"A heavy progressive or graduated income tax."
2 Communist Manifesto,
Karl Heinrich Marx
"Why do governments claim consumption
must be financed by debt?
The answer is really very simple. The wealthy
increase wealth by lending.
They use a
Ponzi scheme known as
fractional reserve banking.
When debtors cannot meet their
obligations, assets are
acquired by the wealthy at fire sale prices who then become even wealthier." -
economies existed long before money and coinage.
economies were agricultural.
Grain was the means of
payment paid at harvest time." - Michael Hudson
Sumerians and Babylonians
paid their beer tab at harvest time.,
, when was nice and fresh.
ale-woman then paid the palace or temple for the grain on the threshing floor;
an advance of wholesale beer for her to retail during the year.
Peers of Hammurabi recognized debt built to
a point it was unpayable.
Debtors unable to pay fell into bondage to
the palace or temple and, forced to work palace or temple land, ultimately lost
their own land.
Babylon the flight of debtors from the land drove this reality home.
Clean Slate proclamations were part of the community's
Rulers recognized aid was required for people who
were sick, widows who lost their husbands or other factors that obliged them to
run up debts.
Rulers would then
cancel debt to restore
the status quo in a Jubilee
"The Greeks and the Romans learned about interest-bearing
debt from Middle Eastern
civilizations, but failed to institute Clean Slate debt amnesty.
Their failure has been an albatross around the neck of Western
economies ever since." - John Siman
"The world's biggest economies are reaching
an inflection point
where the growth in debt loads is becoming unsustainable." - William Pesek
"Debt is the source of all power and wealth
for the central banking system as
they do not actually produce any tradable good, such as industry; nor do they
provide any necessary service, such as government.
Interest on debt is
the source of income and authority for the central banking system, and thus, it
needs to continually advance credit and expand debt.
In Marxist theory,
the nature of accumulation
holds a dual character.
One is known as accumulation by expanded production, which, since
1864, has been mostly concerned with
Money is made through
extraction of fruits of the
production of labor.
The other nature of accumulation is
accumulation by dispossession, which is
usually framed in terms of relations
between capitalist and non-capitalist.
This is accumulation derived from
dispossessing someone of something.
Atlantic slave trade was an example of
accumulation by dispossession, as Africans
were dispossessed of their lives and freedom.
Colonialist resource extraction
dispossess' a nation of it's resources.
would be helpful to expand upon Marx's ideas of
dispossession in regards to the central banking system.
banking represents an example of accumulation by dispossession.
Money, loaned at interest which debtors are
never able to fully repay, dispossesses them of freedom
through interest payments and
Debt is just another word for slavery,
therefore, the central banking
system itself, functions through a system of accumulation by dispossession.
Conventional understanding of
dispossession describes it as
an interaction between
capitalist and non-capitalist modes of production; the
capitalist mode will
dispossess the non-capitalist mode of
the pinnacle of the
capitalist system and the primary
source and avenue of its
power, is an interaction between
central banks and ALL modes of
production including those of
ALL the ecosystems of
Industry/commerce, governments/nations, and
individuals/people, are ALL dispossessed of freedom
through debt bondage." - Andrew
Fannie Mae, Freddie Mac and Sallie Mae
1938 Fannie Mae, the
Federal National Mortgage Association, is founded as a government agency
as part of Franklin Delano Roosevelt's
New Deal (an extension of Herbert Hoover's New Deal),
in order to provide liquidity to the mortgage
1938 to 1968 Secondary mortgage
market in the US is monopolized by Fannie Mae.
1968 Fannie Mae is converted into
a private corporation to help balance the federal budget.
Fannie Mae at
one time is the ninth-largest business in the world according to
The Government National Mortgage Association, Ginnie Mae, is
established to promote home ownership.
1970 Emergency Home Finance Act is passed
to provide competition in the
secondary mortgage market, and to prevent Fannie Mae from continuing to
have a monopoly.
charters Freddie Mac as a
private corporation to compete in this same market.
