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The Middle Class's Rebuttal Speech To State Of The Union Address

Continuing applause

Thank you, thank you, thank you!

Fellow citizens, distinguished guests, President Obama, and members of Congress.

I am the middle class and small businesses. We don't ask much from our government. Most of us have worked hard to be self sufficient. Our children volunteer to fight for our country and yours and our freedoms.

We just want a fair shake from our economy, and economic policies that allow us the opportunity to succeed.

What has happened in the last two years has left many of us in a desperate situation.

Millions of us have been left out of the economy's recovery process. We have not been able to restructure our credit obligations like big businesses, and the federal government have done. Because of this, we have lost our jobs, businesses, and our family homes.

I am speaking to you today because our economy is having trouble providing a reasonable standard of living for many of our citizens.

The American Dream of a better future for our posterity is disappearing from America’s landscape. It is being replaced with foreclosure signs.

Today I want to present to you an alternative to federal government deficit spending stimulus programs. These programs, used by both the Democrats and Republicans, are putting our children, and great grandchildren in debt. The debt will ruin our posterity’s economic future. The terrible thing about this situation is that most of deficit spending by the federal government is unnecessary.

If the national debt, and trade deficit continues to grow it will bankrupt our economy.

The American middle class has lost a huge amount of their disposable income due to the credit crisis of 2008.

The middle class is moving down the economic ladder, and are becoming government dependent. This is increasing all of our local, state, and federal government’s deficits.

The tax base is deteriorating for local, state, and federal governments.

The Federal Government is deficit spending to stimulate the economy. Deficit spending by the Federal Government is not the correct solution for our economic problems.

If done correctly, lower starting mortgage interest rates, and a principal reduction plan would allow our economy to recovery with less money creation than with deficit spending programs.

Deficit spending stimulus programs will create inflation in our economy. Inflation will once again be followed by a recession, if we don't change our economy's guiding policies.

We have been destroying our small businesses, middle class, and our economy with these Gloom, Boom and Doom economic policies.

President Obama: Not a word about the foreclosure crisis in your State of the Union Speech. Why is that?. Solving the foreclosure, and underwater mortgage problem is the solution to the high unemployment rate.

I am speaking to you today, President Obama, because you, and Congress are making a major mistake in your plans for economic recovery.

There is still time to correct this mistake if we join together, and create a better future for our children, and grandchildren.

The deficit spending stimulus, and foreclosure reduction programs that you, President Obama, and Congress enacted over the last two years have not worked as well as you had hoped to improve our economy.

We have added trillions of dollars to our national debt, and have not lowered the unemployment rate by very much, or stemmed the ever-increasing foreclosure rate.

Many economist and political representatives argue that we must reduce the unemployment rate first to solve the foreclosure crisis.

This is wrong. It is the other way around. The foreclosure, and underwater mortgage problem must be addressed first to improve the unemployment rate.

Recovery will come from the middle up to the top, not from the top down. Banks do not create demand, people do.

When the economic crisis occurred, millions of people lost their confidence, and disposable income. This is what had to be repaired first, not roads, and bridges.

Aggregate demand, and people's confidence in the future must be increased to have an economic recovery. Businesses do not hire people until they see more people willing, and able to purchase their products, and services.

The federal government, and the Federal Reserve have tried to increase aggregate demand by increasing banks reserves, and with government job creation. Increasing banks reserves did not work to increase aggregate demand, because the money is not being lent to Main Street. It is being lent to Wall St., and the federal government to fund its deficit, which is causing the stock market to go up, and commodities to increase in price.

We need to create a mortgage with new terms that increases the middle class’s confidence and disposable income to cut the federal deficit, reduce unemployment, solve the foreclosure, and underwater mortgage problem. The new terms must also be acceptable, and beneficial to investors, and public and private financial institutions, or they won’t embrace it, and offer it to the public.

The new mortgage terms must be made available to all primary homeowners, with or without an underwater mortgage to have the stimulating effect we need to have a broad-based sustainable economic recovery.

Underwater mortgages will have their principal balances reduced monthly equal to an additional 30% of their monthly mortgage payment each month.

The monthly reduction in principal balances is beneficial for the financial institutions, and the home owner. If the homeowner can see that sometime in the near future, the home’s value will equal the unpaid principle of the mortgage, they will not add the home to the foreclosure inventory.

The home, and the mortgage will become more valuable with the homeowner remaining in the home, and continuing to make their mortgage payment. Also the homeowner will be protecting the home, and maintaining it.

By reducing the principal balance monthly, the financial institutions do not need to mark down the mortgage to the current value of the home. The mortgage remains a performing asset, and maintains a higher value than a non-preforming asset, a foreclosed home, or a short sale. By maintaining most of the value of the mortgage on their books the financial institutions do not have to continue to recapitalize themselves with federal government debt.

The principal reduction process for the underwater mortgages will only last 10 years, or until the home’s value equals the then current possible selling price of the home, which ever is shorter in time.

The new mortgage will have a lower starting interest rate than the current 5/1 Adjustable Rate Mortgage, that the banks are offering homeowners. The interest rate on the new mortgage will increase at 1/4 percent a year, and stop increasing at 5 percent, unlike the 5/1 ARM. This change in the 5/1 ARM will increase primary homeowners disposable income substantially the first year, and then taper it off as the economy improves, and employment increases, because of the increases in aggregate demand.

Unlike the 5/1 ARM, the mortgage interest rate is not indexed, on the new mortgage, and will remain fixed after 7 years. The homeowner will know their mortgage payment will only go up to a predetermined amount.

Many mortgages can be restructured without much cost, with a modification agreement letter sent to the homeowner by financial institutions that hold unsecuritized mortgages.

Those mortgages that have been secruitized will need investor approval, or must be refinanced. Most investors would prefer restructuring of the mortgage, under the new terms, to a foreclosure, short sale, or a refinance, because with a foreclosure, short sale, or a refinance, the mortgage will be reduced to below the current market value of the home.

The foreclosure inventory will be quickly sold to primary homeowners, because the family will have to occupy the home to qualify for the new mortgage. With the foreclosure inventory reduced, housing prices will stabilize, and then slowly rise.

We will not create another bubble in the economy, because we will be changing the guiding policies of our economy with the Zero Inflation Taxation Policy. If prices in the economy increase more than 1 or 2 % a year, we must increase underwriting standards and larger percentages of equity to loan amounts.

Financial institutions have a very difficult time when the Federal Reserve uses high interest rate policies to control inflation, and inflation psychology. When the Fed makes short term interest rates increase, this action by the Fed reduces the value of their loans, and the bank’s cost go up. The Zero Inflation Taxation Policy stabilizes long-term interest rates, and slows down an economy that is affected by inflation psychology, without adding cost. This allows production the time it needs to balance supply with demand.

If you google “foreclosure crisis solved”, or my name “Leonard C. Tekaat” you will find a more detailed explanation to increasing the middle class’s disposable income, and confidence without more federal government deficit spending, or quote “investments” as you, President Obama outlined in your State of the Union speech.

After the economy improves these “investments” should be made, if necessary, to improve the productive capabilities of our economy, after we pay down the national debt and deficit, and have the excess savings pool to pay for them, like Japan, China, Germany, and other countries have done.

President Obama, I want to discuss this very important matter with you. Please have someone contact me. The sooner we can put people back to work, the sooner the misery created by the Great Recession of 2008 will end.

President Obama, will you do what you said you would do? Will you listen to a better idea on how to improve our economy? If you support this economic recovery plan it will cost the taxpayers very little, because it does not require the government to purchase the bad mortgages to restructure them.

Under the terms of the new mortgage most foreclosures are unnecessary, and government liabilities will decrease!

Fellow citizens if you like the idea of solving our economy’s problems with a smaller deficit, and a more common sense approach to helping our economy to grow, please say so with an approval vote and send it to your newspaper, political representative, banker, and your friends and contacts. Thank you

The “big boys”, “the moneyed”, and “the disadvantaged” got the “gold mine. The middle class, and small businesses, they get to be unemployed, foreclosed upon, and go bankrupt. They then get their taxes increased to pay for cleaning up the mess.

If you are tired of getting the shaft, quote (bill), join with me, and help improve your future, and your posterity’s future. Vote this article up so more people will learn of this alternative recovery plan, to the government's deficit spending economic recovery plans. Thanks again!

May God bless the middle class with the new mortgage, and God Bless America!

More applause, continuing applause!

Solution To Foreclosure Crisis Decreases Unemployment And Federal Deficit

Is The Sun Setting On Our Economy?…..Not If We Join Together And Change Our Future!

To the Honorable U.S. Congressman Kevin McCarthy from Ca.

To the Honorable U.S. Congressman Jim Costa from Ca.

Dear Sirs:

Our economy is having trouble providing a reasonable standard of living for many of our citizens. Many of our middle class citizens are moving down the economic ladder, and are becoming government dependent. This of course is increasing the federal deficit. The high unemployment rate in the private sector, and the ever-increasing foreclosure rate have not responded very will to the current economic recovery policies that we have tried.

The problems with the economy trouble me very much. There is more poverty being created than real wealth. Our economy needs to create more real wealth to raise people’s standard of living, and put people back to work. In the last 100 years, our nation has become a nation that produces more “paper profits” than anything else. There are policies that need changing, that create too much, or too little money in our economy, before we can have a sustainable economic recovery, and a stronger economy in the future.

I would very much like to meet with you to discuss this very important matter. Our nation’s citizens cannot wait as Congress debates political ideological policies. These are economic problems that must be solved now. People are becoming homeless, and desperate. Please tell me as soon as possible when we can meet. I will make myself available at your convenience.

There is a major flaw in our economic guiding policies. Our economy has become so large, and electronically sophisticated that the old guiding policies need changing to make our economy more efficient, so people can increase their standard of living with work, and determination.

Why are our citizens taking one step forward, and two steps backwards, as the current policies dictate? This is not the America of the past. Our country has always been the land of opportunity. If our posterity is to have a chance at the American Dream of a better future for their posterity, it must stay that way.

I have enclosed an article that outlines some of the benefits that the new policies, that we are purposing, will create. For a more detailed discussion please visit our website.

This is a very pressing matter. Please reply as soon as possible.

Sincerely

Leonard C. Tekaat

Foreclosure Solution, Decreases Unemployment Rate And Federal Deficit

Is The Sun Setting On Our Economy?…..Not If We Join Together And Change Our Future!

Many economist, and political representatives believe that the unemployment crisis needs solving first, to solve the foreclosure crisis. This is wrong! It is the other way around. The solution to the foreclosure crisis reduces unemployment, and the federal deficit.

We can help the middle class, and the economy (reduce unemployment and foreclosures) better, and with less creation of money, than with deficit spending stimulus recovery programs, by doing the same thing they did in the Great Depression. In the Great Depression the federal government created the Home Owners Mortgage Corp., which created the 30-year fixed rate mortgage. The new mortgage terms allowed people to stay in their homes, because they could now afford their mortgage payments. The banks had no ownership interest in the homes, which the HOLC had restructured the mortgages on. The banks did not own the mortgages anymore. The HOLC had traded government bonds for the discounted bad mortgages. Almost all the mortgages restructured by HOLC were repaid in full. When the HOLC closed down in the 1950s it returned the excess funds it had collected to the U.S. Treasury. It was a very successful program.

