Obama Admin Busted for Approving $200k Grant to Terror-Connected Organization

By Cillian Zeal


Few nations have felt the sting of Islamism as acutely as Sudan. When the Second Sudanese Civil War started in 1983 (just 11 years removed from the First Sudanese Civil War), the east African nation was already one of the more despairing corners on God’s green earth.

Yet, the regime in Khartoum felt that what its citizens really needed — instead of economic development or jobs or anything of that ilk — was the imposition of Shariah law. And when the mostly-Christian south didn’t resign themselves to the legally codified strictures of the Quran and Hadith, among other non-religious issues of exploitation that were deeply unpopular in that region of the world, the government decided to embark on a conflict that lasted over 20 years and resulted in the highest death count of any war since World War II.

The war ended in 2005 and South Sudan later became its own nation, although one still suffering from war-induced privations. In other words, given all this, one would think any government would be somewhat sensitive to religious extremism in the region, either emanating from officialdom or an extra-governmental source.

Alas, not so much — at least where the Obama administration is concerned.

“The Middle East Forum has discovered that the Obama administration approved a grant of $200,000 of taxpayer money to an al-Qaeda affiliate in Sudan — a decade after the U.S. Treasury designated it as a terrorist-financing organization,” Sam Westrop of the Middle East Forum wrote in a piece for National Review this week. “More stunningly, government officials specifically authorized the release of at least $115,000 of this grant even after learning that it was a designated terror organization.”

The funds in question were distributed by an interlocutor to the Islamic Relief Agency or ISRA — a Khartoum-based organization also known as the Islamic African Relief Agency that had links to Osama bin Laden and Maktab al-Khidamat.

Maktab al-Khidamat was an Afghani fundraising organization that was the progenitor of al-Qaida. ISRA had raised more than $5 million for Maktab al-Khidamat by 2000, in addition to helping “to secure safe harbor for” bin Laden when things went awry.

In October 2004, the Treasury Department’s Office of Foreign Assets Control designated ISRA a terrorist finance group, meaning (obviously) it shouldn’t be receiving any aid from any American, much less their government. However, a July 2014 award of $723,405 to evangelical group World Vision Inc. to “improve water, sanitation and hygiene and to increase food security in Sudan’s Blue Nile state” included $200,000 for ISRA.

When the U.S. Agency for International Development had been alerted to the fact that ISRA was probably on the terror list by World Vision, they started an assessment of the situation and warned the group to “suspend all activities with ISRA.” However, World Vision was apparently unhappy with this, saying that the assessment was taking too much time and that ISRA “had performed excellent work” for the evangelical group and that the assessment was “putting contractual relationships in limbo for such a long period is putting a significant strain” with their relationship with officialdom in Khartoum, since ISRA also has close contacts with the Sudanese government.

“World Vision’s statement stunned USAID officials, who complained that World Vision’s behavior ‘doesn’t make sense,’” Westrop writes. “USAID official Daniel Holmberg emailed a colleague: ‘If they actually said that they wanted to resume work with ISRA, while knowing that it was 99% likely that ISRA was on the list then I am concerned about our partnership with them, and whether it should continue.’”

By January 2015, the Treasury Department’s OFAC had ruled that ISRA was indeed a terrorist organization, meaning World Vision would have to cut ties with them. Instead of realizing they were in bed with an organization that had helped create al-Qaida and backing away, World Vision wrote to Obama administration USAID official Jeremy Konyndyk, imploring him for a new contract to pay ISRA for “monies owed for work performed” and said that “their whole program will be jeopardized.”

There’s a lot of machinations behind the scenes here, but here’s the condensed version: the Obama administration eventually approved a new contract for ISRA after “close collaboration and consultations with the Department of State,” which World Vision said came as a “great relief as ISRA had become restive and had threatened legal action, which would have damaged our reputation and standing in Sudan.”

In other words, the Obama administration acted on behalf of an organization which in turn was willing to act on behalf of an organization with close ties to al-Qaida and the mephitic Sudanese regime.

The Obama administration has a long and storied history of ignoring extremism, from the Islamic State group to Afghanistan to Africa, where groups like Boko Haram barely made the administration’s radar. Now, we discover that the administration was giving money to a group that actively fundraised for al-Qaida in a country that’s already been devastated by Islamism.

Nineteen months on, we’re still dealing with that ugly legacy — and so, unfortunately, is the rest of the world.



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Linking The Dollar To Gold: The Recipe for an American Economic Boom


Alexander Hamilton was America’s first Secretary of Treasury under President George Washington. When he first entered office in 1789, America was an agricultural nation of just 4 million still broke from its financially costly victory over the British Empire in the Revolutionary War.

The states had accumulated relatively massive debts to finance that war, which mostly remained unpaid. The United States did not even have a national currency, with Spanish coins still in wide circulation and use. Steve Forbes explains in his recently published definitive work, Money: How the Destruction of the Dollar Threatens the Global Economy and What We Can Do About It, “America’s finances were in a state of disarray after the wild inflation resulting from massive money printing during the American Revolution.” As a result, “Hamilton faced the challenge of restoring the economy of the young republic that had been devastated by the Revolutionary War….”

