The financial avarice of the global banking system – U.S. banks insolvent to the tune of $3 trillion. FDIC pretends to have funds to support over $7 trillion in banking deposits.

Part of the big delusion in our banking system is the reality that debt has become a large source of money flowing through the economy.  This is why housing made the perfect vessel for Wall Street and banking speculation.  Banks create money by issuing loans and there is nothing larger to loan on than a home.  Think about the fact that banks were giving out $500,000 for trashy run down homes overrun with rats and this was something that they were booking on their balance sheet as an asset.  The FDIC and other regulators simply sat back and watched as the wolves ate the financial chickens at the roost. Many Americans think that banks actually have the money in a vault when they make a loan.  They do not.  Just like Houdini the illusion is what is powerful.  In fact, the FDIC has an insurance fund that is close to negative and this institution is supposed to back up over $7 trillion in saving deposits.  How is that even possible?  Only when a world is blindly accepting to a banking system and believe the media jargon that banking is too complicated for them to understand.  This is what the central and investment banks want because it makes the theft easier.

The heist in housing and mortgages

household debt

The above chart is critical in understanding that our current banking system is functionally insolvent.  U.S. household carry roughly $13.5 trillion in debt.  This is “money” to banks as it is an asset on their balance sheet.  But with the double dip in housing, home prices have fallen by 31 percent from their peak.  Mortgage debt is the biggest asset for banks running at over $10 trillion.  Given that banks have yet to realize the mark to market realities and keep hiding bad assets in cover-up programs, banks are overstating assets by at least $3 trillion.

People wonder why banks are hoarding what is now comically called shadow inventory.  In effect this is housing that should be sold and picked up by the banks but they refuse to do so.  Why?  First, examine the above chart again.  Banks claim mortgage debt as assets and therefore look wealthier than they really are.  This artificial wealth makes their balance sheets seem healthier and it frees them up to speculate on Wall Street.  Banks refuse to process these homes because they would have to realize the actual value of that rat invested shack that they lent out $500,000 on.  When they sell the property on the current market it may yield only $100,000 to $200,000 depending on what neighborhood it is in.  Since the FDIC is broke and banks simply claim debt as money, debt that is now not being paid on for over 6 million homes and you can see how the dominoes begin to fall.

Dominoes

The entire banking edifice is sitting atop mountains of debt.  Think about some really rough numbers here:

-$10+ trillion in mortgage debt

-$1 trillion in student loan debt

-$750+ billion in credit card debt

And billions of dollars in other debt including automobile loans.  Current household debt is basically equivalent to U.S. annual GDP.  In other words banks are creating money to boost households that don’t have the ability to purchase items without going into massive debt.  Banks can pretend they are richer and households can buy more stuff that they cannot afford.  That is the avarice of the system.

All of this is occurring with the average per capita income in the U.S. being $25,000.   People have a really hard time believing this because they have been conditioned to believe in the all hat and no cattle model of money.  Yet this is actual data:

average-income-americans1

Source:  Social Security

Surely my neighbor with the new car is wealthy.  Of course my friend that bought that big house is wealthy.  Again, look at the first chart and think of the $13.5 trillion in household debt floating in the market and also the reality that 50 percent of Americans wouldn’t know where to get $2,000 for an emergency in the next 30 days if it came down to it.  The entire banking system is hanging by a thread.  Thomas Jefferson had a healthy dose of skepticism when it came to banking.  He understood that those holding the debt held a control over those who were borrowing.  And when banks don’t even have to have their own money and simply borrow from the Federal Reserve the system become rife with corruption and avarice and we are now seeing the consequences of this.

The mass pseudo-income delusion

Fact:  The middle class has been disappearing for well over a decade

Fact:  Households have been losing wealth on a steady pace for over a decade

Fact:  New employment is coming from lower paying job sectors

Fact:  Banking profits are back to near record levels

So why are people in denial about the above statistics?  Why is it the case that people simply deny that in reality, the middle class in America is disappearing because a large part of the funds is being funneled in propping up a banking system that is clearly not helping the economy?  One of the main reasons I believe is the temporarily embarrassed millionaire syndrome.  I think a lot of Americans vote against their own economic wellbeing because they envision themselves as making millions of dollars speculating on paper stocks and raiding the savings accounts of Americans.  Ironically 99.9 percent will never even come close to this and the data reflects this hard fact.  Yet the draw of hitting some sort of lottery is deeply rooted and banks exploit this to the detriment of our overall society.  This isn’t the hard workers that build companies and make it big both financially and professionally.  We are talking about the vampire like financial system that sucks out money by robbing it from the productive sectors.

