“Our Federal Reserve Chairman Ben Bernanke and President Obama have united on policies that saw the printing of new dollars to the tune of 15.1 X our 2008 circulating currency; and then later doubled that amount by running the money printing presses non-stop. In an ordinary country operating by ordinary rules, America would be beset by hyper-inflation and the 2011 dollar would be worth about 3.2 pennies-worth of the 2008 dollar. We’ve been saved by the fact that the American dollar is the world’s reserve currency . . . that lucky saving situation will soon change . . . the day of reckoning is upon us.”
“. . . the American Dollar will be yesterday’s news and those holding dollars and any American paper instruments (like bonds) will be up a certain infamous creek without locomotion. The price of everything in dollars would then jump spectacularly. Gas might reach $16 or $17 per gallon. Eggs? Maybe about the same. Overnight the standard of living of all Americans would drop to about the 1930’s level as the cost of necessities would become prohibitive and luxuries would be . . . well, rare luxuries again.”
American Dollar to Go
The Way of the Dinosaurs?
The seedy little bearded men with wild-eyes carrying signs reading “The End is Near” have stepped out of the magazine cartoons and will soon surround us. The apocalyptic event foreseen long ago, conceived in progressivism and dedicated to the socialist dream is now approaching her “due date.” The gold dollar is long dead, long-live the Obama B.S. paper dollar worth 1/3 of a cent in 1913 money. Hail the new AmeriKa!**
For all but 27 of the last 98 years, progressive politicians have owned the Oval Office. For 93 of those years they have controlled at least one and usually both chambers of Congress (the House and Senate). America in the next fifteen months, probably sooner, will receive an ugly slap across the face; forced to pay for those sad voting truths as our Keynesian chickens get swallowed alive by the voracious hawks of economic reality. Are we talking about the end of the American Way of Life? Short of a miraculous and virtually instantaneous return to original principles and virtues (meaning fiscal-conservativism; Constitutional-conservativism; simple common sense; and drastically reduced government size and scope and interference), that is precisely what we mean: the end of America and the beginning of AmeriKa, the decadent banana-republic socialist state we’ll all come to know and despise. Let’s return very briefly to the beginning of our woes . . . .
With the assassination of William McKinley, Theodore Roosevelt ascended to the presidency. There was no Oval Office then; his successor William Howard Taft was the first to occupy that room. TR was a believer in progressivism (the doctrine that we must progress beyond and abandon the “outdated and ill-conceived U.S. Constitution” if we are to make progress toward our earthly Utopia). What does that mean in real life, your life? What’s progressivism about? Roosevelt did some powerful things that certainly in retrospect seem like they well needed doing. He began the National Park system; he created the Panama Canal; he dramatically expanded and modernized the nation’s armed forces especially the Navy which he sent out upon an ostentatious world tour to flex our muscle while sailing “quietly but carrying a big stick.”
TR is now one of the four faces on Mt. Rushmore and regarded as one of our greatest presidents. So what’s so bad about progressivism? It wasn’t particularly what he did, but more HOW he did it. Teddy commandeered part of a larger country then known as Colombia by creating a revolution there and next removed part of Colombia. He then named the resulting isthmus-nation “Panama” and began dredging a canal there which was owned by the United States. His expansions of the military and creation of the national park system were largely a product of TR’s powerful personality side-stepping and by-passing Congress and the Constitution. It was a benevolent progressivism for the most part, but progressivism nonetheless.
Our first truly progressive and ugly-progressive President was Woodrow Wilson and since the 1913 creation of the Internal Revenue Service and the Federal Reserve Banking System and Wilson’s dramatic expansion of government reach and largesse we’ve largely been a progressive nation ever since. The wages of Wilson’s sins added to those of ultra-progressives Hoover, FDR, Johnson, Carter, and Obama(36 years so-far and Obama’s seeking re-election); and several semi-progressive presidents; and a virtual unending list of progressive Congresses and we’ve now as a predictable result piled up a national debt of $15 TRillion. We’ve played fast and loose with UNfunded liabilities of $112+ TRillion (Social Security, Medicare, and the federal side of Medicaid – not to mention all the welfare state which isn’t even included in that figure) for a total of ($127+ TRillion) 2.2 X the entire planet’s gross domestic product.
Since March, 2009, our Federal Reserve Chairman Ben Bernanke and President Obama have united on policies that saw the printing of new dollars to the tune of 15.1 X our 2008 circulating currency; and then later doubled that amount by running the money printing presses non-stop. In an ordinary country operating by ordinary rules, America would be beset by hyper-inflation and the 2011 dollar would be worth about 3.2 pennies-worth of the 2008 dollar causing immense consternation at the grocery store, gas pump . . . everywhere. We’ve been saved by the grace that the American dollar is the world’s reserve currency . . . a lucky saving situation that will soon sadly change . . . the day of reckoning is upon us.
Understand this: we’re NOT talking about the 2007-to-present financial crisis, but referring to a situation that’s related to it, but infinitely worse. We’re talking about 98 years worth of Keynesian chickens come home to roost. We’re talking about the Bernanke-Obama inflationary epoch coming home to roost; we’re talking about the collapse of the American dollar. In case you don’t understand the word “Keynesian,” let’s quickly clear that up: the Brit John Maynard Keynes’ back in the teens and 1920’s came up with theories that totally defied the collected economic wisdom of the centuries and specifically Adam Smith’s massive tome The Wealth of Nations. In line with the Fabian Society of England (the progressive British fathers of American Progressivism) Keynes said that government spending was an unmitigated GOOD that could create prosperity at will. Government spending was the key to Utopia. Every semi-totalitarian state gained carte blanche from Keynes to spend whatever it took to make the powers that be happy. Every democracy gave progressives the power to promise the people anything and everything to keep their sick policies; and sick leaders in office perpetually. Even though Keynes later in his life recanted and admitted that Smith was correct and his own theories dead wrong, most governments around the world and here in the United States have been enveloped in a binge of government spending ever since.