Hamilton boosted America’s economy first by advancing legislation for the federal government to assume and pay off the debts of the states, establishing the foundation for America’s historic creditworthiness. That was recognized by America’s AAA credit rating for over 200 years, until 2011 when the relentless spending of the Obama Democrats led to the first credit downgrade of the nation in history.

But even more importantly for the nation’s long term economic growth and prosperity, Hamilton promoted The Coinage Act of 1792, which established the first U.S. Mint, and fixed the value of the dollar at $19.39 per ounce. That was devalued slightly in 1834 to $20.67, which prevailed for 100 years, until President Roosevelt adopted the only major U.S. devaluation in history during the Depression, to $35 an ounce. That prevailed until President Nixon took America off the gold standard in 1971.

Forbes explained the results: “Overnight the economy sprang to life. Capital poured in from the Dutch and also America’s former enemies, the British. Barely a century after Hamilton’s reforms, the United States was the premier industrial power in the world, surpassing even Great Britain.” He added, “Hamilton’s system of banking and stable money quickly attracted and generated capital. It turned the American economy into the leading industrial power in the world.”

Forbes further explains that while America was under the gold standard, the economy boomed at an astounding 4% real rate of economic growth. At that rate, our economy, incomes and standard of living would double every 17 years. That was the foundation of the American dream and our historic, geometric explosion into the world’s leading “hyperpower.”

Forbes adds that in the U.S., “Between 1870 and 1914, real wages more than doubled even though the country had millions of immigrants [greatly expanding the supply of labor]. Agricultural output tripled. Industrial production… surged a jaw-dropping 682%.”

Campaign poster showing William McKinley holding U.S. flag and standing on gold coin “sound money”, held up by group of men, in front of ships “commerce” and factories “civilization”. (Photo credit: Wikipedia)

The question is why did Hamilton understand economics so much better than the Ivy League poobahs of today, like Paul Krugman, who are more interested in promoting the socially hip stagnation of socialist equality than the dynamic economic growth of capitalism.

If only Colonel Hamilton was alive today, he would be more worthy of the Nobel prize in economics than at least half of those prize winners living today.

Great Britain experienced quite similar results under the gold standard. In 1696, the Enlightenment philosopher John Locke was joined by the path-breaking scientist and physicist Isaac Newton in arguing against devaluation in the process of Britain replacing or “recoining” its debased currency with new, unshaved, fully restored coins.

By 1717, Newton was Master of the Royal Mint, and he fixed the British pound to the value in gold of 3.89 pounds an ounce. That exact same historic value remained the same for more than 200 years, until 1931.

Forbes notes, “When it tied the pound to gold, Britain was a second-tier nation. Soon all of that would change.” A century later, “By the end of the Napoleonic Wars in 1815, Great Britain emerged indisputably as the world’s major power and global center of innovation.”

Economic Benefits of the Gold Standard

Fixing a nation’s currency to gold assures that the currency maintains a stable long term value, without inflation, or deflation. That enables a nation’s money to serve as a measure of value, like a ruler measures inches, or a clock measures time. Such a stable measure of value, in turn, means money can best perform its most essential function in facilitating transactions.

When money serves as a stable measure of value, it most clearly expresses the value of everything in terms of everything else.

That best enables producers to determine whether their production is adding or wasting value as compared to the value of the inputs to that production. Or whether they should be producing something else instead that might create greater value. That information is essential for an economy to maximize output and economic growth over time.

When a farmer trades his crop for such stable money, he immediately knows what that crop is worth. And he knows that he can keep that value of his production in the currency because it will hold its value over time, until he is ready to buy something with it.

That stability of the reward for production undisturbed by monetary fluctuations adds further to the incentive for such production.

Similarly, with a stable value for money, investors know the money they will receive back from their investment will be worth the same as the money they put in it, undepreciated by inflation. That encourages greater savings, investment and capital formation from within the country. And it encourages investment and capital to flow into the country from abroad. This maximizes overall investment, production and economic growth.

Nixon Takes America Off the Gold Standard

On August 15, 1971, President Nixon took America, and the world, off the gold standard completely, leaving a world of unanchored fiat currencies, by terminating the postwar Bretton Woods monetary regime.

Nixon and his advisors mistakenly believed that this would help the economy by promoting American exports, which Forbes recognizes as 18th century mercantilist thinking. [It was Roosevelt who took America off the Gold Standard, See the end of Bretton Woods - ED]

But it was a decisive turn for the worse for the American economy, and the entire global economy. Since that time, real annual U.S. economic growth has averaged 3%, down 25% from the prior gold standard long term trend. Forbes explains,

“If America had grown for all of its history at the lower post-Bretton Woods rate, its economy [today] would be about one quarter of the size of China’s. The United States would have ended up much smaller, less affluent, and less powerful.”

