Path to self destruction

“I'm just a patsy”, that's what Lee Harvey Oswald said just before he was shot. I think the banks are the patsies and the culprit at the same time. All these bail outs and public debt is not because of anything other than the banks failing, but the question is why are we even bailing them out. Now, all the people who said these banks were going to fail are now saying let them fail, including the countries that are failing as well. So, where's the logic in all of this?



Let's look at the banks for just a second. The banks made all these bad loans, packaged them up and sold them to investors. This allowed the banks to give the money out while betting against people being able to pay their loans. I would love to bet both sides, but I don't go to race tracks, and the stock market is the biggest form of legalized gambling in the world. Because of federal regulation the banks were required to give out a certain percentage of bad loans. The banks got two sweeteners to do this. The banks were able to write off the bad loans on their taxes if people defaulted and the government secured the debt.


My question is did the banks do this on purpose to get richer or did they just get greedy and didn't have any consequences for their actions? I think it's a combination of both. Anyone in their right mind would go after more wealth if they could, so increasing the amount of high risk loans to get more to write off and not even really lose any money would be in their best interest. For the banks, there's no losing, so why not be reckless? The politicians made these deals so they could say they did a good thing and the banks made out like bandits.


Now the States are in trouble. I went to the usdebtclock.org and looked at my home state, Oregon, I saw that we're only at 23% debt to GDP. Thinking to myself I began to ask, was this all a scare tactic by the media? The answer is no. Let's look at New Jersey for example. New Jersey has about 17% debt to GDP. New Jersey has $8 billion in revenue, $11 billion in debt, and is short $10 billion dollars. New Jersey has started cutting services so that they've actually come out with a $400 million surplus this year according to Governor Chris Christie, so their debt to GDP is going down. The thing to see here is that if New Jersey decided to borrow money instead of cut back, their debt to GDP would go from 17% to around 34%. This doesn't give long before the state is at 100% of debt to GDP.


Most, if not all, States require that a budget be balanced every year. So, for most states you're going to have to cut services, cities too. What I find to be absolutely backward is that these states and cities are choosing to pay for pension liabilities while cutting essential services like police, fire, and rescue. A great example of this would be Detroit. Detroit is reducing coverage of 20% of its city because of budget shortfalls while not expecting any concessions from the police, fire, and rescue. Another example would be Illinois. Illinois is about 6 months behind on payments, not even local gas stations will accept state credit cards for gas. What is Illinois doing with their money, paying pensions and shorting everyone else?


These people, who I regard highly, that are asking to let these states and institutions fail aren't really looking at the unintended consequences. My favorite quote from Chris Martenson is “the next 20 years will not be like the last 20 years”. People like Peter Schiff and Bob Chapman see this as a good thing, but let's look at what will happen in the event of a collapse.


In the event of a collapse or letting states and institutions fail, there will be a giant power grab by Washington's elite, bankers, and corporations. Everyone is going to want to have a stake in the pie because they want to keep what they have. The banks want their wealth, even if it means 50 years of depression. The corporations want to make sure they stay in business because they'll be in power once everything settles. The politicians, they're just power hungry, they believe that we're their servants instead of the other way around. The one thing they forgot is that when people are oppressed enough, they will revolt, that's what started the American Revolution in 1776.


I think that what people don't realize, except the politicians in Washington, is that we've been groomed for so long to feel that we're entitled to certain things. Since the Great Depression, no one in this country has ever felt true hardship. We've become so accustomed to our lives, our trinkets, and our entitlements that we'll follow anyone who promises to keep us comfortable. In the end, I don't think freedom and inalienable rights will win out, but entitlements and complacency will win the day.


At this point it doesn't matter what you believe in, as long as you believe in something, which has been missing from this country for a long time. If you're like me, you believe in Natures God and that this is an inevitable cycle that we're going through. The Earth can only handle so many people before the people start to get crowded. With crowding comes excessive wars, famine, death, corruption, and greed. Although many people talk about global warming and our carbon footprint, they forget that Nature has it's own supernatural powers. You can only have so much of something before you have nothing then you're led down the path of self destruction, which is where we as a planet and country are heading.

Federal and State governments insolvent

**For those readers that are my regular readers, I apologize for not posting regularly. I've been working long and hard on this current article. Please spread the word**



If you watched 60 minutes this weekend, you've been informed of what's going on. There's a bigger story here which leads to politicians, corruption, and banks. All of these different entities have played a big part in our impending collapse. If the States are bailed out next year when they collapse, then I would expect by the end of 2012 we'll have a complete financial collapse of the whole US which includes debt, currency, and the economy.


