Si Senor

Welcome to the end of the world. Where reality is stranger than fiction. Where a reality TV star is actually leading polls for the office for the President of the United States in September before an election year. I know we're circling the drain but evidently the puddle is shallower than I've casually perceived.

So much has been made of Donald Trumps bombastic rhetoric that's short on execution and long on hyperbole. Anyone can talk. And this clown never stops.

Of all the empty promises and hallow words there lies (pun most definitely applicable here) no bigger fugazy than his illegal immigration reform. His words here.

Much has been made about Mark Zuckerberg and Bill Gates support for expanding the H-1b Visa Program. Trump thinks the program should be reduced and instead filled with "the number of black, Hispanic and female workers in Silicon Valley who have been passed over in favor of the H-1B program". So, instead of allowing a corporation to hire whom they want based on the most qualified they must be forced to fill their positions from a dumb down American pool first. American company's forced to hire not the best man/women for the job but the most qualified man/woman Americans for the job. Small government and affirmative action don't jive.

There is the E-Verify program Trump touts to screen legal employees. This program would cost small businesses 2.7 billion to comply according to Bloomberg. Not to mention,  the killing of agriculture; as ending illegal immigration alone wont pick the corn. It still has to be done by people and who does it and how long does it take to get them? Crops don't wait for red tape. There is also the loss of tax revenue implementing this mandated system across the board. According to Bloomberg, this would be around 17 billion in lost revenue for the government. and more importantly there is this... E-Verify would become a defacto National ID system. How can this be the opinion of a small government minded individual?

How in the world does he "impound remittances" of  "illegals" ? Legal Americans of foreign decent send remittances as well. How does this work? Confiscating all and then sifting through the legal and illegal ones? Does anyone trust the government to handle this task efficiently ? Whats next, sorting through their mail too? And this is how this cat funds the Great Wall of Mexico?


Then there is the numbers.

Sites like this advocate the illegals as a drain on the economy. One where illegals cost California alone 21 Billion in wasted tax dollars. Now subtract that from the 130 Billion that Undocumented immigrants alone contribute to California's GDP – a figure greater than the entire GDP of Nevada – or AT&T’s total revenues. Or, you could say 17 Billion more than all the states COMBINED deficit due to illegal immigration. 

What about Social Security? What about the 1-Trillion illegals have contributed to that ponzi scheme that they wont even participate in? Talk about a screw job. Those wars in Iraq and Afghanistan you liked so much? Paid for by the sweat of wetback Mexican laborers. That 2010 Tax Credit from the Hope and Change savior? You rember that 34 dollars dont you? Paid for by fruit picking, lawn mowing Mexicants. Who helped pay for that balanced budget string you got in the 90's by Jizzy and Newt? You know it.

Then there is this from the Right leaning American Action Forum on what taking the 11+ million illegal aliens out of the country and workforce would look like:

• Take about 20 years and cost the government between $400 billion and $600 billion
• Real GDP would drop by nearly $1.6 trillion and the policy would shave 5.7 percent off economic growth
• Not inlcuding the cost of: constructing new courts, prisons, and other buildings that might be needed to process and detain millions of immigrants.

There is also tripling the border patrol. Again, not a small government position.

Last but not least. Above the idiocy. Above the flip flopping. Above the total empty hot air this guy spouts out there is one fundamental flaw with his logic and it has nothing with him being a big government whore. Its life.

We "Conservatives" will tell you a child is not a fetus. We will tell you the child shouldn't be punished for the mothers lack of morals. Funny how fast we flip the script when talking about illegal immigration. All of a sudden those babies don't hold the same value. Funny how politics can be used to promote morality and in the same breathe use politics to discredit the very morality that was justified originally when its doesn't fit an agenda. So instead of babies... they are anchor babies. As if that title denies them the very protection we so vehemently defend all unborn life with.

So if you want to feel patriotic, light a firework, shoot a gun - sing the star spangled banner with your dick in one hand and an American flag in the other... but whatever you do, don't espouse to ideas that essentially cut your nose off in spite of your face. Illegals aliens, undocumented workers or whatever PC term we are using these days are a boon to this economy. It keeps costs down and that provides a strapped middle class with much need savings. Its like having a slice of China in a field near you.