Moreover, “Since 1971, the dollar’s purchasing power has declined by more than 80%,” with about a third of that (26%) since 2000. Real incomes have been stagnant, or even declined. “[A] man in his thirties or forties who earned $54,163 in 1972 today earns around $45,224 in inflation adjusted dollars — a 17% cut in pay.”

Unemployment has been significantly higher on average. Globally, “After the 1970s, world economic growth has been a full percentage point lower; inflation 1.5% higher.”

Forbes observes, “The correlation between unstable money and an unstable global economy would seem obvious.” Indeed, the termination of any link between the dollar and gold immediately inaugurated worsening boom and bust cycles of inflation and recession in the 1970s, with inflation soaring into double digits for several years. Inflation peaked at 25% over just two years in 1979 and 1980.

It took the worst recession since the Great Depression in 1981-1982 to tame that inflation, with double digit interest rates for years, and unemployment peaking at 10.8%. The Reagan/Volcker/Greenspan strong dollar monetary policies effectively restored a discretionary link to gold, with gold stabilizing around $300 to $350 for 20 years. That kept close control over inflation.

But this discretionary standard broke down as 2000 approached. The Fed loosened money and reduced interest rates over the Y2K scare, contributing to the tech stock bubble. Much worse, the Bush Administration supported a weak dollar monetary policy again on the mercantilist/Keynesian confusion that would help the economy by promoting exports.

That included more loose money and 2½ years of negative real interest rates which served to pump up the housing bubble and lead, along with Clinton’s wild over regulation (in the name of affordable housing), to the 2008 financial crisis and recession.

The best thing about Steve Forbes’ new book, Money, is that it discusses exactly the specific reforms that should be adopted today to establish a modern, 21st century link to gold for the dollar. That new system would not require the federal government to hold any gold stockpiles, and the money supply would not be limited to the availability of any quantity of gold.

Federal law would fix the dollar’s value in gold at a specified market price. That price would be set by some index to recent market prices for gold, perhaps the average gold price for the last five to 10 years, marked up by 10% as a hedge against causing deflation in the process. Federal law would mandate that the Fed conduct its monetary policy to ensure a stable value of the dollar at that market price.

The Fed would enforce that price through its open market operations buying and selling U.S. government bonds. If the price of gold began wandering in the market above the specified market price, that would signal the threat of inflation, and the Fed would begin tightening monetary policy by selling bonds to the market in return for cash withdrawn from the market.

That reduced money supply would hold down price increases in the market, including for gold. The Fed would continue this policy, until the market price for gold returned to its specified target value.

If the price of gold began wandering in the market below the specified market price, that would signal the threat of deflation. The Fed would then begin loosening monetary policy by printing cash to buy U.S. government bonds in the market. That would increase the money supply, which would tend to increase prices in the marketplace, including for gold.

The Fed would continue this policy until the market price for gold returned to its specified target value. The Fed would be required by the federal law to take such actions to prevent the price of gold from varying from the target price by more than 1%, which was the range permitted under the Bretton Woods system for currencies to fluctuate against the then gold backed dollar.

The federal law would provide that this new monetary policy would become effective at a specific date set in the future, perhaps 12 months away, to enable the private economy to plan for and adjust to the new policy. The law should grant the President or some other federal official the power to adjust the target price for gold to reflect more recent market prices as the implementation date approaches.

Those more recent market prices would better reflect what the target gold price should be when the dollar is based on this new link to gold.

A lesson learned from experience with President Obama, the law should also specify that any member of Congress would have standing to sue the President or other designated official if he or she did not carry out the law regarding this later market based adjustment as provided, and that federal courts would have the power to enforce relief. For example, not following more recent market prices in adjusting the target price would be a violation of the law.

This would effectively mean that the Fed would no longer have any power to pursue discretionary monetary policies to try to guide the economy in one direction or another. The new federal law would bar the Fed from attempting to manipulate interest rates, for example.

The Fed would no longer have the power to set the federal funds rate, which is the rate banks pay to one another to borrow reserves. The Fed would continue to have the power to act as a lender of last resort to deal with financial panics that might temporarily threaten an otherwise sound bank.

So the Fed could continue to set the “discount rate” that it would charge for such short term, lender of last resort borrowing. But even that would be required to be set above market rates, so that the Fed would not become a cheap source of funds for banks to borrow to lend out.

Along with a federal balanced budget amendment to the Constitution, this would effectively make Keynesian economics illegal. That would be highly desirable, because Keynesian economics is proven not to work, and Keynesian advocates are so oblivious to reasoned discussion on the point.

As a safeguard to help ensure that the Fed did follow its responsibilities under this new law, the law should specify that anyone could turn dollars into the Fed, and get gold at the legally specified target price. If the Fed was following the law, it could always buy gold in the market to pay for such a redemption in return for the target price for gold.

If the Fed was not following the law, then it would likely not be able to finance such mandatory redemptions. The new federal gold law should again specify that any member of Congress would have automatic standing to sue the Fed to enforce the law.

Another safeguard would involve removing all barriers to the rise of private, competing, alternative currencies, to challenge the Fed to enforce and follow the law. That would mean no taxes, including capital gains taxes, could be assessed on sales of gold and silver. If the Fed did not follow the law, then these competing currencies could displace the dollar.