Unlike the HOLC program, the federal government is not required to buy the underwater mortgages in this economic recovery plan. This recovery plan will not cost the government, or the taxpayers a dime. The financial institutions of the private, and public sectors should embrace the new mortgage terms, because they are beneficial to all parties concerned, homeowners, banks, governments, and investors.

Our modern economy is very different from the economy of the 1930s. The amount of existing credit (money) in our economy is sufficient to stabilize prices, unlike in the Great Depression where people had very little money. People are not afraid to go into debt. The use of credit in our economy is the primary exchange medium we use for the exchanging of goods, and services. In the 1930s the primary medium of exchange was paper money, and coin.

The middle class will facilitate an economic recovery without government help, if have enough purchasing power. With this in mind, we have created a primary home mortgage that fits our modern economy, and the current economic conditions. The new mortgage has new terms that will solve the foreclosure, and unemployment crisis in our economy. Almost all new primary homebuyers, and existing homeowners, including those people with underwater mortgages, will have the mortgage with the new terms made available to them. Existing primary homeowners with mortgages, will have the mortgage with the new terms made available to them without refinancing cost by using a Modification Agreement Letter. Investors that have invested in securitized mortgages, will have to agree to the new terms of the mortgages. They should agree to the new terms, because the terms are more beneficial to investors, than a foreclosure, or short sale.

The new mortgage terms will increase most existing homeowner’s disposable income, similar to an income tax rate cut. Stabilizing the primary home market will help the entire economy recover, which will reduce unemployment, and strengthen the financial sector of our economy.

The States, and local governments are already starting to lay off employees, which will increase the unemployment rate, and foreclosure rate. The increase in disposable income, when we restructure the mortgages, and correct the flaw in our guiding policies, will increase aggregate demand, which will increase production, productive investment, and normal consumption, increasing employment, and reducing foreclosures. The increases in economic activity will increase tax revenues, which will lower local, states, and federal government’s deficits. With real estate prices stabilized, and unemployment decreasing, the States will not need help from the Federal Government. The federal deficit will not increase, because of the States worsening economic condition.

We must always look forward, and learn from the mistakes of the past. I wrote before TARP, and the first deficit spending stimulus plan , that deficit spending was the wrong type of stimulus to facilitate an economic recovery. The deficit spending stimulus plans created by President Obama, and Congress are not working very well to lower the unemployment, and foreclosure rate. Unemployment, and foreclosures will be increasing along with our taxes to pay down the deficit in the future. unless we change the deficit spending recovery programs, and replace them with The People’s Economic Recovery Plan.

Unlike an over-supply, or under demand recession, the bursting of a credit bubble caused the Great Recession of 2008, which was cause by a price bubble in the primary home market. When the credit bubble burst, millions of people’s disposable income, and confidence, was reduced or eliminated. Their disposable income is what needed repairing to have an economic recovery in the private sector, not a bunch of roads and bridges. Businesses don’t hire more people until they see more people willing, and able to make purchases of products, and services.

There is still time to correct Congress’s, and President Obama’s mistake. Please go to www.recoverygovforthepeople.wordpress.com for a more detail explanation of the People’s Economic Recovery Plan, also go to: www.economysflaw.wordpress.com for more articles about the economy. Both sites have a sample letter you can send to President Obama to inform him about The People’s Economic Recovery Plan. You can contact Rep. McCarthy, and Rep. Costa by clicking on their names above. You can send them, or anyone this article by putting their e-mail address in the e-mail share box below. Use business@bakersfield.com to send this article to the Bakersfield Californian. Get involved in changing the future, for your own benefit, and your posterity’s benefit.

Are you unemployed? Is your home being foreclosed upon, or are you just tired of getting the shaft (bill) after the Federal Reserve, and the government screw up. We need you! We don't need your money. We need your support, and your participation. Nothing is going to change unless you help change it. Get involved!

America must stay the land of opportunity if our posterity is to have a better future, and achieve the “American Dream” of a better future for their children. The current policies dictate that our citizens take one step forward, and two steps backwards economically. The working people, and the middle class cannot get ahead under the current policies. Join us to change these policies. Our representatives in Congress need to know what to do.

Very Important, to help spread the word please click the “Like” button at the top, and fill in the subscription form. By subscribing, I will be able to notified of any new information I post on this very important matter. Tell your friends, and contacts to do the same. The more people we can get involved the faster the economy will improve, and the less taxes we, and our children, and our great, great grand children will have to pay to cut the deficit.

The working people, the middle class, and their families must unite, and Yell in a load, and united voice. This is the only way we will be heard in the halls of Congress, above the roar of the special interest lobbyist of the “Big Boys” and the “Moneyed”.

The Big Boys, Moneyed, and the “Disadvantaged” got the Gold Mine. The middle class, and small businesses get foreclosed on, get unemployed, and go bankrupt. They then get the “shaft” (bill), for the mess created by the big boys, and the moneyed, by having their taxes raised. The middle class people are sick, and tired of getting the shaft.

Are you upset enough yet, to do something about it?

Do It For Them!!! If not for you, do it for Your Posterity

Thank you for your help…..Leonard C. Tekaat. He is Chairman of a special Committee For Economic Reform and A Better Economic Future.

The Bush Tax Cut Should Not Be Extened For People That Have Net Weekly Income Of $4807.69

The Bush tax cuts are in existence now. Have they done anything for main street in the last two years? The unemployment and foreclosure rate have gone up in the last two years. We have increased our national debt by trillions of dollar to solve these problem, and they have only gotten worst. If the tax cut does not expire for people with a net income of $250,000.00 the deficit will increase by more than 850 billion dollars. If the first deficit spending stimulus recovery plan failed to bring down the unemployment and foreclosure rate, which among us is insane enough to believe a second deficit spending stimulus recovery plan, almost as large as the first one, will result in a different outcome.

THERE IS A BETTER WAY TO INCREASE THE DISPOSABLE INCOME OF THE MIDDLE CLASS TO SOLVE THE UNEMPLOYMENT AND FORECLOSURE CRISIS, THAN TO EXTEND THE TAX CUT FOR THE UPPER INCOME PEOPLE.

Honorable Representatives and Senators you will soon be voting on the extension of the Bush tax cuts please read this article before you vote.

When there is dooms day talk or inflation expectation in the economy, as there is currently, the people in upper income levels do not create jobs. They move their money into protective positions, and make unproductive investments, in gold, inflation hedges, and commodities “investments”, causing more increases in food prices, and production materials.

We can help the middle class and the economy (reduce unemployment and foreclosures) more by doing the same thing they did in the Great Depression. In the Great Depression the government created a new mortgage that fit the then current economic conditions. It created the Home Owners Mortgage Corp., which created the 30-year fix rate mortgage. The new mortgage terms allowed people to stay in their homes. The banks did not need to foreclose on the homes. People that lose their homes to foreclose can create more government dependent people and a larger deficit. When the HOLC closed down in the 1950s it returned the excess funds it had collected to the U S Treasury. It was a very successful program.

.I have created a mortgage with terms that fit the current economic conditions. www.recoverygovforthepeople.wordpress.com/ Unlike the Home Owner Mortgage Corp., it is unnecessary for the government to purchase the bad and underwater mortgages. The financial institutions and investors should be willing to restructure the mortgages with the terms that are outlined on my web site. The mortgages do not need to be refinanced. Refinancing will increase cost. When you restructure a mortgage, you only need to send the borrower a modification letter with the new terms. The new mortgage terms should be offered to everyone, even the people whose mortgages are underwater.

The reason this mortgage would be good for the economy, the middle class, the government, investors and the financial institutions is that it will increase a large number of people's disposable income, all at the same time, similar to a decrease in tax rates, but by a much larger amount, and without cost to the taxpayer or the government.

With an increase in disposable income, extended over a long period of time, the middle class will restart the economy with increased economic activity. Businesses will see demand pick up, and hire the unemployed. This will reduce the unemployment rate, which will lower the foreclosure rate.

With the new mortgage terms the foreclosed inventory will be sold very quickly. With the foreclosure inventory eliminated home prices will stabilize and then slowly rise.

This will maintain the tax base for state and local governments and their financial condition will improve. They will not need further assistance from the Federal Government, which will help lower the federal deficit.

I do not want the tax cuts extended for anyone that has over 250 thousand dollars of net income. The deficit must be reduced. The middle class cannot afford an increase in their taxes. If people with over $4500 per week net income do not pay the 4.6% increase in their tax rate, the middle class, you and I will have to pay more taxes in the future. It will depress normal economic activity further. Spending should be cut after the economy is operating more efficiently with new guiding policies.

With the federal government increasing the amount it is borrowing, interest rates will increase and suppress our fragile recovery.

There is a second part to this recovery plan that I explain in my articles posted on my site. It is more important than the first part. It helps prevent the creation of another Great Recession.

Leonard C. Tekaat 12/12/10 economysflaw@yahoo.com JOIN ME ON FACEBOOK Join R.E.B.L.E.S www.facebook.com/leonard.c.tekaat/

Leonard C. Tekaat He is the Chairman of a special Committee for Economic Reform and A Better Economic Future.

IF YOU WANT SMALLER DEFICITS AND LOWER TAXES, PLEASE SEND A COPY OF THIS ARTICLE TO YOUR CONGRESS AND THE PRESIDENT at www.WhiteHouse.gov/

President Obama; I Want Larry Summers's Job, I Want To Be Your Next Economic Advisor

You have been empowered. You will be able to change things and make a choice after you read the comments and replies. Also read the People's Economic Recovery Plan at www.recoverygovforthepeople.wordpress.com/

President Obama

C/O U.S. Congress

1600 Pennsylvania Ave.

C/O US Congress

Washington D.C. 20500

202-456-1111 Comment line

202-456-2461 Fax

202-456-1414 Switchboard

Oct.14, 2010

President Obama and U.S. Congress:

You said you would listen, but we haven't been heard yet! The middle class and small businesses need help! We are being destroyed by obsolete policies and Keynesian economics.

Mr. President, at one of your town hall meetings you said that you would consider all options to improve the economy’s recovery and the financial condition of the middle class.

I am Chairman of a special Committee For Economic Reform and A Better Economic Future. Our members belong to an exclusive list of noted private business people and highly educated economic scholars, from the past and current history. I have been involved in improving the economic policies of our economy since 1980.

These policies will lead to another Gloom, Boom, and Doom cycle of economic activity. These are Keynesian economic polices, which we continue to use during each recession and continue to get the same results, recession, posterity, recession, this is the definition of "insanity."

When the federal government deficit spends it creates money by increasing its debt. The spending of the money for wages and products increases aggregate demand in the economy, because the government has increased or maintained a large number of people's disposable income.

In the simplest form, the Plan has only two parts. The first part, just like deficit spending, it restores the middle class’s disposable income by restructuring their mortgages, similar to what government and big businesses are doing, which will increase total demand. Increased aggregate demand will increase productive economic activity, which will wake up employers. They will say to themselves," Where did all these customers come from? I need more help!" Thereby increasing the disposable income of the previously unemployed.

What is beneficial about the Plan is that the Federal Government is not borrowing any money therefore taxes do not have to be increased to pay it back. The Plan does not cost taxpayers a dime. The Plan will also help the financial service sector because their customers will be in better financial condition, which allows the economy to de-leverage without crashing.

