Will You Survive The Coming Financial Crash? Some Clarifications
I have been reading with great interest, the comments that are being made about my white paper entitled "Will You Survive The Coming Financial Crash?" Even though I took great pains to explain things as simply as possible --- some people no longer possess the proper mental faculties to understand some of the more difficult aspects of what I discuss. This is, no doubt, due to the deliberate dumbing down that Charlotte Thomson Iserbyt talks about in her book "The Deliberate Dumbing Down of America."
Let me begin by providing the link to Mrs. Iserbyt's website --- her book is the most mind-blowing expose I have EVER read about the compulsory government-mandated public education system of the United States:
Deliberate Dumbing Down of America - Charlotte Thomson Iserbyt
Here below is one such comment --- from someone who calls himself Big Fat Freddy --- but his real name is George:
"He confuses national debt with our trade deficit, which is what Buffett is talking about. Buffett hasn't switched out of dollars, he has only increased his euro holdings during a time in which he knows the dollar is being lowered to combat our trade deficit.
Kent can either be ignorant, sell his house and buy gold, or he can take a basic economics class at his local Buffalo city college where I am sure they would be less than awed by this "paper." I'd give it a "D" for effort but basic lack of understanding."
This would be amusing if it weren't so sad . . .
You see, the section of the white paper to which he refers is entitled WHAT WARREN BUFFETT SAYS ABOUT THE U.S. TRADE DEFICIT AND THE U.S. DOLLAR (pgs. 23-25). So, I don't have anything wrong, Freddy. Next, he makes a comment that Warren Buffett has not decreased his dollar holdings, but increased his Euro holdings. It is clear here that Freddy does not have the faintest idea of what he is talking about.
By the way Freddy, the dollar is lowering in value because the system is COLLAPSING --- and NOT because of some battle to lower the trade deficit. The reader should know that the U.S. trade deficit is killing this country because of NAFTA and GATT --- the two so-called "free-trade" agreements. Just count the number of items you purchase that are marked MADE IN CHINA.
Next, he admonishes me to go to college and learn economics --- which is more nonsense. As I point out in this white paper --- real math is NOT taught at U.S. schools of ANY level. I was licensed by the Securities Exchange Commission in the early 1980's, and in this past twenty-plus years, I have used my knowledge to help myself and my family to avoid all of the pitfalls I describe in the paper.
Maybe Freddy should himself go back to school and LEARN HOW TO READ. That might be helpful.
UNDERSTANDING INTEREST-RATES CHARGED BY THE BANKS:
The next clarification concerns the example I gave of simple versus compounded interest that banks employ. Here is a comment by someone that calls themselves JustYield on the talkgold.com message board:
"Why does he compare one year of simple interest ($7K) to 30 years of amortisation ($144K) in his mortgage example? Doesn't make sense, is highly misleading and seriously diminishes the impact of the rest of his arguments. Does he not understand that if you take out a loan it is someone else's money?"
Well, here is another person who simply did not understand what they were reading. The example I gave was in the section entitled HOME MORTGAGE USURY (pgs. 18-19):
To begin with, I was NOT talking about loan amortization. What I WAS talking about were the differences between what interest-rates the bank CLAIMS they are charging --- versus what interest-rates they are REALLY charging their customers.
Here is what I wrote on page 19 of the white paper:
"When the banks are paying their customers interest, it is simple interest. In the case of my one-hundred thousand dollars above, the total interest would have been a simple $7,210.00. However, the interest was $144,609.20 --- a sure sign of compounded interest. This is what we pay to the banks, and already the individual buying the home is at an extreme disadvantage. The cards are stacked against the middle class in a situation like this, and if I attempted to do something like this, I would be hauled in for loansharking or racketeering, or both."
In the chart on this same page, the bank claimed that my hypothetical home mortgage was only 7.21% of $100,000.00 --- which by the manner in which they state in all their advertisements --- people actually do believe that this is ALL they are paying in interest. To confirm this, I asked several of my friends and family members what they THOUGHT their own home was ultimately costing them. Not a single one of them knew anything about the TRUE RATE that they were contractually obligated to pay the lending bank.