Such a new gold link to the dollar would be the last, missing component to any comprehensive strategy to restore traditional, world leading, American prosperity. Such a strategy would include as well personal and corporate tax reform to lower tax rates, deregulation of unnecessary regulatory costs and barriers, reduced federal spending to balance the budget and reduce the national debt as a percent of GDP, and free trade.

Those policies could be expected to restore long-term U.S. economic growth to 4% of GDP, which would leapfrog the American economy another generation ahead of the rest of the world.





Peter Ferrara is Director of Entitlement and Budget Policy for the Heartland Institute, Senior Advisor for Entitlement Reform and Budget Policy at the National Tax Limitation Foundation, General Counsel for the American Civil Rights Union, and Senior Fellow at the National Center for Policy Analysis. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under President George H.W. Bush.

This article is published under a creative commons license here.

The True Value of Gold

Every gold investor has their own “gold story” — that pivotal moment in their lives that made them realize the true value of gold. For Olivier Garret, founder and CEO of the Hard Assets Alliance, that story goes all the way back to his grandfather… and the German invasion of France.  Today, he tells that story. - Owen Sullivan


by Olivier Garret


I grew up in a little town in Northern France that, from 1939 to 1945, was occupied by the Nazis.

I hadn’t been born yet at the time, but my mother and her family were forced to live for five long years with two German officers as “guests” in their own home.  My childhood was colored by first-hand stories of life in a Nazi-occupied town.

I heard many stories of scarcity, like that of the nuns in my mother’s school serving rodents and rutabaga for dinner — or that of my grandfather setting up a soup kitchen in his small factory to help feed the families of employees.

But there was one story my mother used to tell me that made me realize the true value of gold and sparked a lifelong appreciation for it.

It revolved around my grandfather, a Swiss immigrant who moved to France in the early 1920s.  He was an electrical technician and entrepreneur. And his arrival in France coincided with the electrification of the country, just as France’s most remote towns and villages were being connected to the grid.

Up until that point, farmers had been working the fields and processing their crops entirely by hand or with the help of animals. Basic machines were powered by cranks, ropes and pulleys or treadmills.

My grandfather, seeing the opportunity, invented an electrical motor that could power many different types of equipment.

Farmers around the country quickly adopted his product and by the late 1920s, he ran a small but successful business, selling his electrical motors and a variety of mostly farm-related equipment. (One of his inventions was a device to automate the ringing of church bells.)

Being Swiss, my grandfather always associated financial security with gold. He used all of his excess savings to buy small Swiss gold coins called Vreneli.

Over the next decade, he accumulated hundreds of them.


The War Begins


In 1939, following Hitler’s invasion of Poland, France declared war on Germany. Within weeks, German tanks were rolling through Flanders into Northern France.

My grandfather decided to take his wife and two daughters south to his mother-in-law’s farm in rural Normandy.

As his wife prepared for their departure, he retrieved his stash of gold coins and headed into the basement.

There he cut lead pipes into five-inch sections and melted one end of the tubes to seal them. After filling the pipes with his gold coins, he sealed the other end and within a couple of hours emerged from the basement with twelve short lead tubes filled with gold and a shovel.

He went out into the yard and buried the pipes with his life’s savings in a deep hole next to a big tree. With the gold safely hidden, the family left their home and joined hundreds of thousands of refugees heading away from the advancing German troops.

In August 1944, the German troops retreated and Paris was liberated by the Allied forces. As France started to heal from the wounds of war, life in the quiet town of Senlis slowly returned to normal.

Many years later, my grandfather fell ill and became bedridden. It was then, near the end of his life, that my grandfather called my mother to his bedside and instructed her to get a shovel, go to the tree and dig up the twelve little gold-filled lead tubes.

After decades underground, the coins were still there, and my grandfather split them between my mom and her sister.

A couple of decades later, my parents decided it was time to pass the gold coins on to their children—and so in 1984, the tubes were opened, revealing their precious contents as shiny and new as when they were first buried.

If my grandfather had kept the money in bank notes instead of investing them in gold coins, the value of the 36,000 French francs would be approximately €3.00 today (by the mid-1980s, the old French francs had lost 99.9% of their purchasing power).

On the other hand, the value of the 480 gold Vrenelis he bought would be approximately €105,600 today (each Vreneli coin contains 5.8 grams of gold).

That was the day I learned the true value of gold.






This article is published in accordance with a creative commons license here.

Cost Functions Should Not be Used to Make Education Spending Decisions

by Kansas Policy Institute


June 1 - Wichita - A cost study recommending a school funding increase upwards of $2 billion survived a peer review by a scholar the Legislature hired; but, another respected school finance scholar says cost studies should not be used to set funding levels.

Benjamin Scafadi, Ph.D., a professor of economics and director of the Education Economics Center at Kennesaw State University, says, “cost function studies do not provide valid and reliable estimates of the minimum 'cost' of achieving a given outcome.” 