Another one bites the Dust: Australia turns nose up at the dollar

It appears the jig is up America, your chickens are coming home to roost. Australia is the latest nation to opt out of the dollar in trade and now will conduct trade in the yuan. This is just another nail in the coffin for the dollar as we know it.

Brazil, South Africa, even Japan are getting out of trading exclusively in dollars. But what do we do about it? How do we keep these latest traitors, these damn barbequing Aussies from going through with this? Do we convince the American people kangaroos are secretly hiding dirty bombs in their pouches and are training to enter the US and set them off?

The problem is more and more nations are trading amongst themselves without the dollar. We can’t just attack the entire world. OR, maybe this (sic) IS THE PLAN? Why else are we spending the same amount in military expenditures as the rest of the world combined and refusing to make any cuts to it?  

And here all along you thought these wars over the last 30 years were for freedom, fighting terrorism, nukes and/or WMD’s. Wars are a win-win for America. It keeps the population always at war, thus easier to manipulate. It promotes growth for so many sectors in private enterprise (especially banking) and above all it protects American hegemony. From the end of the cold war to Kuwait to Iraq and soon to be Iran it’s all been single pieces in a larger puzzle – the petrodollar. From the Federal Reserve Bank of New York:

 The recycling of petrodollars into the U.S. financial markets has supported activity here by allowing for higher consumption and investment spending than otherwise would have occurred. The concomitant cost has been a further expansion of the U.S. economy’s already sizable net international liabilities.

As we enter the golden age of globalization, we must accept the old proverb to be true; for whatsoever a man soweth, that shall he also reap.

American companies wanted to establish markets and dominate the globe with its dollar and to a large degree it has; OPEC still uses the dollar but the rest of the world isn’t down with it anymore. In doing so, American business and its government have built and educated the world in finance and trade. Now they are turning around to see who has been dangling the strings. And they don’t like it.

As we turn each page of history we see empires rising and falling. Nobody has stood the test of time. It’s been a good run America but the grip we’ve had on the world is loosening. When the dollar starts to tumble it will trigger a REAL economic catastrophe and the rest of the world knows it; 2008 wasn’t that long ago in the history books.

This will have a direct impact on our debt, trade deficit, standard of living… basically EVERYTHING and ANYTHING “uniquely American”.  

Circling The Drain. The death of the American family and its middle class; now two incomes be damned. (Part 2 of 2)

This 

The second part of the blog entry entitled: How to fix the economy: throw your wife back in the kitchen, barefoot and pregnant is optional



This is the most complicated aspect of working mothers in the workforce and the part that would be considered third-rail politically; the economic impact. I feel to date, this might be the most important topic I have talked about on this blog because it affects all of us on so many levels. I would like to think after reading this you would agree.

The confusing aspect of this, as mentioned in Part 1, is not intertwined in the complexity of the argument. On the contrary, it lies in the simplicity of it; yet it’s not even in the discussion of what ails our economy?

When it comes to children being cared for outside of the home, its hard to find clear cut data that points out positively home is better, thus I’m sure someone could call it subjective. Now it's common sense having one parent home works better but I like to deal in absolutes rather than conjecture. What is totally objective is the impact of working parents (and to a degree women in general) on the economy. This all can be traced back to two words: supply and demand.

Obviously, with any prospering nation, the population has been on the incline since its inception. Thus, there have always been more than enough people looking to work. If we compare our population today (315 Million) to 1960 (180 Million) we can see a 75% increase in population in 53 years. In 1960, there were 69 Million Americans employed. Today, there are 155 million Americans employed. That’s a 125% increase in Americans working today from 1960. If we include real unemployment numbers in one of the worst economic recovery’s in history (said to be about 22 million more Americans) that 125% climbs over 150%.

Adjusted for population and time, we have seen the true workforce expand more than 25% in 53 years. Even with the staggering unemployment, we are seeing 49% of our population in the workforce compared to just 38% in 1960. As we know, women entering the workforce deserve the spotlight here, but with all these added workers, are we getting our money worth?

