No pain with plunge protection

Have you ever heard of the “Plunge Protection Team” or PPT? If you're like me then the answer is no. Today I was watching an interview on MSNBC's “Closing Bell” interview with Charles Beterman. In this interview he talked about how individuals are doing major sell offs in equities, but the government was purchasing the stocks that people were selling because of QE2. When I decided to look into this I came across PPT, but it's official name is the Working Group.



PPT's official goal is to

“...keep the markets operating in the event of a sudden, stomach-churning plunge in stock prices -- and to prevent a panicky run on banks, brokerage firms and mutual funds. Officials worry that if investors all tried to head for the exit at the same time, there wouldn't be enough room -- or in financial terms, liquidity -- for them all to get through. In that event, the smoothly running global financial machine would begin to lock up.....In the 1987 crash, government officials worked feverishly -- and, ultimately, successfully -- to avoid precisely that bleak scenario.”

In simple terms, if we have a market crash like the housing and credit bubble that started to burst in 2007 the Federal Reserve, along with other agencies, would step in and prop up the market.

After reading this article, I took a trip back in the way back machine to 1907. In 1907 we had a similar crash. The market went so low that margins were being called and many people were on the verge of bankruptcy and ruin. If it wasn't for J.P. Morgan coming out and promising loans we might have had our Great Depression in 1907 instead. After J.P. Morgan went public with loan promises, the market rallied. Many believe that this is what led to the Roaring 20's or at least allowed it to happen. However, 22 years later, we had another crash, but people decided to get out of the market unlike the 1907 crash where people jumped right back in and the market rallied.


If you've ever watched the movie “The Recruit”, there's a scene where the main character was asked if he preferred a walk in the rain or to feel no pain. His first answer was to walk in the rain, but as he was walking out he told the truth, he wanted to feel no pain. I think with the creation of the Federal Reserve Bank in 1913 was what has led us down the road to feel no pain. After so many people had gone through the Great Depression, they wanted to make sure that future generations wouldn't feel any pain either, hence our entitlement programs starting with Social Security and the New Deal. The thing is every politician since has campaigned on the promise to let the general public feel no pain, which brings me to my favorite quote from the Tao Te Chang.

“If you want to be a great leader, you must learn to follow the Tao. Stop trying to control. Let go of fixed plans and concepts and the world will govern itself.


The more prohibitions you have, the less virtuous people will be. The more weapons you have, the less secure people will be. The more subsidies you have, the less self reliant people will be.


Therefore the master says; I let go of the law, and people become honest. I let go of economics, and people become prosperous. I let go of religion, and people become serene. I let go of all desire for the common good, and the good becomes common as grass.”

It seems to me that in our quest to feel no pain, we've caused even more pain than if we would have left things alone. There was 22 years between the crash of 1907 and the crash of 1929, it's been 20 years between Black Monday 1987 and the financial collapse of 2007. Economists have said that our current financial crisis is mirroring the Great Depression that started in 1929, but their propaganda lately is how we're coming out of this recession although anyone who's paying attention will see that everything is about to collapse.


The thing that is most important to take from this is that although things look like they may be getting better, they're not, the Federal Reserve is propping up the market to give an illusion of stability. During the Great Depression the market had upswings and crashed again and again. The main problem for the common man during that time period was jobs, over 30% of the population was unemployed. Some of the big differences between that time and now is that we were an emerging economy just like China whereas we're number 2 in the world now. Also, most of the people during that time had family farms or property, so they could grow their food. Right now, we don't own property and if we do, there's not enough land to grow a big enough space for a crop to survive for a year. Another thing that was important back then, they had little to no regulation so it was easier to start up a business compared to today. Most of all, during that time a war could bring an economy out of ruins unlike today where it's actually a drag because we don't make anything here.