Knowing the Legislature’s WestEd cost study would define the conversation on education spending and impact further judicial proceedings, Kansas Policy Institute partnered to do an independent peer review with Dr. Scafidi.  His findings disprove the notion that spending more money causes student achievement to improve. 

In response to the Kansas Supreme Court’s recent ruling in the Gannon V case, the Kansas Legislature recently contracted with a vendor conducting a $285,000 study to analyze the “cost” of educating public school students in grades K-12. The Legislature asked the vendor, WestEd, to “estimate the minimum spending required to produce a given outcome within a given educational environment.” WestEd used a “cost function” approach to estimate the costs of providing students in each public school in Kansas with an adequate education. 

Dave Trabert, president of the Kansas Policy Institute, commented, “These cost studies may be done with the best of intentions, but they fail to provide results that are useful in guiding policy decisions. In practice they only take a partial look at one variable – spending – and ignore all other variables that impact learning.”

Scafadi said, “The estimates vary widely and do not track with historical data on spending and achievement.” The review outlined the reasons why supposed “cost” functions do not provide valid and reliable estimates of the minimum “cost” of achieving a given outcome.

“One glaring problem we found with the WestEd study is that researchers do not have access to data on all external factors that impact the cost of educating students.” Trabert said.

Scafidi’s study for Kansas Policy Institute included in its exhaustive review a complete recommendation of best practices that should be performed to “check carefully for robustness and reliability of results.”

His data determined it unreasonable to conclude that giving the Kansas public school system, as currently constituted, a large boost to spending would significantly improve student outcomes.

“Given the vast sums of taxpayer funds at stake, the Kansas Governor, Legislature, and the State Supreme Court should implement the five best practices, as laid out in my review, to discover the truth about the relationship between spending and valuable student outcomes.” Scafadi concluded.




Editor's Note: Such mathematical games accomplish little more than feed the lawyers who feast on endless court decisions that force the Kansas Legislature to raise taxes violating both the separation of powers and the people's right to determine fiscal policy.

RBC Wealth Management USA

by Allen Williams

Royal Bank of Canada (RBC) is a huge conglomerate featuring global asset management which  “is the asset management division of Royal Bank of Canada” located  in Canada,  the United States, Europe, Asia-Pacific,  Middle East and Africa, Latin American and the Caribbean.   Your investments work hard to build the globalist vision of a new order.

RBC is the 12th largest bank in the world based on market capitalization and the fifth largest in North America.”  Barron’s notes that RBC Wealth Management is looking to Grow having actively recruited a significant number of high profile investment managers over the last 8 years.

But all is not well in the RBC golden world of investment as RBC is charged with Negligence and Elder Abuse   If you have a few bucks to invest and you’re of retirement age then beware because the wealth management brokerages are going to milk you. What do you mean by that remark you might ask?   Well, older people are prime targets for abuse by investment firms because the money is there and ripe for the taking and seniors tend to be overly trusting.

We’re already seeing evidence of this in RBC’s late December 2017 User Agreement modification. RBC blocks you from viewing your own account unlessl you agree to their terms.

RBC User Agreement, Section 7C:

"IN ADDITION TO AND WITHOUT LIMITING THE FOREGOING, RBC CM SHALL NOT BE LIABLE FOR ANY HARM CAUSED BY THE TRANSMISSION, THROUGH THE PROGRAM, OF A COMPUTER VIRUS OR OTHER COMPUTER CODE OR PROGRAMMING DEVICE THAT MIGHT BE USED TO ACCESS, MODIFY, DELETE, DAMAGE, CORRUPT, DEACTIVATE, DISABLE, DISRUPT OR OTHERWISE IMPEDE IN ANY MANNER THE AVAILABILITY OF THE INFORMATION OR ANY OF YOUR SOFTWARE, HARDWARE, DATA OR PROPERTY."

This statement also removes liability from the transfer of erroneous information from ‘typos’ and other such glitches which may cost you money.  


RBC Capital Markets, LLC
60 South 6th Street
Minneapolis, Minnesota 55402
Attention: Client Support Services, Mail Stop P12
Phone: 1-800-933-9946 (Weekdays 8:00am-10:00pm ET and Saturdays 10:00am-6:00pm ET)

The White law Group reports:According to The Financial Industry Regulatory Authority, an all-public FINRA arbitration panel has awarded $212,000 to the estate of a former RBC Wealth Management client who had charged the firm with negligence and elder abuse.

"The attorneys of the client, the late Hazel Kitzman, charged that RBC Wealth Management engaged in the unauthorized sale of shares in the client’s account and in the unauthorized transfer of funds from an account at another firm. The attorneys requested compensatory damages of at least $1.5 million, treble  punitive damages and reimbursement of all legal costs, all of which the FINRA panel denied.”

Remember that ‘unauthorized RBC broker activity’ because we’ll see that again shortly. Think this is just sour grapes or a few disgruntled clients? Well, take a look at a host of other complaints as RBC Wealth Management Reviews compiles complaints summed  up nicely by ‘RK’ back  in January of this year with ”..Money sucking leeches. No fiduciary responsibility. Will suck you dry with fees.”

