Comptroller of the United States Warns of Pending Economic Disaster

posted by subz

I find it quite ironic that it was the Democrats who stood in the way of the big government Federal Reserve. It just goes to show how false the whole right left paradigm actually is. There is nothing "Republican" in the Federal Reserve. [Edited by Don W]

I disagree Subz, that your conclusion follows on your premise. I think this is a case of the “missing middle.” I also believe your reference to “big government” is misplaced. I usually think of the Fed as being part and parcel of the movement that resulted in the 16th Amendment and the essential changes in our nation’s financial policy. That in turn was mandated by the influx of millions of immigrants - 1870-1890 - and the intensive capital requirements of new industries such as rail, steel, retail merchandising and even oil. Many of the new industries had been sparked into being and hurried along by the great demands of the Union Army in the Civil War.

The 16th Amendment was proposed to the several states on July 12, 1909. That would have been in the term of Pres. Taft, the hand picked successor to Pres. Roosevelt. On February 25, 1913 it was certified as ratified. Woodrow Wilson took office on March 4, 1913. Times were changing. In that time frame, the Republicans were more progressive than any others but the post 1933 Democrats.

“The Federal Reserve System was created via the Federal Reserve Act of December 23rd, 1913. All national banks were required to join the system and other banks could join. The Reserve Banks opened for business on November 16th, 1914. Federal Reserve Notes were created as part of the legislation, to provide an elastic supply of currency . . “ See link below. From 1862 to 1913, a system of national banks was instituted by the 1863 National Banking Act.

A series of bank panics, in 1873, 1893, and 1907 provided strong demand for the creation of a centralized banking system. After the Panic of 1907, Congress created the National Monetary Commission to draft a plan for reform of the banking system. Senate Republican leader and financial expert Nelson Aldrich was the head of the Commission. Aldrich made an in-depth study of European central banks, discovering that Britain and Germany had far superior systems. Working with the banking community he developed a plan, but was unable to pass it because of anti-bank sentiment among Democrats.

It took the political clout of Democratic President Woodrow Wilson to get the bankers' plan passed over the objections of William Jennings Bryan. Wilson started with the bankers' plan that had been designed by leading expert Paul Warburg. Wilson had to outmaneuver the agrarian wing of the party, led by Bryan . . “ en.wikipedia.org...

in 1933, FDR finished the job begun in 1907, when he took the US off the gold standard, and created the FDIC - Federal Deposit Insurance Corporation - so that small depositors would not lose their life savings when the local bank failed. FDR “talked” the people into taking their life’s savings from under the bed and putting it back into the banks, thereby making capital available to resurrect the industry and commerce of the country. The FDIC - later joined by the FSLIC - cost the taxpayers nothing. It was and is funded by a levy on deposits paid by banks.

Just as in the FHA - Federal Housing Administration - made it possible for working people to buy a home, by guaranteeing the payment of the mortgage, so that lenders would not hesitate to loan 90% of the sale price. Sound fiscal policy had limited banks to loan 50% of sale price prior to the FHA. That loan limit was raised to 100% by the 1943 GI Bill. Which sparked the post war boom. In both cases, again, this costs the taxpayers nothing. There was a loan fee of 0.5% added to the mortgage rate, which went into a fund which would pay off any defaulted mortgage. Lenders - not borrowers - were secured! And etc. big government? Mmm? Big country! 300 million and growing.


[edit on 10/29/2006 by donwhite]

Back to privatization as a way to resolve the federal financial crunch. Privatization implies for profit to me. Unless the SSA is going to be handed over to a bunch of NPOs (maybe FBO's?). It doesn't make sense to try and make a profit off what is essentially a pension fund. Look how corporations have managed their pension funds, and you will see what I mean.

I see privatization as an effort by the feds to pass the buck and cover their butts. They have been ripping off the SS fund for so long now, and it is so far beyond repair for them, that they need to dump it on the private sector and let it go belly up there, where they will probably blame the individual account holders for making bad investments.

Privatization is a lie trying to cover up a scam. subz hit it right on the head in his first post, if you ask me.

posted by IcarusRising
I see privatization as an effort by the feds to pass the buck and cover their butts. They have been ripping off the SS fund for so long now, and it is so far beyond repair for them, that they need to dump it on the private sector and let it go belly up there, where they will probably blame the individual account holders for making bad investments.

So what you're saying is that it's gonna go belly up, it's just about whose going to get blamed? I would prefer taking some kind of action personally. If the government screwed it up, then take it away from them, it's a start. But we won't get that start because it's so much easier to sit around and play the blame game. Precisely why the head of GAO is sounding alarm bells.