The second part of the Plan is what all gold backed money enthusiasts want. It limits and discourages the creation of money (debt) with the Zero Inflation Taxation Policy. It will no longer be profitable or necessary for people to play credit-leveraging games, to protect their capital, when people are affected by inflation psychology.

When inflation raises its ugly head it can be controlled before it gets out of hand. Not by raising cost and eliminating demand from the bottom of the economic ladder with unemployment and small business bankruptcies, but by decreasing demand from the top of the economic ladder with the income tax laws. During the inflation economic cycle, the Policy will redirect money into money investments, savings and productive endeavors.

We also support the enterprise sector of our economy, but it is no longer free. It was a free system when the "robber barons" amassed and controlled a majority of the means of production and supply and created monopolies and trust, which President Theodore Roosevelt, Congress and the Supreme Court broke up to create more competition in our economy.

The Capitalist system needs to have some guiding principles, similar to the morality side of people’s lives. The economy is made of people. Just like a person’s life, the Capitalist economic system can become so imbalanced it can destroy itself.

So that we know that you have heard us. We will say it again. The current economic policies are not working as well you had hoped, Mr. President, to lower the unemployment rate and the rising number of foreclosures. The Committee For Economic Reform and a Better Economic Future has developed an Alternative Economic Recovery Plan that does not raise taxes or deficit spending. It also does not use quantitative easing by the Fed. Go to www.recoverygovforthepeople.wordpress.com/ to read the complete plan.

Please reply ASAP. Please do not send me a form letter or a letter that states that my information is being directed to the correct department. I want to be President Obama's next economic advisor. If you are reading this letter, you have not been authorized to do so. This letter is address to him. It is for his eyes only. No One Else! Period!!

Sincerely

Leonard C.Tekaat Chairman of Committee For Economic Reform and A Better Economic Future E-mail economysflaw@yahoo.com

You have been empowered. You will be able to change things and make a choice after you read the comments and replies.

P.S. I replied to a donmason, who made a comment on my blog article at www.bakersfield.com/ , which is our local newspaper's web site. His comment was, in a few words, let it all collapse and start over again.

Leonard C. Tekaat's reply was:

To donmason: I understand what you are saying. But there will always be people holding other people’s debt, unless you have another economic system that you want to put in place, other than the enterprise capitalistic system.

Money is almost all created by debt. Under the policies of our money system only a small portion of the money supply is something other than debt. Paper money is created and authorized by the federal government's debt through the Federal Reserve System. When a person puts money into the bank it was created by somebody’s debt. It does not matter you holds the debt or money, it is how and when they spend it that is important.

The first part of the plan is to allow the economy to de-leverage, in an orderly way, without crashing. It creates a process that will keep people in their homes instead of the lean holder foreclosing on the homes and resolves the problem of underwater mortgages. It also puts people back to work, in the private sector, as quickly as possible.

The most important part is the second part. We keep using Keynesian policies to re-inflate the economy during and after a recession. We don't want to re-inflate the economy. It decreases our competitiveness in the world markets. Wages go up and our jobs are shipped over seas. It reduces the value of the dollar, which increase commodity prices.

People can't afford the prices in the economy now. As you point out, incomes of the middle class have not been keeping pace with prices. It was when primary home prices became too high, relative to incomes that busted the credit bubble, created by the primary home price bubble.

People don't read or maybe they don't understand how important the second part of the plan is. I am purposing less credit use during the inflation cycle. Keynesian said, Tax people more to pay off the deficit, created by the recession." Congress never does that. Congress recycles the money back into the economy with social program because people are getting poorer because of the inflation that is being created by government and private sector inflationary spending.

I am creating policy that will reduce the number of people asking for loans during the inflation cycle. Money will become more valuable when less of it is created and it is taxed less. The Plan gives production the time it needs to catch up to demand before inflation psychology is created.

When inflation begins to occur, in an economy, it must become more productive and competitive domestically and internationally. Currently when inflation occurs our economy, becomes less efficient. People try to protect their capital (money) by using credit to either profit from inflation, or maintain the value of their capital, by creating more money and more inflation.

When the Fed uses higher interest rates to reduce demand it raises cost and reduces competition by bankrupting small businesses. Larger businesses & corporations buy the distressed small businesses because they can't restructure their loans, even though they may be good companies and can contribute to the economy and employment. This process decreases competition in the market place. When the economy begins to expand again we have reduced the number of product and raw material supply businesses and businesses that sell the production created by the supply side of the equation.

Don says, “Let it crash and purge the system.” I say, “We have a flaw in the system”, as I point out in my articles, posted on my web site at www.recoverygovforthepeople.wordpress.com If we rebuild on the same policies that we currently guide our economy (people) with, we will end up with the same results.

We the people out number "the big boys”. and the "moneyed class." They only have the power of miss-information. If you are empowered with knowledge and the truth, you can weed out the misinformation. We are not sheep going blindly to the slaughterhouse each day. The power of the vote is vested with the people. We can change tax policy and our government's policies!

PS. More Comments and Replies 10-14-10

donmason: Reply to comment made on 10/16/10

I agree, almost all money, under the current international fractional banking system, is created by the Federal Reserve Systems of the world. Once the money (debt) is created someone owns it. It is how and when they spend or invest it that matters. If the person is directed incorrectly, at the wrong time in the economic cycles, by government policy or by possible inflation created profit and the money may create "paper profits' without work, the money will go in that direction. If enough people are directing their money in one direction, the price of that commodity or capital asset will spike in price without any new money being created by the fractional banking system. It is similar to100 people in a lifeboat. If something good is happening on one side of the boat and enough people want to participate in what is happening, the boat will lean further and further until it capsizes.

I believe the Zero Inflation Taxation Policy would not guide all the people to the side of boat, as the current static policies do. It would create enough uncertainty in the inflation cycle that people would not be affected by the crowd effect. Energy prices are going to spike but people who bet on inflation with leveraged enlarged bets with credit, will pay more income taxes. People that support production, without credit, will pay less income taxes, until supply is balanced with normal demand. The adjustment will come at the end of the year. I am talking about annual inflation rates that reflex a true Consumer Price Index, not the government's gerrymandered rigged CPI that they are currently using.

Tkozy--You are correct about how the money was destroyed over seas. I call what you said “the silver lining “ of this economic mess we are in. If you believe in conspiracy theories, what if, that is why this bubble was created. We had trillions of dollars of debt (money) around the world. When the credit bubble popped, much of the debt was held by over seas by financial intuitions, banks and investors. Maybe we learned something when the Japanese were buying up America. Destroy the money before foreigner can use it to buy America. Just a thought; Do you think they are that cunning? It would take a lot of planning to pull it off.

The world probably thought that we wanted all the wealth and the jobs when we were running trade surpluses for all those years in the eighteen and nineteen hundreds and all the other nations of the world were in debt to us.

Virgil-- Producing more of the products we use would definitely help our trade imbalance and our unemployment stats. When our nation relies too heavily on other nations, we definitely give up some of our security.

We ran a trade surplus from the late 1900s to the late 1960s. The dollar was strong, maybe too strong for the banks. When President Kennedy was elected he lowered taxes, the long-term capital gains rate and increased the deficit. He got us involved in the conflict in Vietnam. These moves are classical Keynesian economic policy.

The inflation takes time to be created and feels good in the beginning. The government was on cloud nine. It thought it could do anything. The tax revenues were poring in. The progressives thought, wow, we could make everyone rich and eliminate poverty. Then it got out of hand and shit hit the fan in the beginning of the 1970s, when President Nixon had to take the dollar off the gold standard. The dollar’s value has continued to go down since then and our price structure has gone up.

The financial service sector loved every minute of it. They were creating more and more debt (money). Larger and Larger loans were needed to support the higher and higher prices.

If we had the Zero Inflation Taxation Policy in place back then, we would not have become, as a people in general, so relaxed about using credit and going into debt way above our means.

Oh don’t forget this: In the 1960s the Kennedy family was heavily invested in Chase Bank. They still might be, I don’t know.

Remember the first objective is to de-leverage the economy without crashing it and put people back to work so they can stay in their homes. The second part is not to repeat the mistakes of the past and correct the flaw in our policies.

Donmason—You bring up the several things. Glass-Stegal, fractional banking and capital requirements.

I agree that Wall St investment banks and the Federal Reserve Banks should be separated. But did the deregulation and the elimination of Glass-Stegal cause the primary home price bubble.

I believe the process mortgages go through had more to do with it. A mortgage broker or bank creates the mortgages. It is then sold to a Wall St. firm or a government-housing agency or Fannie or Freddie. Then it is securitized and sold to investors nationally and internationally. Neither Glass-Stegal nor the Volcker Rule forbids the banks from selling their mortgages to these entities.

The selling of the mortgages is how the investor’s money was pumped into the primary home market. When the return on an investment is good and investors feel confident that their capital will be returned to them, the money will flow in that direction. A large portion of the securitized mortgages were sold to over seas investors.

The American fractional banking system did not provide the money directly. The banks acted as the originators of the mortgages. Their capital was returned to them when they sold the mortgages. They then loaned the same money out again and the process was repeated over and over again. It was domestic and foreign investors and financial institution money that was used to finance the ever-increasing primary home price, not directly by the fractional Federal Reserve Banking System.

The banks only held a small portion of the mortgages on their books. The amount of deposits and loans they held, on their books, is what determined how much capital they had to retain for emergencies (a run on the bank or a devaluation of capital). Even though they sold a large portion of their mortgages, the mortgages they did hold, got them into trouble, but they had the Fed’s discount window to go to, to stay solvent.

It was the Wall St. investment banks that failed. It was the Wall St. banks and AIG that were bailed out and bought by the Federal Reserve Banks.

Some of the Wall St firms changed their structure to banks to save themselves. As banks they had access to the Fed’s discount window. The Community Banks don’t have access to the Fed window. They were helped by TARP along with GMAC and AIG.

Over 100 community banks have failed this year, because they hold a large amount of commercial mortgages and loans. I am sorry to say, but this will decrease competition in the financial service industry and eliminate places for small businesses to go to restructure their debt. This further consolidates the financial service industry making the “big boys” and the “moneyed few” richer and politically stronger.

ApolloDawn--You are not seeing things. I haven’t changed my policies. I think you understand them better and maybe I am explaining my ideas better. I hope that is the case.

If I am explaining them better, then the general public might be catching on to how we have been led down this dark path of servitude to the banks. You can read more at my web site at www.recoverygovforthepeople.wordpress.com At the bottom of the page it will direct you to another site which has the Alternative Economic Recovery Plan. I hope you like to read. There are many articles on the subject.

I don’t see any changes that have been made that will stop another economic crisis from happening again. The same mortgage process is in place. Investors are a little more nervous, but they will get over it. The government thinks that the new consumer protection agency will protect the consumer and that education of the consumer will change the consumer’s attitude about using excessive credit. These are all smoke and mirror plans.

The real problem is inflation psychology. The only way I believe that inflation psychology can be handled is with the Zero Inflation Taxation Policy. If you take a good look at the Policy, it makes the government and borrowers guarantee the value of the money that is created. The debt holders or savers will be taxed less if inflation is created and the borrower will be taxed a little more, if inflation is created, until the economy balances itself, using the enterprise system to create more supply. If we can discourage people from taking out larger loans during the inflation cycle, with the income tax, the Fed will not have to raise interest rates and banks won’t be able to leverage (increase) the money supply too much, which creates credit bubbles and Great Recessions.

