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Exposed, The Money Changers

The world today is filled with graft, corruption and greed at just about every institution there is. Whether it is our politicians, the increasing number of banks that continue to sprout up, to the many mortgage companies that have come to dominate the housing market and our for profit universities, all have their hands in, you guessed it, the cookie jar. Every one is grabbing up hordes of your hard earned money. But it is these unscrupulous money managers in our financial institutions, mortgage companies and our for profit universities that have managed to have reached further into the pockets and pocketbooks of just about everyone. They have continued to get away unscathed with reaping huge profits all at the expense of unwitting consumers. It is a known fact that in the last few decades more of the population have been falling down that ladder of upward mobility and ending on the door steps of the Poor House.

When so many are destitute they become easy pray for the unscrupulous to take full advantage of their unfortunate circumstances. Credit scores are known to be the instigators of blatant disregard of the financial difficulties one is experiencing. The financial system today is really like a wolf in sheep's clothing. It is no more apparent than what is still happening all across the country. We would have thought that what happened in 2008 would never replay but tragically corruption, graft and fraud are as prevalent today as ever. To keep the gravy train going it is the greater portion of the population that is now paying the price. In order to fully understand what is actually taking place today we would be wise to trace history to find the similarities and consequences of what happened in one of the darkest periods in American history and today.

It has only happened once before where practically a whole generation felt the real urgency to keep whatever money they possessed away from the very institutions that are supposed to safeguard their savings. In the 1930's so many individuals purposely held on to what little they had because it was the financial institutions that failed to secure the peoples money and reinvest that savings for the purpose of generating more profits [interest on savings accounts] for the public and for the banks themselves. Ever since then banks and practically every other financial institution as well as businesses have set up other forms that generate profits. Retirement accounts like IRA's, Roth IRA's, and companies 401K accounts all now have hidden fees attached. Whether it is a maintenance fee or other miscellaneous fees associated with that personal saving accounts they drastically reduce the total value of your money.

When people put their hard earned money into retirement accounts they rely on that savings to grow. Interest bearing accounts are now the norm in banks all around the country. But, with interest rates still at all time lows many see no reason why they should put their money into these financial institutions. We'd all like to think that retirement savings would at least keep pace with the cost of living so that when a person does retire there will be sufficient funds to cover day to day expenses as well as any unexpected emergencies. That is not so today. Too many companies retirement accounts have dried up. Remember Enron? Individual pension plans have gone the way of the dinosaurs and even Social Security is under attack by our Republicans in Congress. No longer are social security recipients going to receive cost of living increases that translates to the actual cost of living. In fact due to the ever increasing cost of living the publics social security benefits have and will continue to decrease in value. Unconscionable in this day and age where so many United States citizens now rely on social security as there only source of income. When so many are faced with income stagnation, retardation and even with no incomes becoming more prevalent saving money for that rainy day when it is always pouring is an impossibility. This is another factor why banks have to increase fees and just maybe attribute to some unscrupulous actions that only snowball into an avalanche of despair for so many.

The similarities of the 1930's and today are very striking in the way the financial crisis in 1929 came about and the way the financial meltdown in 2008 through 2009 occurred. Both are very reminiscent of the same type of behavior that prevailed in our financial institutions, Wall Street and the Federal Reserve. The chain of events leading to both crisis is almost a duplication of behavior of corporate America and the government. One of the key factors that propelled the United States into such an economic nightmare in 1930 according to the Council of Economic Advisors was the Smoot Hawley Tariff Act. By the way, it was sponsored and passed by the Republican's. This piece of legislation alone was probably one of the most damaging pieces of legislation ever signed in the United States. The act was passed in June of 1930 and increased tariffs on goods imported into the United States by more than 50%. This single piece of legislation only exasperated the ongoing deterioration of our economy. Enacting the tariff was exactly the wrong thing to do and about 1,000 economists signed a petition begging Congress not to pass it. But, like today government continues to ignore the publics concerns and passes acts and mandates contrary to the majority of the publics wishes, Eventually, 60 other countries passed similar retaliatory tariffs in response. This led to global inflation. The biggest danger occurred when so many people didn't have the capital when prices dropped. This created a deflationary trend that was even more devastating and had lasting repercussions more pronounced than the inflationary trends before.