I think we need to start feeling the pain. If we feel no pain, there's no real gain. By having hardships and working your way through rough times, it builds character and confidence. Right now with the Federal Reserve propping up the stock market, it's only making it worse. A couple years ago I got a spider bite. At first it was a bite, but then the redness started spreading. I took the attitude that it'll either pass or if I just ignore it, it will go away. After about two weeks my leg was so red and my foot so swollen that I went to the ER. The doctor had to cut open my leg which was so painful that when I squeezed my wife's hand, I almost broke it. A few days later the part of the infection in my foot finally exploded as well. The moral of the story was that if when I had the problem I took care of it, I would not have had to go through that ordeal which cost me money and pain. We, as a country, need to stop trying to ignore the problem like it's going to go away and let the impending crash happen because if we don't, we'll pay a higher price. The sooner we start to take care of our problem, the less pain and quicker we can get back on our feet. I believe it was Iceland who did just that, now they're coming out of their recession and starting to become productive.
 
Sources:
 
http://www.youtube.com/watch?v=AwlQ5PjITJ8
http://www.conspiracyplanet.com/channel.cfm?channelid=114&contentid=7474&page=2
http://oddcitizen.com/?p=116
http://www.huffingtonpost.com/social/MrBadExample/senate-votes-for-wall-str_n_567063_46581780.html
http://en.wikipedia.org/wiki/Working_Group_on_Financial_Markets
http://www.washingtonpost.com/wp-srv/business/longterm/blackm/plunge.htm
http://www.washingtonpost.com/wp-srv/business/longterm/blackm/blackm.htm

Undergoing MyBlogLog Verification

Headline news

Today a site where I posted a lot of my articles decided to ban me from posting because of the subjects of my blogs. When I wrote the administrator of the site, he was just as just as rude and unprofessional as I've ever seen. I tell you here and now, I'm not an Alex Jones supporter, nor have I ever supported him. He does have some good points, but I don't trust his sourcing. A few months ago Glenn Beck did a segment on the Chinese not purchasing anymore US bonds and 15 days to the New World Order. Thinking he was crazy, I decided to research it on my own. Glenn Beck was right to a point, but I don't think anyone really knows what's going to happen. I do know that if we make it to 2012, it will be a miracle and I might just start believing in God again, but I don't see that happening.

Today on "Freedom Watch" Judge Napaletanno talked about European civil unrest coming here to America and its possibilities. The following show "Follow the Money" not only did Eric Bolling talk about European civil unrest coming to America, but also an economic collapse happening as well. Peter Schiff who predicted the housing and credit bubbles bursting also tonight predicted the bond bubble bursting which I wrote about on Monday. What's starting to concern me is that this is starting to be talked about more and more by the mainstream media and they're accepting it. This isn't just one kook talking about it, heads of companies and reporters are starting to tell people, hey this is coming.

Anyone who knows me knows I only deal in facts although my wife says facts are subjective. The fact is the military does war game simulations of martial law frequently, what's different this time is they're actually moving food around which tells me they know its coming. Fact is, the Federal Reserve can't buy bonds quick enough to keep rates from raising. The Federal Reserves QE1 started out at $600 billion and turned into $1.8 trillion. Fact  is, if interest rates rise, more and more people will not only lose their homes due to high payments, but unemployment will go higher for those industries that rely on the housing market. Fact is, our economy will never be what it was because our economy was based upon borrowing money we didn't have, that's what got us here in the first place. Fact is, not only is the House talking about passing a $1.2 trillion spending bill, but they've already agreed to pass a $900 billion stimulus 2 which includes extending unemployment for 13 months and retaining the Bush-era tax cuts. Fact is, even with the new Republicans coming into the House next year, spending will continue to soar. Fact is, China is buying shorter term bonds and starting to diversify in Gold and Commodities.

Call me crazy if you want. Call me a fear monger even, but facts are facts and you can't run from them, just ignore them. If you haven't prepared, start preparing, you don't have much time. If you don't know how to survive an economic collapse, research it or read my older blogs. If you don't know how to survive martial law, research it or read my older blogs. Anything you don't know, check my older blogs first, then research it if I haven't covered it. Get out of money, buy Gold and Silver. One thing I'm doing that my grandfather told me is going to the bank and looking for pre 1970 coins. Anything before 1970 has 40% silver and anything before 1964 has 90% silver. Do what you have to do, but make sure you're prepared, because if you aren't, it's no one's fault but your own. If I'm wrong, hey, you just got rich accidentally, but if I'm not, you're prepared.