Around 1949 those policies cost England, Keynes’ homeland, its ownership of the world’s reserve currency the British Pound Sterling after it had held that lofty position for over two hundred years . . . since then England has been shrouded in one financial disaster after another . . . after being THE global military super-power pretty much since 1588 and owning the most trusted money on the planet for roughly 2 ¼ centuries. A far worse fate awaits the United States barring an extraordinary miracle because America under Bernanke and especially under Obama has abused the laws of economics far worse than the Brits ever did. What precisely are we talking about?
The nation is now past the point where a long predictable “economic rebalancing” is overdue. Recently our nation’s credit ranking was dropped for the first time in our history. The point where that should have happened was actually reached in 1973 when Richard Nixon let the dollar “float” against gold and against other countries’ money and refused to honor our country’s fiduciary promises to people who bought American Treasury bonds. Things have gotten much, much worse for foreign-holders of American currency since 1973 and much, much, much, much, much worse for American holders of dollars ever since.
Here’s one very quick example of why this happened. Besides all the foolish government spending of borrowed money (we were the world’s greatest creditor nation two generations ago and are now the world’s largest DEBTOR), the government also stepped into the free markets and told banks and businesses how they must run their operations. Progressive Jimmy Carter and his progressive Congress in 1977 passed the Community Reinvestment Act (CRA ’77) which for the first time required (FORCED) mortgage lenders to knowingly make bad loans to unqualified home loan applicants. Since that time the rate of suspect loans (with 3% down payment or less) has risen from 0.24% in 1977 to 34.25% of all mortgages in 2007 when our financial crisis (the sub-prime loan crisis) began.
That amounted to a 1,425% multiplication of the rate of suspect loans. Worse, instead of giving 3%-down loans to ex-Army officers enrolled in college under the GI Bill (as they were back in 1975), under the 4th Bill Clinton expansion of CRA ’77 (his 1998 “steroid version” expansion) 0%-down loans were being granted to people without jobs; without good credit; whose only “income” was food stamps; and even to illegal aliens. Many of these people were put into $400,000 homes on the belief that home prices could only rise and they could later sell out and make a profit: a monstrously stupid progressive spread-the-wealth scheme. This was all pure Keynesian prosperity according to the progressive manifesto. The result is history, sad, sad history. Today our woes are so bad that even if all Americans were taxed 100% of our earnings we could NOT repay the national debt ($15 TRillion and growing). As far as the nation’s UNfunded liabilities ($112 TRillion+ and growing) and the welfare state (who knows what the cost of the welfare state is since under Obama just SNAP -- the Supplemental Nutrition Assistance Program commonly called “food stamps” --recipients have reached well over 40 million souls), so your guess on the full size of all these government spending and government interference boondoggles is every bit as good as my guess might be . . . .
The bottom line? Expect (unless miracles occur) the world to change back to the gold standard; or possibly a combination gold standard and a shift to gold-back currencies like the Swiss Franc or the Kruggerand; or most likely a digital-based gold standard for conducting the world’s international trade. That is, the American Dollar will be yesterday’s news and those holding dollars and any American paper instruments (like bonds) will be up a certain infamous creek without locomotion. The price of everything in dollars would then jump spectacularly. Gas might reach $15 or $16 or even $20 per gallon; eggs, maybe about the same. Overnight the standard of living of all Americans would drop to about the 1930’s level as the cost of necessities would become prohibitive and luxuries would be . . . well, rare luxuries again . . . You know those problems with pensions some people have had recently . . . those problems will soon seem like a pimple under Miss America’s evening gown: Bad day at Black Rock.
Ya’all live long, strong and ornery,
** What can you do; what SHOULD you do to avoid AmeriKa becoming your own new lifestyle? The question is TOO BROAD and encompasses your safety (expect food riots in big cities) and perhaps even your nationality . . . wealthy Americans will exit in droves taking their job-creation abilities with them probably mostly to Canada and Australia and the U.K. Here’s the minimum you should consider: if you can afford it, GOLD would be a great idea. Gold could see $12,000-$15,000 an ounce soon. But every thinking American ought now to invest in “junk silver.” Either the 40% (1965-1970) or 90% (1964 and earlier) silver coins will do nicely. Silver has risen faster than gold this last decade and has, according to experts still a greater upside than gold. Silver is also much cheaper and far for convenient for every-day transactions. Won’t it be nice to be able to pay for a decent meal with a 40% silver quarter or a 90% silver dime rather than huge amounts of paper currency . . . however, Gresham’s Law (“Bad money drives good money out of circulation.”) would remind you that prudently you should spend your paper before you use any silver at all. The government would smarten up eventually and forbid flight from the country . . . with gold, palladium, platinum or silver or even numismatic coins . . . and even seek to “inspect” people’s safe deposit boxes as a Brave New World ushers in . . . by the way while this reality is galloping toward us, MSNBC's Chris Mathews on his Hardball show (which only throws marshmallow questions to progressive politicians) is accusing the TEA Party of turning the Senate and House into zombies by "body-snatching." So the only sane ideas in politics are being likened to horror flicks . . . my, my . . . .