A very dangerous thing occurred last Thursday and Friday. The Federal Reserve monetized roughly 40% of the nation's enormous debt. This means that the Fed printed money to flow into the economy in order to cover over 40% of the debt burden the U.S. now carries.
Within days the U.S. government quickly sold off this portion of the debt, creating even more debt, leading Treasury Secretary Timothy Geithner to request from Congress a lifting of the debt ceiling so that we could cover our obligations. That, of course, will create even more debt.
This economic shop talk may sound like gobbledygook to most average citizens, like myself. But the bottom line is that what the Fed did last week will create what is known as 'hyper-inflation.' The cost of goods and services rises so fast that average citizens can't afford the basic essentials of living.
However, the dirty little secret among economists and government bureaucrats is that what's bad for the citizens in this scenario is actually good for the government. In a hyper-inflation scenario the government makes more money due to the tax structure being based upon percentages. Thus, the government makes more money without having to enact an official tax increase.
In a free, Constitutional Republic, a very careful balancing act must be undertaken by government in this situation. The amount of hyper-inflation that benefits government must be carefully balanced with the tolerance level of the public for the ever-rising costs of goods and services, or else the citizens will vote out every politicians who contributed to this dastardly plan.
The salient point here, though, is that we are headed for a round of heavy hyper-inflation. We'd better get set.
But this is not the only troublesome area.
Many economists who closely watch the mortgage and housing markets are saying that we are going to experience yet another major crisis with foreclosures within the next year or two. The reason? Homeowners will owe more on their mortgages than their homes are worth on the market. One economist in particular stated on Fox News that this crisis will not only prevent a recovery but throw the nation back into a deeper recession or even a depression.
Barack Obama has stated, on the record, that the U.S. is 'out of money.'
For once in his life, he told the truth. We are broke. Yet at the worst point in at least 30 years for our economy, Obama and the Democrats wish to pass a 9 trillion-dollar healthcare plan, just so roughly 10 million Americans can have some insurance. And to boot, they want a cap-and-trade plan that will cripple business, decimate jobs, and add $1500-$3000 per year in extra energy costs to the average American family.
There are only 2 ways that the government can cover the costs of such a head-splitting load of debt, on top of the debt we already have. One is to raise taxes. The other is to print more money. Neither solution is acceptable. If inflation is headed through the roof, how will the citizens pay for more taxes? If the government continues to print more money, inflation will only continue to increase.
In short, the Barack Obama plan for the nation is a prescription for chaos. Some would argue we are already sliding into chaos without the healthcare plan or cap & trade. Obama and the Democrats have led us to a point in our history where the very survival of the Republic hangs in the balance. We are edging ever closer to a precipice, and if we fall off of it the Republic will be lost.
Obama and the Democrats who control Congress have given us snake-oil remedies that are leading us closer and closer to that precipice. Perhaps this is a slight hint as to why the citizens who shout at town hall meetings are so passionate.
And perhaps this is why the voices calling for a complete change in Congress, from top to bottom, are growing.
For more commentary on other issues, visit my blog at The Liberty Sphere.
Comments
it isn't just congress.
every stinking federal employee, every clerk, every press secretary, every lobbyist, every lawyer..
Washington D.C. needs an enema.
Throw all incumbents out that have not voted/conducted themselves pursuant to their Oath of Office to uphold the US Constitution as the Supreme Law of the Land. Even if they have voted/conducted themselves honorably, vote them out if they've been in office for 2 or more terms. Demand that your Congressperson and Senators introduce legislation to limit terms. The founding fathers never intended the Congress to be a career! They expected farmers, carpenters, electricians, small business owners etc. to serve then return to the civilian sector and their chosen professions. Let's return our DEMOCRATIC REPUBLIC to its founding principles.
The Government of the United States is a wholly owned subsiderary of Corporate entities.
The Federal Reserve Bank is no more a Government agency than Federal Express is.
