Livinglies's Weblog

The fraud perpetrated on the world by mortgage creativity emanating from Wall Street amounts to the unregulated creation of proprietary currency leveraging off of the U.S. dollar. By creating this free money, the giddy co-conspirators went nuts and now have all sorts of rationalizations about how their behavior was not illegal, unfair, or immoral. The fact remains that we are headed for unprecedented declines in sectors of the U.S. economy, some of which will be permanent. The fact also remains that the effect of the “free money” markets, combined with free Washington spending, and the diminishment of our leadership in world affairs has produced a meltdown of the U.S. dollar, so much so, that most countries who have pegged their currencies to the dollar for decades or longer, are now about to cut free because they must.

1.  The ultimate bloat caused by the creation of funny money amounts to more than $3.5 trillion.
2. The loss of value of the U.S. dollar amounts so far to around $12 trillion — which is inflation about to hit the U.S. consumers and companies.
3. The cutting of ties to the U.S. dollar will have an immediate effect of creating $1.3 trillion in additional U.S. debt.
4. The U.S. economy has been fueled by consumer spending (70% of GDP).
5. Consumer spending has been fueled by credit. Consumers are maxed out on credit cards, and have borrowed heavily on the inflated value of homes, the value of which is declining and will continue to decline. Consumers have virtually no savings of any significance to the economy in terms of buying consumer goods and services. Most workers are suffering with a real decline in discretionary income caused by stagnation of wages and inflation that is under-reported. In short, consumer spending is not going to save our economy.
6. The Fed is pumping even more currency into the system to stave off collapse, which is exacerbating the decline in value of the U.S. dollar and worsening the incoming inflation, which cannot be anything less than the worst third world country. It is something we have not seen in our lifetimes or our grandparents’ lifetimes.

Bottom Line: Big Bad recession, perhaps depression. Reality dictates, now that the truth is out, that we correct the bloat and excess in our economy. That means taking a huge hit — unless we bring in leadership from the private sector that defers the loss over years and saves not only the appearance of our control over our own economy, but the immediate demands from other Governments and foreign companies for payments we cannot afford. 

Filed under: CDO, CORRUPTION, Eviction, foreclosure, Investor | Tagged: funny money, inflation, mortgage meltdown, recession |