Gold Investment

Zion, IL
By A.B. Dada
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The housing bubble has popped, and not just a small loosening of air from the gigantic, Federal Reserve-created madness. It’s a full blown pop, one that will quickly affect more than just the housing/construction markets. If you’re looking to be a wise and protected individual, today is a great day to restrain spending — even necessary spending — to brace yourself for the day when cash of any sort is king.

As of last week, mortgages are in very low supply — the banks don’t have easy access to new money (counterfeited legally by the Federal Reserve), and investors on Wall Street aren’t looking to buy bonds backed by new mortgages. The subprime mortgage market is in complete collapse (again, the fault primarily of the Federal Reserve’s easy money policy), the Alt-A mortgage market is rolling as people who were given loans by banks are now finding the banks backing out of those deals. Even the prime market is seeing an increased foreclosure rate due to people with excellent incomes and excellent credit scores getting ridiculous loans to buy homes significantly more expensive than common sense dictates.

This is all a good thing, and we need to let the market work its way out. The poor and the middle class are quickly become slaves to debt, with many fearing losing their cars, their credit lines, their credit scores and even their homes. In my home town, “For Sale” signs are common everywhere, but “Desperate Seller” signs are popping up. You can thank the Federal Reserve for that — and the best thing they can do is be restrained.

Remember, for every person who is in over their head, there is another person who made money on the deal. If a family earning $50,000/year gross bought a $400,000 home and is in trouble today, someone else received that $400,000 before, so the money still exists somewhere. What likely happened, and what always happens when the Federal Reserve creates new money, is that money trickles up from the poor and the middle class to the ultra rich. Even people earning $200,000 per year household are considered middle class when you look at the incomes of the wealthiest Americans (see: Wall Street and Banking bonuses for the past few years). If the Federal Reserve holds back and restrains ANY bail-outs, what will happen is mass foreclosures causing people to lose their homes, forced to return to renting.

In the short term and mid term, this is not as bad as it sounds. With empty repossessed homes on the market, banks will be forced to sell the homes at liquidation prices. Those (wealthy) who are sitting on cash will eventually see a huge potential for long term profit: buy homes at 50% off firesale prices, and then rent them back to those who lived in them previously. This is the main game and plan of the Federal Reserve — to transfer not just money but assets from the masses to the elite few. It doesn’t hide this fact when you look at all the years of bubbles and busts the Federal Reserve created, starting with what they did to create the Great Depression. The poor make malinvestments with all their “easy credit,” buying overpriced stocks and homes and assets from the wealthy elite who are quick to exit the market and sit on cash.

There is a TON of cash floating around the world, just waiting to buy hard assets at fire sale prices. That money isn’t going away. Maybe millions of previous homedebtors will be “reduced” to renting for the rest of their lives, but this is an EXCELLENT lesson for their offspring — don’t be a slave to debt. Some will learn, most will repeat the same mistake. It’s a fact of life, one that was warned about since the Bible and before — 2000+ years of warnings about debt.

What will the Federal Reserve likely do, and has already started? They’ll start a bailout of various industries in hopes of “saving people their homes and retirement investments.” I put that in quote because it is a fictitious declaration, so don’t believe it.

Picture this: someone invents an item that cures cancer. It sells for $500 and it sells millions. Then people find out that this item does cure cancer, but it causes people to go dumb and blind. People withdraw from buying the item, and want to sell this useless item for whatever they can get for it. Quickly the cancer-cure prices fall, from $500 to $400 to $200 to $50. This is the market responding to an oversupply and an underdemand. Many people will lose their “investment” but some people may want this item because it can be used for other things, maybe drying the laundry.

Now, let us assume that the Federal Reserve decides to jump in and “save” the industry by loaning money to people who promise to keep buying the cancer-cure device for $400-$500. What happens is that our government, unconstitutionally and immorally, creates new money to loan to people who will prop up the cancer-cure device’s price. Eventually the market “recovers” as others find new uses for the device, and the device’s price may actually go up because of all the new money in the market, created by the Federal Reserve. Yet in addition to that market being “saved,” everyone else’s money is reduced in value because of the new money. If the market still crashes, even with the legal counterfeiting, we’d be left with the taxpayers holding the bag — forced to pay off the bailout over decades or generations with interest to — guess who — the elite who form the banking industry and investment industry in this country.

This is NOT a free market, not as long as the money supply is dictated by powerful forces such as the Federal Reserve and the U.S. government. This is terribly immoral, and makes it impossible for the poor and the middle class to stave off losing the value of their money savings because of all the new money created. No matter what the Federal Reserve does, only by restraining themselves completely can the market return to whatever equilibrium should exist based solely on supply and demand.

Remember this, voters: every Presidential candidate of every party wants to keep the Federal Reserve in power. That is, every Presidential candidate but one is lying to you about their ultimate goal: to continue to control the money supply, so they can prop up the profits of whatever elite-driven market controls that candidate should they win the election.

Beware of those who DON’T speak out against the Federal Reserve, the most immoral and unconstitutional agency in our fine Republic.