Ginnie Mae begins
creating and guaranting mortgage-backed securities.
securitized as Ginnie Mae mortgage-backed securities (MBSs) are insured by the
Federal Housing Administration (FHA), which typically insures mortgages to
first-time home buyers and low-income borrowers.
1972 Sallie Mae, the Student Loan
Marketing Association is founded as a government sponsored enterprise.
The coorporation remains the country's largest originator of federally
insured student loans.
"The dirty little secret of the guaranteed
student loan market is how concentrated it is: only 32 lenders hold 90% of the
The Education Department has found that at about 300
colleges one lender controls 99% of loan volume -
essentially holding a monopoly on those
campuses" - Stephen Burd
1989 Under the
Financial Institutions Reform, Recovery, and Enforcement Act
Freddie Mac becomes a publically
Lenders of student loans are specifically exempted from the Fair Debt
Collection Practices Act.
1999 The statues of
limitations are removed from license debt
created from student loans.
Student loans are now never forgiven
Student seeking loans are not allowed to shop loans;
Student loans may be refinanced only once,
if interest rates drop the borrower will
be stuck with the original rate without an
interest rate swap.
Defaults are typically charged 25% of the loan value.
loans are also exempt from "truth in lending" regulations and rules that
require lenders to explain fees and interest rates.
collection rights include the right to garnish
tax refunds, Social
Security payments and disability payments.
2000 Sallie Mae
starts its Opportunity Loan Program.
A lender hands a college a
fixed amount of private loan money which the college then lends to students
with credit problems for higher rates with less consumer protection.
The college then promises to make the lender it's exclusive provider of
loans backed by Sallie Mae.
monopolizing a captured
market through kickbacks.
Sallie Mae denies
but agrees to pay a $2 million fine.
Mac hires the lobbying and PR firm DCI Group for a "stealth lobbying
DCI did not file lobbying reports on the contract;
Freddie Mac executives
referred to the lobbying campaign as their "stealth lobbying campaign."
2006 Hank Paulson nationalizes Fannie Mae and
Fannie Mae pays a fine of $400 million for alleged accounting
manipulations and lying to investors. Earnings are reduced by $6.3
Freddie Mac is fined $3.8 million for illegal campaign
contributions arranged by Freddie Mac lobbyists including former House Speaker
Newt Gingrich, who recieved $300,000 to push for increased
deregulation, and former Senator Alfonse
Freddie Mac agrees to settle lawsuits stemming from a $5
billion profit reduction restatement of 2003 earnings.
Freddie Mac makes
"six-figure payments to 52 outside lobbying firms and political
After nationalization, Fannie and Freddie own 90% of US
Private equity group led by JC
Flowers that has sought to buy out Sallie Mae informs Sallie Mae that if
reductions in subsidies
pending in a legislative bill are passed by Congress then the sale would be at
George Walker Bush requested a reduction of
subsidies to Sallie Mae of $16 billion.
The House approved of a measure that would lower subsidies by $19
billion over five years.
subsidies = no deal.
September 6, 2008 The director of the
Federal Housing Finance Agency (FHFA), James B. Lockhart III announces
his decision to take Fannie Mae and Freddie Mac into conservatorship run by
Over 98% of Fannie's loans were paying timely but $270 billion in
loans that Fannie Mae had purchased or guaranteed between 2005 and 2008 were
now considered risky.
Fannie Mae and Freddie Mac each had a positive net
worth as of the date of the takeover.
The takeover was triggered by
credit default swap derivative
In credit default swap
parlance this is termed a 'credit event'.
It triggers the settling of
outstanding contracts for the derivatives,
which are used to hedge or speculate on the
potential risk that a incorporation will default on its
default swaps are essentially insurance policies covering the losses on
securities in the event of a default.