Politicians


Our political leaders only job is to get re elected. After August 1971 President Nixon put a stop to the mass liquidation of our gold by telling the nations of the world that they could accept the dollar in exchange for paying our debt. This took the US fully off of the gold standard, which was what FDR wanted during the Great Depression, and also put us as the global exchange currency. I think Nixon did this with good intentions, but the very entities that were supposed to keep watch over our currency were corrupted along with the politicians.


Have you ever noticed that politicians, when trying to be elected, make all these campaign promises. These promises are made so that they can get votes. They end up making deals with Unions and promise gold standard pensions. Unions weren't the only ones, the corporations bought the politicians as well so they could have influence the create legislation to stamp out their competition. After the Campaign finance reform, this allowed special interest groups, which tend to be to one extreme or another, to buy politicians as well.


Glenn Beck asked a great question before the November elections. He asked how long does a politician campaign. He was told that they start campaigning 2 years in advance. The next question he asked was how much money do these politicians have to raise and how many people do they owe favors to by the time they get elected. Those were two great questions, this gives us the complete insight into why we have so much corruption inside Washington D.C.


Currency


All this talk about currency collapsing, what exactly are they talking about? Think of things based upon supply and demand. If the supply is up, the demand is down which gives it less value, if supply is down then it's more expensive. The US used to be on the gold standard, this means that every ounce of gold represented 1 dollar, you could take your dollar to the Treasury Department and exchange it for 1 ounce of gold. Based upon the diversity of metals that the Treasury department has allowed that specific amount of paper money to be printed. This put limits on the amount of money that can be printed. This is also what made our currency so strong and so stable.


After Nixon took us completely off of the gold standard, this took the ceiling off of the amount of currency being able to be printed. This is actually where inflation comes from. The more money that is printed, the less your dollar can buy, this is where prices actually rise and they call it inflation. During President Reagan's campaigning he made a big deal about having a 1 trillion dollar deficit, but by the end of his presidency he had allowed it to increase 3.4 trillion dollars. Before G. W. Bush left office his biggest deficit was 587 billion dollars, now we're running a starting year deficit of 1 trillion dollars. Remember, every time we run a deficit the Federal Reserve prints money in exchange for Treasury bonds of different denominations.


Banks


In my opinion, this is where history will lay the blame. Banking was invented early in history, but really took off when capitalism was implemented here in the US. There was nothing wrong with the banks until the implementation of the Federal Reserve in 1913. The Federal Reserve loaned our currency to us at an interest rate and also created the fractional reserve system. During the Great Depression some people thought that the Federal Reserve didn't print enough money to help bail everyone out, this is why FDR wanted to get away from the gold standard. After getting away from the gold standard in 1971, this opened the flood gates to put us on the path we're on now.


As much as I want to blame the banks, this also has a lot to do with how corrupt our system has become. Remember, politicians owe favors, some favors are deals with the devil. With Wall Street being based off of profitability and growth, banks wanted to make even more money. With credit being given away so readily, this padded the banks books. Eventually so much credit would be given away that there came a point when no one could get any more credit and the banks became insolvent which was part of the credit bubble that crashed starting in 2007.

Don't forget the creation of Fannie and Freddie really took off in the 1980's. Fannie was originally a New Deal program created by the government to promise loans to people with little to no credit or just bad credit. The federal government let Fannie go private in 1968 and then created Freddie to counter balance Fannie. This allowed a private company to put loans together for those who couldn't get a loan, but the government backed these mortgages. This is what lead to the housing bubble that crashed starting in 2007.

Once these banks became insolvent because of government regulation, the government bailed them out. Remember what I said earlier about currency, the more you have, the less it's worth. The Bush and Obama administration both authorized and signed the bailout bills. The bailouts were a 3 phase operation. Phase 1, give banks money to cover their bad debt, phase 2 and 3, the Federal Reserve drove down interest rates to keep people in their homes along with buying government bonds to artificially create a demand and drive bond rates extremely low.


Economy


For years since the Great Depression our countries economy has been built on spending and manufacturing. After 1971 with the US being the global exchange currency, the US exports and manufacturing declined with the last trade surplus being in 1976. From that period on, we've been building upon debt with more debt because we don't make anything. Once the housing and credit bubbles burst in 2007, our economy made a change, but the politicians didn't figure it out. Have you ever noticed how our politicians are telling you to go out and spend so you can start the economy with their different forms of stimulus? How can you spend when you're so broke paying minimum payments and you can't get credit.


