Foreign Delegates

How many of the delegates to the Constitutional Convention had been born in foreign countries – none, five, or nine? [Read more]

Constitutional Deliberation

How long did Congress deliberate before approving the Constitution and sending it to the states for ratification – eight days, two weeks, or six weeks?

[Read more]

The Cure IS the Disease

Let’s Get Real About the Bill

Washington recently passed the Wall Street “Bail-Out bill,” a plan that is supposed to save our faltering banking industry from the “Cliffs of Insanity”. This bill will allow the Federal Government to add 700 billion dollars to the current budget deficit and use it to buy bad or failing loans from these very large banks. These banks are failing because of the large amount of bad loans they have on their books that they have leveraged against through the use of derivatives and other investment vehicles.

But what got us to this point? Why are these banks, that dominated the scope of our economy for years, suddenly on the brink of collapse? Has the Free Market been the cause which brought us to this “Failure of Capitalism” that so many of the socialist elites have been predicting?

Let’s go back to the dot com bomb in 1999/2000.  You’ll remember the chaos and turmoil on Wall Street and the Nasdaq, where people lost millions and millions of dollars overnight. “Worried” about the economy, the gallant savior of our great markets, the Federal Reserve, began to lower its interest rates, and increased the supply of credit, so that people would have an easier time borrowing funds, and hopefully cushion the blow of the crash.

As the market seemed to be entering a state of recovery another devastating event occurred. On September 11th, 2001, the destruction of the world trade center sent the markets into even greater despair and turmoil than the dot com bomb. Not only was the mentality of the market effected, but the infrastructure of many companies (that had large investments in the market) were severely damaged if not completely destroyed. In light of the disastrous event and the potential for lasting damage to the economy the Federal Reserve once again came to the rescue, slashing interest rates again, so great was their “Concern” for the economy. These events coupled with the continued threat of terror attacks and the declaration of war, inspired the Federal Reserve to continue to keep those interest rates very low.

The natural consequence of abnormally low interest rates coupled with credit that is easy to obtain, is to distort the natural market indicators of value. This lead to a boom in the real estate market.  Houses in some areas experienced a doubling in their “market value” in 6 months or less! As prices began to soar in one area, people sold their houses, realizing an immense “inflated” profit and then moved to another area that had not yet seen the same market growth and immediately began to speculatively invest in the fresh market, beginning the rapid inflation of the market prices in the new area.

Because this credit was so easy to acquire, people were able to get approved for loans easily that they could only support by acquiring additional credit, and leveraging the new real estate they had acquired. Many individuals had acquired loan upon loan upon loan – each supporting one another.

Easy credit also drove banks to look for any and every way to place it in the hands of willing people that had a pulse and a current ID. Some reduced the requirements on getting credit, so that they could easily acquire new notes and then resold those notes to other banks. The banks had so many notes that they started dreaming up new ways to leverage their “Value” through derivative instruments in the market.

The “Loan Triangle”

The “Loan Triangle” had become so dangerous that when the Federal Reserve decided that it was time to increase the interest rates, even a little bit, and make credit slightly harder to obtain, many individuals found their personal empires sucked into the “Loan Triangle” never to be heard of again. As more and more individuals began to be sucked away, the banks started to feel the pressure. Over time the pressure became so great that even some of the largest financial institutions in our country began to be sucked into the “Loan Triangle” and some even got swallowed up themselves.

We have recently experienced just a taste of the coming panic and financial frenzy caused by these practices.  There was a call for extension of credit by US citizens and the nationalization of our banking industry to fix this awful blunder. Was the Free Market unable to cope with these conditions or did it fail because our economy is just too big to be left alone?

Let’s lay this one to rest right now; if you remember from the beginning of this article, and going even further back to 1913 and the creation of the Federal Reserve, since that time our monetary market has not been free, but rather has been under the constant control and safeguard of the Federal Reserve. Their regulation of the interest rates and credit removes the natural market safeguards that would have naturally stopped this problem from occurring. The Federal Reserve was sold to the american people as a way of protecting against the “constant” boom and bust cycles of the market, and bringing stability to our financial lives. But contrary to the promises, there has been greater financial duress and calamity since 1913 than in all of the US history preceding it’s creation.

This “Bail-Out” is an attempt to paint the Federal Reserve as a prince that is riding in to save the economy from those evil predatory lenders, brandishing his shining sword and helping to protect against further economic strain.