Sources:

http://www.tomdispatch.com/post/175113/Michael_Klare_the_great_superpower_meltdown
http://peterschiffblog.blogspot.com/2010/12/market-update-commodities-us-dollar.html
http://online.wsj.com/article/SB10001424052748704828104576021413142892094.html?mod=WSJ_Bonds_LEFTTopNews
http://pragcap.com/northern-trust-qe1-failed-why-will-qe2-work
http://www.sooperarticles.com/finance-articles/investing-articles/federal-reserve-launches-qe15-157842.html
http://en.wikipedia.org/wiki/Quantitative_easing
http://www.businessinsider.com/why-quantitative-easing-is-bad-for-the-economy-2010-11#
http://online.wsj.com/mdc/public/npage/2_3051.html?mod=2_3002&sid=1224040&page=bond

Bond bubble about to burst

Today the Fed bought up 9.7 billion in US Treasury bonds. From what I understand of the bond market is that the Treasury issues bonds at a specific starting interest rate and gives them to the Fed and the Federal Reserve sends over cash in exchange. If there are high demands on bonds then the rate will go lower, if there are low demands on the bonds the rate goes up. Last week after the Obama tax cut deal with the Republicans, the bond market had a huge sell off which rose interest rates almost .5%. This is a big deal because people's mortgage payments go up based upon these interest rates. Today the Fed bought up bonds which dropped interest rates a little lower.



The speculation is that without keeping interest rates lower it will allow people to borrow more and keep those people who can afford their homes in there without putting extra pressure with rising interest rates which raise their mortgage payments. The thing the people are denying is that by creating this cheap money it's driving bond investors away for a couple of reasons. One reason is that we're devaluing our currency by monetizing our debt which is growing bigger by the day. Another would be that bond investors see how much debt we currently have and realize that our spending habits aren't changing which will ultimately cause us to either default or even worse monetize our debt even more.


This is all part of a chain reaction. In 2006-07 the housing bubble burst which caused the credit bubble to burst which will lead to the bond market bubble bursting. Bubbles are defined as exceptionally high demand artificially driving up prices or in a bond market, driving down prices. When the housing bubble burst, people had to choose between paying a credit card or mortgage payments. Most people chose to pay their mortgage. With some people defaulting on their mortgage and even more on their credit cards the banks started requesting bailouts. With the Fed printing money to pay for these bailouts it caused accelerated devaluing of our currency which in turn started a bond sell off because of loss of market confidence. With this happening the fed started the QE program. This is what will ultimately be linked to the bond bubble bursting and collapse of the US economy.


The Federal Reserve has put itself between a rock and a hard place with these QE's. Either Bernanke wants to collapse the US economy and currency or he just doesn't have basic common sense that an IT guy with a computer and the internet can figure out. Because of the credit bubble bursting the economy will not be back to the way it was during the 80's and 90's because we no longer make things. Our wealth has been borrowed away for the last 25 our of 30 year. The only reason that America's economy was so robust is because we could use our credit to borrow to pay for that new car, house, or trinket that we want. The thing is until we start making things here and manufacturing, we're going to be at this rate of prosperity for a very long period of time because we need to pay off our debt so that we can go back to borrowing. Bernanke is trying to artificially keep interest rates lower so the whole country including the government can borrow money at low rates, but if everyone is in so much debt, you can't load them up with more otherwise it's robbery.


