Strauss & Howe The Fourth Turning
We've sold out America for cheap Chinese hair dryers, low-priced Chinese TVs, inexpensive Mexican apparel, economy packs of Fruit of the Looms from Indonesia and yellow smiley face stickers for our kids. As reward for gutting the American economy by shipping jobs overseas, American CEOs have enriched themselves at a rate 500 times higher than the average worker's pay. Wall Street bankers were paying close attention to how corporate CEOs were able reap ungodly profits while socializing the costs. With a clear signal from Alan Greenspan that the Federal Reserve would save any moron on Wall Street that got in trouble, the gluttonous Harvard MBAs created exotic financial products and convinced the world they could spin gold from straw. The CEO's of the five biggest investment banks (including Hank Paulson of Goldman Sachs) convinced the SEC to waive their 12 to 1 leverage ratio and leveraged their Wall Street gambling casinos at 40 to 1. This excessive leverage combined with financial products designed to confuse and bamboozle investors generated billions in profits for these banks and hundreds of millions in pay and bonuses for their Boomer leaders. When the crooked house of cards collapsed under the weight of lies and fraud, these banks were essentially insolvent. At that point Hank Paulson, who was now Treasury Secretary, along with Ben Bernanke decided to socialize their losses by having the U.S. taxpayer pick up the tab. Middle class Americans lost 8 million jobs and Wall Street bankers used the taxpayer bailout to generate billions in fake profits while paying themselves hundreds of millions in pay again. The resentment of average Americans is boiling over and will play a main role in the unfolding Crisis.
Scream, America Scream
I am a nation
A worker of pride
My debt to status quo
The scars on my hands
And the means to an end
Is all that I have to show
I swallowed my pride
And I choked on my faith
I've given my heart and my soul
I've broken my fingers
And lied though my teeth
The pillar of damage control
Scream, America scream
Believe what you see
From heroes and cons?
Green Day 21st Century Breakdown
Progressives like Arianna Huffington clearly don't comprehend what is happening. The anger and disillusionment of the population are seen as worrisome and disturbing by those who believe history is linear. The entrenched ruling elite should be apprehensive. During a Crisis existing institutions are torn down as the social fabric of the country undergoes wrenching changes. Those in power are rightfully fearful of the masses they have screwed for decades. President Obama, Ben Bernanke, Timothy Geithner, and the majority of economists and TV pundits are convinced the Crisis has passed and they have successfully maneuvered the country through the worst, avoiding a second Great Depression. History suggests otherwise. We have yet to experience the nastiest part of the Crisis. We can expect to encounter private and civic choices analogous to the cruelest ever confronted by ancestral generations. The recently submitted Obama budget, adjusted for reality, will add at least $12 trillion to the National Debt in the next ten years. That would bring the National Debt to $24 trillion in 2019. At a modest interest rate of 5%, the country would be paying $1.2 trillion per year in interest. The more likely scenario would be a 10% interest rate, resulting in annual interest costs of $2.4 trillion. The entire spending of the Federal Government was only $1.2 trillion in 1990.
Mr. Progressive, Paul Krugman, insists that worries about the debt are overblown. Despite the fact that our economy isn't capable of growing more than 2.5% over the long term, he sees no problem growing our National Debt by 10% per year. It's as if his Nobel Prize was coated in lead and he has been sucking on it. Only someone who is brain damaged would argue that doubling our debt will solve a crisis caused by too much debt. It's as if Krugman wants to become the Irving Fisher of his time. One week prior to the Stock Market Crash of 1929 Fisher famously pronounced:
"Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months."
The truth is our lenders will not allow our National Debt to reach $24 trillion by 2019. The U.S. dollar has already lost more than 80% of its purchasing power since Nixon closed the gold window in 1971. The amount of currency in circulation since that time has gone up by a factor of 16 to $800 billion. The result has been a stagnation of real wages for the middle class, while the ruling elite have seen their wealth soar to astronomical levels. The correlation between printing more of something and its relative value are as clear as day to anyone with a smattering of intelligence. Ben Bernanke is attempting to print his way out of this financial crisis. He is playing a game of chicken with our foreign lenders. He wants to devalue the U.S. dollar slowly to reduce the unbearable weight of U.S. debt. Foreign lenders from China, Japan and the Middle East know what he is doing. They will be the long-term losers in this scenario. At some point in the next few years they will balk at buying more US debt. A "Weimar Moment" will strike the United States like a sledgehammer. The veil of financial stability will be revealed to be a fallacy and the worldwide reserve currency will revert to its intrinsic value of zero. The chaos that would ensue as people's life savings are wiped out would test the mettle of our country's citizens, government, and military.