The US government, regardless of whether it's Democratically controlled or Repblican controlled, is totally and completely controlled by Large Corporate entities, they absorb all of the rewards and the American citizens absorb ALL of the risks.
Our Constitution is no longer worth the Hemp that it's written on. We are all done for. I am afraid.
"Vote" them out? I think voting them out using the branches of a sturdy tree to sling the rope over is more appropriate for this lot of Congressthieves.
All concerned citizens need to find a common internet gathering place. Demand from congress referendums from constituents on every bill going through Washington D.C. Force constitutional amendments to allow enforcement of TWO term limits, recall of federal lawmakers by the states, and an end to automatic citizenship. We also need a new people's party based on our newly amended constitution.
Thank you for at least getting Consitutional Republic part right. The main point of the article seems to be the lame old argument that it is all the Democrat's fault. Let's face it, W and the Republicans borrowed and spent a ton of money as well.
Steve, if you had half a brain you would be able to comprehend that I have repeatedly stated that I opposed such spending under Bush as well. But under Obama, just in 7 months, the deficit has at least doubled and the debt has nearly quadrupled. When are you going to force Obama and the Dems to take responsibility for ANYTHING?! Huh???
ibid, I don't think it is fair to say "every federal employee" is part of the problem. Some federal employees are just regular folks, working to earn a paycheck like everyone else. They have to go where the jobs are. They too are at the mercy of this corrupt system. It is however, a corrupt system that does need a major flushing, but no anger should be felt towards most low level peons who happen to work for the federal government. Your mail man, the humble employee answering the phones at the Social Security office, or a lowly secretary for some a**hole black robed tyrant judge who spends more time on the golf course than in his chambers didn't cause this mess. They are just trying to put food on their table the best way they can.
impeach obama the crook.
Violent Revolution is coming.
simply amazing... the kiddies are still going back and forth along the left-right paradigm. look, people... it's not about 'democrats' and 'republicans' - those jokers all have (and promote) the same agenda. only once we realize that our political/economic system is but the illusion of freedom, can we finally enjoy (and exercise) it. just sayin'...
In 1492, Chemor, chief Rabbi of Spain, wrote to the Grand Sanhedrin, which had its seat in Constantinople, for advice, when a Spanish law threatened expulsion.2 This was the reply:
” Beloved brethren in Moses, we have received your letter in which you tell us of the anxieties and misfortunes which you are enduring. We are pierced by as great pain to hear it as yourselves.
The advice of the Grand Satraps and Rabbis is the following:
1. As for what you say that the King of Spain obliges you to become Christians: do it, since you cannot do otherwise.
2. As for what you say about the command to despoil you of your property: make your sons merchants that they may despoil, little by little, the Christians of theirs.
3. As for what you say about making attempts on your lives: make your sons doctors and apothecaries, that they may take away Christians’ lives.
4. As for what you say of their destroying your synagogues: make your sons canons and clerics in order that they may d
estroy their churches. [Emphasis mine]
5. As for the many other vexations you complain of: arrange that your sons become advocates and lawyers, and see that they always mix in affairs of State, that by putting Christians under your yoke you may dominate the world and be avenged on them.
6. Do not swerve from this order that we give you, because you will find by experience that, humiliated as you are, you will reach the actuality of power.
(Signed) PRINCE OF THE JEWS OF CONSTANTINOPLE.”
2. The reply is found in the sixteenth century Spanish book, La Silva Curiosa, by Julio-Iniguez de Medrano (Paris, Orry, 1608), on pages 156 and 157, with the following explanation: “This letter following was found in the archives of Toledo by the Hermit of Salamanca, (while) searching the ancient records of the kingdoms of Spain; and, as it is expressive and remarkable, I wish to write it here.” — vide, photostat facing page 80.
~ The above was quoted from Waters Flowing Eastward by Paqui
Out of money? How can we be out of something that does't exist?
More right-wing BS. Where were you when Bush was illegally invading Afghanistan and Iraq and wasting TRILLIONS of dollars on Halliburton larceny and planeloads of cash flown to Bagdad?