People are complaining because the banks are holding onto an estimated $2+ trillion dollars including businesses. The question I ask you, why wouldn't banks hold onto their money? I think they're seeing the bond market crashing while the Fed is artificially propping it up through QE's that they're preparing for bank runs and possibly worse case scenarios than that. This is their only hope of staying alive once everything goes belly up. The only thing they have on their side, from what I hear, is that they're not being required to give high risk loans anymore. With the economy almost in shambles and just barely plugging along, no one has good enough credit to get any loans. I know people who have over 750 beacon scores who can't even get a good car loan and they've even had their job for years. Before my mother's boyfriend passed away from cancer his credit score was so high he could get a million dollar loan on just a signature, he only made about $35k a year.

There's two things you should take away from this article. First, the economy is going to remain in its current state as long as we're not manufacturing goods, a service based economy is no longer sustainable. Secondly, the bond market is about to crash, but when? As long as people keep getting out of the US bond market we're going to have to keep doing QE's. Every time we do a QE, we're going to have to make it bigger and bigger. Sooner or later, within next couple of years, we're going to be the Wiemar Republic. People will start burning money because it will be cheaper than firewood.
 
Sources:
 
http://online.wsj.com/article/BT-CO-20101213-712553.html?mod=rss_Bonds
http://online.wsj.com/public/page/news-fixed-income-bonds.html?mod=WSJ_topnav_markets
http://www.treasurydirect.gov/govt/govt.htm

Social Security no longer taboo

I use a message board called Congress and today one of the posts was about the census report. I've never been so mad in my life, made me want to start rioting in the street almost. The report states that the wealth gap is increasing between wealthy and poor, this means the middle class is shrinking yet again. Another part of the report stated that household income decreased all while experiencing inflation (flooding the market with more money than gold and silver can back). What infuriated me most were the two claims that the baby boomers are the wealthiest part of our society and that politicians will be less likely to cut social security than any other entitlement program. What infuriated me most about this is not the fact that the baby boomers are the wealthiest in our society because that's to be expected of every generation, but the fact that politicians are more inclined to cut education and other entitlement programs than social security and medicare/medicaid which is what's killing our budget in the first place. In my opinion, this is the greatest generational theft in history. Those born after 1970 will not be able to collect Social Security.

When asked to provide my facts I decided to look up the baby boom generation and the biggest entitlement programs we have. The baby boom started in 1946 and ended in 1960, my mom and dad are the last of the boomers. The first boomer came of age to vote in 1964, so any policies put forth from 1963 to 1978-79 would be baby boomer responsibility, but considering they've been the largest voting block since 1964 until 2000, we'll give them 50% of the blame from 1979 on. Here's a list of some of the major budget items of the day and when they started.

• Social Security was started in 1935, but a majority of the population of that generation wouldn't live long enough to collect Social Security. My grandfather on my mother's side is the last of them to die off and he's 89, he's also the last of the WWII generation.
• Food Stamps was started in 1940, but a skeleton form of what we know today. In 1965 with LBJ's “great society” he expanded an emergency program and it was made permanent 1969 under Nixon. Welfare was later reformed under President Clinton and a Republican Congress in 1994.
• Medicare/Medicaid as we know it today was created in 1965, this was another part of “great society” by LBJ.
• 1940 welfare is created as an “emergency” service and in 1965 welfare is made permenent and expanded as another part of “great society” by LBJ.
• 1974 HUD was created.

Baby boomers started retiring as early as 3 years ago, so we're only going to see our financial crisis get worse. A lot of baby boomers have pensions, saved money, or invested it. Considering the current housing crisis, the stock market and cash will be the only assets that these baby boomers will be able to liquidate in order to enjoy their 20+ years of retirement. This will in turn cause the stock market to either crash or just remain stagnate.

The baby boomers had it good until around 1978 when the cost of living rose to where you needed at least 2 incomes to make ends meet for the middle and lower classes. This was caused by two key factors according to Chris Martenson. First, in 1971 Nixon completely took us away from the “Gold Standard”, and secondly, because of taking us off of the “Gold Standard” which took away any bank responsibility and allowed for an endless ceiling of money to be created out of thin air.