The proposed solution is $700 billion in cheap credit for these banking institutions, and a free ticket to dump all their failing “assets” upon the American People. What caused the crisis? Too much cheap credit. This is like giving a year’s supply of crack to a crack addict and asking him to mend his ways. The problem will only worsen as a result of this proposal, but the crack addict will be able to keep his high while the rest of the country continues to suffer. The proposed cure is just more of the disease.

We must change our mentality if we want to resist being sucked into the next crisis. And further crises will continue to occur until we wake up to the dangerous truth that this and all major economic crises since 1913 have been caused primarily by the Federal Reserve’s arbitrary control over our monetary system. Compared to the volatility we have experienced since its inception, our dollar showed almost no volatility at all before the Reserve came to power.

The Answer to this Problem Is…

…for each individual to be fiscally conservative and responsible over their own stewardships. As we become more responsible, we will naturally require that our government must also be fiscally responsible, and will not continue to support representatives that practice reckless abandon with our sacred treasury funds. If the Federal government is fiscally responsible they will remove a portion of the Federal Reserve’s power, and will eventually have the strength of character to call for the revocation of this institution’s charter. And reclaim the responsibility that they have to manage the printing and issuance of our national currency.

Could the Bail-Out Spell Personal Disaster for YOU?

Which ever way the Federal Government ultimately chooses to deal with the problem of the Wall Street Bail-Out, there are potentially painful days ahead for you and your family.

Washington could decide to let the market work things out naturally, letting banks and other businesses declare bankruptcy and then allowing a short time for the market to adjust and return to a more nominal level. There will still certainly be a term of economic and emotional pain from a few months to a year, possibly longer.

Or the government could decide to arbitrarily bail out the markets and by so doing begin the process of propping up the prices and wages of the nation.  If so, we may find ourselves in for a long ride on the pain train. It may take a little longer but the pain will eventually reach us tax payers. We could experience the same level of hardship (if not greater) than what was experienced during the Great Depression.

In either case it is fundamentally important that you are adequately prepared to deal with either painful situation. We advise that in whatever circumstances you find yourself, that you do whatever it takes to buy your family at minimum a 6 month supply of food.

You may ask, “Why should I get a 6 month supply of food? I can run to the store.  Even if there was a run on the store, I could just run down myself and get enough to last until the store re-opened.”

Let’s talk for a moment about food and the system of credit that it revolves around. We will simplify this a little bit. The Farmer sells his produce to a distributor, but the distributor rather than paying cash for the product, will most likely negotiate terms with the farmer, say 30 day terms (NET30), which gives him 30 days to pay for the produce. Meanwhile, the distributor takes the product and sells it to a retail store, and they likewise desire terms with credit, so they purchase the food on NET15 terms from the distributor. Then the Store sells the produce to the end consumer, they pay off their net15 terms with the Distributor and then the distributor pays off his debt to the farmer. Everyone has profited through the use and extension of private credit.

But what happens if the market is volatile, specifically, that the value of the dollar is inflating at an extremely rapid rate? So quickly in fact that it causes the Farmer to wonder if the dollars he sells his produce for on credit will be worth that much at the end of the 30 days. What then? The same thoughts go through the Distributor’s head; that it makes potentially more economical sense for the farmer to keep his crop rather than sell it. And they all watch as the value of the dollar plummets.

This is a very plausible scenario given the time and circumstances that we live in today. If the Farmer looses faith in the dollar/economy of the US, there is the very real potential of having little to no food on the shelves of our great supermarkets. If such a problem arises (taking months or years to correct), you could be left with nothing to eat simply because you didn’t take the time to adequately prepare.

It wasn’t raining when Noah built the ark.  It may not be raining now but it certainly is sprinkling! As I said earlier, if you can afford it I highly recommend having at least a 6 month supply of food. Maybe I am totally wrong and the markets will correct themselves, operate optimally, and government will keep its hands off.  But what if that doesn’t happen?  Even if supermarket shelves stay stocked, what if you lost your job because of the economy? At least you would have enough food to sustain your family while you searched for new employment.

THE TIME TO ACT IS YESTERDAY. Avoid as much pain as possible by preparing today for the challenges that tomorrow could bring.  Self-reliance is ALWAYS timely.

If you are interested in growing or acquiring some food storage, I encourage you to contact Joseph’s Storehouse for a professional consultation and advice on what foods are best for you to store.

P.S. Having a little food storage in their homes could have saved lives of many during/after hurricane Katrina who starved to death while they were waiting for someone to rescue themselves from the flood. Don’t become a statistic!