Minds of most Americans have been corrupted with many economic myths by mainstream economists and so called experts, which are reinforced by the media and often repeated on the streets. These myths are false in most cases, and based on half truths in others. We constantly hear things like: inflation is caused by rising oil prices; consumption is the most important element for economic growth; government expenditures help stimulate the economy; and many others.

In this article, First in a series of two, I will explore some popular myths regarding Inflation and Energy matters. In the second article, I will write for you about common myths about Consumption.

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Economists continually try and sell the public the idea that recessions or depressions are a natural part of what they call the “business cycle”. This timeline below will prove that is simply not the case. Recessions and depressions only occur because the Central Bankers manipulate the money supply, to ensure more and more is in their hands and less and less is in the hands of the people.
Central Bankers developed out of money changers and it is with these people we pick the story up in 48 B.C. below.

48 B.C.

Julius Caesar (right) took back from the money changers the power to coin money and then minted coins for the benefit of all. With this new, plentiful supply of money, he established many massive construction projects and built great public works. By making money plentiful, Caesar won the love of the common people.
But the money changers hated him for it and this is why Caesar was assassinated. Immediately after his assassination came the demise of plentiful money in Rome, taxes increased, as did corruption.
Eventually the Roman money supply was reduced by 90 per cent, which resulted in the common people losing their lands and homes.

30 A.D.

Jesus in the last year of his life uses physical force to throw the money changers out of the temple. This was the only time during the the life of his ministry in which he used physical force against anyone.
When Jews came to Jerusalem to pay their Temple tax, they could only pay it with a special coin, the half-shekel. This was a half-ounce of pure silver, about the size of a quarter. It was the only coin at that time which was pure silver and of assured weight, without the image of a pagan Emperor, and therefore to the Jews it was the only coin acceptable to God.
Unfortunately these coins were not plentiful, the money changers had cornered the market on them, and so they raised the price of them to whatever the market could bear. They used their monopoly they had on these coins to make exorbitant profits, forcing the Jews to pay whatever these money changers demanded.
Jesus threw the money changers out as their monopoly on these coins totally violated the sanctity of God’s house. These money changers called for his death days later.

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Mortgage rates in U.S. have fallen to another record low as the week closes. It is has declined for 10th consecutive week this time.

As Freddie Mac reported this Thursday that 30-year fixed rate mortgage yields have averaged about 5.01% for the week ending on January 8th, 2009. it is a 9 basis point decline from last weeks’ rate. It is nice to compare it with the rates this time last year. which were 5.87% .

Since The Govt. Sponsored Agency Freddie Mac started the survey(1971), this is the lowest reported level for these rates.

15-year fixed rate mortgage is even lower at 4.62%. It is has declined sharper from 4.80% levels of last week and a down hill slide of 5.43% level of this time, last year. It is said to be the lowest reported rate since June 13, 2003.

It is expected that this will impact on adjustable-rate mortgage especially the 5-year adjustable mortgages which averaged about 5.5% this week down from 5.7% last week.

Plain English: What does it mean for house owners

Well, the the house owners around US are struggling with increased cost of living and job uncertainty, these attractive rates can offer real relief in terms of monthly amount spent on home loan re-payments. Most of the homeowners will see this as an opportunity to get rid of expensive adjustable rate mortgage and get a fixed payment loan instead for the peace of mind that comes with it. As It the fixed-rate mortgages are not likely to go down any further, It is a good time to bet on them.

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Is the world heading toward a zero rate policy? This question is being asked by hundreds of economists and businessmen.  As evidence of deep recession is unfolding, bankers and economists are predicting that UK interest rates can hit zero any time now. The Bank of Japan’s decision to lower its key policy rate to 0.10 percent from 0.30 percent followed by US Federal Reserve Bank’s dramatic move is more proof to that fact that world is heading toward a global flat zero interest rate.

The Bank of Japan’s policy board voted 7-1 to cut the uncollateralized overnight call rate target from 0.3 percent. It was the second cut in less than two months. Japan’s interest rates have gone lower — they were effectively at zero from 2001 to 2006. TOMOKO A. HOSAKA of AFP reports

“The BOJ is in a similar situation to the Fed — the policy rate is down to a critical point, and policy conduct will inevitably shift to full-blooded quantitative easing,” said Tetsufumi Yamakawa, chief Japan economist for Goldman Sachs.

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The United States Federal Reserve says it will use “all available tools” to restart economic growth. The central bank’s main interest rate is now the lowest in its history. This week the Fed cut its target rate of one percent for overnight loans between banks to a target range of zero to one-fourth of one percent. The Fed based its decision on weakening economic conditions.

