?Both Rick and Gonzalo left out the obvious third way–debt
forgiveness.
No? debt does not have to be paid by someone; it can be
absolved,
especially debt created upon fraudulent and/or counterfeit-ridden
practice? (D)erivatives are not real wealth, and neither was the
ostensible
climb in the values of housing resting in large part on those phony-
wealth
derivatives.
The only ?real wealth? here revolves around ability to produce real
and
needed goods (to allow us to survive), and the ability to create
something
that increases one?s quality of life (to promote our thriving). Precious
little
of the present global economy involves either one of these. Yeah, if
we
use FASB standards and Goldman Sachs accounting, we can
pretend our
worthless junk is all really simply very rare, ?unique condition?
collectibles
worth trillions of dollars.

I?ve got a better idea. Take our financial junk out of the global attic
in
boxes, put them out on the front lawn, and see if anyone wants to
pay a
few bucks for the various items, give away the leftovers to anyone
interested passing on the sidewalk, and recycle, donate, or dispose
of the
rest. It?s a moving sale, and if our economy is going to get moving,
maybe
we ought to have one.? (Zeus Yiamouyiannis April 6, 2011 at 4:11
pm)

How it might play out

This subtle debt extortion creates a system of never-ending debt-
slavery
for a vast majority of the population. When this ?manageable?
slavery is
aggravated by a desire to use hardship to extort ever greater assets
from
the overburdened at ever cheaper prices (what Naomi Klein calls
?disaster
capitalism?), by open and unapologetic widespread fraud, and by
the
unjust offloading of risk and liability to taxpayers who had nothing to
do
with poor decisions of private banks, then the systemic abuse is
revealed
in the daily lives of citizens.

Debt creates scarcity, which stimulates fear, which drives manic
competition, which favors opportunism, collusion, and
concentrations of
power, which translates to abuse, which results in a collapse of
legitimacy
for the economic system. Overreach causes a breaking point, and
we are
getting close to it. Will the response be warfare, taxpayer revolt,
political
upheaval, mass default, debt forgiveness, something other, some
combination? I have predicted pockets of violence would be mixed
with
some softer combination of taxpayer revolt, mass default, political
upheaval, and debt forgiveness, along with a return to community
exchange to meet basic needs. ( The Big Squeeze, Part 3: The
Quiet
Rebellion: Civil Disobedience, Local Markets, and Debt Erasure
(January
29, 2011)

This possibility of epic reprisal may very well compel banks to come
to the
table around debt forgiveness to avoid violent backlash and criminal
prosecution, even over preserving their gravy train companies. The
bitter
irony of these companies and their galloping greed is that they
ended up
victimizing each other by selling junk to each other and extracting
all the
real value in salary and bonuses. Their assets rest on notional
values, that
when unmasked would drive each into immediate insolvency. They
have
simply been scam artists, producing little value and extracting
mountains
of money.

What might this look like? Looking at present trends and using the
very
useful framework of Kubler-Ross?s stages of grief, it might go
something
like this?

Average debtor:

  1. Denial: Liquidate savings to pay for over-priced house and cost
    of
    living.
  2. Anger and fear: Exhaust resources, experience want,
    compounded by
    austerity measures.
  3. Bargaining: Attempt to negotiate with bank through HAMP and
    other
    mechanisms to lower payments. Banks don 't bite and even have
    incentives to foreclose.
  4. Depression: Lose/default on the house and move in with family or
    cheap
    rental.
  5. Find out life is better without being a debt slave and spend more
    time
    with community and the ones you love.

Bankers:

  1. Denial: Collect 144 billion in bonuses after financial collapse and
    laugh
    as not a single trading day loss arises for zombie TBTF banks
    completely
    subsidized by governments.
  2. Anger: Express false righteousness, indignation, and hubris over
    even
    modest/toothless demands/regulations attempted to be placed on
    them by
    governments. Exhibit sadistic zeal at being able to simply claim you
    own
    and liquidate properties they have no clear title to.
  3. Bargaining: Experience dawning awareness that may have just
    cooked
    your own gooses as strategic defaults skyrocket, populist demands
    to
    prosecute fraudclosure gain traction, and quantitative easing ad
    infinitum
    dwindles and fails to keep stock prices artificially aloft. Improvise
    panicked
    attempts to “be reasonable” and actually negotiate, once the asset
    and
    money flow well runs dry.
  4. Depression: Contemplate and realize possible bankruptcy by big
    banks.
    Retreat to the Hamptons to hire criminal defense lawyers,
    contemplate
    empty life, and shoulder the abuse of media and contempt of a
    global
    citizenry.
  5. Acceptance: Trying to regain “good guy” status and avoid
    criminal
    prosecution by agreeing to be part of debt forgiveness.

Once defaults happen in increasing numbers and certain asset
prices
plunge (i.e. real estate), what will initially look like a bonanza for
capitalist
parasites could easily get out of hand, with people either unable or
unwilling to buy inventory even at greatly reduced prices. Profits
would
tank at banks, liabilities would skyrocket even with most of it
transferred to
government guarantee. Because no one plays the game anymore,
banks
could go under as well, as people rise to vote out bank-friendly
politicians
and simply refuse to pay. This unraveling could easily force
exposure of
the notional value of derivatives in banks as worthless, meaning
they are
as bankrupt as the people they exploited. At this point, there will be
a
common desire and need to simply “forgive” the debts and try to
find
some way to distribute these empty homes.

Conclusion

Debt forgiveness simply calls out either the inherent systemic
inability to
make good on debts or the recognition that debt was produced
through
fraudulent means. In the present situation, both conditions obtain.
There
has likely been no point in world history where debt forgiveness has
been
so comprehensively merited. The only speculation from my point
(barring
world-wide global feudalism and eternal debt slavery) is whether we
will
initiate such forgiveness or be forced into it.

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