From almost every statistical standpoint the answer is simple. No. And it doesn’t end there. First, this is what the employment history looks like men versus women over the last 60 years.









As we can see, women have almost doubled their numbers, while men in the workforce have fallen about fifteen percent since 1960. With the influx of all these new workers over time, it’s only natural to expect that a “rising tide lifts all boats” scenario would exist but that just doesn’t seem to be the case. Despite the fact that the US has more billionaires than anywhere else on the globe, despite the fact that the average net worth of the newly elected 113th Congress is 966k; the average American family has been stuck in neutral for 40+ years.

Nothing paints this picture more vividly than what has happened and will continue to happen to the middle class. Like the time you left the bath running too long, low-interest rates/created new money has been filling up the economy. By the time you do notice and go to shut the faucet off, you find the handle is stripped (as there is no end in sight to new money with record low-interest rates). And no matter what you do, we cannot keep up with rising costs (inflation via new money).

You work and work and work some more. Your spouse goes to work; your youngest kids are off to daycare while your teenager competes with those without a high school diploma for jobs. Debt, credit, 2nd job... it doesn’t matter; whatever it takes, you will use any bucket you can find. You throw every bucket you can into that tub to keep it from spilling over, to keep from falling under that median. To keep that American dream still afloat. The fear of being poor is a great motivator. But to no avail.

As we can see below the median income has been relatively unchanged for Americans over the last 40+ years. In fact, today, real household income is LESS than it was in 2000, adjusted for that inflation. Meanwhile, the median income for males in this country is LESS today than it was in 1973. Does this sound like a 'dream' or progress? Women have gained roughly 80% in median income in this span but it's still substantially less than men (there goes that richer sex theory).










The destruction of the middle class is taking place before our very eyes. We have more people getting rich but substantially more getting poorer. I suppose this is “better for everyone” too? And this lunacy isn’t just limited to Time Magazine either. All media seems to be nothing but a mouthpiece for this propaganda. As I said yesterday, we know it’s not better for kids and more specifically the family and as we can clearly see here it’s been no blessing for the overwhelming majority of Americans economies either.









Let’s re-cap. We work long hours. We are flooding the job markets over the last 50 years with record number job seekers, turning upside down our outlook on work and family in our culture in the process. All of this just to keep a foot in the middle class or otherwise known as: ‘living the American dream’. But inflation (read theft) through loose (read suicidal) monetary policy and cost of living has not just made this 'dream' impossible but in turn nothing short of a nightmare.

If this sobering fact of our economy wasn’t enough, we also have the reality that nationally; this situation is even worse. In fact, this is how the banksters and those at the top of the pyramid power structure want it. After all, all this work and no gain by the masses have to go somewhere, right?

It wasn’t until 1982 that we as a nation reached a national debt over 1 Trillion (1,142,034,000,000.00). That took 191 years to reach that numerical milestone. Thirty years later, we have surpassed the 16 trillion dollar ceiling. As I have pointed out before, interest rates are at record lows to finance this gargantuan debt, thus we don’t necessarily have to feel the direct pain associated with such outlandish debt. But that doesn’t indicate there isn’t damage. The public debt side of the national debt has risen 140% since 2007, from 5.1 trillion to 11.9 trillion today. 140% in just six years.








And for all this debt, we know GDP has grown, but really has it?






As we can see, our growth,  like our economy, both micro and macro is nothing but an illusion. A dirty trick, made possible by the complacent yet complicit public. So eager, to be dictated by emotion, so much so that sound logic is actually discouraged and looked down upon. Have you seen the savings rates at your local bank? Check out a CD. You’d make a better investment buying scratch off lottery tickets than let your savings be ravaged by the fractional reserve banking system who rely on ‘kick the can down the road’ politicians who spend more time whoring for re-election than legislating. Or you know… what they were elected for in the first place.


You think it's bad, now? Wait until the FED start's raising rates again (if that's even possible).

