The 11th Hour: Bailout in Simple Terms
The 11th Hour: Bailout in Simple Terms
I received the following in my e-mail today.
Topic is the Bailout Bill…I thought
it might help some grasp a better
understanding on the situation/bill
at hand. I listed the link to the
site at the end of the post.
(Note – I know it looks
long, but it is an easy read.)
The 11th Round: The Wall Street Crisis and Bailout Bill Explained
Posted September 29, 2008 by Michael Nystrom
September 29, 2008
The following story illustrates the root cause of our current
financial crisis: the flawed and immoral banking system, headed
by the private Federal Reserve Bank, which relies on ever
expanding debt creation.
Not one in 1,000 understand it, but if you can grasp
this, many once confusing aspects about the world we
live in will become clear. While the majority of Americans
have no understanding of what follows, you can be certain
that the bankers at the Federal Reserve and the brokers on
Wall Street understand it perfectly.
The story is adapted from the book The Future of Money
(pp. 50 â€“ 53) by Bernard Lietar. Your thoughts, comments
and discussion are welcomed and appreciated below.
The Eleventh Round
Once upon a time in a small village, the citizens
used barter to conduct all of their transactions.
Every day, people walked through the marketplace
with chickens, eggs, hams and bread, and engaged
in prolonged haggling and negotiations among themselves
to exchange what they needed. However, at key periods of
the year, such as harvests or if someone’s barn needed
repairs after a big storm, people recalled the old tradition
of helping each other out with a sense of generosity and
community spirit. They knew that if they had a problem down
the road, others would help them in return.
One day, a stranger with shiny black shoes and an elegant
black hat came to the village and observed the marketplace
with a sardonic smile. When he saw one farmer running around
trying to corral the six chickens he wanted to exchange for a
big ham, he could not refrain from laughing.
“Poor people,” he muttered under his breath. “So primitive,”
he said. The farmerâ€™s wife overhead him and challenged the stranger.
“Do you think you could do a better job handling chickens, stranger?”
“Chickens, no,” he responded. “But there is a much better way
to conduct business and eliminate all that distasteful hassle,” he said.
“Oh yes, how so?” asked the woman.
“See that tree there?” the stranger replied. “I will go there
and wait for one of you to bring me a large cowhide. Then have
every family come visit me. Iâ€™ll explain to you the better way.”
And so it happened. He took the cowhide, and cut perfect leather
rounds in it, putting an elaborate and graceful stamp on each round.
To each family he gave ten rounds, and explained that each round
represented the value of one chicken.
“Now you can trade and bargain easily with the rounds instead of
the unwieldy chickens,” he explained.
It seemed to make sense. Everyone was impressed by the banker
with the shiny shoes and impressive hat.
“By the way,” he said after each family had received their
ten rounds, “in one yearâ€™s time, I will come back and sit
under the same tree. I want each family to bring me back 11
rounds. That 11th round is a token of appreciation for the
technological improvement I just made possible in your lives.”
But where will the 11th round come from?” asked the farmer
with the six chickens.
“Youâ€™ll see,” said the man with a reassuring smile.
Assuming that the population and its annual production remain
the same during the next year, what do you think happened?
Remember that the 11th round was never created. Therefore,
some of the families had to lose some of their rounds – even
if they managed their affairs well – in order that other
families gain the 11th round for the banker. Put another way,
for each ten families that gain an additional round, one family
must go completely bankrupt!
While it was much more convenient to exchange the rounds instead
of the chickens on market days, the new game also had the unintended
side effect of actively discouraging cooperation that was traditional
in the village. Instead, the new money game was generating a systemic
undertow of competition among all the participants. Under the new
system, when a storm threatened the crop of one of the families,
people became less generous with their time to help bring it in
before disaster struck. It was every man for himself!
This is how todayâ€™s flawed monetary system – guided by the
Federal Reserve – operates in our lives and society. It is at
the root of the crisis that we are facing today. The 11th round
represents the interest that we are all struggling to pay on our
debts, lest we too succumb to bankruptcy. But the 11th round has
a wider impact as well.
Have you noticed how everyone in our society works harder
than ever, but no one can seem to get ahead but the bankers,
brokers and hedge fund managers? There was a time in America
when a single breadwinner could easily support an entire family.
Now, even with both husband and wife working, families still
require copious amounts of debt just to get by. And since 1913,
the year the Federal Reserve system was created, the dollar has
lost 95% of its value! This is because the Federal Reserve has
created a money and banking system that pits participants in the
economy against one another in fierce competition, while consistently
skimming off the 11th round for itself and its members. This is why
common people cannot get ahead. They consistently lose the fruits of
their labor to the bankers!
During the recent housing bubble, the US banking system – under
the guidance of the Federal Reserve – played the role of the
banker in the story above. The banking system creates only principal,
but demands repayment of both principal and interest. In spite of
the fact that the interest is never created, and therefore does not
exist, banks booked both principal and future interest as an asset.