I believe the economy is going to shrink, this might lead to mass starvation and even mass exodus to other countries. If you're economy is strictly based upon offering services, there's only so many people you can employ. We have two choices at this point, either reduce wages to bring manufacturing jobs back or devalue our currency so that its is not only no longer the reserve currency, but so that it's cheaper to do business here than anywhere else. What made America the industrial might it used to be was because of the cost of doing business, resources, and manufacturing. Now that we don't do this, we either need to get back to that, or realize that there's only so much room we can maneuver inside a non export economy because our only export, the US dollar, is about to cease to exist.


The Ultimate Collapse


We have so many factors playing into our current economic situation. There are also so many organizations pulling at every free spot of fabric of our nation, there's no way that we can keep the gravy train going. There are many extreme organizations inside of the US that want to pull us in their direction, there are different countries that we've made enemies out of, and there are those who are so bent on power that they'll sell a whole country down the river just to have it.


The biggest threat to our way of life would be a tie between debt and politicians, but they go hand in hand. Our politicians for so long have been telling us that they will give us this and that and expand services for the majority of voters in their area, but my question is, did anyone stop to think about how we're going to pay for that? The thing I was told growing up, especially during the 90's, is that America is rich, so we can afford it. If you have a million dollars, would you ever stop to think about paying a thousand dollars for something you want, the answer would probably be no for a poor person and yes for a rich person. I think that the farther we got away from the Great Depression, the easier it was to forget what hard times were and how to be responsible.


According to 60 minutes between 50-100 states and cities will be bankrupt and are currently unable to pay their basic bills because previous politicians made sweetheart deals with special interest groups and unions that they knew they wouldn't be responsible for. One of two things will happen, either the Fed will bail out the States and stave off destruction for one more year(After a year of bailouts by the IMF the Euro is expected to be dead by the end of 2011) or they will let the States declare bankruptcy and this will cause a domino effect and the US will collapse by the end of 2011.

The Future


Although I can't predict the future, I can look at recent events and get an idea. In Europe a country that represented 2% of the Euro economy, Greece, was bailed out because they thought that it would cause a domino effect and collapse the whole European Union. Once Greece fell other countries such as Ireland fell and Spain and Portugal are expected to be next. In exchange for these countries being bailed out, pretty much the banks not the government, the IMF came in and offered to bail these countries out, but they had to do Austerity programs. This caused the civil unrest we've seen on the news coming from Greece.


If you compare the EU to the US, you'll the same similarities between states and a centralized power. So, if the States go bankrupt as expected next year, the Fed will take the place of the IMF and bail them out. In exchange for bailing them out though, I'm willing to bet that they'll merge the states into one super state or something similar. The thing is though, unlike the EU where everyone's currency fails, the US Dollar will collapse and the IMF will come in with the same Austerity programs for the whole country, if we haven't had a civil war.


This is probably the scariest part, I believe the IMF is acting as the instigator for the new world order. With everyone being bailed out by the IMF, you get a new currency, a world currency. In order to have a world currency, you'll need a world government. Think UN with actual power to govern. I think this is most suitable under Obama because if there is enough civil unrest, he can suspend elections or even appoint who he wants as Reps. and Senators. Considering he's a one worlder, he's going to want to merge the US into this global government. This will ultimately be the end of the US as we know it and if anyone resists, they'll be squashed because at this point the US will be outnumbered. This will be like the movie Serenity where the country no longer exists, so the resisters will be labeled as rebels and allow the State to eradicate them.
 
Sources:
 