Financial institutions buy them
to protect themselves if assets drop in
It's like bookies
trading bets, with banks and hedge funds gambling on whether an investment
(bundled subprime mortgages) will succeed or fail.
Swap related provisions of Gramm's bill - supported by Fed
Greenspan and Treasury
secretary Larry Summers - a $62 trillion
market (nearly four times the size of the entire US stock market) remained
utterly unregulated, no one made sure the banks and hedge funds had the assets
to cover the losses they guaranteed." - David Corn
Fannie Mae and
Freddie Mac had approximately $ 1.5 trillion in bonds outstanding, and since
the market in credit default swaps is not
public, there is no central reporting
mechanism to verify how many credit default swaps are linked to those
Fannie Mae unveils the HomeSaver
Advance plan to provide "foreclosure prevention assistance to
distressed borrowers" to avoid increased losses of as much as $2.4 billion
in credit default swaps.
71,000 cash advances to forestall foreclosure with an average value of
$6,500 for a total of $462 million.
In spring 2009 Fannie Mae valued
those loans at $8 million.
"Whatever credit defaults
are in theory, in practice they are mainly side bets on whether some
incorporation, or some subprime
mortgage backed bond, some municipality, or even the US government will go
Call it insurance if you like, but it's not the insurance most
It's more like buying fire insurance on your neighbor's
house, possibly for many times the value of that house - from a incorporation
that probably doesn't have any real ability to pay you if someone sets fire to
the whole neighborhood." - Michael Lewis & David Einhorn 01/03/08
"On September 7, 2008, the Federal Housing Finance Agency
(FHFA) placed Fannie Mae and Freddie Mac, two government-sponsored enterprises
(GSEs) that play a critical role in the US home mortgage market, in
As conservator, the FHFA has full powers to control the
assets and operations of the firms.
This means that the
US taxpayer now stands behind
about $5 trillion of GSE-issued debt." - Mark Jickling, November 24, 2008
"When Fannie Mae and Freddie Mac were taken into conservatorship, they
were leveraged at an eye-popping
100 to 1." - Mike Whitney
Franklin Raines, Bill
Clinton's White House
budget director, is accused
by the Office of Federal Housing Enterprise Oversight (OFHEO), the
regulating body of Fannie Mae, of abetting widespread accounting errors based
on the overstated earnings estimated at $6.3 billion.
announced a suit against Franklin Raines in order to recover some or all of the
$50 million in payments made to Franklin Raines.
Fannie Mae chief
Franklin Raines, chief financial officer Timothy Howard and former controller
Leanne Spencer agree to a $31.4 million
David Kellermann, CFO of Freddie Mac, commits
asks for $31 billion in additional aid after posting a gargantuan loss of more
than $50 billion in 2008.
The loss' were driven by $13.2 billion in
hedged trades, $7.2 billion in credit losses from the declining housing market
conditions and $7.5 billion in write-downs of the value of its
mortgage backed securities.
incorporation also takes a charge of $8.3 billion for now-worthless tax
"Madison Avenue helped drive the expansion with use of credit
There was a lot of money to be made by collecting fees for loan
origination and debt service, and the largest banks wanted in on the action.
The 1980s was the age of
a paradigm shift
in American politics.
The US was transformed as the profit
motive supplanted the public good.
The rich were taking it all for
themselves and letting the good times roll and everyone who wasn't rich wanted
to be or act as if they were rich.
Advertisers suggested people could
purchase the 10-day Caribbean cruise or expensive diamond ring that was once
restricted to those with higher income levels creating
the illusion that debt was equal to
wealth." - Paul C. Wright
"In times past,
bankruptcy would have wiped out the bad
The problem with debt write-offs is the very wealthy hold
most of the savings, so the government doesn't want to have them take a loss.
It would rather wipe out pensioners,
industrial companies and foreign investors.
So toxic debt will be kept
on the books and the economy will slowly be strangled by debt deflation." - Michael Hudson 06/08
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