Take Your Time and Watch Some Informational Stuff

CNBC - Bond market takes violent turn, but Fed taper seems on track

New York Times - Health Care Law Raises Pressure on Public Unions. It is sad how gullible the public is. People who believe that Obamacare will be more expensive are also supporting putting all government workers on it. Huh? In either case a bigger trick is being played.

New York Times - A Plan to Avert the Pension Crisis. Municipalities are failing to contribute to their public pensions, that is the bottom line. The real game being played is that civil servants are seeing a better than 10% pay reduction. By having them fully fund their pensions our of their salary, they are constructively seeing a pay cut. We can agree or disagree as to whether or not this is necessary; but, the pension and health care excuse is just that.

NBC News - CNBC - Pandemic of pension woes is plaguing the nation. More of the same.

YouTube - English News Today - Keiser Report: Fake it till you make it or Potemkin Policies.

Now I want to explain how Quantitative Easing works. QE is basically where the Federal Reserve buys up about $85 billion a month in bad mortgage debt. At the same time the Federal Reserve and other central banks throughout the world are also lending money to banks at about 0% interest. The banks take this money and then buy other assets to hold onto that pay 2% interest, for instance. The amount of profit is on the difference between what they borrow the money for and what they either loan it out for or invest it in. The amount made off of the difference is in the hundreds of billions of dollars and is kept by the banks. The Federal Reserve could do the same deal with local municipalities and the profit would then transfer to the municipalities which would then be able to continue services and meet their obligations. That would then increase consumer spending.

This begs the question, why is the Federal Reserve and the federal government failing to help municipalities? In my opinion it is to straighten the power of the Federal government by weakening the strength of states and local governments. Lets look at schools. Schools have traditionally been funded by the local government and were free to set their criteria based on local employment realities. In Detroit all the schools taught auto class. Now schools seek and get federal funding for their programs so long as they follow the federal guidelines. The same thing is now happening with healthcare and you know what, most people will support it. Next up, somehow the federal government is going to take charge of the public pensions, it could happen through bankruptcy proceedings or willingly by offering some sort of guaranteed national pension program insuring all promised benefits that have already vested and putting limitations on future participants. The price tag will be turning over all of the existing assets held by local and state public pensions.

The big move is not about healthcare, it is not about salaries, it is not about public pensions, it is about the federalization of local decision making. That is the real transfer of power. There is and was an alternative. The Federal government "gives" the states money do do what the states should be doing already. If the Federal government taxed less, the states could tax more with no additional burden on the tax payer. If the Federal government charged you 1 cent less on each dollar of income and the states then taxed for just that 1 cent, your total tax is a wash, it is the same; but, the difference is that the control over how the 1 cent was spent would be left up to the states and not the Federal government.

The Federal government now has control over healtcare, water, roads, farming, schooling, the list goes on and on and it is not the way it was 50 years ago. Currently, the biggest bully in the room has been the banks and the game is complete when they get broken up, just like is outlined in the BOE-FDIC paper I previously linked to.