Increasing capital requirements is a good idea, but banks know how to play games to get around this requirement. They do it by setting up other entities that make believe the loans are owned another corporation or entity,

You are correct, donmason, when you say growth cannot go on indifferently. Our world has a limited supply of energy and natural resources. If each person of the entire world’s population consumed as much as each person uses it the U.S., the world would run out of both the current energy source (oil) and natural resources in a very short time. We have predicted this same thing in the past, but have always been able to find alternatives to use. Perhaps this will happen again. Lets hope so, for our posterity's sake.

If you want to reduce the size of the deficit and government, and put people back to work in the private sector and get people off the government dole and out of your wallet, call the White House comment line, and tell them you want Leonard C. Tekaat to be President Obama's next economic advisor. Ph. 1-202-456-1111 comment line or go to www.WhiteHouse.gov/ and leave a message.

Donmason Commented, Leonard C.Tekaat Replied On 10/14/10 Comments

I replied to a donmason, who made a comment on my blog article at www.bakersfield.com ,which is our local newspaper's web site. His comment was, in a few word, let it all collaspe and start over again.

Leonard C. Tekaat's reply was:

The first part of the plan is only to allow the economy to de-leverage, in an orderly way, without crashing. It creates a process that will keep people in their homes instead of the lean holder foreclosing on the homes and resolves the problem of underwater mortgages. It also puts people back to work, in the private sector, as quickly as possible.

The most important part is the second part. We keep using Keynesian policies to re-inflate the economy after a recession. We don't want to re-inflate the economy. It decreases our competitiveness in the world markets. Wages go up and our jobs are shipped over seas. It reduces the value of the dollar, which increase commodity prices.

People can't afford the prices in the economy now. As you point out, incomes of the middle class have not been keeping pace with prices. It was when primary home prices became too high, relative to incomes, that busted the credit bubble, created by the primary home price bubble.

People don't read or maybe they don't understand how important the second part of the plan is. I am purposing less credit use during the inflation cycle. Keynesian said, Tax people more to pay off the deficit. Created by the recession" Congress never does that. Congress recycles the money back into the economy with social program because people are getting poorer because of the inflation that is being created by government and private sector inflationary spending.

When inflation begins to occur, in an economy, it must become more productive and competitive domestically and internationally. Currently when inflation occurs our economy becomes less efficient. People try to protect their capital (money) by using credit to either profit from inflation, or maintain the value of their capital, by creating more money and more inflation.

When the Fed uses higher interest rates to reduce demand it raises cost and reduces competition by bankrupting small businesses. Larger business & corporations buy the distressed small business because they can't restructure their loans, even though they may be good companies and can contribute to the economy and employment. This process decreases competition in the market place. When the economy begins to expand again we have reduced the number of product and raw material supply businesses and businesses that sell the production created by the supply side of the equation.

Don says let crash and purge the system. I say, We have a flaw in the system, as I point out in my articles, posted on my web site at www.recoverygovforthepeople.wordpress.com If we rebuild on the same policies that we guide our economy (people) with, we will end up with the same results.

We the people out number "the big boys".and the "monied class." They only have the power of mis-information. If you are empowered with knowledge and the truth, you can weed out the misinformation. We are not sheep going blindly to the slaughter house each day. The power of the vote is vested with the people. We can change tax policy and our government's policies!

PS. More Comments and Replies 10-14-10

Tkozy--You are correct how the money was destroyed over seas. I call what you said “the silver lining “ of this mess we are in. If you believe in conspiracy theories, what if, maybe that is why this bubble was created. We had trillions of dollars of debt (money) around the world. When the credit bubble popped, much of the debt was held by over seas by financial intuitions, banks and investors. Maybe we learned something when the Japanese were buying up America. Destroy the money before foreigner can use it to buy America. Just a thought; Do you think they are that cunning? It would take a lot of planning to pull it off.

The financial service sector loved every minute of it. They were creating more and more debt (money). Larger and Larger loans were needed to support the higher and higher prices.

If we had the Zero Inflation Taxation Policy in place back then, we would not’t have become, as a people in general, so lacked about using credit and going into debt way above our means.

Oh don’t forget this: In the 1960s the Kennedy family was heavily invested in Chase Bank. They still might be, I don’t know.

ApolloDawn--You are not seeing things. I haven’t changed my policies. I think you understand them better and maybe I am explaining my ideas better. I hope that is the case.

Donmason—You bring up the several things. Glass-Stegal, fractional banking and capital requirements.

I agree that Wall St investment banks and the Federal Reserve Banks should be separated. But did the deregulation and the elimination of Glass-Stegal cause the primary home price bubble.

The fractional banking system did not provide the money. The banks acted as the originators of the mortgages. Their capital was returned to them when they sold the mortgages. They then loaned the same money out again and the process was repeated over and over again. It was domestic and foreign investor and financial institution money that was used to fiance the ever increasing primary home price not directly the fractional Federal Reserve Banking System.

The banks only held a small portion of the mortgages on their books. The amount of deposits and loans they held, on their books, is what determined how much capital they had to retain for emergencies (a run on the bank or a devaluation of capital). Even though they sold a large portion of their mortgages, the mortgages they did hold onto got them into trouble, but they had the Fed’s discount window to go to, to stay solvent.

It was the Wall St. investment banks that failed. It was the Wall St. banks and AIG that were bailed out and bought by the Federal Reserve Banks.

Over 100 community banks have failed this year because they hold a large amount of commercial mortgages and loans. I am sorry to say, but this will decrease competition in the financial service industry and eliminate a place for small businesses to go to restructure their debt. This further consolidates the financial service industry making the “big boys” and the “moneyed few” richer and more political stronger.

I don’t see any changes that have been made that will stop it from happening again. The same mortgage process is in place. Investors are a little more nervous, but will get over it. The government thinks that the new consumer protection agency will protect the consumer and that education of the consumer will change the consumer’s attitude about using excessive credit. These are all smoke and mirror plans.

The real problem is inflation psychology. The only way I think that it can be handled is with the Zero Inflation Taxation Policy. If you take a good look at the Policy, it makes the government and borrowers guarantee the value of the money that is created. The debt holders or savers will be taxed less if inflation is created and the borrower will be taxed a little more, if inflation is created, until the economy balances itself, using the enterprise system to create more supply. If you can discourage people from taking out larger loans during the inflation cycle, banks won’t be able to leverage the money supply too much, which creates credit bubbles and Great Recessions.

You are correct, Don mason, when you say growth cannot go on indifferently. Our world has a limited supply of energy and natural resources. If each person of the entire world’s population consumed as much as each person uses it the U.S., the world would run out of both the current energy source (oil) and natural resources in a very short time. We have predicted this same thing in the past, but have always been able to find alternatives to use. Perhaps this will happen again. Lets hope so, for our posterity's sake.

I Want To Be President Obama's Economic Advisor

President Obama

C/O U.S. Congress

1600 Pennsylvania Ave.

C/O US Congress

Washington D.C. 20500

202-456-1111 Comment line

202-456-2481 Fax

202-456-1414 Switchboard

10-13-2010

President Obama and U.S. Congress:

You must have unopened mail! Or perhaps your advisers do not know what to do to improve the economy for the middle class and small business. All your advisors are from Wall St., big business or Keynesian economic policy practitioners. I would like to be your economic advisor. You said you would listen, but we haven't been heard yet! The middle class and small businesses need help! We are being destroyed by obsolete policies and Keynesian economics.

Mr. President, at one of your town hall meetings you said that you would consider all options to improve the economy’s recovery and the financial condition of the middle class.

I am Chairman of a special Committee For Economic Reform and A Better Economic Future. Our members belong to an exclusive list of noted private business people and highly educated economic scholars, from the past and current history. I have been involved in improving the economic policies of our economy since 1980.

The economic policies that are currently being used are not working, as well as you had hoped to increase employment and stem the rising number of foreclosures. The Committee For Economic Reform and a Better Economic Future has developed an Alternative Economic Recovery Plan, posted at www.recoverygovforthepeople.wordpress.com that does not use deficit spending and quantitative easing by the Federal Reserve. These policies will lead to another Gloom, Boom, and Doom cycle of economic activity. These are Keynesian economic polices, which we continue to use during each recession and continue to get the same results, recession, posterity, recession, this is the definition of “insanity.”

When the federal government deficit spends it creates money by increasing it's debt. The spending of the money for wages and products increases aggregate demand in the economy, because the government has increased or maintained a large number of people's disposable income. In the simplest form, the Plan has only two parts. The first part, just like deficit spending, it restores the middle class’s disposable income by restructuring their mortgages, similar to what government and big businesses are doing, which will increase total demand. Increased aggregate demand will increase productive economic activity, which will wake up employers. They will say to themselves,” Where did all these customers come from? I need more help!” Thereby increasing the disposable income of the previously unemployed. What is beneficial about the Plan is that the Federal Government is not borrowing any money therefore taxes do not have to be increased to pay it back. The Plan does not cost taxpayers a dime. The Plan will also help the financial service sector because their customers will be in better financial condition which allows the economy to deleverage without crashing.

The second part of the Plan is what all gold backed money enthusiast want, it limits and discourages the creation of money (debt) and the over leveraging games that people play when they are affected by inflation psychology, with the Zero Inflation Taxation Policy. So when inflation raises its ugly head it can be controlled before it gets out of hand. Not by raising cost and eliminating demand from the bottom of the economic ladder with unemployment and small business bankruptcies, but by decreasing demand from the top of the economic ladder with the income tax laws. During the inflation economic cycle, the Policy will redirect money into money investments, savings and productive endeavors.

We also support the enterprise sector of our economy, but it is no longer free. It was a free system when the “robber barons” amassed and controlled a majority of the means of production and supply and created monopolies and trust, which President Theodore Roosevelt, Congress and the Supreme Court broke up to create more competition in our economy.

So that we know that you have heard us. We will say it again. The current economic policies are not working as well you had hoped Mr. President, to lower the unemployment and the rising number of foreclosures. The Committee For Economic Reform and a Better Economic Future has developed an Alternative Economic Recovery Plan that does not raise taxes or deficit spending. It also does not use quantitative easing by the Fed. Go to www.recoverygovforthepeople.wordpress.com/ to read the complete plan.

Please reply ASAP

Sincerely Leonard C.Tekaat

Bakersfield, California

It All Happened After Leaving The Bakersfield Business Conference

There must be over 10,000 stories that can be told about the Bakersfield Business Converence, I would like to tell you ours.

On Saturday October 9, 2010 my great grandchildren and I had planed to go quad riding in the foothills of Taft. Ca.

I had sat down earlier that morning and read the Bakersfield Californian. I noticed an article that reminded me that the Bakersfield Business Conference was being held on Saturday. I said to the boys, Nate 8 years old and Dakota 11 years old, that I wanted to pass out some flyers at the Business Conference. They asked, "What’s the Bakersfield Business Conference. I told them that it was a place where famous and not so famous people come to give speeches about their ideas on how to improve our nation and the economy. "But Grandpa", they said, "We want to go quad riding. I know, I said, "But the battery is dead on Nate's quad, so we will put the charger on it. Then go and make some flyers up and put them on some vehicles, in the parking lot at the conference." They said, " O...OK. What are the flyers about?" I told them they were about my ideas on how the economy could be improved and that my ideas would help people have jobs and they wouldn't lose their homes to the bank. They said, "Can we help." I said, "Sure, lets go."