I've always held some animocity towards the baby boom generation, but not for the reason's you would think. Looking at my parents who were baby boomers, I see the baby boomers as those who wanted instant gratification and didn't think of the consequences, or as George Carlin said, “They went from Cocaine to Rogain”. As I learned when my mother's boyfriend passed away, his doughter was stuck with his outstanding debt, and so will I. I think the hippie movement was a real identity crisis for our country, but we spent like crazy depressed shoppers and left the bill to later generations. The worst part of all this is mine and my wife's generation are robbing our child by extending unemployment to 3 years and trying to create a free education system, but that's what the Tea Party movement is supposed to be all about stopping.

What this is all leading to is that we need to think about what we're doing. You can't ask me to give up everything for you and you give up nothing. Social Security shouldn't be taboo anymore because if you're going to cut education, welfare, and other programs, then you should be willing to take the hit yourself as well by doing things such as means testing or an immediate jump in retirment age. Come the 2012 election the baby boomers will be losing significant voting power as quickly as they came into power, that's why President Obama is starting to pander to the younger voters. You can't ask someone to let you move in with them, then tell them they have to wait hand and foot on you. The baby boom generation is mostly repsonsible for a lot of our deficit, so think twice before urging your congressman not to cut social security because, in essence, you'll be doing a disservice to the whole country. I've been wondering what will cause the riots in the US like they're having in Europe, I think I just found my answer.

Game Over America

**Blogger’s Note: Exploring this topic has been difficult for me. My family has always been the defenders and the backbone of this country. I come from 10 generations of military as well as middle class business-people. While one side of my family was helping to create a strong economy, another part was fighting for the freedoms and rights that our country needed and deserved. Doing this research has made me feel that we’ve been fighting and growing for nothing. All of the effort put into this country seems to have been disregarded and unappreciated. All it took was a handful of people to get into power and decide they wanted to destroy our country as we know and love it. I’d like to ask you to do your own research on this subject. If your research contradicts mine, I would love to see it. I think everyone needs to research these topics for themselves and find the information. If you love your country as much as I do, it may be a pretty painful experience, but I guarantee you, it is necessary. My sources at the bottom will be a great starting point for your own personal research.**

Recently Glenn Beck did a segment on the 15 day path to the New World Order. Either he didn’t paint a big enough picture, or he’s just plain wrong. I decided to look for the answers myself and what I found was kind of scary. I’m waiting for the Wallstreet Journal to finally publish this so that we can start rebuilding because right now, we’ve reached the end of our rope about $600 billion ago (http://www.usdebtclock.org/). First let’s answer the question that Glenn Beck stated may be the downfall of the Republic, which is will China stop buying US Bonds.

The simple answer is that China won’t stop buying US Bonds unless a couple of things happen. First of which would be that the US Dollar is no longer the global exchange currency. Secondly, China would have to be the global exchange currency which would mean that the Euro and US Dollar have collapsed. Lastly, America would have to collapse internally from such an overwhelming debt that the inflation over values the Chinese RMB. These are possibilities, but I doubt that this will happen in these ways from the research I’ve done.

Recently America has been accused of implementing the same currency warfare towards the rest of the world like when the stock market crashed in 1929. The world relies on the dollar being the global currency and is a very delicate system of checks and balances. With the US being the current exchange currency this gives us a lot of clout, but the policies of the Pelosi Congress and Obama Presidency have put the whole country at risk, even Hillary Clinton has admitted this.

The way this works is that the US dollar is the bench mark currency. The countries who have lower value currencies tend to have a trade surplus like China, Japan, and Germany. Those countries with higher currency values tend to have a trade deficit like the US and Greece. Currently the US makes up 40% of the world’s total trade deficit with China leading the way with the largest trade surplus at 23% and Japan runs somewhere around 21% and Germany around 19%. These nations in order to keep their trade surplus. which means jobs and development, keep their currency lower than the dollar because it makes their products cheaper to buy. As the US waters down its dollar by borrowing and doing things like QE2 this lowers the value of the dollar making purchases from China, Japan, and Germany more expensive. This in turn sends them into a recession because they rely on the US to be large importers of goods. If the US were to devalue its currency so low that it would match the Chinese RMB this would come close to collapsing the global economy.

