- Alan Greenspan essentially admitted what he's never admitted
before over the weekend: that he and the Fed have been scrambling over
the past few years to overcome the after-effects of the bubble -- a bubble
that he arguably fueled in the first place, and certainly could have mitigated.
But that's not the point. The point is... well, here's his point, from
a speech this weekend:
-
- "During 2001, in the aftermath of the bursting of
the bubble and the acts of terrorism in September 2001, the federal funds
rate was lowered 4-3/4 percentage points. Subsequently, another 75 basis
points were pared, bringing the rate by June 2003 to its current 1 percent,
the lowest level in 45 years. We were able to be unusually aggressive in
the initial stages of the recession of 2001 because both inflation and
inflation expectations were low and stable. We thought we needed to be,
and could be, forceful in 2002 and 2003 as well because, with demand weak,
inflation risks had become two-sided for the first time in forty years.
-
- "There appears to be enough evidence, at least tentatively,
to conclude that our strategy of addressing the bubble's consequences rather
than the bubble itself has been successful. Despite the stock market plunge,
terrorist attacks, corporate scandals, and wars in Afghanistan and Iraq,
we experienced an exceptionally mild recession--even milder than that of
a decade earlier. As I discuss later, much of the ability of the U.S. economy
to absorb these sequences of shocks resulted from notably improved structural
flexibility. But highly aggressive monetary ease was doubtless also a significant
contributor to stability."
-
- ====================
-
- One unmistakable consequence of this attempt to ward
off the ill effects of the bubble has been the tumbling value of the U.S.
dollar. Since early 2002, the value of the Dollar Index has plunged about
28%. And yet the Chairman talks so blithely about inflation being "low
and stable". One quick question for him: what is that 28% relative
decline in the dollar in less than 2 years, other than inflation in a different
guise?
-
- It remains to be seen whether the after-effects of a
bubble can be overcome by this particular prescription, and this particular
monetary experiment in liquidity and debt creation. History says otherwise.
But rejecting Alan Greenspan's colossal gamble certainly does not have
to be the market's agenda right here and now. Someday, the course of action
pursued by the Greenspan Fed could prove haunting -- and don't think he
doesn't know this -- but when that day of reckoning is going to arrive
is anybody's guess.
-
- Another result of the Fed's attempt to "address
the bubble's consequences" is the explosion in global debt. Debt in
all shapes and sizes has been mushrooming everywhere. Don't get me wrong:
debt can be a good thing, and it's even my belief that our long-established
debt and homeownership programs are ultimately the biggest contributors
to the huge and enduring success of the United States. But more of a good
thing is not always better, especially when it comes to debt.
-
- Let's look at some astonishing facts about the explosion
in debt in 2003, culled from a year-end credit market wrap-up:
-
- "Dow Jones (Tom Sullivan and Christine Richard):
"Low interest rates and a recovering economy fueled a record $4.938
(up 25% y/y) trillion in global private sector bond sales for 2003. The
final data, released Wednesday by Thomson Financial Securities Data, underscore
just how big the bond business has become. The numbers include issuance
of corporate debt, federal agency debt, taxable municipal bonds, debt backed
by mortgages and debt backed by assets such as credit card receivables
and home equity loans. By comparison, issuance in 2002 totaled $3.938 trillion,
according to Thomson. In 1990, global private sector debt issuance stood
at just over $500 billion, or about one-tenth of this year's level... For
2003, however, debt issuance climbed in almost all categories and there
were records in many. Nearly 60% of the total debt sold in 2003 was issued
by companies located in the Americas, with the vast majority of that issuance
by U.S. corporations.
-
- "Bloomberg tallied CMO (collateralized mortgage
obligations) issuance of $1.052 Trillion, up 26% from 2002 and almost double
volume from 2001. Bloomberg's total Agency MBS Pool issuance through November
sums to $2.0 Trillion, up about 40% from the comparable total from 2002."
-
- ====================
-
- These figures are pretty jaw-dropping. The amount of
mortgage obligations has doubled from 2001 levels -- just 2 years later.
Doubled. This is unprecedented. Global debt issuance increased 25% year
over year, up $1 trillion. Also unprecedented.
-
- Who knows how this is going to work out? Nobody. For
better or worse, the global economy is now highly levered to the U.S. real
estate market, and debt market issuance and speculation is out-of-control.
To think this debt monster can be "managed" is an assumption
the market is making, right now, but that may not always be the case.
-
- ©2004 21st Century Investor Publishing, Inc. All
rights reserved.
-
- Comment
From Michael Shore
- 1-7-4
-
- The Federal Reserve, which controls the MONEY of the
USA is a PRIVATE COMPANY OF A FEW BANKERS and not a government agency.
As you can see in the organization chart of the bankers who own the Federal
Reserve, the Rothschild banking family are at the top of the organization
chart. So, mainly the Rothschild family controls the money of the USA.
-
- The NWO and the US government do not want US citizens
to know this. The paper money SCAM is the greatest CRIMINAL CON ever perpetrated
on humanity.
-
- <http://www.save-a-patriot.org/files/view/whofed.html>http://www.save-a-patriot.org/files/view/whofed.html
- <http://www.rense.com/general29/ringring.htm>http://www.rense.com/general29/ringring.htm
-
- Nations, corporations and individuals are kept in huge
debt and the bankers collect interest on this trillions of dollars of debt.
By keeping everyone in debt, a small group of bankers, members of the ILLUMINATI,
can control Nations, corporations and the over 6 billion humans in our
world.
-
- The PEOPLE IN THE US, and the world for that matter,
can call for the stoppage of the charging of interest on loans by banks.
That's right: no more interest on loans by banks, including home loans.
Who says you have to pay interest on money borrowed? The criminal bankers
who set up the current corrupt criminal MONEY SYSTEM, that's who. It even
says in the Bible that you are not allowed to charge interest on money
loaned to your fellow human beings. A reasonable, very low simple administration
processing fee could be charged instead of the huge amount of interest
that accumulates over the term of the loan. This would literally break
the stranglehold that the bankers and the New World Order currently have
on the people and the governments of the world.
-
- This is one simple method to eliminate the NWO and ILLUMINATI,
so we can have a real chance for WORLD PEACE.
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