By Tony Treece
If ignorance is bliss, then knowledge must be sadness. In this newsletter I will explain another layer of why our economy is imploding, what caused it, and why the Wall Street system of retirement makes us losers. I’ll begin with the foundation.
As we have explained previously, banks being able to leverage money to borrowers caused the stock market crash of 1929. The stock market was rising higher and higher, much like it has over the last few years, and banks capitalized on the climbing stock market. If you had ten dollars you could get a loan for a hundred dollars and if the market went up ten percent, you doubled your money. Sounds good, right? It did until these loans were called. These loans were called 24-hour call loans. If the bank asked for their money, within 24 hours the borrower had to pay the called loan. Of course, when people could not pay these loans off it caused the crash and as a result banks closed too.
In 1932 the Glass-Steagall Act was passed to prevent banks from lending money beyond what they actually had. Like government does, it created the problem all over again in 1999 when Alan Greenspan lobbied Congress to repeal Glass-Steagall. The Wall Street cartel is a powerful lobbying force in Washington, and it does not care if its actions cause you to be a retirement loser. The monster only cares about being fed our money, and it has an insatiable appetite that’s fed through investor greed.
The repeal of Glass-Steagall didn’t create an immediate problem. However, think about credit card debt… Most of us do not get in credit card debt with one big purchase. It’s little decisions here and there that add up to big consequences that often haunt us. The first manifestation of problems occurred in 2007 with the housing market crash, and then a year later the stock market crashed.
Since then the government has been applying Band-Aids to terminal cancer to delay more crashes, and we can see evidence that our economy is like a dead man walking by the Federal Reserve’s decision last week to not raise interest rates one quarter of one percent. Zero percent interest rates have existed for far too long, and it’s not a good thing. If lenders cannot make a return on lending money, there is no incentive to continue lending.
We stated at our September 8th seminar that interest rates will not go up, and it’s easy to see why. When at least 71% of every dollar goes to debt service payments or entitlements, there is no way to increase interest rates. During the Kennedy administration, approximately 21% of every dollar was spent on debt service payments and entitlements. The garbage the mainstream media pumps about the national debt not being a big deal because of our GDP is bunk. Our economy is teetering on a complete implosion because we have 535 impotent politicians in Congress who have no will to do anything different. My only guess is their $170,000+ salary creates a desire to continually campaign to keep their paycheck and gives no incentive to change anything as long as they are paid and sassy.
The Band-Aids our government has applied will painfully come off like they do on our skin. It’s a quick sharp pain as the adhesive rips the hair out. The only issue is that once one Band-Aid comes off, it will create a cascading effect. And emergency measures will be taken. I predict the first will be for the government to continue printing more money, and officials may say they are doing it to stabilize the stock market. After all, this is what is happening in China. Why couldn’t it happen here? For that matter, why couldn’t anything bad we see happening around the world happen here? Are we so brazen as to think we are exempt from suffering?
Zero Hedge recently published an article which listed triggers that could begin this cascade. These are the triggers:
- Creditors dump US debt back into the US market
- Commodity prices spike
- A crash occurs in the stock or bond market
- A backlash occurs from countries sanctioned by the US
- European countries default on their debt
- The US dollar ends as the petrocurrency (causing a sale in US treasuries)
- The US or EU introduce significant tariffs, diminishing world trade
- Interest rates rise, as they did in 1929
- The paper gold market crashes, when the shortage of physical gold is revealed
- Banks freeze or confiscate deposits
- FATCA accelerates the demise of the US dollar as the default currency
- A credit collapse occurs (followed by dramatic inflation or hyperinflation)
There are too many variables outstanding to entrust your money to the Wall Street Retirement scheme. When we write these things, we do this out of a desire to help you not lose it all. When you can be in the driver’s seat, why do you allow ignorant stock brokers and bankers to control your destiny? Leaving it to them will make you a Wall Street Retirement loser.