If one calculates 7.21% of $100,000.00 --- the answer ends up being $7,210.00 in simple interest. This is what the banks CLAIM they are charging. How this does not violate TRUTH IN LENDING laws --- I'll never know.
However, because simple interest is merely what the banks PAY their customers --- I needed to calculate the TRUE TOTAL COMPOUNDED INTEREST --- which becomes $144,609.20. This represents a 144% interest-rate and this TRUE INTEREST-RATE is NEVER MENTIONED in any of the literature --- and is NOT anywhere on the mortgage contract itself.
$144,609.20 is NOT 7.21% of $100,000.00 --- THAT was the point I was discussing.
Nowhere do I mention loan amortization --- and it is a mystery to me WHY the person above BELIEVES that this is what I was talking about.
Next, I state that if I PERSONALLY attempted to loan someone money at 144% interest --- I would be charged with the crime of loan-sharking or racketeering (or both). Why did I make such a comment? Because that is PRECISELY what I was told when I contacted the agency that would be investigating me if I ever did such a thing.
HERE'S THE BOTTOM LINE . . .
While some people might be pissed-off that I called attention to their own worst judgement --- the only way that they can attempt to combat such TRUTH is by an attempt to discredit me in some way. However --- all that the people in the above two examples have accomplished is to show the world how little they know and how little they can understand of what is, admittedly, a complex and vexing issue.
I could mention a couple of other comments --- but they are merely variations on the themes explored above. Before I published this paper --- I did sent a DRAFT copy to people I know who are involved in both finance and economics. I was told by everyone with whom I shared that DRAFT copy --- that I was right on the money. I even listed an extensive bibliography section at the end of the white paper --- along with listing website links within the body of the paper itself, when and where they were appropriate.
Again, I have to go back to Mrs. Iserbyt and the deliberate dumbing down of this country. This is the reason why people such as Big Fat Freddy do not understand what they read. Read Iserbyt's book for yourself --- as it will forever change the way in which you see the compulsory government-mandated public education system in this country.
A system that is falling apart by DESIGN . . .
financial crash
Let me begin by providing the link to Mrs. Iserbyt's website --- her book is the most mind-blowing expose I have EVER read about the compulsory government-mandated public education system of the United States:
Deliberate Dumbing Down of America - Charlotte Thomson Iserbyt
Here below is one such comment --- from someone who calls himself Big Fat Freddy --- but his real name is George:
"He confuses national debt with our trade deficit, which is what Buffett is talking about. Buffett hasn't switched out of dollars, he has only increased his euro holdings during a time in which he knows the dollar is being lowered to combat our trade deficit.
Kent can either be ignorant, sell his house and buy gold, or he can take a basic economics class at his local Buffalo city college where I am sure they would be less than awed by this "paper." I'd give it a "D" for effort but basic lack of understanding."
This would be amusing if it weren't so sad . . .
You see, the section of the white paper to which he refers is entitled WHAT WARREN BUFFETT SAYS ABOUT THE U.S. TRADE DEFICIT AND THE U.S. DOLLAR (pgs. 23-25). So, I don't have anything wrong, Freddy. Next, he makes a comment that Warren Buffett has not decreased his dollar holdings, but increased his Euro holdings. It is clear here that Freddy does not have the faintest idea of what he is talking about.
By the way Freddy, the dollar is lowering in value because the system is COLLAPSING --- and NOT because of some battle to lower the trade deficit. The reader should know that the U.S. trade deficit is killing this country because of NAFTA and GATT --- the two so-called "free-trade" agreements. Just count the number of items you purchase that are marked MADE IN CHINA.
Next, he admonishes me to go to college and learn economics --- which is more nonsense. As I point out in this white paper --- real math is NOT taught at U.S. schools of ANY level. I was licensed by the Securities Exchange Commission in the early 1980's, and in this past twenty-plus years, I have used my knowledge to help myself and my family to avoid all of the pitfalls I describe in the paper.