I got on the computer and down loaded a part of an article I had written, hooked up the battery charger, and we headed to the closest Pack & Ship Plus on Calloway Dr., to make up about 100 copies. We got to P&S and I asked the clerk about cost. She said, “10 cents a copy.” I asked about colored paper. She showed me some paper that was orange with leaves around the edge. It looked like autumn. It was nice and I liked it. I asked how much more per sheet. She said, "Ten cents." I said, "OK, I need 200 copies." We copied one copy. For some reason when I copied the original it was crooked on the paper. The clerk was very nice and made-up a proof copy that she taped to another piece of paper. We got the job done and headed to the Conference. A copy of the Flyer is at www.recoverygovforthepeople.wordpress.com/

At the Conference the boys eagerly helped me put all 200 copies under windshield wiper blades. They put the flyers on the low vehicles and I put them on the pickups and SUVs. The last copy I had was the proof. I gave it to an older Gentleman that was at the entrance driveway, holding up a sign in support of his favorite candidate for a political office. Just as we approached him, he was slowly trying to sit down on the curb. I jokingly said to him, "Hey, no sitting down on the job." He smiled at me. I sat down beside him and talked a minute. He said, "He would read the flyer at home." The boys had a good time, they said, then we headed home.

We arrived at home after filling up a couple of container with gas and found that Nate's guad battery was still dead. The plug end of the extension cord had been unplugged after I had used a power saw and I hadn't noticed it. It was 3:30 pm and I was determined to take the boys guad riding. I said to the boys, "We will just jump start Nate's quad, its getting late, the sun goes down at 6 pm.

We took off to have a good time. Just as we passed over the I-5 over pass on Enos Ln., we had a blowout on the left tire on the trailer. NO SPARE!! We limp to the Shell station on the corner of Enos Ln. and Taft Hwy., to pull off the wheel and hub. I was going to call home, oops, no cell phone. Did I lose it? I went inside the gas station to ask about a public phone. No public phone. A lady at the counter offered me her cell phone. THANK YOU! I called my twin brother, Athol, no answer. I called my home and asked my daughter to drive out and pick us up so we could to get another tire.

We picked up a couple of used tires and wheels at a yard I have on Roberts Lane. After dropping the boys off at home, with my wife Brenda, we drove back out to where the trailer and truck were parked. We arrived there about 8 pm. Lo and behold the small doe-nut tire and wheel I had found, that fit the hub, was flat after airing it up at home. The other wheel and tire was flat also, that I had loaded when we left home. The tire needed a valve stem installed to air it up. I had planned for this, and had stopped by Auto Zone and picked one up. I had to break the bead of the tire without any tools, most gas stations don't have service bays anymore. The one I was at didn't, so I used the front wheel and the weight of the Van, my daughter was driving, to break the bead and install the valve stem.

I had thrown in a small compressor with a full tank of air in the van. I tried to reset the tire bead and it wouldn't set because there wasn't enough air going into the valve stem. I almost emptied the tank of air while trying to reset the bead. I had to try something different. I took out the valve core. I took off the inflator gage, off the end of the hose and put the end of the hose over the valve stem and reopened the hose valve on the tank. I just had enough air pressure to reset the tire bead, partially. So I rolled it over to the gas station's air and water island.

There were a couple of guys there that had some trouble with a leaking heater hose. While I was asking what kind of trouble they were having, his partner walk up and said, "They don't sell hose clamps here." I had them show me what size clamp they needed. After looking at it, I told them that I think that there is a clamp on Nate's quad that might work. We walk over to my truck, on the other side of the parking lot, to check out the clamp that held on Nate's air cleaner. It looked like it would work, so I took it off and gave it to him. On the way back to his truck, I asked the gas station clerk to turn on the air. When I got back to the air station, one of the guys was airing up my tire. I never did get their names. They asked for mine. They wanted to return the clamp to me in the morning, so I said, OK. Update they didn't return Nate's clamp as they said they wanted to do by 12 oclock Sunday the time that I told them they need to return.

After putting the wheel back on the trailer, we started back home. Less than 1 mile down the road the tire comes apart. Apparently it was sun rotten and all the rubber came off leaving the nylon cord exposed. I stopped and looked at it, and my daughter, who was driving behind me, tells me something happen, and that a big chunk of something had hit the windshield. I asked her if it had hurt anything. She said, "No! Thank goodness! I told her that since we didn't have any other tires to put on the trailer. We couldn’t leave the trailer beside the road because of the quads that are loaded on it, that we would drive it slowly home, because it was not riding on the rim, but on the nylon cord. I told her we would see how it went. She said, " I will put my hazard flashers on, and I'm staying way back! I don't want anything else to hit the car."

We proceeded to drive home, which is in the NW part of Bakersfield, about 15 miles from where we were, at 20 mile an hour. We stopped every once in awhile to check things out and everything was fine. The nylon cord lasted all the way home. By the time we got home, it was after 10pm. Boy, what a day.

Guess what I'm doing today? I'm taking the boys quad riding after I put a new tire on the trailer.

Oh! The cell phone was on the desk at home. Thank you Lord, well almost. I some how lost my credit card, sometime after I bought a bolt and a couple of pairs of gloves for the boys at the ACE Hardware store on Rosedale Hwy. Had to call the credit card card company this morning. Oh I still haven't found the key to the truck. Sure a good thing my daughter had a copy. I hope you have a better day today, than we had on Saturday the 9th day of Oct. 2010. Best of luck, Have a nice Bakersfield day.

It Is Simpler Than You Think To Have A Sustainable Economic Recovery

Replies to comments are posted at end of article.

On September 26, 2010 Leonard C. Tekaat a local Bakersfield Tea Party Patriot member posted The Tea Party Member's (The People's) Economic Recovery Plan on www.bakersfield.com/

The authors of the Plan said, "You cannot push an economy too fast or it will run over a cliff. The free enterprise system is self- balancing. A person stops doing something when it becomes unprofitable. The financial capitalist do not know when to stop creating money. Creating money is profitable during the expansion and the contraction, because of all the financial repositioning that occurs. What the plan does is it neutralizes Keynesian policies that have been applied to our economy for the last 75 years, before they unbalance the economy. Policies that may be good for stimulating the economy during a recession become over stimulating and destructive to an economy during the inflation cycle.

The creators of this recovery plan stated, "It is very similar to a plan that was used in the Great Depression of the 1930s, to keep people in their homes. The Home Loan Corporation created a new mortgage, with new terms. that fit the economic conditions of the day. We know of it today as the 30 year fixed rate mortgage. The Home Loan Corp. closed down in the 1950s, returning, after paying for all it's cost with the interest and fees it charged the homeowners, the excess money it had collected. The program did not cost the taxpayers a dime. If fact it made money.

The Great Depression was created when a credit bubble burst, very much like the credit bubble that was created during the housing bubble that created the Great Recession of 2008."

Their plan also includes a means to help prevent future credit bubbles.

Mr. Tekaat states, "This is not a plan to bail out the investment banks or the Federal Reserve member banks. They should pay for what part they played in the creation of the Great Recession, by discounting the underwater mortgages monthly. By discounting the underwater mortgages monthly, the financial sector will become stronger because their primary mortgage assets will remain preforming assets thus maintaining more of their value. The home will not have to be foreclosed on or sold using a short sale. The Plan is beneficial to the financial institutions and the homeowners. It is a common sense way to keep financial responsible middle class people in their homes and create employment opportunities in the private sector for the unemployed, without costing the taxpayers a dime or creating inflation.

Responsible and credit worthy people, by no fault of there own, have seen their hard earned savings disappear because of government policies and investment banks, and large bank executives wanting to increase the bottom line of their corporations.

It is the Wall St. investment banks, executives of the GSEs (Fannie Mae and Freddie Mac) and the Federal Reserve member banks, that should be discounting the underwater mortgages. In the long run they will have a smaller loss. The taxpayers should not be paying for their desire to increase their profits and their incorrect financial decisions."

The Tea Party member's (The People's) economic recovery plan works to keep more people from becoming government dependent. We don't want the government deficit spending on failed Keynesian Economic policies. We would rather have a more capital efficient economic enterprise system, which uses mechanism that enhance people's opportunities to take care of themselves, than paying higher taxes to the government, to keep people from working.

The economic recovery plan we are purposing will help, long term debt investors, the banking sector and main street. It will help maintain the savings rate and productive investments during the inflation cycle.

The advice given to President Obama by academia about using old school Keynesian Economics has not worked very well to lower the unemployment rate and stem foreclosures. This economic recovery plan does not use quantitative easing, which may create hyperinflation, and higher interest rates, which will cause the economy to collapse again. It targets where the problem is; in the primary home sector and consumer confidence."

Businesses are sitting on over a trillion dollars of cash, yet they are not gearing up for increased production or increasing employment. Why? It is not because of an uncertain tax future, or added employee expenses as widely held. What is it that they are waiting for?"

He stated, " You could all help by e-mailing a copy of the article to newspapers and other media outlets. Send a copy to the President Obama. He said,” He would consider all recovery options". We want to get a national debate going so we can discuss the pros and cons of the Tea Party Member's Economic Recovery Plan.

What the government is doing now is not working very well to reduce the unemployment and the foreclosure rate. Until the debate starts we are going to continue posting and sending the article to as many places as we can." To read the Plan and more articles at his web site go to: http://people.bakersfield.c...

Chairman of the Committee For Economic Reform and A Better Economic Future and member of the Bakersfield Tea Party.

Leonard C. Tekaat

Comments:

There was a comment about Keynesian economic policies. It is these policies that can create inflation and credit bubbles. These policies that are used in the U.S economy are: Cheap money (interest rates relative to the inflation rate) A differential tax rate for capital investment, for productive or "paper profit" reasons. Devaluing of the domestic money supply, (money investments, savings, bonds, and securities) by taxing them at a greater rate than inflation derived profits. Using higher interest rates to devalue older debt that is earning lower interest rates. Create policies and programs that create excessive government deficit spending. Encourage people to use credit to make purchases by giving them a tax deduction, which further cheapens the cost of interest during the inflation cycle.

How do you create inflation and credit bubbles in an economy? How do you destroy the fabric of a nation? How do you remove the child caregiver from the home and cause both adult family members to run after their tails just to stay even? All of the above. With the economy being guided by the current policies, unless you play the credit leveraging game, you are financially at a disadvantage because your money capital loses value every day during the inflation cycle. This is how the financial capitalist suck the life out of an economy and help create credit bubbles and recessions and depressions. This is Gloom, Boom, and Doom economics 101.

KEYNES, JOHN MAYNARD KEYNES, lst BARON (1883-1946) British economist who revolutionized economic theories, critic, and architect of national economic policies, political essayist, successful financier, bibliophile and patron of the arts, was born at Cambridge England on June 5, 1683.

