The US Housing Bill 2008: Part IX

The Peter G. Peterson Foundation is now marketing a new documentary called I.O.U.S.A. I have only seen the trailer. Based on my reading the website and watching the trailer, I'd say that it is slick, Orwellian hogwash.

If the national debt was almost ten trillion dollars before the housing bill and, if my estimate is right, approximately ten trillion dollars has been stolen since 1997, then do we have a debt problem or do we have an aristocracy problem?

One of the beauties of I.O.U.S.A. is that all the luminaries interviewed as experts on this “debt problem” were in a position to stop or warn us that the $10 trillion dollars was leaving. They did not.

The implication is that the American people are slobs who are irresponsible and wrecked the place while the leaders who ran the country were helpless to do a thing about it.

Let’s set the record straight:

• If energy technology had not been suppressed for the past 100 years, our energy costs would be a pittance compared to what they are now, and our savings would be much higher.
• If countless medical discoveries had not been suppressed, we would not be looking at such ridiculous costs for health insurance, Medicare and Medicaid.
• If government had produced proper financial statements as required by law and had also produced such disclosure contiguous to Congressional districts, the housing bubble and a lot of other bubbles could never have happened.
• If the currency and monetary systems had been run in the manner envisioned by the founding fathers rather than by private bankers, we would not have any debt.
• If the American media and government had communicated honestly about our problems for the past few decades, we would not be in this pickle.
• If wasteful defense spending and disappearing money had not defined the Pentagon for quite some time, things would look very different.

I once had a wonderful employee when I was the Assistant Secretary of Housing. He told me that the way to clean up a big mortgage mess was to view the problem as the solution. He said, “In the destruction of the old, let there be the creation of the new.”

America does not have a debt problem. We have a political problem. We have created a system where secret governments can steal and have Congress, the U.S. Treasury, and the Federal Reserve replace whatever they stole. The theory is that the end of the world will come unless we bail them out. That is not true, for all the reasons you learned in kindergarten about letting bullies have their way.

The implication of the trailer for I.O.U.S.A. is that we must turn to these great financial leaders to lead us out of our mess. But if they were truly leading, how did we get in this mess in the first place? How did billions of fraudulent securities get sold around the world? Why were several generations of Americans fraudulently induced to take on student debt and mortgage debt they could not afford?

In the destruction of the old, let there be the creation of the new. This begins with seeing the housing bill as it is.

When I finished reading the housing bill, I realized that it was more economic—on a risk-adjusted basis—for a young person to learn how to build a home than to manage dealing with the current homebuilding and mortgage finance industry. Mind you, I say this as a former Assistant Secretary of Housing. Shortly thereafter, I recently spoke to an attorney whose son was leaving for boarding school. She indicated that she was having similar thoughts. Why shouldn’t his education include learning to build and repair his own home?

I also realized that the rich resources that the passage of this housing bill makes available would now be available for currency and market manipulation. Sure enough: dollar up, gold down.

(See Silicon Investor Dollar Intervention Chart.) For some temporary period of time, the price of everything that has no inherent value is rising and the price of anything that has tangible value is falling. This, however, is temporary. As someone wrote recently about the additional write-offs that one of the large banks was taking,whatever money you put into these things, it just disappears. They will be back for more. They can’t create wealth, they just consume it.

If there is to be any blessing in this housing bill, perhaps it will be to so offend, so disgust those of us who are awake that the process of withdrawing from the old and reinvesting in the new models will accelerate. And maybe the smartest and most creative among us will be willing to invest the time and energy it takes to reinvent a model that incorporates what we like to think are traditional American values. These are the values that are enduring and make us proud to be Americans still. There is no hint of these values in the housing bill. There is, however, an abundance of them in the hearts and minds of the people.

In the destruction of the old, let there be the creation of the new.

~ Please post comments to this article at Catherine Austin Fitts' Blog.

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