What I'm saying is its already belly-up, and the politicians in DC don't want the tab to come due at their doorstep. Look at the age demographics in this country. The federal government has been "borrowing" (I say stealing) from the SS fund all the while the Boomers have been paying into it. Now that a large % of the population is entering or nearing the retirement threshhold, and there are relatively fewer workers to support the system, all of a sudden they want to privatize it. That's because it is going to operate at a significant deficit very soon, and they will no longer be able to steal from it.

The thing that bothers me is anyone who looked at birthrates in this country over the last 40 years and applied that information to the SS model would have been able to see this coming. The people who have done this to us, our elected officials, aren't stupid, they are just corrupt.

Again, what subz said makes sense, and throwing fears of another 9/11 at us if we pull back from occupations and operations overseas to secure our borders and repair our infrastructure is simple fearmongering. Our government policies and lapses did as much to bring on 9/11 as the terrorists did, and the politicians in DC have capitalized on the attacks more than anybody.

posted by IcarusRising
What I'm saying is its already belly-up, and the politicians in DC don't want the tab to come due at their doorstep.

Well, then things can't get much worse then right? Letting it crash isn't going to make some politician accountable all of a sudden.

Our government policies and lapses did as much to bring on 9/11 as the terrorists did, and the politicians in DC have capitalized on the attacks more than anybody.

Here we go again. Everythings our fault and if we just go sit in the corner that mean bully will leave us alone. Again, this kind of blame gaming is exactly why the head of GAO is saying these things. Do you have any other ideas that don't involve isolationism.

We are overextended. How does securing our borders and investing in our crumbling infrastructure equal isolationism? The two main threat avenues for terrorists into this country are our borders and international air travel. Why not secure those areas instead of traipsing all over kingdom come with our million member army trying (unsuccessfully) to catch OBL and end Islamic Extemism? Is what we are doing now working? It isn't, it is making things worse all over the world while it breaks the bank here at home.

Our elected officials caused this problem with the SS fund. I think they should manage their own solution to it without privatization, and that means fiscal responsibility.

posted by IcarusRising
Our elected officials caused this problem with the SS fund. I think they should manage their own solution to it without privatization, and that means fiscal responsibility.

I'm sorry, but telling Washington to fix itself, is just silly. If we don't trust capitalism, then I guess we have real problems.

HimWhoHasanEar;

You shouldn't trust capitalism, or rather, trust capitalism all you like, just don't trust the current economic system.

What America has is not capitalism. Capitalism can be described as many small similar producers, selling to many consumers. In this way the fair market price is established, via the invisible hand. What America has now could more closely be called a Oligarcy(sp?) where most of your products are produced by a few producers, thus being able to artificially control prices.

In other words, while America was held in fear of who/what is coming over the hills to militarily take your freedom way, the policians and businesses(The true traitors to America in this case) simply sold away your freedoms without so much as a bullett being fired.

Let me ask you, have you ever thought that maybe a dash of socialism might just be a good thing? Taking a look at all the top nations there seems to be a very socialist bias there. Maybe it has something to do with that whole liberal bias we know reality seems to have?

The US government has managed to maintain a AAA credit rating, which makes it very easy for them to raise capital, relatively cheaply. The market has greater faith in the US government than nearly any other corporation or institution. The smart thing to do is to invest this money in projects that will increase GDP, and hence income taxes returns.

Military expenditures provide utility to the US only insomuch as they ensure markets of the stability of the United States. However, way too much money is being thrown at the US military and yet it appears the US military is losing in Iraq. Besides, political patronage spending is out-of-control.

The other problem is the US doesn't really have anything to easily export. What can the US sell to the rest of the world? Will there be anything in the future. When US government investment goes into R&D and creating ideas, other countries can benefit just as much or more than the US. Infrastructure, health care, and education directly benefit just the US.

There is quite an easy solution to this problem of baby boomers leaving the work force...

Legalize the millions of illegal immigrants!

Originally posted by RetinoidReceptor


Legalize the millions of illegal immigrants!

And where the money is going to come from to pay for the ones that will take a ride on the system once they qualify to stop working.

I will side with Lou Doub on the death to our middle class America thanks to the way our political system works or rather has turned into.

[edit on 29-10-2006 by marg6043]

How funny that the US now has to borrow to other countries in order o keep on being functional with its blackhole budget. Seems like "Rebuilding America's Defenses" has revealed itself to be an onerous yet useless big project that goes nowhere... all this for the fanatical fantasies of war against terrorism, and of course for the big profits of war-profiteering corporations.

Now who's gonna be the US's main creditor? China... America's next big stand up enemy, who'll eventually turn out to effortelessly win against a US empire that's crumbling on its own...

You might have the biggest army in the world, and over 60 military bases everywhere, but you know, if you don't have the cash to play with all these toys, you're dead meat.

posted by waiting2awake
Let me ask you, have you ever thought that maybe a dash of socialism might just be a good thing? Taking a look at all the top nations there seems to be a very socialist bias there.