There’s a few scenarios that are more realistic that could happen before Glenn Beck’s China refusing to purchase US Bonds scenario works.

Scenario 1:

With the US debt to GDP level reaching 100% by the end of 2010 we could see a new policy. The fed has already started to implement this by doing QE2. Congress could or could not raise the debt ceiling, but this really doesn’t matter at this point. Fed Chairman Bernanke has publicly stated that he’s not subject to the Congressional debt ceiling nor does he have to worry about having to be an elected official. This makes the Federal Reserve a rogue and destructive element in every scenario. The Federal Reserve can print money devaluing our currency as it pleasse because it has no real oversight. This would cause massive inflation and devaluing of our currency. No one in their right mind would want to invest in the US Dollar because it’s worthless. Our economy collapses, the rest of the world’s economy collapses, and a new global currency emerges.

Scenario 2:

China is currently trying to head off the currency wars by maneuvering to become the new world currency or global exchange currency. I have read an article that stated that China is giving discounts to nations that are willing to use the RMB instead of the US Dollar. They would still have to get the US to accept this, but since they own so much of our foreign debt and we’ve made promises, China could very easily twist our arm very hard in a post Obama Presidency or just politely ask the current Obama Presidency to get this done. The downfall of this would be that with China having such a large trade surplus and the US having such a large trade deficit that this would collapse the world economy. The upside to this is we might get bailed out like Greece, but be prepared for riots in the streets by union members because they lost their pensions.

Scenario 3:

With the value of the dollar dropping so rapidly and the inflation causing the cost of comodoties to go up this could give us a double dip recession that we may not be able to dig ourselves out of. If the US dollar collapses and the Euro being so weak and the US being 40% of the worlds trade deficits this could still lead us into a global catastrophy. This would open the door to a global currency and even possibly a global government because the general public of the world would sacrifice liberty in exchange for security like the US has currently shown it is willing to do just like after 9/11.

Scenario 4:

People like Glenn Beck and ultra conservatives could force the Federal Reserve to show them their books. By showing their books there is a possibility that the Federal Reserve could show at minimum double the amount that they have printed. This would cause such a major amount of hyperinflation that the American economy could collapse, the Euro could collapse, and then the Chinese could have a total collapse of their economy and create such a global catastrophy that would put us in the “Dark Ages”.

The bottom line with all these scenarios is that the US is devaluing its dollar so much that it is risking the collapse of the US economy which in turn will create a domino effect for the rest of the world because we are so intertwined. We will recover in due time, but we might see the dawning of another “Dark Age” for the world. Will this be equivalent to the world rebuilding itself from the ashes?

I watched a documentary on the History Channel about the “Dark Ages”. I was so upset by it I had a hard time finishing it. Once barbarians conquered the capital city of Rome’s Western half the world was sent into the “Dark Ages”. Barbarians in all corners of the old western empire were jockeying for domination. The world only knew one world power, Rome, and so they figured they would conquer as much as they could to create their vision of world domination. Unfortunately the “common man” was stuck in the middle of this. Technology, arts, and many other vital civilization evolutions were put on hold just to be able to whether the turbulent times. Once there was order, a new barbarian leader rose to conquer the stabilized society. This could very well be what happens here in the US and worldwide if we keep going in the direction that we’re going in.

