The Greatest Heist in American History has not been from Robbing Banks

The greatest heists from American taxpayers have all been perpetrated by actions taken by the government that served as a redistribution of money and capital.  Let’s review 7 massive redistribution actions by our leaders that (robbed) from taxpayers and transferred the benefits to wall street related firms, large financial institutions, and into programs where the primary beneficiaries were people employed by the government, or dependent on government services.  Always follow the trail of money and enhancement of power to get more.  The American public is merely a pawn in the game.

  • Creation of the Federal Reserve- In 1913 Woodrow Wilson signed the Federal Reserve Act to act as the central bank for the United States. This gave 12 Federal Reserve banks the right to print money intended to provide a safe, flexible, stable monetary and financial system. Also, to address the threat of bank runs that characterized the Panic of 1907 in hopes of fostering a sound banking system and promote a healthy economy. The banks were chosen by an earlier event when a group of the wealthiest entrepreneurs met on Jekyll Island for the expressed purpose of creating a secret cartel and drive all nonmember banks out of business. Today these Federal Reserve banks are given tremendous power and receive preferential treatment by creating/making money and profiting from this system, at the expense of the general public. The Federal Reserve constantly expands the money supply which is turned into debt owed by the public. For every dollar created by the Federal Reserve, there is a corresponding new dollar of debt that is then owed by the taxpayers. This also creates a systematic erosion of the purchasing power of the dollar.

 

  • LBJ’s raiding of Social Security. President Lyndon B Johnson issued an executive order in 1968 raiding the Social Security Trust Fund as a method to balance the federal budget and close the gap in the federal deficit to pretend that the budget had been balanced. Johnson did not want to raise taxes but needed money to pay for several ambitious government programs including the Vietnam War, The Great Society, the War on Poverty (expanded welfare programs) and the NASA Space Race.  Thus, a star was born in the practice of using the Social Security Trust Fund to hide the size of the overall federal budget deficit. No president or administration has ever changed this back so that the social security system could accumulate real assets to pay for future retirees. Social Security is currently paid by active workers to recipients. Social Security took in $912 billion and spent $991 billion in the fiscal year 2018. There as a $79 billion shortfall that had to be covered.

    The Social Security Trust Fund ($2.85 trillion) and federal employee and military retirement funds ($2 trillion) are all just part of the national federal debt scheme. They are not assets at all.  They are a hollow shell filled with debt instruments that will never be paid back. All that is left as security in these agencies is a digital file full of non-negotiable bonds from the Bureau of Public Debt. These are debt instruments that can only be redeemed by the federal government creating more debt to replace the it.

    Imagine that assets sitting on the books of these Trust Funds were swapped for debt instruments that are expected to be owed and paid from future taxpayer receipts. This was the ultimate form of financial prestidigitation. Yes, the debt you owe in the future becomes an asset to hold on your behalf to pay you in the future, when you pay back the original debt.

    Your future social security payments are just a hollow shell of debt instruments, which can only be paid by current taxpayers or by issuing new debt.  It is bookkeeping magic. This strategy has worked so far, but the accrued government direct debt obligations and the interest due coupled with the under-funded pension and medical obligations will eat up the entire national budget, then the Ponzi based merry-go-round will stop.

  • Allowing public employees, the right to collective Bargaining: A letter by President Franklin D. Roosevelt dated July 14, 1937, entitled “Letter on the Resolution of Federation of Federal Employees Against Strikes in Federal Service” issued a stern warning against allowing public employees to unionize and collectively bargain.   In 1962 John F. Kennedy issued an executive order that would allow public employees the right to form labor unions and engage in collective bargaining for more pay and benefits. They were given the right to bargain against the people they represent. The additional benefits they bargained for were to be paid by the people they represent.  Public employees were given monopoly power to demand whatever they wanted.  If they chose to strike and refused to work, they could not be replaced by other workers who may get better results for lesser compensation.  If they did not get what they wanted, they were given the right to strike and shut down part or all public services, such as schools, transportation, libraries, fire stations, police services, and all the other stuff we rely on and pay taxes for.

 

  • In 1971 President Richard Nixon, in response to increasing inflation, installed wage and price freezes, surcharged imports, and announced that US currency would no longer be backed by gold. He unilaterally canceled any rights of international convertibility of the United States dollar into gold. This created a fiat money system backed by nothing but the full faith of the government. There were no caps placed upon creating or issuing more money into the system, thus creating more debt. Sustainability has always been a sublimated topic. This has resulted in increasing direct debt, indirect debt and unfunded pension obligations of over 220 trillion dollars, which will come due over the next 10 to 30 years. The only solution is to issue more debt to purpurate the Ponzi system.