Other contributing factors incurred which contributed to the initial cause of the Depression and deepened the economic abyss that the United States fell into was that the Federal Reserve made some very bad decisions. Whether it was by design or not the only people that came out of the depression were the few very wealthiest individuals. The great income disparity gap just keeps getting wider. We have to remember during the 1920's was a time of record growth in our economy, hence the term "Roaring 20's came into vogue. What made it possible was that the Fed infused cash into our economy and increased the money flow by more than 60% At that time US currency was on the Gold Standard but to induce more investment more capital was needed so more money was printed which made it possible for the economic expansion of the " Roaring 20's. Had the Federal Reserve been a little more careful in expanding the money supply could have prevented the artificial Stock market boom and subsequent crash. There were factors that indicated that the robust spending and borrowing was tapering off by early 1929 making interest hikes unnecessary which would have averted the subsequent stock market fallout. But since the crash occurred what the Fed did was the exact opposite of what sound economic principals dictated and that was they raised interest rates. This was done in 1931 at exactly one of the worst periods in our economy. When there is a contraction in economic mobility interest rates have to fall not rise. At the time when interest rates sharply increased only further deteriorated already deteriorating conditions. Another element that helped our slide into the Depression was that very few new that the country's gold stock was already increasing by the early fall of 1929, so if the Fed did not intervene the money supply would have increased on it's own and would have felicitated economic recovery.

Today, unlike that of the 1930's the Fed has at least done something right and that is the interest rates have fallen to record lows. But with record low interest rates these rates have done nothing to encourage people to put their hard earned savings back into the financial institutions. Quite the contrary. While this is happening the banks meanwhile are doing everything they can to recoup any amount of extra funding to offset the lack of personal savings. Up front fees and hidden costs abound in personal banking accounts now. These checking and savings account fees along with credit card fees now account for a hefty amount of capital that is infused into the banking industry as well as enormous profits. When the Government infused billions into these same financial institutions that caused the financial catastrophe in 2008 has only managed to keep the economy at a virtual standstill. Mean-while the financial institutions continue to rake in billions of profits every quarter, impose fees that cut into personal savings, and continue to deny mortgages {credit scores are purposely set up to higher levels]. All this while continuing to make more money by foreclosing rather than issuing lower payments for so many strapped homeowners and increase the lending of capital to spur business growth.

The similarities of the 1930's and today are very striking not only on the financial front but with the weather of this past spring and drought in California and Texas are almost the same conditions that America experienced in the 1930's. Both then as now millions of Americans are faced with so much adversity and insecurity. It is still our monetary system, one that is used all over the world, that is based on faith, honor, and trust. Fractional Reserve Banking is the terminology where monies are no longer backed up by tangible assets. The gold standard has long since been replaced. When that happened in 1972 the US dollar has become devalued and is in great danger of no longer being the worlds first currency. What has happened every time their is a debate in Washington on raising the debt ceiling is actually a blatant disregard of the trust that other nations have for the United States. Our legislatures are still playing Russian Roulette when it comes to matters of fiscal policy.

The United States economic system was once the envy of the world, but now we are perceived with contempt and suspicion. The sub-prime mortgage crisis was only the tip of the economic ice-burg in America today. Trust in America is quickly disappearing. Why? Because we single handily brought the international financial system to almost insolvency by passing off fraud-ridden sup-prime debt on unsuspecting economies in 2008 and we have yet to learn from all our mistakes.

Apparently the Fed finally realized their mistake from the 1930's when they raised interest rates. This time the realization is that at any time a possible recession looms interest rates have to fall. What the Fed did in 2000 and again in 2007 was a way to make up for the disastrous rate hikes of the 1930's. But, 2000 and again in 2007 when mortgage rates fell it induced more people to apply and get loans all the while savings accounts decreased. All of this resulted in higher home prices and eventually the whole system fed upon itself. Now, as home prices rose banks needed to develop more ways of recruiting more home buyers. That brought about the easy sub-prime mortgage scheme. This whole system was based on low interest rates. Banks really did know the risks in holding all of the overvalued sup-prime mortgages so they looked to foreign financial institutions to sell their mortgages by marketing them as a safe investment. American banks convinced { Here is why trust is vital in the financial world ] investment rating agencies like Mood's and Standard & Poor's to give mortgage securities higher valuations than regular sub-prime rates would normally receive. This amounts to fraud brought on by the United States banking industry. now the whole world realized that the United States thirst for quick and easy profit created a world wide financial and economic disaster.

Different set of circumstances occurred in the 1930's and in 2008, but, none the less in both instances the United States was led down a dangerous path by greed, callous acts by both our financial institutions and Congress and a woeful misinterpretation of sound financial and economic principles by all. We have yet to recover from 2008. Today, we have only continued to fail to fully integrate sound economic concepts that would eliminate any chance that another financial catastrophe would strike again. We are just as prone to face yet another Armageddon like economic disaster. The problem now is how the United States is going to restore our international credibility, regain their trust, restore our economic stability, narrow the greatest income disparity gap in our history and firmly entrench that ladder of upward mobility for all Americas to not only reach it but to be able to actually climb up its steps. To do that requires the implementation of National Economic Reforms Ten Articles of Confederation. Only then will the United States secure it's own future.