Maybe Freddy should himself go back to school and LEARN HOW TO READ. That might be helpful.
UNDERSTANDING INTEREST-RATES CHARGED BY THE BANKS:
The next clarification concerns the example I gave of simple versus compounded interest that banks employ. Here is a comment by someone that calls themselves JustYield on the talkgold.com message board:
"Why does he compare one year of simple interest ($7K) to 30 years of amortisation ($144K) in his mortgage example? Doesn't make sense, is highly misleading and seriously diminishes the impact of the rest of his arguments. Does he not understand that if you take out a loan it is someone else's money?"
Well, here is another person who simply did not understand what they were reading. The example I gave was in the section entitled HOME MORTGAGE USURY (pgs. 18-19):
To begin with, I was NOT talking about loan amortization. What I WAS talking about were the differences between what interest-rates the bank CLAIMS they are charging --- versus what interest-rates they are REALLY charging their customers.
Here is what I wrote on page 19 of the white paper:
"When the banks are paying their customers interest, it is simple interest. In the case of my one-hundred thousand dollars above, the total interest would have been a simple $7,210.00. However, the interest was $144,609.20 --- a sure sign of compounded interest. This is what we pay to the banks, and already the individual buying the home is at an extreme disadvantage. The cards are stacked against the middle class in a situation like this, and if I attempted to do something like this, I would be hauled in for loansharking or racketeering, or both."
In the chart on this same page, the bank claimed that my hypothetical home mortgage was only 7.21% of $100,000.00 --- which by the manner in which they state in all their advertisements --- people actually do believe that this is ALL they are paying in interest. To confirm this, I asked several of my friends and family members what they THOUGHT their own home was ultimately costing them. Not a single one of them knew anything about the TRUE RATE that they were contractually obligated to pay the lending bank.
If one calculates 7.21% of $100,000.00 --- the answer ends up being $7,210.00 in simple interest. This is what the banks CLAIM they are charging. How this does not violate TRUTH IN LENDING laws --- I'll never know.
However, because simple interest is merely what the banks PAY their customers --- I needed to calculate the TRUE TOTAL COMPOUNDED INTEREST --- which becomes $144,609.20. This represents a 144% interest-rate and this TRUE INTEREST-RATE is NEVER MENTIONED in any of the literature --- and is NOT anywhere on the mortgage contract itself.
$144,609.20 is NOT 7.21% of $100,000.00 --- THAT was the point I was discussing.
Nowhere do I mention loan amortization --- and it is a mystery to me WHY the person above BELIEVES that this is what I was talking about.
Next, I state that if I PERSONALLY attempted to loan someone money at 144% interest --- I would be charged with the crime of loan-sharking or racketeering (or both). Why did I make such a comment? Because that is PRECISELY what I was told when I contacted the agency that would be investigating me if I ever did such a thing.
HERE'S THE BOTTOM LINE . . .
While some people might be pissed-off that I called attention to their own worst judgement --- the only way that they can attempt to combat such TRUTH is by an attempt to discredit me in some way. However --- all that the people in the above two examples have accomplished is to show the world how little they know and how little they can understand of what is, admittedly, a complex and vexing issue.
I could mention a couple of other comments --- but they are merely variations on the themes explored above. Before I published this paper --- I did sent a DRAFT copy to people I know who are involved in both finance and economics. I was told by everyone with whom I shared that DRAFT copy --- that I was right on the money. I even listed an extensive bibliography section at the end of the white paper --- along with listing website links within the body of the paper itself, when and where they were appropriate.
Again, I have to go back to Mrs. Iserbyt and the deliberate dumbing down of this country. This is the reason why people such as Big Fat Freddy do not understand what they read. Read Iserbyt's book for yourself --- as it will forever change the way in which you see the compulsory government-mandated public education system in this country.
A system that is falling apart by DESIGN . . .
financial crash
posted by Kentroversy at 7:41 PM
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