In conclusion, the US Dollar is so devalued that over the next several months inflation will set in. Companies like General Meals and McDonalds are already stating that the commodities that they use to make their products are more expensive than what they are charging in the market causing them to raise prices. Once inflation sets in we should expect to see the double dip recession that some people have talked about. Once in the double dip recession we’ll continue to borrow because the Federal Government will want to give some sort of stability. One of two things could happen. We could have another civil war because of the imminent collapse of the dollar or we finally wake up and dig ourselves out of this problem. I think civil war will end up being the way we go because American’s have shown they just don’t care anymore. As my wife says “American’s just don’t stick to things and see them through anymore”, so the easy way out would be civil war. We have the potential to really send civilization back as much as a 100 years if any one of the 4 scenarios play out. The question is starting to become not “if” but “when” our economy collapses because Pelosi and Obama have singlehandeldly spent up to $6 trillion over 4 years which is almost a 50% drop in the value of our currency in just a short period of time.



Sources:

http://www.businessinsider.com/henry-blodget-china-terrified-us-will-default-on-debt-2009-3
http://www.nakedcapitalism.com/2009/01/ny-times-china-cooling-on-us-debt.html
http://www.guardian.co.uk/business/2010/may/27/stock-markets-buoyed-china-eurozone-debt

http://www.numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId=7081
http://www.bcheights.com/marketplace/china-refuses-to-revalue-currency-despite-intense-u-s-pressure-1.1124754
http://wpblog.ohpinion.com/2010/09/25/u-s-going-beyond-polite-requests-to-get-action-on-yuan-revaluation/
http://www.brookings.edu/opinions/2010/0222_china_debt_burtless.aspx
http://www.cbsnews.com/8301-503983_162-4864398-503983.html
http://hubpages.com/hub/Why-is-China-so-Important-to-the-US-Economy
http://www.marketoracle.co.uk/Article21510.html

http://mpettis.com/2010/05/don%E2%80%99t-misread-the-trade-implications-of-the-euro-crisis-for-china/
http://mpettis.com/2010/05/don%E2%80%99t-misread-the-trade-implications-of-the-euro-crisis-for-china/
http://www.marketoracle.co.uk/Article21058.html
http://www.wsws.org/articles/2010/nov2010/pers-n05.shtml
http://weakonomics.com/2010/02/01/what-happens-if-congress-doesn%E2%80%99t-raise-the-debt-ceiling/
http://patriotsforamerica.ning.com/forum/topics/what-happens-if-the-gop
http://www.tradingonlinemarkets.com/Articles/Economics/debt_to_gdp_ratio.htm
http://www.nuwireinvestor.com/articles/what-happens-if-the-yuan-replaces-the-dollar-as-the-53636.aspx
http://economics.about.com/od/foreigntrade/a/trade_deficit_h.htm
http://epi.3cdn.net/28e51781e452fee9d9_3um6ii54c.pdf
http://mediamatters.org/print/research/201010190002
http://www.wnd.com/?pageId=114759
http://www.naturalnews.com/030309_food_inflation.html
http://www.naturalnews.com/food.html
http://inflation.us/foodpriceprojections.pdf
http://www.independentlivingnews.com/pdf/Final_days_of_dollar.pdf?utm_source=Publicaster&utm_medium=email&utm_campaign=1008%20-%20Initial%20Welcome%20Email%20-%20FDoF%20Survey&utm_term=The+Final+Days+of+the+Dollar%3a+10+Last-Minute+Preparations+You+Need+to+Make+Now&AID=2334
http://www.youtube.com/watch?v=4ljqUXVbZR0
http://www.doughroller.net/news-analysis/food-prices-are-soaring-everywhere/
http://online.wsj.com/article/SB20001424052748704506404575592313664715360.html

Federal Reserve Bankrupting America

Does history repeat itself? Are we in the verge of repeating the Weimar Republics mistake? I think the answer to both questions is yes. On the day after the elections when everybody is still discussing the results, the Federal Reserve is holding the QE2 meeting. In this meeting they will discuss a second stimulus to put more money into the system. From early speculation the Fed could be putting out between 500 Billion to 1.2 Trillion dollars into our economy. There are two problems with this meeting and the outcome. The first is that congress has no say in this, yay Republicans, and secondly, that this will devalue our currency even more.


