Major Frauds of Humanity

Increased mortgage debt just in past few years allowed borrowers to double or triple the prices of houses relative to income:

http://www.mortgageguideuk.co.uk/blog/house-prices/house-prices-income/

http://www.ritholtz.com/blog/2009/02/us-existing-house-price-median-family-income/

And to cause the prices of houses to increase by ten-fold:

http://www.econbrowser.com/archives/2008/02/house_prices_fa.html

Thus stealing 50% - 90% of the savings of those in the market to buy a house with their savings.

Even those with savings were enticed to participate in borrowing, because to deploy their savings in a real estate purchase meant losing 50 - 90% of the savings relative to before the debt bubble.

It is denial to say that those who borrow and spend before they work and save, don't know in their hearts that they are stealing from those who work and save before spending. We are spoiled brats, because the MSM has told and government schools have educated us that this guilt in not our responsibility, because such bubbles are "unintended consequences" or are the fault of "lack of regulation" or the fault of greedy bankers (Wall Street). Baloney! This result was not a random event, it is mathematically guaranteed that when borrowers create loans out of thin air, that they will drive prices up and steal from savers. Every human innately knows this, but is on some sort of drug of denial. Our forefathers (at least in USA before 1900s) would cringe and probably take us out to the woodshed for good whipping. My article was more of a personal confession and call to all of humanity to come back to reality.

Why? Because as Howard Katz and others have explained, without justice, the misuse of concept of "love", "compassion", and the denial of reality, ends up in unmitigated disaster of epic and even genocidal proportions:

http://thegoldspeculator.blogspot.com/2009/12/real-love.html

http://goldwetrust.up-with.com/technology-f8/psychology-t123.htm#3354

(note Katz is wrong about Jesus, who did not preach unconditional love, but rather "came with a sword" and taught that love is possible only via justice)

If we don't admit and stop stealing from ourselves, we are going to end up killing ourselves as happened in the examples in history provided at the links above.

1John 1:8 If we say that we have not sinned, we are fooling ourselves, and the truth isn't in our hearts

1John 1:9 But if we confess our sins to God, he can always be trusted to forgive us and take our sins away

Matthew 7:2 For in the same way you judge others, you will be judged, and with the measure you use, it will be measured to you.

In the 1800s we had a different system in USA. Gold and silver were legal tender, and so the loans were created as fractional reserves by banks not revealing that they had more loans outstanding than deposits. This would result in frequent bank runs that would bankrupt the depositors. This made is very clear that borrowers were stealing from depositors (those depositors who put their money with banks that were doing fractional reverse lending). So in that era, people were very well aware that borrowing was a theft if fractional reserve banking was used. So what did the banksters do? They increased the fractional reserve lending and caused massive booms and busts in the 1800s, eventually in early 1900s leading to the adoption of fractional reserve lending as the legal tender system guaranteed and backed by the government and federal reserve. This institutionalized the theft and gradually people forgot that it was stealing and become intoxicated with stealing. Why work when you can steal?

What did I do? I moved to a 3rd world country that did not (at the time) use mortgage debt, and thus I was able to rent a basic 2 bedroom house (near the beach) for $50 per month in late 1990s (now $100). I could do this because I could outsource myself as the owner of my own software company. Most people did not have this option, so they had no choice but to either rent or take a mortgage (or change their career and lifestyle and move to low cost or rural area). During the times I was in USA, I chose to rent (other than a very brief and aborted attempt in 2001 to buy 5 acres near College Station, Texas on an owner financed short-term loan).

Some have given me the feedback that people think they pay the money back with interest, that they have not done any thing wrong. Well that is precisely why I wrote the article. The implication is that I am being too harsh by using the word "thief" since the people didn't have an intent to steal. Since when did intent become an legal excuse not to steal? Stealing is stealing. If something of yours is in my possession then it doesn't matter how I got it, it is stealing. Legally I would have to prove I didn't steal it (e.g. prove it fell through my roof or was planted there). All of us know innately that when we borrow and spend, we have cheated relative to those who work and save before they spend. Our forefathers knew that, as they used to banish debtors to Florida and Australia. What has happened is denial and addiction, analgous to having sex with many ladies. We know in our heart that it breaks their hearts, but it feels so intoxicating, that we rationalize it and feel no guilt. I am here to confess guilt and hopefully wake people up from the MSM mind programmed debt addiction and loss of innate guilt.

I knew from as early as I could remember that debt was bad. I remember working and spending what I earned from age 13 (cutting grass in hot & humid New Orleans), and feeling so darn guilty the first time I got a credit card and took a student loan. I knew my life was going to crap, and that was way before I learned about how money works. It was just innate.

1. I wrote that all of us are thieves for stealing from each other. That is a fact. I am not writing about any intent.

2. Someone wrote I was not following the scripture about judging, because I can not know if their intent was to steal. I did not originally write about any one's intention. If I had said that was their intent to steal, then I would indeed be judging something that I can not judge (Matthew 7).

3. I am also retorting by meaning to say that if there is no guilt (in private between each person and their own God/conscience) then there is no confession. Someone was taking my article as a public attack on them, then accusing me of something I did not write, by arguing that the definition of thief to include intent.

