Monday, December 19, 2011

DEflation and your money gone

Deflation

After the inflation bubble, they pull in the lending and funds to create the collapse, of course under the right cycle to get maximum effect. The spiral starts again and as fear sets in more money is lost.

Here’s how it’s done: say Borrower A bought a house for $500,000 - at the top of the inflation boom (maximum printing of money) - and in the recession/depression, the house value falls 50% to $250,000; Borrower A desperately puts the house on the market and the banks lend $250,000 to the new buyer, Borrower B at, say, 10% interest rates. Borrower A has a $250,000 loss and will also have to pay late fees, the loss and the interest, making more money lost than the value of the original loan. If Borrower B goes broke then the same thing happens. The more that go broke the more money the bank makes, which incidentally explains why the banks continue to pay their executives huge bonuses during a recession – they profit from your misfortune, like the true parasites they are!

People paying interest on a mortgage may have an annual interest rate of, say, 8% and businesses have loans at 10%. Why do home borrowers have a cheaper rate? Well they don’t. ‘Per annum’ means once a year, but house buyers are paying monthly in advance, which is effective, a higher rate. When the banks receive 1/12th of the annual interest paid in the 12th month, then 1/12th in the 11 month and so on, the interest gives the banks more deposits to lend out to new borrowers. This is how banks make so much money out of nothing: and don’t forget all the fees and charges as well. Banks are only good for one thing, depositing money and earning interest, so they can lend to people who want debt.

Next is the first home buyer, to become the first home seller. They have borrowed with a 95% loan which has to be paid back with after-tax (nett) money, and the loan has been approved on the basis of two incomes, to get the maximum loan. The only people making money out of this are of course the banks, the developers, the builders - and the government through stamp duty and taxes. With increases in taxes, new taxes like the ETS (extra tax scheme), the home buyer will have more trouble paying off his loan, as all these increases are taken from his nett money - after he has already paid his income tax. The interest isn’t a tax deduction either. Of course with the increase in taxes, unemployment will go up, and many businesses will move to China and India - where you don’t have this nonsense yet.

The bank knows that there will always be a large number of bad debts - because the system can’t work. To recoup the loss, they just add a risk margin to those that can pay, and widen the spread between the depositor and the borrower. They can’t and won’t lose, but you can, if you have debt.

G-20

What our politicians are doing is inventing a way to control the world under a new world order, world government, world currency, etc, and there will be no better time to do this than in the next great depression between 2016 – 2020.

The governments engineer this by working hand in glove with the banks, and here’s how: the world stimulus (the printing of money) has only added more cash for the banks to have on deposit, no new lending has happened - in fact people now have to have larger deposits and better balance sheets to get loans, which is the tightening of credit. Now if the G-20 decides not give more credit, then debts will climb on existing loans on real-estate, stock market, cars, credit cards etc. The banks (= government) will then take your land for free because the debt will be larger than the asset value, as your assets keep falling in value. Once governments take all the land, they will become the new landlord, you will be a tenant, and we will be back to having much more socialistic countries as capitalism dissolves. People will be happy to have just food and shelter, then just give them a uniform (people like to belong) – just as Hitler provided to the German people in the 1930’s after Germany’s hyper-inflation in 1923. Then we will have a new dictatorship, a new Hitler, a new civil war.

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