This isn’t about women staying home and men working. The reality of men staying home while a woman works is not something that is concerning. What is concerning to me and should be to you is the reality of the American family. How one income is no longer able to support a family (regardless of the sex) and how we have been conditioned to accept this as the norm! As we can see, we are just barely staying afloat with two incomes, in the meantime causing major damage to the fabric of the family structure. What happens 30 years from now?

We are seeing our wealth being vaporized at the expense of our families and our way of life. This leads to only one thing. As “we” Americans continue to be duped, dumped-on and mislead, don’t expect things to change. We are paving our inevitable road that leads into a cul-de-sac of serfdom. I think George Carlin said it best in his last HBO stand-up before his death:


"The reason they call it the American Dream is because you have to be asleep to believe it."


So, wake up America, the wolves are already at the door.

Stealing is legal, just ask those that got shoved off the cliff.

What can I say, I’m flabbergasted. Are these crooks in Washington really going to assume the American public is that dumbed down to see through this guise? Uh… never mind.

Let’s call it what it is. This idea that Republicans failed in the “fiscal cliff standoff” is pure poppy-cock. This notion that the Democrats somehow “won” is equally a failure if we value logic and reason. For what we seen these last two days has been what the American people have wanted for years now… compromise.

The federal government finally compromised. Republicans and Democrats finally crossed the isle. With its legislative and executive branches all on board, despite all its fury, anger and alleged partisan indignation, the deal was struck. Just like the bailouts before it, along with every other hot potato-political topic involving money; the sides "somehow" came to an “agreement”. On the outside this looks like a victory for the people, and it would be if it wasn’t such an absolute charade.

This was nothing more then a WWE broadcast, the winners and losers were already predetermined. When push came to shove everyone got what they want: more for them and their sugar daddy's and you footing the bill. The fiscal cliff was likening to a pay per view event, where afterwards, backstage the heel and the face toasted champagne and laughed all the way to the bank in their stretch limos and learjet's. Meanwhile the poor bastards who bought tickets returned home in their minivans and via subways, still in awe and totally oblivious of exactly how the farce that was just performed before their very eyes. 

Here’s the impact:

Almost all of the Bush Tax Cuts are permanent, while this helps everyone who pay tax; it helps the wealthiest substantially more.

Wheres the cuts on defense spending?

The Payroll tax cut that saved everyone who works in our nation an average of anywhere between $500-$2,000 has ended (which is good for Social Security in the long run) thus acting as a tax increase from last year for everyone earning a paycheck. This will essentially raise the taxes for anyone making fewer than 100k by 2%.

Wheres the entitlement restructuring? 

We have also seen the definition of "rich" get a facelift, as “rich” is anyone making over 400k per year. They will see their taxes rise from 35% to 39.6%. This is hardly the 250k cap that Obama sought re-election on.

And last but not certainly least... the dreaded “Death Tax”.

From the Republican perspective, one of the biggest hold-ups in this “fiscal cliff deal” was the death tax or estate tax. It was 35% as of 2012 on Estates valued at five- million or more. The President wanted 45%. They reached a deal at 40%, splitting the difference. Now, in case you are wondering why you don’t know what this is or why you’ve never heard the particulars, its because it doesn’t affect you. That is unless you have an estate valued at $5 million or more.

As of 2010, courtesy of the Federal Reserve board, only 4.4% of American households had financial assets exceeding $1 million, much less $5 million. According to the IRS, the estate tax will only affect about 3k families. With the additional five percent of taxation of those that are required to pay, the liability may rise slightly, but with the exemptions staying the same, there will be no new cap, thus the limits stay the same.

What does it all mean? I’m not telling you anything you already don’t know. It is what it is. This idea that there is a real tangible difference between these two parties …is make believe. The only real differences are on the margins and that is by design. From abortion, death-taxes, tax-break for billionaires, tax-breaks for multinational conglomerates, gay-rights, funding public television, praying in schools, you name it. Basically, anything that doesn’t benefit the bulk of the populous & affects less then 10% of the population is a heated, highly-contested debate.