RBC Wealth Management meets that assessment.

Then there’s just the run of the mill abuse like a $140 yearly ‘account’ fee for not buying anything.  Remember interest rates are barely 3% and inflation is currently at 2.1%.  As a big or small investor you pay for not buying the financial investments a brokerage offers, even if you lose return on that investment.    The forced purchase of unwanted goods or services from corporations has become a global hallmark.  This policy causes older investors with smaller portfolios to purchase less desirable investments to keep their accounts from being pillaged by excessive and ruthless fees.

If you’re an elderly or a new retiree investor expect to be milked if you don’t know the ropes.  And, even if you do, the financial industry is structured such that there are no real penalties for fund mismanagement or cheating a client because the account holder must agree upfront to binding arbitration as a condition of getting an account   

Outside a court of law the odds swing dramatically in favor of the brokerage, so do not count on FINRA for any real relief.  The centralized global banking system is designed to extract wealth from the general populace virtually at will simply by changing the prime rate.   Fees for any alleged services are just icing on the cake.

The recent HSBC LIBOR rate fixing scandal illustrates just how easily the banks can cheat people and the Federal Reserve System has demonstrated how well its QE releases can rob the nations’ citizens of their purchasing power. 

These financial conglomerates own the various individual governments around the world and 20 trillion in debt buys a lot of favors.  Then there’s the annual revisions to Brokerage fee policies which can occur after you’ve committed significant resources to the firm.  Remember, whomever controls the money limits your options and ultimately controls you

 Be sure and read the fine print in the RBC periodic account updates so you’re not surprised by the latest excursion into your back pocket.

Controlling the investor market is the key to successful brokerages because interest rates are rock bottom low in the public sector.  And, it’s risky for individuals to play the stock market or derivatives in today’s environment.  So offering investments priced slightly above what’s available at the trough guarantees a pool of people with above average financial strength. 


Managing RBC  Investments


Managing a brokerage account at RBC will tax your time as much as if you were actually a broker yourself,  from watching for mistakes in tabulated interest to your accounts to  buying financial instruments that you didn’t want  just to satisfy an order.  Here’s an example of what can happen, even if you watch, from last December as I purchased a financial instrument from BOFI federal through the brokerage:  “I did not authorize a purchase beyond the BOFI investment.  If an additional $2000 worth of BOFI was not available, you should have called me to ask if I wanted to buy something else offering the same terms.  Obviously, you didn't think it was worth asking me what I wanted to do with my own money.”

The RBC Broker’s reason for the snafu? Why a ‘typo’, what else? Note that elderly investors don’t have the time to make up losses from bad deals that their brokerage might recommend like zero coupon J.P. Morgan chase securities which can pay zero interest for months until the consumer price index increases.  

If you have more than one brokerage account, then you must be prepared to buy something within the specified time frame for each account.  If you don’t buy regularly in a calendar year then you pay an ‘inactivity fee’ under the following conditions.

First, investment maturity doesn’t count. If you have an existing security and it matures then you get no credit  for reinvesting that principal with that brokerage.  

Interest from other investments that pay into your brokerage account isn’t activity either, ‘activity’ is only new purchases that lead to the broker making a profit from your account.  So, why keep it there?  Because it will cost you another fee to close the account anywhere from $90.00 upwards. 

Pursuant to the RBC  ‘user agreement’, I bought another financial  instrument in January 2018 with an end of the month settlement date to avoid the penalty ‘for not investing’.  Sounds like the Obamacare penalty, doesn’t it?

I received the RBC purchase confirmation in the mail.  But at the end of January the capital was still in my investment account so the purchase was in doubt as my agreement with the broker stipulated the money was to be transferred after the 26th of the month. I had to call the broker to discover that they had bought the instrument with their own money. Why?  This is highly irregular. I’ve never had securities bought on credit before without my knowledge and so this experience was of some concern given the wording of their user agreement:  “..until payment is made by you, securities purchases by you or held by us for your account will be or may be hypothecated comingled with securities for other clients. If payment or delivery is not made by the settlement date, we reserve the right without further notice to charge interest on the amount due shown on the face hereof..”

And despite what the brokerage may tell you, there is a good chance that an interest charge will appear on the next statement.  Also, guess who will be keeping the interest on the investment until the funds are transferred? So, if you can buy something on credit without client approval, why not double my order as well and hold me liable?

Even RBC’s instrument purchase confirmations are full of additional clauses that work against the account holder.  And there’s no recourse provision in these clauses for RBC negligence when a buy order isn’t executed because the user agreement requires client agreement to binding arbitration instead of a court of law or you don’t get the account.  So to find out what additional fees may have been dumped on you in a given transaction, you must request an explanation in writing or you get nothing: .this transaction may have incurred other fees..a complete breakdown of fees associated with the transaction  will be provided on your written request..”

If you’re looking for a place to invest, look well beyond RBC‘s client satisfaction hokum.