Federal Reserve in Washington

Americans have decreased their spending every month since July — the longest period in at least sixteen years. Unemployment grew to six and seven-tenths percent in November — the highest in fifteen years.

This week’s cut in the federal funds rate was larger than many economists had expected. The Fed also cut its rate for direct loans to banks. And it began paying interest on balances held in the Federal Reserve System.

In the past, cutting rates has been a powerful tool to lift the economy. But President-elect Barack Obama says it is not enough this time.

BARACK OBAMA: “We’re running out of traditional ammunition that’s used in a recession, which is to lower interest rates. They’re getting to be as low as they can go.”

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As we get out of collage and grow older, our needs expand and time comes in life when we need a car and then a house to live in. Expenditure builds up very fast. We Apply for one Credit Card for emergency and before we know it, our pocket is full of credit cards and we have many supplementary credit cards too for our wives, girlfriends and children. We also undertake personal loans to purchase luxury items like furniture, home theater, backyard swimming pool etc. etc.

Whenever we acquire a new line of credit, we are actually reducing our future disposable income. This disposable income keep shrinking till our situation get very desperate.

If things keep going well  (we don’t encounter a major problem with our health or job. And we are also lucky enough to survive the mid life crisis that is so common these days that every ones seems to have it. It’s more common than influenza.) and we do keep paying all our obligations on time i.e. Utility bills, mortgage payments, credit card bills, chances are that we do have a very sound Credit Score. Which is quite a good thing, but wait.

Let’s sit down and check each and every debt account. Let’s average our minimum monthly payments and accompanied interest rate. Mine average is quite horrible. It’s 27%. I can bet that your’s will be way more than your best guess.

“What is the problem with these credit card companies” I am now getting angry at them “They are getting money from central bank at little more than 2% and charging me upto 30%?????”  Such a banking spread is really criminal. but since I can’t do anything about them, Let’s see what my options are..

After little searching on Internet, I came up with some great options to break out of current situation. Best among them is to seek a debt consolidation loan so I can all these monthly payments into a single payment and also reduce my effective interest rate to a reasonable level.

The Great thing about debt consolidation loans is that they will sum up all of my debts and one monthly repayment is much lower than the sum of all the minimum payments I currently have to make to all of these credit card companies. I have only one due date to remember and only one check to write… It is a major stress remover indeed.

I have already spoken with a few banks. They are saying that because I have a sound credit history and a good credit score they will be more than happy to consolidate all of my credit card debt into one loan. They said that main reason they are very eager to get my account is that I have proven that I can make the monthly repayments on time and therefore will manage just one monthly repayment without risk.

Even in dire situations too, where the debt collectors are up your behind you, debt consolidation loan is still a great option. Although you won’t be able to get lower interest rates but still Its good in the sense that debt collectors will be off your ass and your monthly minimum payment will be manageable too.

If you own a house and have the mortgage on it which is less than the actual value of home, you have an option of getting a home equity loan. Unlike credit card, this is a secured loan and the interest rates a bottom low on it. By taking out this loan you can consolidate all your debts into the one. You will be able to pay off all your outstanding debts immediately and will be able to save thousands of dollar is interest payments.

If you don’t own a house then you will need to look for some other sort of secured loan to consolidate your debts so you can pay off all of your outstanding debts. paying off outstanding debt is important and vital.

To secure a debt consolidation loan you will have to do some research on Financial Institutions and view their web sites to find out their eligibility criteria as well as terms and condition of the loan. It is very important to read the disclosure and Term and Conditions. If you don’t understand what a particular term means, don’t skip, Just search for it in google or look at Wikipedia.com. Overlooking an important term can haunt you for years to come, so be careful.

Most of these web sites do have a loan calculator of some sort. Normally it is very easy to use. Use it to calculate the monthly repayments, the amount of money you may borrow as well as they give you a good idea of  interest rates.

Once you have all this information you should decide which banks or financial institution you will work with and start filling our the loan application. You will also have to arrange all the supporting documents as required by the lender.

Once you get consolidation loan, you must clear all outstanding credit card debt and Cut your credit cards and close all lines of credit so that you may not fall deeper into debt. The point of no return starts beyond that…

Financial planning is a vital tool, use it to stay clear of debt. Try to save yourselves from getting too down in debt. If you get there anyhow then seriously think about bankruptcy  as a good option. Sooner you do it.. better off you are..

A debt consolidation loan is one monthly repayment and one lower interest rate that you can use to consolidate your debt.