Until the 1930s he was to be regarded as an orthodox economist of unusual brilliance and penetration. In the subsequent ten years, he attained fame as the protagonist of a school of economic unorthodox₇ and a savage critic of earlier orthodoxies. Seeking to analyze the causes of the recession of the 1930s,he showed how demand in total was determined by expenditures and how an equilibrium short of full employment might emerge without automatically setting in operation forces of recovery. Full employment, according to his theory, could be achieved only if the government and central banks deliberately encouraged investment in new capital goods and maintain cheap money policy and public investment during a recession. Keynes’s most important works General Theory of Employment, Interest and Money(1936) advanced these ideas, for a time divided economists throughout the world into two opposing camps. The academic impact of the book was permanent and cause a majority of the economist the world over to use much of Keynes technique of thought, even if in detail they departed significantly from his first conclusions.

At the level of practice the book had profound effects, first upon the American scene and later upon war finance. In the U.S. Keynes had earlier outlined his ideas to Franklin D. Roosevelt and they were known to some of his advisers; they formed one intellectual ingredient in framing the Roosevelt policies for economic recovery.

John Maynard Keynes was chief British representative at Bretton Woods in 1944, when plans for the International Monetary Fund and the International bank to stabilize exchanges and assist reconstruction were worked out, and he was the chief negotiator of the large U.S. loan to Britain in 1945. Raised to peerage in 1942, he died on April 21,1946,at his home Firle, Sussex, of a heart disease which he had been continuously a victim for the last nine years of his life.

Source: Encyclopedia Britannica First published 1768, nbsp; &n bsp; Vol. 13 1972

See: R. F. Harrod, The Life of John Maynard Keynes (1951) and

E. A. G. Robinson, “John Maynard Keynes,” Economic Journal

vol. LVII, no 225 (March 1947),for more Biographical information

John Maynard Keynes, the world renowned economist, (1883-1946) gave the world the economic directions on how to get the economy moving again, when the economy is in its recession cycle. He basically said, “loosen the credit system, which will lower interest rates, encourage investment in new capital goods, and increase public investment during a recession.” In fact, since World War..... look it up and read his books.

Read the articles carefully. They are based on solid principals. You cannot push an economy too fast or it will run over a cliff. The free enterprise system is self- balancing. You stop doing something when it becomes unprofitable. The financial capitalist do not know when to stop creating money. Creating money is profitable during the expansion and the contraction, because of all the financial repositioning that occurs. This is why I stated, "Change a couple of misguiding policies." What the plan does is neutralizes these Keynesian policies before they unbalance the economy. Policies that may be good for stimulating the economy during a recession become over stimulating and destructive to an economy during the inflation cycle.

I will only reply to a comment that is on subject and will increase people's understanding of the situation the economy is in.

The plan lays out a way for people to stay in their homes by restructuring their mortgages, even if the mortgage is underwater. It empowers the middle class with purchasing power to facilitate an economic recovery.

Tea Party Member's (The People's) Economic Recovery Plan

On September 26, 2010 Leonard C. Tekat a local Bakersfield Tea Party Patriot member posted The Tea Party Member's (The People's) Economic Recovery Plan on www.bakersfield.com/

The creators of this recovery plan stated, "It is very similar to a plan that was used in the Great Depression of the 1930s, to keep people in their homes. The Home Loan Corporation created a new mortgage with new terms that fit the economic conditions of the day. We know of it today as the 30 year fixed rate mortgage. The Home Loan Corp. closed down in the 1950s, returning, after paying for all it's cost with the interest and fees it charged the homeowners, the excess money it had collected. The program did not cost the taxpayers a dime. If fact it made money.

The Great Depression was created when a credit bubble burst, very much like the credit bubble that was created during the housing bubble, that created the Great Recession of 2008. Their plan also includes a means to help prevent future credit bubbles.

It is the Wall St. investment banks, executives of the GSEs and the Federal Reserve member banks, that should be discounting the underwater mortgages. In the long run they will have a smaller loss. The taxpayers should not be paying for their desire to increase their profits and their incorrect financial decisions."

The Tea Party member's economic recovery plan works to keep more people from becoming government dependent. We don't want the government deficit spending on failed Keynesian Economic policies. We would rather have a more capital efficient economic enterprise system, which uses mechanism that enhance people's opportunities to take care of themselves, than paying higher taxes to the government, to keep people from working.

The advice given to President Obama by academia about using old school Keynesian Economics has not worked very well to lower the unemployment rate and stem foreclosures." This economic recovery plan does not use quantitative easing which may create hyperinflation and higher interest rates, which will cause the economy to collapse again. It targets where the problem is; in the primary home sector and consumer confidence.

He stated, " You could all help by e-mailing a copy of the article to newspapers and other media outlets. Send a copy to the President Obama. He said,"He would consider all recovery options". We want to get a national debate going so we can discuss the pros and cons of Tea Party Member's Economic Recovery Plan.

What the government is doing now is not working very well to reduce the unemployment and the foreclosure rate. Until the debate starts we are going to continue posting and sending the article to as many places as we can." To learn more go to: http://people.bakersfield.com/home/Blog/happyashell/61000.com

Chairman of the Committee For Economic Reform and A Better Economic Future and member of the Bakersfield Tea Party.

Leonard C. Tekaat

Check It Out

Tea Party Member's Jobs, Foreclosure, Home Value, Middle Class, Small Business Recover Plan, Without More Deficit Spending /Taxes.

http://people.bakersfield.com/home/Blog/happyashell/61000

This is not a plan to bail out the investment banks. It is a way to keep middle class people in their homes and create employment opportunities in the private sector for the unemployed. Responsible and credit worthy people, by no fault of there own, have seen their hard earned savings disappear because of government policies, investment banks, and large bank executive wanting to increase the bottom line of their corporations. It is the government and the banks that should be taking the loss not us taxpayers. If the plan works to keep more people from becoming government dependent, the government won't deficit spend as much on failed Keynesian Economics and our taxes won't go up. I would rather have a more capital efficient economic enterprise system, which uses mechanism that enhance people's opportunities to take care of themselves, than to keep giving the government more money to keep people from working.

You could all help by e-mailing a copy of the article to www.business@bakersfield.com/ or other media outlets. Send a copy to the President he said he would consider all recovery options. we want to get a national debate going so we can discuss the cons and pros of the plan. What the government is doing now is not working very well to reduce the unemployment and foreclosure rate. Until the debate starts I am going to continue posting and sending the article to as many places as we can.

INFLATION PSYCHOLOGY, INTEREST RATES, AND PREVENTING ANOTHER BUBBLE

To get our economy moving again and prevent another housing bubble, the U.S. Congress needs to change the income tax laws. The change I am purposing would allow the financial sector to offer long term starting mortgage rates at 3% with an increase of 1/4% per year and be capped at 5%. This policy will stabilize housing prices and interest rates, lower the number of foreclosures, increase consumer confidence and purchasing power, which would reduce the unemployment rate by increasing demand for products and services.

I believe the current credit crisis could have been avoided by a change in our income tax laws. We should enact what I call "THE ZERO INFLATION TAXATION POLICY". This policy is a new way of controlling inflation in our economy. When inflation starts to occur in our economy, the interest deduction, and the tax on interest income must be decreased. This would cause the economy to become more efficient, create more real wealth and strengthen the American dollar in the world markets. This change in our tax code would help the Federal Reserve System (Fed) control inflation and maintain employment.

In the 1980s, I wrote a book titled INFLATION THE ECONOMY KILLER that outlined this policy. I ran for the office of California state senator in 1992 to help people deal with inflation and their financial affairs. Back then; I predicted the current problems would occur in our economy because nothing has changed in the last 75 yrs to correct the cause of " INFLATION PSYCHOLOGY", and the creation of "PAPER PROFITS."

Inflation psychology is the perception that rising prices is profitable and money is losing its value. When people are affected by this perception, they are unwilling to keep any part of their money in the credit system of our economy, to support long term debt, which in turn supports increased production. People feel that inflation is eroding the value of their money and that it must be spent or invested in the products of the economy as quickly as possible before it looses any more purchasing power. Paper profit is the money people receive from inflationary investments. (Investments in housing, commodities etc., purchased with credit, that increases in price without making improvements or increasing supply)

The government has changed the way it figures the Consumer Price Index, by removing the cost of purchasing housing. This does not mean that we haven't had HIGH INFLATION in our economy. In the last 30 yrs. home prices have increased 600% or more. With the cost to rent a home in the Consumer Price Index, the cost of owning a home was not reflected in the inflation rate. Therefore the Fed did not take action to slow down the rise in single-family home prices.

The U.S. government does a lot, sometimes too much, to prevent a recession but very little to control a boom. A boom is very profitable for governments, but leads to a recession. When the Fed steps in with their HIGH INTEREST RATE POLICY the economy goes bust again and thousands of small business go bankrupt. We need this tax policy change, before more and more people become government dependent. We need a new method controlling inflation in our economy. It has become so big and electronically sophisticated the old ways no longer work. I submit that my idea is a real answer to this problem.

The long-term capital gains rate devalues the domestic money supply. One of the reasons inflation exist in our economy is that we have made it very profitable. Another reason is we have made money investments (savings and bonds) compete with inflationary investments. Since inflationary investment income is taxed at 15%, (long-term capital gains tax rate), money investment income, which is taxed at up to 35%, is worth 20% less. In fact, to offset the capital gains rate on personal residences, which is at 0%, and the home's annual appreciation rate is 30%, (which we had in 2004 to 2006) interest rates earned on bonds and bank accounts would have to go all the way up to approx. 48.5% to control inflation psychology. This is why the Fed’s interest rate policies couldn’t have done anything about the single- family home housing bubble even if they had tried. Is it any wonder that so much money was moving into single-family homes, which helped create the housing bubble and the economic crisis?

The Federal Reserve, in the early 1980s, tightened the money supply enough to raise interest rates to 21%. Of course this created a recession, because normal production and consumption cannot continue under these conditions. Many people were thrown into the unemployment lines. Small and large businesses went bankrupt and the government's responsibilities increased as more people became dependent on welfare and other government programs. A better way to control inflation psychology and maintain the value of money is by progressively reducing the interest deduction and the tax on interest income, at the same percentage rate, as inflation increases in our economy. The balance of our economy would be maintained. Whenever the interest earned on money investments becomes 15% taxable income, money investments would be as valuable as inflationary investments. This "zero inflation taxation policy" when used during an inflationary period would automatically take excess demand out of the market place, slow down the economy and maintain the value of money as needed. The same thing happens when the Federal Reserve tightens up the money supply by raising interest rates. But this action causes interest rates to go up, raising the cost of credit for consumers and producers.

It must be remembered that the value of our money is determined by the amount of interest a debt is earning above the inflation rate. It is also determined by the borrowers ability to repay the debt. According to the U.S. Constitution, the U.S. Congress has the power, " to coin money and regulate the value thereof". Congress is responsible for maintaining the value of the debt (money) in our economy. If Congress continues to tax interest earned on debt or savings under the national inflation rate, it will be taxing a nonprofit. The money (debt) is losing purchasing power, by the inflation rate each year, therefore making the money investment worthless over the years.

Inflation psychology should not exist in our economy. People are not responsible for maintaining the value of their money; it is Congress's responsibility. If people try to protect the value of their money from inflation, by investing in inflationary investments, they create more debt (money) and more inflation.