Why 'tax free' municipal bonds are a bad Investment

by Allen Williams


The lure of municipal bonds as a ‘tax free’ investment can be very appealing, however, it’s the risks that significantly decrease its potential, risks that are never satisfactorily explained by the purveyors of these instruments, other than in ambiguous terms. The claim is that one would require an investment paying 8% to provide the same benefit as a tax free municipal bond, but is that true?

Congress ensures that no one truly attains tax-free status on any investment beyond themselves, despite many statements to the contrary, because of the Alternative Minimum Tax. Government simply adjusts the tax tables and reduces the social security benefit by an equivalent amount for tax-free interest received.

NuVeen offers tax free bond investments in the states of Kansas, Kentucky, Michigan, Missouri, Ohio and Wisconsin. The company offers four basic types of municipal bonds that claim tax-free status. They are ‘A’, ‘B’, ‘C’, and ‘R.’ We will confine discussion here to ‘A’ and ‘B’ bonds. ‘B’ bonds perform nearly identical to ‘A’ bonds but provide slightly less yield because they lack liquidity. Once purchased, they require a holding period before they can be sold. ‘A’ municipal bonds provide a slightly better return than class ‘B’ municipal bonds because the management fee has thus far been less. But, you may expect to pay at least a 4.0% ‘commission’ up front for the privilege of purchasing ‘A’ tax free bonds. The company’s prospectus notes that certain ‘special’ charges may apply when buying $50,000 or more of ‘A’ bonds depending on who offers them and the terms of the fund.

One may expect to pay a monthly management fee anywhere from 0.53% to 0.75% on the gross assets invested to manage the funds, regardless of the type bond purchased or its performance throughout the time of the holding. There is a penalty for selling class ‘B’ bonds ‘too quickly’, thereby depriving the fund manager of his ‘hard earned’ management fee.

A first investment in ‘B’ tax-free municipal bonds was made during the late summer, i.e. Aug. of 1998 through NuVeen Investments or The Boston Group as they are now known. Although the funds were purchased in late August, it was Oct 8th of that year before the first dividend check was received. It seems that the Capitol One true blue Kansas broker was able to collect the interest on my investment, as the funds were deposited with him for 7 weeks while Nuveen ‘processed’ the new account. When questioned on this, the broker indicated that it was typical because of the high demand for these investments. So, either the broker enhanced his earnings or both he and the company benefited during this time. It’s tantamount to buying a $300,000 house with 20% down and closing several months later. The realtor pockets the interest on your $60,ooo down payment with no credit to you during the wait. And, that’s in addition to the selling commission; it’s one reason why realtors favor substantial down payments.

NuVeen seems to function loosely and haphazardly at best for an investment firm. Reports on the bond funds investment performance tended to skip data such as the dividend rate during the period of interest. Early on, I had been required to garner a signature medallion notarization to buy or sell my bond shares over the telephone, which was done on March 4th, 2005 in anticipation of divesting some of my holdings. However, on March 23rd I received a notice from the company that my Telephone privileges had been cancelled.

NuVeen was informed that no one had authority beyond me to cancel since I was the sole owner of the account and had a valid notarization. However, I had to Fax a second copy of the original notarized form (and threaten them) in addition to the one I had already mailed. It was Sept. 22, 2005 before I finally got the company to re-instate the telephone privileges that I had requested in my original March 4th letter. The broker had apparently acted to thwart my ability to sell without utilizing his services.

The holding period for converting Kansas Class ‘B’ to Class ‘A’ tax-free municipal bonds was changed from 6 to 5 years and then back to 6 years again on little more than company whimsy. Class ‘B’ bond rollovers are automatic after 6 years, whether you want them to or not and whether or not it is favorable to you, the holder. In the former case, it prevented me from divesting some of my holdings for more lucrative financial opportunities because an earlier buyout of Nuveen put me right back in the CDSC band that I was just exiting under the original terms. So, instead of being able to sell at the end of the 6th year from the original five-year hold, I had to wait until the 7th year before I could divest.

The ‘tax free’ fund was trading at $10.63 per share in Sept of 1998. Despite some brief upswings, the fund had fallen to $10.54 by the following year and at the end of the 6 year holding period, just before the Fannie Mae and Freddy Mac bankruptcies, had settled in around $10.15 per share. So, what does this translate to in terms of dollars and cents? Well, first let’s calculate the cost of bond conversion. What? You thought they just transferred the shares like you deposit money? Not so, here’s how conversion works on a typical $10,000 class ‘B’ investment purchased at $10.63 per share and now worth $10.44 per share:

940.734 class ‘B’ shares x $10.44/share = $9821.26

Class ‘A’ bonds typically command a higher per share price than ‘B’ bonds largely due to their liquidity. So, you will likely lose shares as well as portfolio value in any bond transitions since there is no set time prior to Dec. 31st of the last holding year to require the company to effect conversion. It likely won’t be the next business day from the anniversary of purchase as is the case with a bank investment. The transaction is done automatically by the company if the shares have not been divested and you don’t get any options for the time of conversion. So now, class ‘A’ shares at $10.53/share are purchased by the Fund:

$9821.26/10.53 = 932.693 of class ‘A’ shares

In this case, 8.04 shares per $10,000 of investment were lost in the roll over. So, the holder has lost both capital and shares as a result of the ‘B’ to ‘A’ municipal bond conversion. Now, sum the losses for a $100,000 to $250,000 investment in bonds and you’re looking at some serious capital gain losses.