Your argument about national health care is typical. You ignore reality because it doesn't suit your arguments. National health care (socialized health care just like socialized police, socialized army, socialized fire fighters, socialized, air traffic controllers, socialized Medicare, etc) will cover many, many more than 10 million people. Additionally, and this is the key point you are intentionally ignoring. socialzed health care should reduce the massive costs of private health care. Let's argue facts instead of party dogma.
You are merely spewing Karl Rove's vitriol. If you want to examine Americ'as problems up close, try taking a long, hard look in the mirror.
Thank God you are an Expat. We don't need your kind here. Where were we? The same damn place we have always been. On the side of liberty. Bush is no great favorite of those so disposed.
You calumny in trying to legitimize the sins of one because others have committed sins is stupid, juvenile, and extremely despicable.
I do not know where you have settled, but please, do not return.
@Straightarrow: I most definitely am not employing what is generally a right-wing tactic: defending a side by pointing out what is worse elsewhere. I have heard that defense from Reagan/Bush supporters for decades now. It is not something usually heard from Democrats.
My first comment does not defend Democrats, or anyone, for that matter. It simplhy attacks the facile, false arguments made i the article. You are so intent on defending your side that you ignored the substance of what I said and blindly jumped into the fray, assuming I was a "lefty".
Your childish comments about being happy that I am expatrioted are also fairly typical of the xenophobic, reactionary views of the right. I have no desire to return, but mainly because of minds like yours. I am neither a Democrat nor a Republican. Nor am I an independent. I am simply sickened by the level of political discourse which has been reduced to name-calling, lies, and demagogery.
How does xenophobia apply? And yes you did do what you denied doing. You tried to dilute the legitimacy of our (American citizens) concerns by implying we didn't have the same level of concern when others did things contrary to principle.
It be you who has engaged in demagoguery. You automatically assumed I am a "righty", and tried to place on the Republican side of this debate. You have no idea where I stand, but you didn't mind questioning my morals without knowing, so as I said, I am glad you are not here. We have enough of your in the two major political divisions in my country.
I will admit to being a radical,however, a Jeffersonian radical classical liberal. The things he professed, not necessarily the things he did when he rose to power.
If you think the arguments are facile and false, why did you not address them, instead of trying to delegitimize the people making them? Tell me again how morally superior you are, because it certainly isn't detectable.
Expat- I hope you aren't looking at this through the left/right, dem/rep glasses. This is a team effort to destroy the country(what's left of it). The divide and conquer approach appears to have worked on you. Fascism is here to stay w/o a united front from the populace. Events in history either happen by chance or by design. The collusion nessesary to tank the country is unmistakeable. We are in for the fight of our lives. Wake up.
if you were to tax the top 10% at the level of say, the Nixon administration, that would help a bit.
a nice 20% V.A.T. is tenenable.
eliminate 75% of overseas deployments.
over ten years, that would take care of large chunk.
"We are edging ever closer to a precipice, and if we fall off of it the Republic will be lost."
It has already been shown more than a year ago that we are already over the cliff edge. The book keeping fraud, 'stimulus', and money printing let us walk ahead like in the cartoons. See what happens when the government let normalcy return (sound book keeping)... They can not, therefore they will not.
Well, it's nice to see Straightarrow write something cogent and well-thought out in response to my trolling. I did not attempt to dilute your concerns, I merely point out that this kind of outrage by right-wing pundits was absent during the most egregious episodes of the Bush administration. My original commentary was aimed at the author, Anthony Martin. Are you suggesting Mr. Martin is not right wing or a Republican? I would bet he is.
I am not looking at this through a left/right prism. I am looking at this as a well-educated, wealthy capitalist who is fed up with partisan posturing and weak arguments based on faith and belief.
I am more than willing to argue about the facts, but when Mr. Martin presents falsehoods and half-truths as facts, I don't see why his character is not in season, as they say.
