Sunday, April 12, 2009


Milton Friedman may be rolling over in his grave in excitement but in the meantime I received part one of a video from a friend on an international economist named Adrian Salbuchi- he said don’t walk, run and get your money out of the bank, buy anything that you like of value in your culture, don’t leave it to them (the financial institutions) to leverage with your money. “Take your money out”.
Based on what I can remember in finance class Friedman was the father of the Argentina economic currency problems. Salbuchi says we are seeing the whole Global financial system melting down due to extreme capitalism that Friedman wrote about. He says that Argentina has gone through this very flawed financial model three times. He says when the Finance system has usurped the real economy, trouble will always follow.

Salbuchi says that “capital finance versus economics is a tumor and it has matisticized in the United States. It will implode on itself, guaranteed. Maddoff perpetuated a Ponzi Scheme and he is certainly not the only person who has done this, he is just one more prolific and most “revealed”.

Salbuchi continues that Maddoff and Associates discovered the flaw in the capitalistic system, took full advantage of it, and became not only greedy but he became greedy with other people’s money. Salbuchi says that a pyramid has a base of four sides. He exclaims that the first side in the pyramid is called the “Planned money inefficiency side” which is determined by the State (or government) and is based on legal tender. The planned side is the actual value or face value of the item being placed on the market. The US naturally does this by the instructions of the Federal Reserve Bank which isn’t a federal reserve or a bank and the US Central banks. The money is supposed to be equal to the items being exchanged. He moves on . . .

2nd side of the pyramid is “base private money”. The private banking system exerts power over the bank. It will always be fractionalizing compared to the reserve system with huge interest being charged on the money that is being borrowed against. The down side of this system is the bank can determine at what level they will charge the individual, institution or corporation for the money needed. Often this percentage or interest rate is based on the demand of the market for money. He adds . . .

3rd side of the pyramid is called the “funny-money side”. The objective is to do everything by debt, as long as the banker or other financial institutions are able to determine the individual, institute or corporation’s worth. The amount of money being issued will vary according to the borrower’s proven past experience or wealth. The system’s down side is to keep the consumer in debt and hand them credit. If the government has to do anything here, it assists the banks in increasing the indebtedness of its citizens with the banks. If the individual is insisting upon having certain services and products then the bank will allow the individual to have the money based on their future ability to pay the money back or knowing that the individual has something else in exchange for the amount of money being requested. Being that the consumer has the opportunity to go to more than one institution for the funds, the consumer must remember that “they will have to pay it back, someday, some how”. The down side to this part of the system, the individual or institutions may be greedy and be requesting more than what they can afford, leading to bankruptcy and the same bank having the ability to buy back their assets for penny’s on the dollar.

He continued that “You may remember the old adage, your eyes are as big as your stomach. With this ability, the financial institution is in the position to sell the items seized to their more profitable debtors who can afford to buy the seized items in bulk. The indebtedness will also keep pushing the interest rates on top of the actual money that was borrowed.

What I have learned is that 20 years ago there wasn’t a derivative market. Some were called swaps. By September 2008, there were $531 trillion dollars in derivatives that equates to 10x’s the world gross domestic and the American base is 40x’s America’s world gross domestic product.

Salbuchi says that even with Obama’s best intent, “There is no way that Obama can be solve this crisis”, because the product and services are not available to fill this inflated gap, Obama can only hope that people and institutions go back to saving, utilizing their assets with great caution and that slowly institutions who have borrowed extremely high to their means, dissolve, and fade away. The problem Salbuchi says with this concept, is that the borrowing is so gigantic, the indebtedness is so incredibly complicated and interactive, that no one in the American government is willing to say so. So, the bottom must be found to develop a “zero”. We can start from some semblance of zero and rebuild with prudence and certainty, however when we know the banks, Federal Reserve and corporate leaders aren’t willing to be ethical or provide the truth where do you begin?
The 4th side of the pyramid or he calls the “privatization of the channels for the private sector”, is when the market gets to the point of exploding on itself and collapses completely. This is when socialization comes in, the government lends from the Federal Reserve bank, central bank and individual taxes are heavily utilized to match the market requirements.

Salbuchi says that Argentina has gone through this process three times and they know the effects of the “great Ponzi scheme”, it will lead to a run on the banks. The devaluing of the currency, the changing of the currency (to wipe the past away) and to reissue currency.

Every since Reagan there has been a cabal of individuals who have been trying to take over the privatization of American markets. Salbuchi believes, they had already taken over the banks, go do your homework on how the Federal Reserve Bank was acclimated with Roosevelt in the early 1920’s he suggests. “Be mindful of where the economic stimulus package funds are coming from,” he offers.
An Argentine opinion on the Global Financial Crisis, is basically describing the whole Global Financial System, which is only one vast Ponzi Scheme. You get yours before the person down the food change get’s theirs is what I gathered from the video’s Part one. What I concluded from all that I have read is to make sure I am financially solvent, that I am not in debt at all and if I do have debt, that it is not in the form of high interest credit card loans. If I have any high interest loans, try to pay them off immediately and with my decent credit, find a lower interest consolidated loan and don’t miss any payments. This is how the rich get richer!

Part Two:

When you finish watching these let me know what you think . . . Minerva

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