Need we go on?  Let us go on and keep pretending our banking system is solvent for the sake of banking profits.

RSSIf you enjoyed this post click here to subscribe to a complete feed and stay up to date with today’s challenging market!

TAGS: , , , , , , , , , , ,




7 Comments on this post

Trackbacks

  1. tyler said:

    Have no fear helicopter ben is here!

    June 2nd, 2011 at 10:25 pm
  2. Dumbfounded said:

    Excellent article. We all know that the Emperor is not wearing any clothes. The problem is that we have all invested in the illusion. Who will be the first to recognize his losses? Anyone? Bueller? Anyone?

    June 2nd, 2011 at 11:04 pm
  3. mile said:

    you have forgotten that when they lend 500,000 dollars they print up and control debt dollars that compete equally with saved dollars of about 5,000,000 to 50,000,000 dollars…………………………that rat shack is penny ante meaningless but to those peasants needing to live there..?

    June 3rd, 2011 at 12:03 pm
  4. Manny said:

    Excellent post, thank you!

    June 3rd, 2011 at 1:17 pm
  5. Buzz Hacksaw said:

    Good rant.
    The propaganda machine works overtime, that’s why!
    Buzz

    June 3rd, 2011 at 7:34 pm
  6. Jim J said:

    I have taken it upon myself to begin to teach financial literacy to juniors and seniors in high school on a volunteer basis. Now…these students are required by the State to pass Algebra II but when I give them an example about checking accounts and ask them to compute the service fees and overdraft amounts,it’s like talking another language. The American Banker Association reports that 24% of Americans can not handle a checking account. What is happening right now is that employers are beginning to give employees reloadable debit cards. In other words, the employees pay is loaded onto a card. When the employee can’t spend anymore, he knows that he is out of money. This isn’t the banks fault….its the parents and schools. Actually, the kids that I have instructed so far are like sponges…they want to know finance but nobody ever taught them.

    June 11th, 2011 at 5:00 pm
  7. laura m. said:

    America is over and done with no hope, zero future. The masses are zombies and patriots very few. We are on the edge of the abyss. All political activities and voting are useless producing no results for decades. Prepare and hunker down low key.

    June 19th, 2011 at 2:21 pm

LEAVE A COMMENT

Subscribe Form

Subscribe to Blog


Enter your email address to receive updates from My Budget 360:

100% Private & Spam Free.


Popular – All Time

  • 1. How much does the Average American Make? Breaking Down the U.S. Household Income Numbers.

  • 2. Top 1 Percent Control 42 Percent of Financial Wealth in the U.S. – How Average Americans are Lured into Debt Servitude by Promises of Mega Wealth.

  • 3. Is college worth the money and debt? The cost of college has increased by 11x since 1980 while inflation overall has increased by 3x. Diluting education with for-profits. and saddling millions with debt.

  • 4. The Perfect $46,000 Budget: Learning to Live in California for Under $50,000.

  • 5. Family Budget: How to go Broke on $100,000 a year. Why the Middle Class has a hard time Living in Expensive Urban Areas.

  • 6. Lining up at Midnight at Wal-Mart to buy Food is part of the new Recovery. Banks offering Mattress Interest Rates. The Invisible Recovery Outside of Wall Street.

  • 7. You Cannot Afford a $350,000 Home with a $75,000 Household Income!

  • 8. Crisis of generations – younger Americans moving back home in large numbers. Student loan default rates surging largely due to for-profit college expansion.

  • 9. The next massive debt bubble to crush the economy – 10 charts examining the upcoming implosion of the student loan market. $1 trillion in student loans and defaults sharply increasing.

  • 10. Welcome to the new model of retirement. No retirement. In 1983 over 60 percent of American workers had some kind of defined-benefit plan. Today less than 20 percent have access to a plan and the majority of retired Americans largely rely on Social Security as their de facto retirement plan.
  • Categories



    wordpress stats