Well just sell off the ‘B’ bonds before they convert and there’s no problem, right? Well that’s not-quite true. A purchaser pays no up front fee to buy class ‘B’ bonds but pays a Contingent Deferred Sales Charge, i.e. CDSC, if they are sold anytime before 6 years and you may expect this requirement to change occasionally in favor of the bond issuer especially after you own the investment.

The CDSC charge is graduated based on the number of years the bond is held as follows: 5% the first year, 4% the second and 3rd years, 3% the 4th year, 2% during the 5th and 1% during the 6th. So, class ‘B’ bonds must be held 7 years before there is no CDSC sales charge to the holder, assuming the company doesn’t decide to ‘up’ the requirement. Yes, issuers of municipal bonds get to ‘change the rules ‘ after you own the investment due to buyouts and mergers just like banks, except banks usually continue to honor any preexisting CD terms from the financial institution bought. However, investment concerns like NuVeen, dealing in municipal bonds, do not. There is also the problem of declining share worth because bond values fluctuate like stock market shares, so losing $0.50 cents per share on the sellout is of greater concern than paying small CDSC commissions. There is an optimum time to sell.

NuVeen has a history of buyouts since my original 1998 purchase, the most recent is their acquisition by the Boston Group. Buyouts often present a convenient terminus for changing the rules on existing investments. This company has altered dividend quantities, dividend pay out times, the hold time for divesting bonds as well as the holding period for conversion to Class ‘A’ bonds.

Dividends from the fund were initially due on the 4th of the month but the most recent buyout settled on the 9th and often was the 11th before they were actually distributed. It should be noted that there is no penalty to the company, no matter when they make the distribution. The monthly holding time requirement for selling bonds shifted to the 29th of the month, i.e. if the bonds are sold prior to this date, the holder automatically forfeits the dividend for that month. So, if I held the investment until the 28th of the month and then sold, I would lose my dividend because its not prorated and the sale was prior to the 29th. You won’t read this on their website at http://www.Nuveen.com, change notification comes by letter and it can come at anytime.

In November of 2007, I received just such a letter: "We would like to take this opportunity to inform you of a change that will take place regarding your NuVeen investments bond mutual fund dividends. Starting in December of 2007, you can expect to receive your monthly dividend check approximately four days later than you receive that check currently. This change is a result of moving the record date from on or about the 9th of each month to three business days prior to the payable date. Moving the record date will allow a larger window during which investments received will be eligible to earn the dividend payable the following month." - Nuveen Investments.

This is pure nonsense. The shift has been made to facilitate the brokerage, first in collection of the monthly management fee and secondly, to accommodate delayed interest payments from the participating states, it gives no benefit whatsoever to the bondholder. The Nuveen letter also fails to note a corresponding shift in the monthly holding time, prior to divesting, as a result of the dividend change.

Tax-free municipal bonds work along the same lines as a ‘slush fund.’ They’re intended to be ready resources for states that can’t manage money. Interestingly enough, both Kansas and Michigan fall into that category with high tax economies and poor growth. States with poor economic policies seek to increase taxes to pay the interest on what they borrow through the sale of bonds. Impoverishment of the citizenry and cheating investors is of no concern to those who hold political office, staying elected is the only objective. Investment firms like NuVeen are ready to capitalize on state's poor fiscal management.

Income tax table adjustments and negotiating lower bond rates are means by which states can ameliorate interest burden and hedge against future operating costs at the expense of taxpayers.

Unlike fixed investments, bond interest rates fluctuate with economic conditions. Bond rates generally fall when the economy is good and increase when it is bad because states are more likely to vorrow during poor economic times. However, Kansas NuVeen municipal bonds ‘went south’ right from the start and were poor performers during the time of my holdings, regardless of the condition of the economy, demonstrating a steady downward trend over a ten-year period.

Figure: Ten Year trend of Bond prices and Dividends for NuVeen Investments

My dividends began at 0.0370 per share initially, dropping to 0.0345 and then to 0.028 per share in April of 2004, a 24% drop in dividend rates in just 6 years. The rate remained at 0.028 through December of 2006. Shares were trading for $10.28 during this same period.

The supposed strength of tax free muni-bonds is the taxes you don’t pay. The NuVeen motto claims, "it’s not what you earn, its what you keep." So how much did I keep due to NuVeen bond fund performance? Well, in 1999 the tax benefit was $152 dollars per 1000 of capital allocated to bonds but by 2006 the savings were down to $101 dollars per 1000. This is a 35.6% drop in tax benefits for capital invested in bonds in addition to the 24% drop in dividend rates during the same period.

It’s an obvious conclusion at this point that the fund is managed for the benefit of the states that sell the bonds.