If our only choices are to print more money or raise taxes and either choice will make us drop over the edge, we must already be over that edge. Either option will destroy the economy. The Federal Government's only choice is to grab for a branch on the way down and quit spending money or enjoy the ride down and spend like a lunatic. Looks like those in power have chosen the way of lunatics.
ha ha ha ha ha ha ha ha ha ha ha ha ha ha
ha ha ha ha ha ha ha ha ha ha ha ha ha ha
ha ha ha ha ha ha ha ha ha ha ha ha ha ha
Expat said, "....I merely point out that this kind of outrage by right-wing pundits was absent during the most egregious episodes of the Bush administration. My original commentary was aimed at the author, Anthony Martin. Are you suggesting Mr. Martin is not right wing or a Republican? I would bet he is."
And you would be wrong. Again you assume facts which you have not seen in evidence. A great many of the so-called right wing pundits, including Mr. Martin, publicly and vociferously took the Bush administration to task for his egregious failures to honor his duties, his oath, and his promises. So, that tells me you weren't reading and taking a stance then and so have no knowledge of who said or did what, or you are simply being disingenuous and are aware of lamentations of those you accuse of silence because of the Party of the violator.
I don't know Mr. Martin's Party affiliation, but I think it safe to assume he is a conservative. In the traditional American sense. [cont]
[cont] I would bet you have no clue what that means. Supply an email address and I will send you the explanation of traditional American political conservatism. If you dare. I somehow suspect you would rather remain comfortably ignorant but if I am wrong but you fear abuse of any email address you provide, set up a temporary address for one time use only. At that point, you will have the email advantage on me, because I will use my real and permanent address. What could be more fair? If you dare.
Evict every Democrat and every Republican from public office. It's obvious both are part of the problem and neither can be part of the solution. Case in point: when Obama proposed his $700bn stimulus bill, the Republican leadership in Congress proposed an even bigger one: $900bn, all in tax cuts. Without any corresponding reductions in spending.
"How to Stop Descending into Chaos"
Simple if Americans cared. Eliminate Wall Streets trading in essential human commodities, stop all options, derivatives, and gambling. Eliminate the Democratic and Republican Party.
Problems Solved.
Can you provide some links to where the Fed purchased 4+ TRILLION dollars in debt instruments during the past two weeks? I can only find reference to them purchasing something on the order of 1/1000th of that amount, which would be approximately 0.00005% of the national debt, not 40%.
Source please? I'm unable to find to verify. I know that the fed purchased back 42% of their last bond sale, but that's not equivalent.
We're still in a deflationary spiral. Bernanke has pulled all the punches he can to stop deflation and prices are still dropping. It's kind of laughable seeing you guys still persisting hyperinflation is near. None of the data is pointing to that conclusion atleast for the near term. There is so much over-supply of everything in America that will driving prices down for years.
I agree with becbeq, the Fed is buying treasuries, not the national debt (whatever that means). Perhaps he means deficit, not debt. However, with hundreds of trillions(that's TRILLIONS) of garbage being hidden off of the banks books through the suspension of "mark to market" accounting, deflation is and will be a threat for the medium term. Tinfoil hat on-This does seem to have freed up a lot of cash to drive up the stock market on low volume. -tinfoil hat off.
And I agree with Jeff, huge oversupply in housing and CRE (regardless of what the idiots and pumpers on CNBC tell you) will continue to pressure prices downward. Iowa doesn't seem to be as bad as we didn't boom so much in the run-up. And don't even get me started on the "cash for clunkers" stupidity.
ExPat, I thought not.
guys right wing, left wing, its propaganda.
Divide us and conquer us. stop it We are All
citizens of this country and All have a right
to be free to choose our path. The government
has become way too controlling. We have a right
to do as we please as long as we are not hurting
our nieghbor. thats a republic.
Well, I meant ~40% of the last bond sale was not equivalent to ~40% of TOTAL debt. Still a problem, still monetizing, but different numbers there. Still trying to figure a source, or if the sentence is just poorly constructed.
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