I don’t despise anyone for their success nor do I feel they should be punished because of it. As being of  Libertarian mindset, how could I?  However, the middle class has been exploited by the wealthy elite who then help run elite corporations that are gaming the system, all the way from General Electric to G.M and everyone in between. Meanwhile the small businesses, who make up the bulk of US employment, continue to be stifled with red tape, over regulation and are continuously outmaneuvered by big business lobbying efforts. And not to be outdone, it cuts both ways.

There are a growing number of people on the bottom of the pyramid, who are out to hustle every organization and opportunity they can. Look no further then - Supplemental Security Income (Social Security Retirement Survivors and Disabilities Income is for those who have paid into it) because they are “too depressed to work” or have kids that are born one day early (purposely) so they qualify for 18 years as a premature baby. I got story's for days on that topic.

Before you utter the words “class warfare”, read the writing on the wall. This fiscal cliff deal did nothing to hurt those at the top or the bottom, just everyone in between. The rich were not hit hard nor was those too poor to pay taxes, with their 6-10k tax refunds on $13,000 in income.

One of the paramount reasons Obama was elected in the first place was his promise of transparency. You can at least say that’s one campaign promise he lived up to. The middle & working class, the backbone of this country, is under siege and its right out in plain sight. So if you are looking for politics for an ally on either “side” you might need to look again because the only thing these two parties have compromised on is you. They say jump, you say how high.

Get your Burl "silver" Ives on.

Everyone remembers the movie “Indecent proposal”. The movie where Robert Redford offered Woody Harrelson's character 1 Million dollars for one night with his wife, who was played by Demi Moore. The movie gave a complex view of how people value themselves in relation to money and it probably made a lot of people play the “what if” game because of it. I remember being a teenager playing the “what if” game myself. More often than not, it was centered on money as well. For example: 

How much would it take for you, to let Michael Jackson fondle you?
If reincarnation allowed you to come back as someone, who would it be?
If you won a million dollars, what would you do with it?
  
The first scenario was when MJ was in his heyday of molestation, so it was relevant then – not proud of it, but true nonetheless. That last scenario was the one I would think about often to myself.  Being that i was young, the answers were predictable for a kid who just wanted to play sports and nothing else. Those fantasy dollars were chasing imaginary possessions like: cars, houses and basketball court's in my backyard(s). You get the idea. As I got older, the view became more conservative, one built on investing and preserving that wealth. I’ll get back to that later. 

Up until recently I haven’t given the “what if” game much thought. That is until I seen this story of a woman in Michigan, who won a lottery worth: 1 million dollars. 

Amanda Clayton, a 24 year old unemployed female, won the "Make Me Rich!" lottery earlier this month as reported on by everyone in the national media. The overview is simple. Mrs Clayton took a lump-sum payment of 500K after taxes and bought two houses and a car. Or exactly what I would have done…20 years ago. 

The rub is that Mrs Clayton also collected $200 in food stamps monthly even after she had won. Now any reasonable person would understand or sense an obligation to end his or her case and stop receiving the foodstamps but Mrs Clayton does have a point. She went on record stating that:

“I thought, maybe, it was OK because I'm not working. It's hard. I am struggling."

You see she is struggling, she doesn’t have a job and if that wasn’t hard enough, maybe you will tear up when you know that she quote:

“I have no income and I have bills to pay. I have two houses."

How is someone able to hit the lottery for seven figures and still legally be eligible for food stamps? Because, according to federal guidelines; gambling and lottery winnings are considered liquid assets and don't count as gross income. Therefore, one could hit the Mega-Millions 350 Million dollar Jackpot and still collect their foodstamps. So technically speaking, she wasn’t breaking any laws. Technically is one thing, morally or ethically is another.

Now, you are probably asking yourself… what does that have to do with you and the “what if” game and Mrs Clayton striking it rich then still collecting foodstamps? It’s obvious that what Mrs Clayton did was unethical and really a microcosm for many in society, who feel they are entitled to benefits. Many times, those benefits are goodwill or tax dollars from others used to give the less fortunate a hand; to only be stolen and pillaged by people that could otherwise do for themselves but would rather go this route because it easier.