Say you went to the bank in 2005 and got a $500,000 mortgage at a
low teaser rate. The bank created $500,000 from thin air. However,
it fully expects you to bring back over $1,000,000 over the next
thirty years or so when interest is included. If you donâ€™t bring
that amount back, youâ€™ll lose your house! But, the bank did not
create the interest! It never does. Instead, like in the story above,
it sends you out into the world to battle against everyone else to
bring back the second $500,000. And just as you thought you had
things under control, they raised the interest rate! The bankers want
blood from turnips!
Since every bank in the system does exactly the same thing, the
system requires that some participants – and at this late stage
many participants – to go bankrupt in order that lenders receive
their interest. This is why there have been so many foreclosures
and so many bankruptcies – especially in the financial sector.
Their phony assets are disappearing.
The money that the bankers say has been lost was never there in
the first place! It was all an illusion to begin with! The banking
system created the the illusion of massive assets. Now they say
those assets have been lost, and that the government, i.e. the
taxpayers, i.e. YOU have to bail them out! They’re saying,
“You have to make us whole, or the entire system will collapse!”
In reality, the entire system is corrupt, as you can see. It
enriches the bankers, and the politically well connected at
the expense of the common man who runs like crazy on the economic
treadmill in order to simply stand still. It is the bankers who
keep increasing the speed of the treadmill!
In reality, the system is unsustainable and will collapse
eventually – bailout or no. The piper waits patiently,
saying ‘pay me now, or pay me later.’
It is true that we do not live in a world of zero population
growth, output or money supply as in the story. In the real
world, there is usually growth in all of these variables, which
makes it all the more difficult to understand what is actually
going on. As long as things are growing, everything appears to
be fine. The system appears stable. The banking system can continue
to create more debt, and the companies can take on more leverage.
But there is a limit to how much debt can be created by the
banking system. The US economy has apparently reached that limit!
The private sector cannot take on any more debt. This is why the
bankers are attempting to push all of the bad, toxic, worthless
debt onto the government!
Thankfully, Congress today did not pass the fat-cat bailout bill.
This is a good thing, not a bad thing! The original draft of the
bill contained the following statement: “Decisions by the Secretary
pursuant to the authority of this Act are non-reviewable and committed
to agency discretion, and may not be reviewed by any court of
law or any administrative agency.” Those 33 words would put the
Treasury Secretary above the law, in what was the most blatant
attempted power grab in American economic history!
Continue to Stand Up Against this Bill!
The bill was defeated today as the result of unprecedented
grassroots pressure on their Congressional representatives. The Bush Administration, the Fed, and all the bankers and brokers on
Wall Street are pissed! They’re not used to consumers
- er, I mean Citizens – paying attention and getting involved
in their dealings. Later this week, they’ll no doubt try to
pass it again. Don’t take the bait.
Stay on their case! Keep calling your representatives,
letting them know that you are against the bailout. All
435 Congressional Representatives are up for re-election in
about a month! Let them know that if they vote for this bill,
that you will be voting against them, and mustering support
to throw them out of office!
Under our current flawed monetary system – that Congress has
built and supports – the common man is penalized with
bankruptcy and foreclosure, while the bankers and brokers
are not only bailed out, but rewarded by our corrupt,
reckless, irresponsible and lazy Congress.
It is easy for us to blame Congress, but ultimately it is
We the People who are to blame. We’ve been asleep at the wheel
for too long, letting Congress play its corrupt game with the
Federal Reserve and the banking system. Today is a day for celebration.
Today is the day that many more Americans finally woke up and
realized the power we have.
Election Day is November 4th. My Representative – Ed Markey –
has been in Congress for over 30 years. I hold him personally
responsible for the mess we’re in. Today Markey voted for the
fat-cat bailout bill. On November 4th, I will be voting for his
challenger, John Cunningham. I urge all Americans to find out
how your representatives voted on today’s historic bill.
If your representative voted for the fat-cat bailout, I urge
you to vote against him or her on November 4th.
IF IN DOUBT, VOTE THEM OUT! NO INCUMBENTS 2008!
I posted this on the other thread, but I am posting it again here…
Here is a vote tally. A list of AYES and NAYS.
Note â€“ The republicians are in italic.
Thank you for the links and info SimplyRaw.
Here is another link with an really easy and clear cartoon depiction of how our monetary system/Fed Reserve really works:
“THE MONEY MYTH EXPLODED”
And another great link to a 45 minute video that eplains really well how the Federal Reserve is a complete scam to us:
Paul Grignon’s 47-minute animated presentation of “Money as Debt” tells in very simple and effective graphic terms what money is and how it is being created
Thanks for the links Aspire.:)
I was starting to think no one
wanted to look at the thread
because of the length of it.
Thanks! Your post told me it
wasn’t a wasted thread. Thanks again!
Going to check out your link.
It makes me upset that they are going
to vote on this at the eve of night.
Like they are going to try and get away
with something. It really burns me!
Here is another video I posted on
the other thread that I found interesting…
Both Defazio and Katpur have an ALTERNATIVE
that wonâ€™t cost a dime and requires no Bailout Legislation
(The Senate is going to attach it to a more popluar bill.)