http://www.youtube.com/watch?v=KsdUpzSjaEA
http://www.reuters.com/article/idUSTRE66I05U20100719
http://news.bbc.co.uk/2/hi/2817995.stm
http://www.youtube.com/watch?v=nBNm3AWF_qE
http://www.chinatranslated.com/?p=993
http://www.cardeapartners.com/aoi/fincad-derivatives-market-could-be-worth-700-trillion-by-year-end/
http://hubpages.com/hub/Survive-Total-Economic-Collapse
http://www.ehow.com/how_4546748_survive-sudden-economic-collapse.html
http://www.marketoracle.co.uk/Article7171.html
http://www.youtube.com/watch?v=KAT__cgdoPs
http://www.benzinga.com/10/08/443492/faber-and-schiff-the-american-bond-bubble
http://www.youtube.com/watch?v=ktEiN2zXZbo
http://beforeitsnews.com/story/314/416/Buying_Gold:_Why_Are_The_Chinese_Gobbling_Up_Gold_Like_There_Is_No_Tomorrow.html
http://bobchapman.blogspot.com/
http://beforeitsnews.com/story/314/416/Buying_Gold:_Why_Are_The_Chinese_Gobbling_Up_Gold_Like_There_Is_No_Tomorrow.html
http://www.trutv.com/video/conspiracy-theory/full-episodes/wall-street.html
http://www.stansberryresearch.com/pro/1011PSIENDVD/MPSILC22/PR?o=230927&s=233550&u=51973801&l=197794&g=156&r=Milo
http://business.financialpost.com/2010/07/26/michigan-residents-turn-to-alternative-currency/
http://libertymaven.com/2010/07/19/competing-currency-being-accepted-across-mid-michigan/10234/
http://www.sandiego6.com/news/local/story/Tijuana-Airport-to-Stop-Accepting-U-S-Dollars/3KGwK6NUaEyuA52yquO91g.cspx
http://www.washingtonpost.com/wp-dyn/content/article/2010/12/19/AR2010121903022.html?wpisrc=nl_pmopinions
http://bobchapman.blogspot.com/2010/12/bank-bailout-boondoggle-of-billions.html
http://online.wsj.com/article/SB10001424052748703886904576031401310024990.html?mod=WSJ_Bonds_LEFTTopNews
http://peterschiffblog.blogspot.com/2010/12/three-investment-themes-for-2011.html
http://jimrogers-investments.blogspot.com/2010/12/things-are-happening-with-dollar-that.html
http://bobchapman.blogspot.com/2010/12/bob-chapman-hyperinflation-end-of.html
http://en.wikipedia.org/wiki/History_of_banking
http://en.wikipedia.org/wiki/Fannie_Mae
http://projects.washingtonpost.com/top-secret-america/articles/monitoring-america/1/

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

Saving our future

This last weekend my grandfather and I sat down and discussed what would happen and how to survive if the economy collapsed. He made sure to remind me at the start that I don't know what hard times are, and he's right. There's always been a program around to help people out weather it be welfare, unemployment, or even food stamps. No one in this country really knows what hard times are like compared to what the people during the Great Depression went through. They had one thing going for them, they had land and knowledge to grow food along with most of the public not really being city dwellers. Today it's quite the opposite. The majority of people are city dwellers, what's worse is we have gotten away from our agrarian roots.



There are two models to look at to decide what the possible outcomes are for us in the event that there is a major crash of our currency and economy. When Russia collapsed their two main exporting partners were North Korea and Cuba. When trade was cut off with North Korea the government just let their people starve. Now most of the people in North Korea are either government employees or cannibals. Cuba on the other hand did things different. Cuba sent out a mandate and loosened up their rules to require that every person start growing their own food. Any available land was to be used for gardening, people in a way had property rights, but this was the key to their survival. The main difference between North Korea and Cuba is that North Korean's are starving while Cubans started prospering more than they had in the past. Looking at this example, we need to start thinking about following the Cuban example.


There is a big possibility that we may not even have a collapse, although my opinion is that it's already happening. If there is no collapse, we could get accidentally rich, if there is a collapse we're prepared and will have a greater chance of survival. We as a society need to start pulling together now instead of waiting for the collapse to happen, then react. I think by pulling together we could actually save our country and bring it back into prosperity and in line with the Constitution again.


If you own vacant land you can do many things and this actually puts you in a better position than most. You have the opportunity to turn that land into a Liberty Garden (Term used during the Great Depression for gardens within the cities). 1 acre of land could feed up to 5 people including yourself if you manage it just right, think of share cropping. Another idea is allowing those who are dislodged from their homes the ability to camp on the property. I think 1 acre could fit up to 5 families, but it would allow them to have a place to stay and have security in numbers. They could even grow mini gardens. I'm not saying let people live there for free or that their entitled to have a piece of your land, but what I am saying is there are many barter deals that can be worked out such as giving a small portion from each garden to you for usage of the land. If there is surplus, you can either donate or sell the remainder, but several people would be grateful and this would be a step on a positive direction for our country, but I'll let you work out the details.