Now, when I played the “what if” game as I got older I would always say I would invest the money in a CD or save it in a Money Market or just conventional savings account. Back when I was doing my dreaming (in the mid-90’s) a Jumbo CD yield was anywhere from 4-6%. Obviously I would have taken out multiple CD’s because of the limitations of the FDIC, but that is really all you would have to do to live off the interest. Pretty simple, no money manager needed. Sure it’s not exotic but its conservative and simplistic. What about now? 

 Graph from: Bankrate.com

In the 90’s we could live off of 35-40K a year, the yield we could expect from a million dollar investment. I assume that would be sufficient for Mrs Clayton (she may only be able to own one house thou) and I know it would be for me. Now with that said, let’s play the “what if” game in today’s environment. 


For anyone of us that frequent a bank and see the rates on the wall, we know the return isn’t worth them holding our cash. As you can see from the link below, a jumbo today would yield you at the most 1.15% with most of the interest rates being below 1%. Using today’s interest rates, it would have us collecting anywhere from $7,500-$13,000 off of 1 Million dollars in Jumbo CD’s. That is not livable by most standards.

 http://www.bankrate.com/funnel/cd-investments/cd-investment-results.aspx?prods=15,24

What this says is what we already know: fiat money, fractional reserve banking and our entire monetary policy/system is starting to eat itself. The debt driven - black hole gathers strength. It’s hurting the poor and those people who rely on cash of course but like we see here, it hurts the savers (where true capital comes from) and instead, favors the wealthiest and credit whores. As I pointed out with pending interest rate tsunami that is coming when/if the FED raises interest rates and the fact that the American consumer is tapped out and saturated in debt, our demise is only a mater of time. Today, the “what if” game for me and hopefully anyone else (including you too Amanda) only consists of silver and gold… and some guns.  

Hyperinflation, the end game or will it be crippling interest? Choose your side.

Recently I saw an interview done with Kyle Bass, which was done in early November as a part of AmeriCatalyst 2011. The interview was over an hour in but if you start at the 46-minute mark, I assure you will be glad you did as it will lead you to the same conclusion that I came to and its one I want to address today. That is concerning the Keynesian debt system and interest payments on the debt. 

Kyle Bass, who founded Hayman Capital in 2006, made a fortune betting against the sub-prime mortgage bond market. Yes, that same bond market that was at the forefront of the great meltdown in 2008-present. You can also find Bass’s surging rise to the top in Michael Lewis’s book 'Boomerang: The Meltdown Tour'.

Towards the latter part of this interview, Mr Bass says that if the FED raises the interest rates, for every 1% point moved higher it will “create an additional 140 billion in interest expenses”. That got me thinking.

The FED is already on record saying they will not move interest rates until 2014 at the earliest, so the amount of liquidity in the system will only explode until then. That we know is a given.

What isn’t a given is what happens when they do raise interest rates. Kyle Bass seems to think that the Keynesian end point is zero and that, of course, would lead to massive hyperinflation. I assume that to be somewhat true as well, although I think the FED will do something to intervene to prevent that from happening, because:

A. they are too arrogant not to

B. their sole responsibility is to control our money supply.

So, even with unemployment news getting better the last few months, we are still (as we have said before) in the period of time of the worst, extended lack of job growth; then any point in modern Keynesian history. There is another factor and that is the FED isn’t going to raise rates for the next few years; then it hit me.

What happens when the FED has to go the Volckeresque route and raise rates too early 80’s height to stave off inflation, assuming zero isn’t the end game?

Will we see a repeat of the “October massacre” of ’79 sometime in the future, where interest rates were raised dramatically? In 1979 inflation was running at 13%. After those interest rate hikes by Volcker over the next few years, inflation dropped to 3.2%.

That, however, was not the politically smart thing to do at the time but it was the prudent thing for the country going forward. It also brought on a recession and I can’t think of any politician let alone anyone from the FED willing to do so in this day in age outside of Ron Paul.