The Weimar Republic is post WWI Germany. They had a revolution that was started by 3 sailors who pretty much started a coupe. Under the Weimar Republic the political atmosphere was a lot like we have here in the U.S., a lot of left and right wing people trying to get along. The Weimar Republic used a currency called the “Papiermark”. The Papiermark quickly devalued by going from 4.2 per U.S dollar to over 1 trillion per U.S dollar. The reason this currency was devalued so much was because they couldn’t stop printing money to pay their debts. The German public was completely unaware of all the money being printed. Later on they would start using the “Rentenmark” which was backed by the value of land. Eventually Germany became a member of the League of Nations with veto power. Over a period of just a couple of years the Rentenmark had the same issues as the Papiermark and started devaluing again. This is eventually what led to WWII Germany.

The general public, and I would even venture to say 99% of everyone in this country, does not know that the U.S. credit rating was lowered from an AAA to an AA rating along with other nations on July 13th of this year, some of whom are having riots in the streets as we speak. With the growing national debt reaching an even higher percentage of our GDP, some say 89%; we become an even higher risk to default. No one would loan you money to buy a house with that type of debt to income and neither would another country.

With our current policy over the last 30 years we’ve been taxing and spending our country away into debt oblivion. Now that the rest of the world is refusing to or at least staying away from buying U.S. debt, we now have to look at the Federal Reserve to bail us out and stimulate the economy. Not many people know that the Federal Reserve is not a U.S. government entity and also that it loans us our own currency at an interest rate.

In order to stimulate the economy the Federal Reserve will be printing money and buying its own bonds in order to keep interest rates low and because the U.S. has almost reached its “Debt Ceiling”, this won’t be voted on again until January.

This is where we are starting to repeat the Weimar history. Since the debt ceiling has almost been reached, the U.S. credit rating has been downgraded, foreign countries will not favor loaning the U.S. money, and we’re almost at 100% of our GDP with our debt, we have to start printing our own money to be able to pay our bills. This will devalue our currency even more. This means that a company like General Mills will be required to pay more for the grain they use to make cereal and the price will then be passed onto the consumer, but wait, are our wages going up? No, our wages will not be going up, our people will have a harder time just providing the basics and this could get out of control very quickly. We could very easily go into hyperinflation which is when the value of the dollar declines so quickly that it becomes harder for the markets to respond and prices skyrocket daily or even possibly hourly, and this ultimately leads to the collapse of a currency. The Weimar Republic only lasted from 1918-1933 and had two currency collapses.

In my final thoughts I ask, what is it that we can do to stop this? Considering George Soros gave the U.S. an ultimatum (http://www.youtube.com/watch?v=TOjckJWqb0A) that we either have a managed decline of the dollar or that the world will do it for us, George Soros is responsible for collapsing the “British Sterling”, and George Soros is also a friend and mentor to President Obama, I think that we have to take action quick. We should all write our Congressman and woman, our Senators, and the President and call for an impeachment and congressional hearings. What is happening here, if it’s not Treason, its borderline Treason. The President of the United States is purposefully trying to collapse our economy, do harm to its citizens, and possibly enslave us. We need to actually take some responsibility and start cutting our government so that we can have a balanced budget. Unfortunately we’ll probably have riots in the streets by the Unions like is happening in the UK and France because they have had to cut back spending in order to repair their credit rating as well. This is not an easy solution nor is it something that I think will actually be done, even under our new Republican leadership. So our choice is to become like the Weimar Republic or to stand up, tighten our belt, and realize that it will be hard at first, but like everything worthwhile we’ll enjoy the rewards.

Sources:
 
http://www.wnd.com/?pageId=188885

http://www.reuters.com/article/idUSTRE6A12IA20101103?feedType=RSS&feedName=topNews
http://economix.blogs.nytimes.com/2010/03/15/what-happens-if-americas-credit-rating-is-downgraded/
http://www.wealthdaily.com/articles/us-credit-rating-downgraded/2594
http://news.yahoo.com/s/nm/20101028/ts_nm/us_usa_fed
http://en.wikipedia.org/wiki/Weimar_Republic