We have a dose of socialism in my opinion, note that the root word 'Social' is used in conjunction with Security to form the name of this program.

Oh, and we are THE top nation, so I'm not sure what looking at others would accomplish.

Originally posted by marg6043

Originally posted by RetinoidReceptor


Legalize the millions of illegal immigrants!

And where the money is going to come from to pay for the ones that will take a ride on the system onces they qualified to stop working.

I will side with Lou Doub on the death to our middle class America thanks to the way our political system works or rather has turned into.

Marg, the problem is not about the millions of immigrants, hypothetically, who would lose their jobs after having been given the same rights to work than other people in America, the problem is RIGHT NOW with tens of millions baby boomers who will inevitably retire in just a few years.

Immigration policy is far too restrictive in North America to provide an appropirate way to make this society survive as it is on the long term. America's growth is mainly the result of immigration, but it turns out there's a bunch of White baby boomers who decided some time ago that the US was "theirs", so now they are fighting by all means to keep it for themselves...

Originally posted by Echtelion

Marg, the problem is not about the millions of immigrants, hypothetically, who would lose their jobs after having been given the same rights to work than other people in America, the problem is RIGHT NOW with tens of millions baby boomers who will inevitably retire in just a few years.

Wait a moment I kind of lost you here, what are they becoming a problem? because they are ready to retired? but didn't they pay their taxes and pay their social security?

So tell me how can they be a problem, they paid their dues just like anybody else in the system while working.

[edit on 29-10-2006 by marg6043]

posted by echtelion
"Rebuilding America's Defenses" has revealed itself to be an onerous yet useless big project that goes nowhere... all this for the fanatical fantasies of war against terrorism, and of course for the big profits of war-profiteering corporations.

Defense spending as a percentage of GDP is below Cold War levels. So, the whole 'America should retreat and everything would be fine' argument doesn't hold water. We will defend ourselves!

I really don't believe all this gloom and doom about how the economies of the world will crash, etc. etc. There have been so many depressions/recessions/panics that I cannot count them on both hands. We recovered. There are hurdles to get over, but it isn't hopeless.

One of the reasons why I dislike so many on this message board is because so many belong on the streets of New York holding up a sign about the end times

Originally posted by RetinoidReceptor
I really don't believe all this gloom and doom about how the economies of the world will crash, etc. etc. There have been so many depressions/recessions/panics that I cannot count them on both hands. We recovered. There are hurdles to get over, but it isn't hopeless.

Do you think the majority of people who lived in the 1920s expected the economy to collapse? Do you think the Romans expected their superior empire to collapse?

Of course not. Another example is the 2nd World War, no one expected another World War after the first.

I am aware of your opinion and you are of mine, but can you give one example of a prominent person in history that expected the US economy to collapse, for instance an ex-Comptroller General?

Originally posted by Echtelion

Originally posted by marg6043

Originally posted by RetinoidReceptor


Legalize the millions of illegal immigrants!

And where the money is going to come from to pay for the ones that will take a ride on the system onces they qualified to stop working.

I will side with Lou Doub on the death to our middle class America thanks to the way our political system works or rather has turned into.

Marg, the problem is not about the millions of immigrants, hypothetically, who would lose their jobs after having been given the same rights to work than other people in America, the problem is RIGHT NOW with tens of millions baby boomers who will inevitably retire in just a few years.

Immigration policy is far too restrictive in North America to provide an appropirate way to make this society survive as it is on the long term. America's growth is mainly the result of immigration, but it turns out there's a bunch of White baby boomers who decided some time ago that the US was "theirs", so now they are fighting by all means to keep it for themselves...

First off the millions of imigrants would not do anything good for us... they are low wage peoples, middle class, lower middle class, at best. Taking in millions of poor and meeting ends meet people is never good for the population, not if it happens to fast.. it stiffles the economy and the budgets.

Our problem is we have to many people.. 300,000,000 people is far bigger then any single European country.. and our tax income has not yet caught up to the population.. our next problem is we rely on consumer spending to make the nation rich through taxing th corporations that make the profit. Yeah, that makes sense, lets make the people spend their savings on usless junk and gasoline and make them poor, hardly able to make ends meet just to pay for a few more usless programs.

Which brings me to the biggest proble, we have large social programs and low taxes. To keep up with the amount we actually spend on these stupid worthless programs the tax in this country needs to go up quite a bit.. which hurts consumer spending which shuts down our service driven ecconomy...

You have voted Valhall for the Way Above Top Secret award. You have two more votes this month.

But don't you dare touch the $1200 a month of social security income my parents get unless you stop the "sink-hole on a lie" going on halfway around the world first. Because I'd a lot rather my tax dollars go to take care of those among us who need us, than to go to kill my neighbor's son or daughter.

You don't need the vote but you got it anyway, just for having a sense of perspective.