Who Makes the Nasty Phone Call?

I cannot fully understand international finance…can you?

This column presents a conservative viewpoint about items of interest in our community and our lives. Focus is on items impacting your pocket book, your personal freedoms, and your rights. I hope you will read the column regularly and it occasionally influences your opinions and actions. Now, on to the subject of the week:

"Where will the money come from??"

I have been struggling for several weeks now trying to develop a full understanding of international finance. On a personal, more local basis, I completely understand how loans and financing works. However, I completely lose it when I try to get some basic answers related to international financing arrangements.

When I need a loan for a worthwhile purpose, I can go to a local bank and have a meeting with one of the bank’s top executives, Mr. Ira Lender. He will want me to describe the use of the funds, and will want me to show my income, my existing debts, my demonstrated credit worthiness and honesty, and will want me to put up my house, car, wife, and oldest child as security…then he will approve the loan.

After they have investigated the truthfulness of the information I provided, they will prepare a massive stack of loan documents for execution at a formal ceremony called "The Closing". After each page in the huge stack has been signed, initialed, and resigned, the ceremony comes to an end. I realize that among these documents with hundreds of words written in intelligible, small print are agreements which lets the bank do anything it wants to do, and allows me to do nothing except pay on time each month. They also have the right to sell my loan if they desire to some huge bank in some far away place which is owned and managed by people I will never see or know. My little loan might even be bundled with other, similar loans and traded as a packaged security around the world.

Finally they issue the check to me for the amount of the loan (less huge closing costs), and I can proceed with the purchase or project for which the loan was issued. The bank will draw on their deposits for the funds they give to me, and they will check to be sure I really use the money for the intended purpose.

I also know that if the loan stays with the local bank and I am late on a payment, I will receive an embarrassing call from Ima Gogetter who will inform me I have missed a payment, and she will want to know what my problem is, and when I can make the payment. I also realize that if the loan is sold to uncaring people far away, I will receive a phone call from a lady somewhere in the North, who has a monotone, unemotional, threatening voice who will inform me I have missed a payment and now owe a huge late fee penalty, and if they do not get payment by noon the next day they will come and take away my house, car, wife and oldest child. I understand all of this procedure.

However, I do not understand what happens when the United States suddenly decides it wants to borrow a trillion dollars for a stimulus program and it plans to borrow the money through international banking relationships. It is stated that U.S. Securities will be issued, and probably these will be bought and held by China. Now, this is where some of my problems begin…

How come China has so much money and we do not? Aren’t most of the people in China very poor? How can the government of China be making huge amounts of money by taxing these poor people, while the US has no money even though it has one of the highest personal and corporate tax rates in the world? Where is their money coming from? Where is ours going? Were did China get the two to three trillion they have already loaned to us? What security did we put up in order to get the loan? What is the term and interest rate on those loans? How much are our monthly payments? Who do we make the payments to? Who writes our check and puts it in the mail each month?

If China decides not to loan us the money, and we have already started thousands of earmarked special projects and have contractors working on roads, bridges, sidewalks, water systems, tattoo removal, pig stink research, Polynesian Cultural Museums’, and thousands of other expenditures occurring….and the loan doesn’t go through…what happens?

If the U.S. fails to make a payment one month, who will call us and make the nasty sounding collection phone call? Who will they call here? Where will the call come from and who will make it? How big are the late fees? What will they do to us if we default on the loan? Can they foreclose on the United States? I just don’t understand how it all works!

I can comprehend the fact that our Government owns the printing presses and master printing plates to print money. I can imagine the temptation to just go to the print shop and print out a few trillion instead of kissing Chinese rumps to borrow the funds. Who decides when and how much will be printed? How can a person monitor how much "new" money is being created? If new money is created, doesn’t that lessen the worth of the "old" money which is already in circulation. If so, isn’t all of our hard earned money which we may have saved at risk of being devalued into a state of becoming worthless? Isn’t that what happened in Germany when the Weimar Republic ran the German economy amuck after WW I? It got so bad that a German housewife had to carry a suitcase full of worthless German dollars to the grocery store just to buy milk and bread.

That condition of economic disarray and the German people’s economic plight and misery made it easy for Hitler to move in with his Nazi Party and oust the struggling, corrupt Weimar Republic which was previously in control. It took Hitler’s ruthless, dictatorial authority to restore economic sanity. In fact they had to begin to conquer neighboring nations and loot their treasuries for the benefit of Mother Germany.Anyhow, the stimulus is upon us. Our politicians now speak in terms of trillions instead of mere billions. Money is apparently about to be splashed out of the federal funding pools in unbelievable amounts. We will be wading in money. Governments at all levels will be on spending sprees. Thousands of lucrative, new government jobs will be created at the federal, state, and local levels. Don’t dare stop and worry about where it is coming from…or who and how it will be repaid…just join the party and Spend!- Spend!- Spend! The loonies in Washington tell us if we will just follow their leadership we will be "Getting It Right!"

Rudiments: Odds and Ends Worth Mentioning

♦ Since I wrote those articles defending our community and all of those wonderful people who worked at Dozier for their entire careers, those ‘White House Boys" who are trying to win a multi-million dollar claim of abuse from our government, have been abusing me through vicious "blogs" on our paper’s web site. Some have been too rough for publication, but we have allowed entry for several. They seem to be demonstrating those same character flaws that probably resulted in them being sent to Dozier many years ago. They really get vicious when their anticipated "prize" is threatened. To read their ranting, go to our site at www.jacksoncountytimes.net.

The 9 Principles of Citizenship as proclaimed by Glenn Beck: 1. America Is Good.2. I believe in God and He is the Center of my Life.3. I must always try to be a more honest person than I was yesterday.4. The family is sacred. My spouse and I are the ultimate authority, not the government.5. If you break the law you pay the penalty. Justice is blind and no one is above it. 6. I have a right to life, liberty and pursuit of happiness, but there is no guarantee of equal results. 7. I work hard for what I have and I will share it with whom I want to. Government cannot force me to be charitable.8. It is not un-American for me to disagree with authority or to share my personal opinion. 9. The government works for me. I do not answer to them, they answer to me.

Note: The opinions stated in this column are solely those of the author and do not necessarily represent those of Hatcher Publications.