“Strictly speaking, it probably is not “necessary” for the federal government to tax anyone directly; it could simply print the money it needs. However, that would be too bold a stroke, for it would then be obvious to all what kind of counterfeiting operation the government is running. The present system combining taxation and inflation is akin to watering the milk; too much water and the people catch on.” – Ron Paul

 

It is also important to note, that interest rate hike also made the perfect organic soil for a vast economic expansion to blossom as well, go figure.

If we know the interest payments are 450 Billion on the debt last year (combining both public and intra debt) and we have heard from Kyle Bass that for every point raised brings about an additional $140 billion in interest… and if we approached the prime rate today what Volcker’s prime rate topped out at 21.5 percent, what would our interest payment be?

It would be a whopping 2.9 Trillion in additional interest payments…annually. On top of the 450 billion currently obligated by law to pay… annually. Thus the interest payment today, on the debt, at early 1980 levels; would be about as much as the entire federal budget is today. If that isn’t a sign of the times and further proof of us living beyond our means, I don’t know what else is. No wonder Bass thinks the end game is zero. No wonder he has over 20 million nickel coins and bars of gold in his drawer… hyperinflation here we come!

Thou not lead us to temptation

When I was working on my last entry concerning FEMA and Ron Paul, I started to get into a bit of a tirade concerning the debt. This, in this writers opinion, is the United States greatest threat, not some foreign enemy. With most people showing no interest or regard for it, its up to those of us who do hold these truths to be evident, to keep putting that word out there... and that word is debt (specifically insurmountable debt) is slavery and nothing more then a transfer of wealth; from the many to the few. 

In this article I want to tackle two situations that I see problematic and the key cogs to insurmountable debt. First, there is the federal government and our elected "leaders" role in this failure to be reasponsible. Secondly, is the Federal Reserve and its banks, that have been culpable in allowing (through the manipulation of interest rates) this economy to take a path that will see it fall off a cliff. What the recoil will be from QE 2,3,4,5,6,7 bailouts and stimulus remains to be seen, but there can be only one thing we know for sure. 

 (Sodahead.com)

That is, we are accumulating debt. And vast amounts of it. The implication of compound interest makes these actions basically treasonous by our elected leaders and criminal by the FED. How can Congress and the executive branch both complicity push the cost of running the government so far out of the realm of practicality? How is it legal for the FED to lend huge sums at what amounts to no interest to those banks that were all considered "too big to fail" who then take that liquidity and invest in T-Bills that will actually yield a 2-3% interest? These practices destroy existing savings and the incentive to save; thus creating only one desired effect - consumption. 

Because, without people borrowing and spending the whole thing blows up. Money = debt, debt = money.  The biggest problem is that the American population are over saturated in debt thus why the sub-prime in housing was needed. Like its population, the US government, is over saturated as well. They, unlike you and I, have no limits and that defies logic. Lets look at the executive's role.

The Interest payment is the only debt payment required by the Constitution that must be accounted for in the budget each year to be paid.

With that said, every President hopeful on the Republican side and President Obama have all released a budget or a proposed budget.

Not one of them have a plan to balance the budget next year, neither will any one of them do so in four years either (with the exception of Ron Paul). We will without a doubt have continuous mounting deficits that will probably be in the 1-2 Trillion mark annually regardless of who is in office (with the exception of Ron Paul). Starting to notice a trend here?

We have seen Obama’s appetite for destruction already regarding deficit spending; so let’s take a peek at the eventual Republican nominee’s (Mitt Romney) insanity.

Mitt Romney wants to increase defense spending by putting 100k more troops on the ground and rebuild parts of the Navy and Air Force. He would not have left Iraq, appears to have an itch to scratch in Iran and will not leave Afghanistan until its won (the forever war) or at least until his generals say to leave??? His budget has the wealthiest Americans (who pay the most income taxes) getting a significant tax cut on top of the existing tax cuts that are already in place.

Romney has no plans to offset the lost revenue that will surly happen when these cuts take place, nor does he have any plans to make any significant cuts in existing outlays to recoup the ramped up defense spending. This defines logic. Mitt Romney's plans are contrary to anything sane in regards to the federal government living within its means. He’s fiscal policy’s will be train-wreck like.