If you don't own land, but you own a house with a small yard, there's many possibilities there too. There are plenty of people in apartments that would be willing to do a little work to have a garden, me being one of them. For example, I would be willing to rototiller and buy the seeds myself if I just had a place to grow a garden if I were to be able to grow in someone's back yard. It would only be fair that we both work the garden, but I'm willing to do the hard work in order to get a reward that I would otherwise not have. If things got really bad, being able to camp in a back yard next to the garden would be most beneficial because I know that I would safe and I could do work around the house to pay for being able to have a place to live. In a collapse money will be worthless, so barter is the only way to go. The good thing about barter is it will weed out the crooks really quick so that you'll end up dealing with mostly honest people within a year or so.


Right now the U6 unemployment rate is around 20% which is just over 60 million people out of work. There is about another 20% or 60 million people who are underemployed. There are a total of around 120 million people hurting in our society and trying to make things work, so even if there's not a collapse, there's a lot of people who could benefit from a hand up under the current conditions. The most important things that people need in the hardest of times are food, water, and shelter. The great thing about being a Christian nation is knowing that we're all in this together regardless of religion, race, or creed. There's a reason why Glenn Beck is going to Wilmington Ohio, which has partially inspired this article.


There are those who do not have property or a house, but you have knowledge. It's a good idea to make sure that you take the time to teach us city dwellers how to garden. There's a lot to gardening such as soil, planting, and drying out seeds. Instructing people is just as valuable as having property or a house, so don't be shy.

There's no point in doing any of this though if you don't get the word out. There are plenty of community engagements where you can make announcements and let people know to get prepared or at least get them to pull together to help the people in the community. This brings to mind what my grandma told me about Apple Valley California where she just moved from. She has told me that there are so many people there that are out of work and most of them are over 40. She's told me stories of going to the grocery store and buying them a couple bags of groceries, but she's also fortunate to be well off as well.


I think we as a society have forgotten what made us great. I think the older generations in our society have a great role to play because they've got the life experiences the younger generations don't have. This is a chance for us to come together and change the tide of things to come. What made the Depression generation so strong is that they banded together and realized that there are more important things in life than life's distractions. What will save use from our utter destruction is our pulling together. I've been taught through mentors over the years about people having roles in society and its time to step up and accept our roles because we've gotten away from that and that's what's been hurting our society for the last 20+ years.

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

Obama using redistributionist policies on rest of the world

Why would the US want to give up its stature as not only a global power, but also as the global currency? Our current President and Fed chairman Bernanke are thinking that an imbalance in trade is unfair to other countries. I would say that this is really mismanaged thinking or that there is something else going on and we’re not watching the other hand.


Currently the US has a trade deficit of 40% of the worlds total GDP and China leads exporting with 23% of the worlds surplus. Is there anything wrong with this? I would say no, there is nothing wrong with having a trade deficit because it allows countries like the US to focus on other things other than manufacturing.

Let me give you an example of what I am thinking. The US is one of the leading nations in research and development because we’re a service oriented industry. Our businesses have to come up with new ideas on how to make people’s life easier. Countries like China, Japan, and Germany are able to manufacture these products at a cheaper price and we are able to have the most up to date technology at a nominal fee. The benefit is that the rest of the world has jobs because they’re able to produce things while here in the US we have jobs by providing things to people. Of course there are some things that can’t be made overseas either for security reasons or because of the level of technology of the producing country. If you look at it this way, it’s a healthy redistribution of wealth because everyone benefits without taking from one to give to another forcefully. This is only successful though if our dollar remains strong and the benchmark currency for the world.

The problem with the thinking in the Fed and the Obama Administration is that they think that in order to have a growing economy you must have a trade surplus, that’s actually the opposite from what I’ve researched. I’m beginning to see that they are applying their redistributionist philosophy to the rest of the world just like they’re doing to the so called “rich” here in the US. By devaluing the dollar they are actually leading to the collapse of the dollar which in turn hurts the rest of the world. The only other reason they could be trying to even the playing field is if you listen to these “conspiracy” nuts that claim one world government is being planned in back room deals. The only thing is they are starting to sound more and more sane the more research is done.

In conclusion, the Obama Administration has got it backwards again. By having a strong dollar and paying off our debt, we make products overseas cheaper to purchase. When products are cheaper, then not only do we grow, the rest of the world grows as well. By watering down our money so far, Obama is actually leading to the collapse of this nation and its currency due to failed policies. Get ready for QE3 and QE4 because if QE2 doesn’t completely destroy our dollar the others will do so for sure. Are you ready for a world where you dollar is the weak currency and something that used to cost a dollar is now $15?

**Bloggers note: This research is based upon my research from previous articles which is why I did not put any sources at the bottom this time. If you would like my sources I would recommend that you read “Game over America” and “Federal Reserve Bankrupting America”.