With the enactment of the "zero inflation taxation policy" normal production and consumption would continue. It would have the money, at the lowest possible interest rate, it needs to maintain employment and raise the standard of living of all our citizens. The long-term capital gains tax rate would still be in effect but those people who make capital improvements and increase the real wealth of our economy would benefit from its existence. People would not be making inflationary investments because inflation would not be profitable, or making investments to protect their money from inflation. Their money would stay in the credit system of our country, supporting increases in production and normal consumption, thus maintaining low interest rates and inflation rates.

The ZERO INFLATION TAXATION POLICY would eliminate inflation psychology without raising interest rates, therefore stabilizing credit cost. This policy would not reward inflationary investment. It would encourage productive investment. It would automatically change, when needed, our economy from a high credit use and a decreased saving economy, to a system that encourages money investments and productive investments. This change is exactly what our country needs right now! We need to be able to lower interest rates without creating another round of inflation and inflation psychology.

We need a 3% starting mortgage rate to refinance the primary home market and return purchasing power to the consumer to avoid a deeper recession.

Feel free to contact me if you need additional information. I would like to discuss this matter with you.

Sincerely

Leonard C. Tekaat

E-mail address: economysflaw@yahoo.com/

Why Isn't The Stimulus Spending Working Like Obama Hoped

I wanted to testify at the Financial Crisis Inquiry Commission’s hearing held in Bakersfield on September 7, 2010 but it ended before I was allowed to speak. My subject would have been: What started the housing bubble and how can we stabilize home prices and help prevent more foreclosures and improve the unemployment rate without a tax reduction or a tax increase.

My name is Leonard Tekaat.

The reason that the economy is not responding very well to the stimulus spending is that we continue to use the same policies that we have used in past recessions. The Great Recession of 2008 is not the same as previous recessions. It was not caused by lack of demand or over supply. It is more like the Great Depression of the 1930s. As in the Great Depression of the 1930s, this recession was caused by a collapse of a credit bubble. If we continue on the same path that we are on it will not turn the economy around. I believe we are headed for a complete collapse if interest rates are raised, high inflation If interest rates are not raised or hyperinflation when the Federal Reserve monitizes the federal government's deficit. You will find the answer as to how this credit bubbles was created in following article or I will post shortly.

We have two major problems. Getting the economy re-started in creating private sector jobs without creating more money, which will create high inflation and inflation psychology. The other problem is: How do we slow down the economy, after it is up and running again, without higher interest rates, which will cause the economy to collapse again.

If President Obama wants the economy to improve, the middle class's financial condition must be improved. His effort to get the economy moving again is faltering because he has been miss guided by the capitalist advisors that surround him. We need to increase tax revenue, not by raising taxes or lowering taxes, but by increasing productive economic activity, by increasing demand without increasing the federal deficit or the money supply. We do not want to create more paper profits as we have done it the past, to expand the economy, to end previous recessions.

By targeting a temporary ascending interest rate reduction for home mortgages to the sectors of our economy that are having the most difficult time recovering, the home sector and the consumer, this will allow the economy's third leg (enterprise sector) to restart the economy again. The primary home sector of our economy is where the economic crisis was created and where the credit bubble collapsed. We have not address this part of our economy in the correct way. I will explain.

You might be thinking that interest rates are at a historical low. The spread between the cost of funds from the Federal Reserve and the current mortgage rate needs to be at least another 1.5% lower. Even then it would be at a historical high. When interest rates went to 21% for a mortgage in the early 1980s that was less than 100% above the inflation rate of 12%. Currently we have home prices that are still declining, yet the interest rate for a 30yr fixed rate mortgage is 450%, (for the most credit worthy), above the home price deflation/inflation rate. The banks can borrow money from the Fed for under .25%. They can loan it out for mortgages at 5%, that is a 20 times increase between the cost of funds and the sale of funds. Let me give you an example. If an auto manufacturer produced a car for $20,000.00 the sale price would be $400,000.00. The capitalist businesses can pay enormous bonuses because of these huge profit margins. The profit margin on other consumer and business credit is even greater.

The economy should not have to be in a depression for the economy to have interest rates low enough to stimulate the economy. The banks have failed to pass through the Fed's low interest rate policies to the main street economy even through 98% of the new home mortgages are either being sold or guaranteed, to or by government agencies. F&F could be used to offer a lower starting mortgage rate.

Our government was created by the people; for the benefit of the people. It was not created to only benefit the capitalist. The government does not have to make a profit from a program for it to be beneficial for the people. A program has to make sense and break even without burdening the people with increased taxes, Why cannot our government agencies be used in the most efficient manner to lower mortgage starting interest rates? Why can’t the government agencies invest in our new and modified mortgages, which will increase in value and earn interest to pay for the operating cost of this program? Banks are not risk takers. They will only loan money when the collateral is maintaining or increasing its value. Credit underwriting standards should be maintained not lowered as the economy improves and home values increase. The program will end in 10yrs or less without increasing our taxes. As the financial condition of the middle class improves, so will the financial condition of the banking service industry. A bank is only as strong as its customers, the value of its collateral and capital.

A lower starting home mortgage rate will increase consumer’s disposable income. As the economy improves, the foreclosure inventory will be eliminated. Since we will be modifying the mortgages, we will not be increasing the money supply, therefore the chance of creating hyperinflation will be decreased. We will be increasing people's disposable income but at the same we will decrease their desire to use credit and increase there desire to hold money as a store of wealth, during the inflation economic cycle, (as explained latter) which will decrease the ability of the banking industry to over leverage the money supply during the inflation cycle.

Because of the "standard deduction" and the exclusion of so many people from the income tax roles, the upper middle class, the rich and investors use the mortgage interest deduction to purchase primary housing and buy single-family homes as investments. This extra stimulus/demand in primary housing is needed when the economy is experiencing a recession, but not when it is experiencing inflation. By using the income tax to reduce demand from the top of the economic ladder, with an automatic change in our income tax system, when inflation begins to occur, will make our economy more efficient and raise all of our citizen’s standard of living.

We have a flaw in our economic policies. We have a dynamic economy that is changing from recession to inflation over the years. Yet we have an income tax that is static. The Flat Tax and the Fair Tax are also static taxes. The stimulus that is enacted in a recession to improve the economy is left in tact as the economy moves into the inflation cycle. This causes the economy to heat up too much and the economy collapses into a recession or a depression. Our economy experiences Gloom,Boom,Doom cycles.

In the past the Federal Reserve used higher interest rate policies to control inflation in our economy. This policy reduces demand from the bottom of the economic ladder, which causes untold misery and hardship for the middle class, the poor and small business. Thereby increasing government dependency and its deficit. Relying only on the Fed's high interest rate policies to control inflation is an obsolete policy and it should be changed.

To Increase The Disposable Income And Confidence Of The Middle Class Without A Tax Cut Or Tax Increase

President Obama and the capitalist stimulus plans are not working as well as they had hoped. Their plans are not lowering the unemployment and foreclosure rate. President Obama has surround himself with capitalist. The capitalist have written the current recovery programs to benefit them not Main Street. The recovery program I am purposing will help the banking sector and main street.

An economic recovery plan must increase economic activity and disposable incomes, of a majority of the people in the private sector of the economy, which will reduce unemployment and foreclosures.

What Must Be Done To make Our Economy Better For All Our Citizens?

#1. Create a new mortgage that fits the current economic conditions. The mortgage would have a starting interest rate of 3%. The interest rate would increase at 1/4% a year for seven years and cap out at 5%. The borrower must qualify at the 5% interest rate. This mortgage would be available to any homeowner that could qualify, even those people that their mortgage is underwater.

The Federal Reserve, US Treasury or a Home Loan Corp., as it did in the Great Depression, would purchase the new MBSs until the housing market stabilized and then sell them to investors when the interest rate on the securities increased to 5% and the value of the homes were 10% greater than the mortgages. This mortgage would increase middle class people's disposable income and confidence, thereby increasing economic activity, which would reduce unemployment by increasing demand for products and services. The mortgage backed securities the Fed currently holds would increase in value because they include mortgages that have a higher interest rate than the new mortgages will have. The Fed needs to sell the Mortgage Backed Securities that they currently hold. The purchase of these MBSs did not increase the disposable income of a sufficient number of people, to improve the financial condition and confidence of consumers to restart the economy.

#2. Mortgages that are underwater would have their unpaid balance reduced by an amount equal to 30% of their monthly payment amount each month for up to10 yrs or until the mortgage equals the then current possible sale price of the home, which ever is less. Second lien holders would be able to participate in this mortgage reduction plan. Their interest rate and terms would be the same as the first lien holder. A modification agreement could be used for mortgages that are held by the banks and federal agencies and have not been securitized. I believe that the investors that hold securitized mortgages will prefer this program, than a possible foreclosure. The banks and F&F that hold securitized mortgages should also prefer this program to the short sale.

There is no need to mark the mortgage down to current market value as long as the borrower has hope that the mortgage will, at some point, equal the possible selling price of the home. The homeowner will continue to make the reduced mortgage payment as the market stabilizes and the home starts to go up in value, closing the gap between the appraised value of the home and the mortgage during the 10yrs allowed by this program. With a 2 to 3% increase in the price of the home each year and a 2 to 3% decrease in the unpaid balance of the mortgage, the maximum amount the mortgage that may be discounted would be 30% over a ten-year period. If you add in the 30% increase in the value of the home the total amount would be a 60% change in the owner financial position in the home.

#3. Enact the Zero Inflation Taxation Policy. This policy would decrease the chance of another bubble/ bust economic cycle. It will stabilize interest rates so debt will not lose value because of interest rate increases. People will be more willing to invest in mortgage-backed securities, and other debt, thereby maintaining interest rates at the lowest possible rate. Low interest rates will help the private sector maintain cost and the government's interest payments on the national debt will remain a smaller part of the budget, thereby not bankrupting our economy and government, which would cause hyperinflation to be created.

www.economysflaw.wordpress.com/

Home prices have been falling for 3 years. Foreclosures and unemployment are increasing. The Federal Deficit is growing larger everyday. Something has to change. If you agree that this program will be better than the Capitalist and President Obama's primary home and economic recovery plans, send this article to your friends and neighbors. Tell them to send it to the President. Don't break the chain until we are heard in Washington D.C

Sincerely Leonard C. Tekaat economysflaw@yahoo.com

To adampayne: For some reason I could not post an answer to your comment on bakersfield.com so I will post it here.

Thank you for your comment. I agree with you that jobs have been created. The majority of them have been local, state, or Federal jobs. My main concern is that we need more jobs in the private sector. The Great Recession was not caused by a lack of demand or by an over supply. The Great Recession was created by the bursting of a credit bubble, very similar to the Great Depression. In the Great Depression millions of people lost their purchasing power. During the 1920s it was mostly cash, which was used in the economy to facilitate exchanges of goods and services. In the Great Recession we have many social programs that maintain peoples minimum purchasing power. To turn the economy around and end the Great Recession we must reestablish the disposable income of the millions of people who have lost their disposable income and increase the confidence of the general population, that there will be a better future. A future made up of a different set of rules. A future were jobs are available and the economy will not be moving so fast that they cannot save and invest without it all disappearing again, caused by a financial collapse or inflation or hyperinflation. Our homes had become the new "gold standard" Almost all consumer and small business credit was established with the collateral value of our homes and real estate. The Capitalist in their desire to increase profits created ways to increase the amount of money that could be created. In 1999 President Clinton changed the capital gains tax on the sale of primary homes, making it zero for most sales of primary homes. It took a couple of years to get the snow ball rolling but this change gave the home owner a profitable reason to sell and a buyer, expecting to reap the same rewards when they sold the home, brought the home without much concern about the price because primary home prices have been rising since the end of World War Two. The Capitalist with their new ways of expanding credit were more than willing to finance the increases in home prices thus creating enormous amounts of "paper profits". As more and more people realized that easy profits could be had it became a feeding frenzy. Banks lowered their underwriting standards because they felt safe, knowing that because the home that was securing the mortgage was going up in value and they could sell the mortgage to Wall St. or a government agency. The rest of the story is history.