4. Because someone attacked me (and probably because I didn't realize to retort with the above logic), I then confessed some things, meaning to say I should not have done that, because I only need to confess to my God/conscience and to any victims of my sin.

5. Also I wrote that I don't want to be an elitist. I don't want to think of myself as smarter than others. I wrote a confessional about the fraud we all do. It was a loving call to get all of us to break free from this jail we are creating for ourselves. Please don't twist that into being not humble. I have given all of myself to this. And my words were not judgmental at all, but rather a statement of fact and compassion. Just imagine if all of us admitted that we are thieves and felt guilty enough to stop! What a wonderful world it could be.

I had written in this article against insurance:

"...But they have no way to know how much to pay out, unless they can predict the future of how many will die before 35. Even the best actuarial statistics can be subverted..."

Some proof:

http://www.marketoracle.co.uk/Article21718.html

"...But other studies that adopted lower discount rates have found liabilities may actually be 75 percent to 86 percent higher than reported. As a result, taxpayers' role as insurer may be much greater than anticipated...

...state and local pensions are underfunded by $3 trillion...

...understand that in most states the law will not allow for adjustment of pensions. Taxpayers are completely on the hook..."

This is because the insurance benefits were calculated with an interest (discount) rate, but no man can predict the future. Nature will rip to shreds any actuarial estimates.

Usury forces socialism

======================

"In a system without fractional reserve banking, do you think it is morally OK to borrow money? For example, internet sites where savers (willing to lend out fully paid for funds) and borrowers are matched, without using a bank."

If a guaranteed interest rate is charged, then I think it is mathematically immoral, because no human can guarantee the future. The Bible tells us not to charge usury when we lend within our community.

Usury is mathematically impossible without fractional reserve banking, unless it is below the aggregate growth in nominal GDP, and on an individual loan basis, some borrowers succeed and others fail.

No the best is investment. If you really like someone's business plan, then invest in it. Guaranteed return is an abomination and impossible. If you are so sure of the business plan, then investing is more lucrative any way. And if you are not so sure of the business plan, then extracting a guaranteed return is a lie to yourself (and then you will use the force of socialism to force society to pay for your lie).

Also when there is minimal borrowing (i.e. a gold standard), then the value of gold appreciates (deflation) as in the 1800s, thus you earn a guaranteed return just for holding money.

Also remember the rule of speculative investing and diversification:

http://www.caseyresearch.com/displayCwc.php?id=32

Which is you invest 10% to earn 100% and double your net worth. If you lose 10%, you still have 90% of your net worth, and with deflation, you are back to 100%. That is the way it apparently was in the 1800s.

I see you buy into this typical American idea that governement is bad. As beeing from Switzerland i think our governement is doing rather well because it is under direct control of the population. The size of gov increases because of the increase of complexity. At some point it becomes self defeating and we will probably experience a 'deflation of complexity'.

Yes all government is bad, as is other forms of centralization, even technical ones as I am pointing out about the future of the internet to the people like me who help create the standards that built the internet:

http://www.ietf.org/mail-archive/web/hybi/current/msg03303.html

Switzerland can do that because afaik it has a small population relative to huge economy as a global banking haven, just as afaik Sweden can do that because has a small population relative to huge exploitable natural resources. But USA and Russia have huge natural resources too. Eventually societies are able to mis-allocate more than 100% of their resources (capital) via the socialism of government. Agreed Switzerland will eventually succeed in doing so too and suffer an implosion of the illusion that capital can be shared successfully (because it creates the situation where people think they earned what they have when in fact they stole it from each other).

Regarding prior comments and points in the article about insurance, which I know weren't completely convincing, I have a more convincing example below.

No (insurance) statistics can predict black swans (long-tail events). Here is an example of how this financial crisis might possibly impact the design of HTML5 WebSockets statistical design assumptions:

http://www.ietf.org/mail-archive/web/hybi/current/msg03468.html

Thanks.

"What is the difference in a bank hiring an armed guard to protect against robbery that might only happen once in 40 years and someone buying insurance against loss in shipping might only happen once in 40 years?"

I realized you asked Jason, not me, but he already told you in his prior post. Insurance is a business to make money, so they will charge society more than the cost of the actual losses. People think this is okay, because if something happens seldom, then it is better to spread that loss around to many people. But the problem is that people use insurance for things that happen to all of them regularly, e.g. shipping packages, medical, or death insurance. Thus it is guaranteed loss and failure, because the insurance company extracts from that pool (significantly), and the insured people are disincentivized from reducing losses, thus losses proliferate. Plus the insurance company raises your individual premium once you start to take more than "your share" of the paybacks (which will always be less than you paid in).

Also the problem with insurance for very rare events, is that the insurance company is going to take its profit much sooner and when the rare event comes, there won't be any money to pay for it and increased premiums (for everyone) will have to go to pay for it (by taking out a loan interim time, which requires a fiat system, which requires theft money, which violates the 10 Commandments, etc).

When you hire a security guard, you decide what is more cost effective. Big difference.

I suppose I would have to write a few chapters in a book with many examples and math, to explain it well. But then the readers would yawn and fall asleep.