That however, is not how Romney sees it. He thinks if he cuts taxes the gains in receipts will pay for this increase in spending. The problem with that is that the FED doesn’t think the economy is going to grow by all that much… and they control the money supply. This leads us into the second part of the equation: the insurmountable tag team.

 The FED’s long term forecast is a relatively weak one going forward with long term GDP growth outlook being in the 2.3 to 2.6 percent ranges. The FED has also said it will not look to raise interest rates until, at the earliest, 2014. Here you have the economy just barley keeping its head above water for the foreseeable future, the FED continuing its non-stop intravenous liquidity therapy into bank’s reserves creating a soon to be inflation tsunami all the while our elected representatives continue to show no regard for the situation.

I want to take a look at two charts that really speak volumes for what is going on and what we will being seeing soon enough in our own backyards. Lets start at 2006, when the FED stopped tracking M3. As you can see below, when Shadowstats picked up the tab of tracking M3, the growth in money supply was steadily rising until early 2008. As the recession came, the Fed lowered interest rates to avoid the fire of deflation but banks weren’t loaning, so the money supply dropped with it.  

(shadowstats.com)

A curious situation started occurring by the middle of 2010. M3 started to rise and its rising still as of now. Meanwhile, Interest rates from 2009 on have stayed basically at zero and as we’ve already heard from the FED, they will remain that way for years. This does not bode well for the dollar or anything equity wise going forward in my opinion. If the economy continues its "recovery” like so many in the media says it is, the eventual outcome will be a pretty substantial increase in inflation. This would, by default, put relatively the majority of commodities into buy, buy and buy more mode. Most specifically gold and silver.

Equally alarming will be the federal governments penchant for debt as we have also seen, they will not live within our means, thus piling more debt on to the insurmountable existing amount. What happens when the FED has to raise interest rates? If we are seeing 450 Billion interest payments already (Intragovernmental and Public) imagine what will happen to those when interest rates go up? They could look something like this:

Just for a little perspective. In 1988, the national Debt was 2.6 Trillion. The interest payment on that in the budget was 214 Billion. The interest payment in 2011 was 450 Billion, roughly double. The principal, as we know, was 14+ Trillion.

The US government will not cut spending and we will continue to finance the welfare/warfare system. What happens in 10 years from now will be interesting thou. Can the FED really raise rates, without completely tanking the economy? And if they did, what would happen to the interest payment on the debt outstanding (besides sky rocketing into the trillion dollar mark). If the FED does not raise rates out of the fear of deflation, isn’t massive inflation the only alternative?

George Carlin said it best:

When you're born you get a ticket to the freak show. When you're born in America, you get a front row seat.

Get 'ya Popcorn ready!

2002 predictions come true.

From the deification by the FED and our federal government on the dollar - to the stripping away of civil liberties here at home via the Patriot act, NDAA, SOPA and body scanners - to the middle east destabilization and us clamoring for an invasion not seen since Vietnam. Dr Paul had it right all along. And people call him the kook??

The assault on the constitution continues...

It was 98 years ago that the Federal Reserve Act was passed during Christmas vacation under much scrutiny then as it is today. It was just ten years ago, weeks after 9-11, that the “Patriot Act” was signed into law while the country was in a state of absolute shock. Take another arrow out of the quiver of freedom today as we enter a period of unimaginable potential consequences. NDAA (National Defense Authorization Act) was signed into the books last night as President Obama paves the way for the indefinite detention without charge or trial into law thus eliminating due process of law.
President Obama is on record saying:

“Moreover, I want to clarify that my Administration will not authorize the indefinite military detention without trial of American citizens.”

In other words: I don’t have to do it if I don’t want to but you better know i can and will if it deems necessary. It was the Magna Carter that first contained the workings of due process of law. Then it was stripped out over time by the King of England. You cant help but to think we are entering that threshold of trading liberty for peace. And along the way, the oval office over the last 10 years is starting to resemble a throne. Happy New Year people!