 

  • The progressive tax structure is a taxation system in which the percentage of taxes paid increases as income increases. This system penalizes financial success. An example may be where a lower wage earner pays 10% taxation, but a higher wage earner will pay 60%. This constitutes a massive systematic redistribution scheme. Since the voters at the lower socioeconomic end are greater as a voting bloc, they always collectively vote for higher rates for higher earners.

 

  • The systematic erosion of the purchasing power of the dollar is the only method to reduce the impact of the debt obligations. Since the beginning of 1913 when the Federal Reserve was formed inflation has risen 2,400 percent.  This process has and will continue to decimate the middle class in the United States.In 1903 consumers could have dinner at Johnny’s Place in Salt Lake City where 10 cents would buy dinner including meat, vegetables, bread, and a cup of tea or coffee. The average worker earned between $200 and $400 per year, 55 cents to $1.10 per day. A professional high-level accountant may have earned $2,000 per year or $5.48 per day.

    An inflation calculation in use is the official US Consumer Price Index. If we calculate the average rate of inflation from 1913 until 2016, we get 3.22%. In some decade’s inflation was much greater, and in a couple, it was less. Prices doubled every 20 years. Note that 10 decades represents 5 times doubling. $10.00 doubled 5 times would mean 10 X 2=20 X 5= 100. This calculation assumes a fixed and static value, not compounded, nor cumulative.

    However, we not only have a cumulative effect, but we have the compounding cumulative effect. Just like compound interest can multiply your savings and investment income over many years, inflation works the same way. The real compound cumulative inflation rate from 1913 to 2016 is 2275%. You would now have to spend $2275.00 dollars for the same basket of goods and services that could be purchased for $1.00 in 1913.

 

    1. Dodd-Frank was a bill passed in 2010 under the Obama administration that effectively created a protection racket for large banks. The bill states that deposit accounts including checking and savings are specifically subordinated to derivative participants who may experience losses in a market collapse.

      A derivative is a contract between two or more parties the derives its price from fluctuations in the underlying assets. Common underlying assets used in derivative bets relate to fluctuation in stocks, bonds, commodities, currencies, interest rates, and market indexes. The regulated banking system has risks associated with the total sum of 247 trillion counter-party bets in the derivative market by these banks through Wall Street which include hedging interest rates, and depositor accounts held in the U.S. banking system. These counterparty bets carry the greatest risk exposure for a total loss or for the potential of a long-delayed or deferred recovery

    The 2008 economic meltdown was solved by the Federal Reserve creating $7 trillion in new money through fiat and using that money to bail out the banks. That strategy may no longer be effective or practical in the future.

    In 2007 there were approximately $600 trillion dollars of derivatives contracts outstanding worldwide. Many major banks became insolvent as did Lehman Brothers and American International Group (AIG), the leading international insurance corporation that insured against losses on derivative contracts.

    Today there are estimated at $600 trillion in derivatives (counterparty bets) worldwide; most are highly leveraged and interest rate sensitive. To put this in perspective, the entire world’s GDP is $88 trillion dollars. Assuming a 10% profit margin that would reflect $8.8 trillion in profit from which to extract taxes.

    The 5 too big to fail (“TBTF”) banks account for 42% of all the outstanding loans in the United States. The largest 6 banks have 67% of all outstanding bank assets.

    The risk in the derivatives market is concentrated in the U.S. In 2011, four U.S. banks held 95.9% of U.S. derivatives.  Depositors maintaining accounts with U.S. banks are subordinated to the risks presented by derivatives pursuant to the Dodd-Frank Act, should derivative contracts default, no government insurance exists, i.e., “derivatives are not backed by the full faith of the government” nor does the FDIC Insurance safety-net insure derivatives. In effect, the Dodd-Frank Act has shifted the ultimate risk for derivatives losses which have resulted in significant profits for the banking industry. This will go down as the mother of all financial heists in the history of the world.

    After a systemic financial meltdown, you may receive a congratulatory letter that states, “Dodd-Frank does not allow you to keep your money.  But, never fear, you will receive stock certificates in an otherwise bankrupt entity to replace the hard-earned cash that you have now lost.” The oligarch bankers win by taking a massive risk, and if they lose, then the financial losses are dumped on the backs of the American taxpayers. The phrase “safe as money in the bank” no longer applies.

The remaining subjects to discuss are eliminating cash from the system and the US losing its reserve currency status in the world. These will be discussed in a related article.

Dan Harkey
Business and Private Money Finance Consultant
Cell 949 533 8315
dan@danharkey.com

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