To tkozy:

I am with you on your idea of limiting commodities trading. I mention this in my Alternative Economic Recovery Plan posted on my web site. www.economysflaw.wordpress.com/ My opinion is that we should not allow an income tax deduction for trading commodities with credit. Trading commodities is similar to gambling with playing cards. Is the contract going up in price or down? Will I win or lose. It is my opinion that commodity trading should be table stakes only. This means that if someone wants to hedge or invest in commodities we should discourage the use credit to leverage their bets. This is why oil went to $140.00 a barrel and homes doubled in price. It is excessive use of leverage that creates bubbles. Normal supply and demand economics does not cause spikes in prices. Commodities have been used by hedge funds to return profits to their investors at the expense of the needs of the people and the economy with larger trade and government deficits.

Please read the following article about inflation psychology. You will understand the economic flaw that exists in our economic policies better.

INFLATION PSYCHOLOGY, INTEREST RATES, AND PREVENTING ANOTHER BUBBLE

We need a 3% starting mortgage rate to refinance the primary home market and return purchasing power to the consumer to avoid a deeper recession.

Feel free to contact me if you need additional information. I would like to discuss this matter with you.

Sincerely

Leonard C. Tekaat

E-mail address: economysflaw@yahoo.com/

INFLATION PSYCHOLOGY, INTEREST RATES, AND PREVENTING ANOTHER BUBBLE

We need a 3% starting mortgage rate to refinance the home market and return purchasing power to the consumer to avoid a deeper recession.

Why Isn't The Stimulus Spending Working

My name is Leonard Tekaat.

It is my belief that the reason that the economy is not responding very well to the stimulus spending is that we continue to use the same policies that we have used in past recessions. The Great Recession of 2008 is not the same as previous recessions. It was not caused by lack of demand or over supply. It is more like the Great Depression of the 1930s. As in the Great Depression of the 1930s, this recession was caused by a collapse of a credit bubble. If we continue on the same path that we are on it will not turn the economy around. I believe we are headed for a complete collapse or hyperinflation. You will find the answer as to how this credit bubbles was created in another article I will post shortly.

As I see it we have two major problems. Getting the economy re-started in creating private sector jobs without creating more money, which will create high inflation and inflation psychology. The other problem is: How do we slow down the economy, after it is up and running again, without higher interest rates, which will cause the economy to collapse again.

I believe, by targeting a temporary ascending interest rate reduction for home mortgages to the sectors of our economy that are having the most difficult time recovering, the home sector and the consumer, this will allow the economy's third leg (enterprise sector) to restart the economy again. The primary home sector of our economy is where the economic crisis was created and where the credit bubble collapsed. We have not address this part of our economy in the correct way. I will explain.

To Increase The Disposable Income And Confidence Of The Middle Class Without A Tax Cut Or Tax Increase

An economic recovery plan must increase economic activity and disposable incomes, of a majority of the people in the private sector of the economy, which will reduce unemployment and foreclosures.

What Must Be Done To make Our Economy Better For All Our Citizens?

www.economysflaw.wordpress.com/

Sincerely Leonard C. Tekaat economysflaw@yahoo.com

To adampayne: For some reason I could not post an answer to your comment on bakersfield.com so I will post it here.

To tkozy:

Letter Written To Elizabeth Warren, Congressial Oversight Panel.senate.gov

To Elizabeth Warren and Members of The Oversight Committee:

Today Ms. Warren appeared on C-span. She was very concerned about home foreclosures and the banks reluctance to modify homeowner mortgages. I tried to call the show but I was unable to get though.

For a mortgage foreclosure reduction plan to be widely accepted it must be beneficial to all parties involved. It must also be conceived to be fair to other homeowners that are being responsible and paying their monthly mortgage payments. It must also be available to a vast number of homeowners, not just homeowners that have fallen on bad times.

It is my belief that if you improve the financial condition of a vast majority of people during a recession, this will improve the economy, thereby the unemployed and the under employed will be put back to work, if the employer realizes that demand has increased for their product or service. Isn't that what the Economic Recovery Stimulus Plan and deficit spending is all about?

Enclosed you find a short article outlining policies that need to be adopted. Please contact me. I have written before but only received a form letter. These policies should be looked at closely. I believe it is possible that they will decrease the misery the Great Recession of 2008 has created. They will increase consumer confidence and increase small and large business activity. It is time to decrease the Gloom, Boom, Doom economic cycles that we have had for the last 50yrs.

Private Foreclosure Reduction Plan Trumps Government Plan

Three Policy Changes; that is all it will take to decrease unemployment and foreclosures.

#! Create a mortgage that fits the current economic conditions. I am proposing a mortgage with a starting interest rate of 3% and then it would go up 1/4% a year for seven years and cap out at 5%. The borrower must qualify at the 5% interest rate. This mortgage would be available to any homeowner that could qualify, even those people that their mortgage is underwater. (Currently banks offer the 5/1 Adjustable Rate Mortgage, which earns about the same amount of interest in the first 5yrs. The new mortgage is not indexed. Therefore people will refinance their homes. The new mortgages could be sold to or old mortgages modified by FNM or FRE, securitized and sold to investors, or the Fed or Treasury until housing prices stabilized and the interest rate increased to 5% and then sold to investors.)

#2. Mortgages that are underwater would have their unpaid balance reduced by an amount equal to 30% of their monthly payment amount each month for up to 10 yrs or until the mortgage equals the then current possible sale price of the home, which ever is less. Second lien holders would be able to participate in this mortgage reduction plan. Their interest rate and terms would be the same as the first lien holder. A modification agreement would be used to modify the terms of the mortgage.

#3. Enact the Zero Inflation Taxation Policy. This policy decreases the chance of another bubble/bust economic cycle and stabilizes interest rates.

These polices www.economysflaw.wordpress.com/ will not cost the taxpayers a dime.

Leonard C. Tekaat is a retired economic analyst, economic scholar, businessman, financier, investor and author. He has over forty years experience in the financial world. He is a former candidate for California Congress. He is Chairman of the Committee for Economic Reform and a Better Economic Future.

Review of policies by Economics Professor Mark Evans CSUB

From: "Economics Professor Mark Evans CSUB" To: "Leonard Tekaat" Hi, Leonard. I agree that current policies haven't been very effective thus far in addressing the foreclosure mess and that the macro economy remains vulnerable to a two-dipper because of it. I think we probably need something along the lines you suggest that cuts both interest rates and the principle upon which the monthly payments are based. Several months ago, I found a couple of columns online, by Alan Blinder, (Home Owner Loan Corp.) which described the highly successful program that was implemented during the depression due to upside-down mortgages and defaults. The agency that was created to run this program ran a profit and was "put to rest" sometime in the 1950's when the last of the contracts expired. I'm not sure without looking at it more closely, but I think your suggestion may work in a similar fashion. We also need some regulatory changes to reduce the risk of bubbles and we needed the stimulus package, as imperfect as it was. Professor Mark Evans.

The Private Fix is the correct way to solve the foreclosure crisis because it does not award the reckless homebuyers or flipping investors. It will increase economic activity and the disposable income of a large number of people, which in turn will reduce unemployment and foreclosures.

The responsible homebuyer or homeowner did not create the foreclosure crisis, economic crisis, or the unemployment crisis. The taxpayers should not have their taxes increased to bail out the economy or to pay for a huge federal deficit. It was the Capitalistic entity (Banks and Federal Reserve) and the government, taxation and housing policies that caused the housing bubble and the Great Recession of 2008.

How will this mortgage help the economy? The banks and the homeowner will both benefit. The homeowner's monthly interest payment will be lower for eights years. If the homeowner refinances a 6% loan their monthly interest payment will decrease by 50% from say $1500.00 to $750.00, the first year and slowly increase the other seven years.

It is going to take time to heal our economy but this private economic recovery plan will help the housing market recover faster and make the financial service sector stronger.

The banks will benefit because the new mortgage cost them less than the amount to foreclose or short sale the house. They are currently losing hundreds of millions of dollars due to foreclosures, short sales, and lost of interest and principal payments.

The economy will improve because more people's disposable income will be increased, than with the government's economic recovery plan. This will increase aggregate demand, increasing economic activity thereby reducing unemployment and foreclosures, shortening the Great Recession of 2008.

For more detailed Info. Go to www.economysflaw.wordpress.com/

Copy right by Leonard C. Tekaat 3-28-2010

Comments

Posted by catpaw on Mar 27, 2010 at 08:18 AM <Delete>

These polices will not cost the taxpayers a dime.

But how much would it cost the banks? Banks are not about to set a dangerous precedent of social conscience or giving a rat's tail about rectifying the duplicity that sucked home buyers into this mess or in any way show a sense of responsibility for the economic downturn they helped create.

Banks are in the business of making money. And they don't care where it comes from or how they get it.

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Posted by happyashell on Mar 27, 2010 at 10:12 PM

To catpaw, Banks want to make money that is correct. They also don't want to lose money if they can prevent it. If a person bought a 2000 sq ft. house in 2007, for $400,000.00, it might sell now for around $200,000.00.

If the borrower decided they didn't want to pay for the house. The bank's, if the buyer had put down 5%($20,000.00), unpaid balance on the mortgage is $380,000.00. The bank or the investor, who invested in the mortgage, would loose $180,000.00 on the mortgage, $10,000.00 on foreclosure and selling cost. They would loose the unpaid interest for all the months the borrower had not paid the mortgage and the time it sat empty waiting for it to be sold. Say a year at 5% is $19,000.00. This all adds up to $209,000.00. If the house is damaged while its empty or it needed repairs when it was foreclosed on, it might sell for a lot less than $200,000.00. So the loss could be more. If the bank or investor did sell the house, they would earn 5% interest on the $200,000.00 or a smaller amount. At that selling price, the interest earned for 30yrs can be over $100,000.00 less than if they allowed the borrower stay in the home, if they were not a credit risk. This is why I think it best to qualify the borrower at the 5% interest rate.

If the banks offer the homeowner, the terms of my mortgage they would lose about $16,000.00 in interest in the <b>eight years </b>until the interest rate reaches 5%, and about $7344.00 a year until the home went up in price and it met the mortgage as it was being discounted down. If the home does not go up in ten years the maximum amount that would be discounted is $73,440.00 plus the interest of $16,000.00 for a total of $89,440.00. They will make some of the lose back because they will be receiving interest on the larger unpaid balance for 22 yrs which will be a higher unpaid balance than if they foreclosed or short sold the home today. Also more than likely the home will go up in price before the ten years is up and everyone will be smiling again.

The important thing is the enactment of the Zero Inflation Taxation Policy so that long-term interest rates are stabilized and remain at near 5%. If home prices can be stabilized local and state government's tax revenues will be improved and the pending statewide economic crisis will be curtailed.

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