Wednesday, July 17, 2019

Debt + $ = $Crisis

The one big problem with democracy is when people with money and influence cause a change in our society. There are many examples, but there are two that I feel is the dry rot that is a danger to the American way of life and the global community.

The Fed

When the bankers found their footing with lobbyists and campaign donations, they were rewarded with the founding of the Federal Reserve. The reserve means the banking industry has protection. The taxpayers become their back-up. This violated the constitution because the endgame was fiat money over the gold standard. This is where the wealth gap begins. This is the beginning in the decline of our standard of living. The value of our dollar declines which is inflation that you do not see, but it is very real. They even changed economic thinking to say that credit was an asset. Credit is debt. Debt is a liability. Bottom line of the Federal Reserve: the US has the greatest liabilities in the world. Now, think about this: the global economy is slowing and the blame is on tariffs. Not all true. Every nation has tariffs. The only change was the US adding to the equation. The real culprit is credit. World credit has retracted by 40%. This is what has effected the Chinese economy the most. The US use to be the engine for the world. China has been playing that role for over a decade until the dangers of credit and debt began to surface. During this period credit has grown fourfold to $41 trillion from $9 trillion back in 2009. No one knows what real assets are in the world's banks. They all lie just like President Johnson who had the Vietnam war costs off the books. Who can say for sure what are the real debt figures. The derivative market is where I see the real danger of a panic in currencies and to the global community. Just look at Deutsche Bank. In the EU, Germany has the biggest and strongest economy and yet, their biggest bank is technically bankrupt. It is around only because of the ego of the German government. We are no better. I read somewhere that some analysts says the total US debt is $72 trillion which is 350% of our GDP. Those numbers are scary, but deceiving. Most of the debt ($52T) is social security. It is misleading because the costs are spread out over time and it is funded. What is really scary are things that are legislated, but overlooked like insurance for tall buildings since 9/11? How about the government sponsored flood program that covers both coasts? How about all those secret military programs? The list goes on-and-on and all based on worthless, fiat Fed money. The US citizen will suffer in the end due to fiat policies, the Fed and our corrupt, so-called leaders who allowed this to happen. The signs are not just written on the subway walls. Read on!


The pentagon got to close to the government during WWII. With too much money and influence, the seeds for continual power developed. The military used any and every opportunity to gain the public's attention as well as Congress. By spreading military contracts to all states, the military had influence to all politicians. This is why the US budget allows 50% or more to the military. It is another violation of the thinking of the founding fathers, "Do not get involved with foreign affairs." The military has troops in over 100 countries. This is wrong!

Fed + Miltary

This is an alliance of mutual interest over the interest of the citizen. The Fed creates wealth for the elite and provides money for the military. The military looks the other way on the debt issue because they believe that the money lenders will solve the problem one way or another. They are both guilty of greed, ego and beliefs. Together, the two evils are spending what the nation cannot afford. It leads too...

More debt does not solve old debt...

it just pushes back to a later date with even more debt until it collapses. This is what happens to all fiat based economies. It is why the USSR failed. They put all their wealth into the military until they no longer could finance the debt. This would have happened to the US years ago if we were not the world's reserve currency. We are not alone. Every nation in the world prints paper. The citizen just hopes that the people in power know what they are doing. They don't!

Debt Ceiling...

is in the news again. Dear Reader, if you look closely at the last time this occurred and even prior to that, our national debt has exploded past $20 trillion. Sebastian predicted this would happen when it was at $13 trillion. Anyway, each time a consensus is reached, the debt allocated to finance the government is always more than enough to cover one full year. In reality, the new debt level is spent long before the fiscal year ends. This is the sad direction of our so-called leaders, both democrats and republicans. This is what is happening now. They need more money, again!
Some politicians are pushing for a two year plan. They say just add another $500 billion. This is money for the military (republicans) and social programs (democrats). People, $500 billion is more money than all of the US debt from our beginning until 1975 which includes WWII and Vietnam.
This is a failure to manage the government, the currency and our economy. By the way, Reagan who ran on cutting big government was the first to push the deficits over $1 trillion.
Want more proof? Here is a recap since the last crisis in 2008. Our central bank, the Fed has instituted three rounds of QE and they cut interest rates to zero. Why so much, you might ask? Because the US is the biggest debtor and if we maintained normal interest rates, the dollar would have collapsed along with our government and economy. Fortunately, we are not alone. Every nation reacted in the same manner (a fool and his money).
The world is floating on the sea of debt in a water logged, fiat papered boat. Banks needed a new plan. Central banks came up with this plan. They will buy government debt even if no one else would. They could drop rates below zero or negative. This means a bond is worth less in the end than the purchase price. This is failure! Then, some central banks supported their stock exchanges (read wealthy) by buying shares of stocks. They control the media and the dialogue as if there really was a dialogue. Things have gotten so bad that US companies are buying into the game. Ford purchased a negative bond which guarantees that they will lose money over the long haul for cash today. Remember when all those shills use to say, "Don't buy gold, it doesn't pay interest?" Gold was legislated out of paying interest, but the idiots can't stop gold from maintaining value to which it has always done. This is the same argument for Bitcoins. People, a digital notation is no comparison to the metal that does not tarnish.
Anyway, my point is this: fiat money is losing value every minute while gold does not and it could increase in value to any and all currencies. Gold does not look for cash today, but it takes the long view. At one time it was used to back the pound. Then, it was used to back the dollar. One cannot know what lies beyong the next mountain, but gold will hold its own no matter the outcome. Gold is an asset and assets trump liabilities. This aspect is reflected by our founding fathers who put the precious metal in our constitution. Enough said.