Staring Down the Barrel of a Gun We Loaded

We Loaded It...

I’ve written and re-written this piece a number of times, in part because I don’t wish to cause undo angst, but also in part because I don’t wish to cause too little.  You can blame Barack Obama, George W. Bush, Congresses past and present, or Ben Bernanke and his predecessors for all it matters, because in the context and scope of your life, it won’t make much difference.  We are headed for a complete collapse, and the collapse is no longer some vague notion in some nebulous, faraway universe of remote possibilities.  At least one analyst has concluded that by 2014, at the latest, this country is going to enter a period of economic turmoil that will make the Great Depression of the 1930s look like a garden party.  The media won’t tell you this, whether CNN or the New York Times; neither FoxNews nor the Wall Street Journal.  We are staring directly at the muzzle of a colossal gun, and it’s aimed at the heads of every American, but neither the current President nor the current Congress will tell you how bad it has become.  For two generations or more, the hand-writing has been on the wall, but unlike ordinary ink that will fade with the passage of time, this bit of script has become bolder, heavier and finally, indelible.  There will be no avoiding it.  There will be no escape.  This time, we will go down, and we may well never stage a comeback. The gun is aimed at our heads, and we loaded it.

To understand this will take a little time, although regular readers of this site will know most if not all of the gory details.  For a brief primer on what will soon confront us, please take a look at this report on Hyperinflation at John Williams’ Shadow Government Statistics website.  It’s lengthy, but it is information every American should learn and know, because while it is a bit of a reading chore, particularly for those whose eyes glaze over at the first hint of economic and financial terminology, it is nevertheless important information, and Williams does a remarkable job of not allowing the material to become overly dry. His report really doesn’t need any dressing-up or embellishment to be terrifying.

If you’ve been paying attention to the news beyond the international developments of the last few days, you will not have missed the fact that today, the US credit rating was again down-graded again by Egan Jones.  You should expect this trend to continue for some time, but this downgrade, like the last round of them a little more than one year ago, really doesn’t tell us anything we should not have known: Our currency is on the verge of collapse, and our ability to repay debt is becoming more challenged, but the fools in Washington DC don’t tell you about it because they’re afraid if you knew how bad it really is, you might react badly.  In the movies Armageddon and Deep Impact, the governments portrayed did their best to keep their respective impending disasters secret for as long as possible.  The thinking was: If it’s inevitable, such that all we can do is make things worse between now and the impact(s) by disclosing it in advance, we should say nothing until the last possible moment.  Another way of looking at this is the question I once posited:

“The government is spending like there’s no tomorrow. What if there isn’t?”

The fact is that we don’t need Hollywood or the Mayans to provide apocalyptic scenarios to fulfill this role in our immediate future.  Our Federal Reserve(hereafter, simply “the Fed”) in concert with our Federal government have created something nearly as disastrous, and potentially, every bit as deadly.  As Ben Bernanke uses his powers as Chairman of the Fed to undertake another round of quantitative easing.  As you’ll remember from previous rounds of this same tactic, this amounts to money printing, a way to inject more cash into the market in the attempt to stimulate lending and business activity.  The problem is that each time this is done, what actually happens is that the value of the dollar falls versus commodities such as oil, or other energy sources, and the cost of everything increases.  When this happens, it makes it harder for business to operate, harder for consumers to spend such cash as they may have, and otherwise has precisely the exact opposite effect, all while driving us closer to the brink.  Bernanke is trying to drive us away from a deflationary cycle that could result if the economy stalls too steeply, but the problem is that he’s going to cause what will be infinitely worse.

At the same time, our Congress and our President have added to the problem, because each time they borrow money, the Fed is printing it into existence.  In short, both our fiscal and monetary policies are rigged in favor of inflation, and with all the money-printing, it is only a matter of time before the dollar becomes completely worthless in the world market.  Any small displacement in the market could lead to our economic demise.  Williams’ report for 2012 goes so far as to suggest that you concentrate on bare survival strategies, and defending yourself in the face of complete political and social disintegration.

I know that you’ve been reading about a “financial cliff” somewhere in the distant and murky future, but what I’m telling you to do at this point is that the veil of fog is beginning to lift because that future is no longer distant.  Williams’ report explains thoroughly the main causes of our impending doom, and this isn’t some conspiracy nut.  When he published this update earlier this year, his warnings sounded eerily like my own, and also those of a few other people who have been sounding the alarm, including some in talk radio, in conservative media, and notably, Governor Palin.  At the time of the announcement of QE2, Gov. Palin did a rather bold thing:  She announced to the world the dangers and the certain results.  Naturally, since her evaluation was based on sound economic understanding, her conclusions might well have seemed prophetic in light of all that has happened since.  The truth is that she was merely telling you what must be based on the immutable laws of the universe: There are no free lunches…or anything.

I believe this is one of the reasons the Republican leadership in Congress has done nothing to substantially obstruct President Obama’s agenda.  It is true that they would have faced some political consequences, but what’s more the case is that they are every bit as aware of the impending collapse as anybody in the executive branch.  One might view Congress cynically, and suppose they are “getting while the getting’s good,” and there’s no doubt that some of that goes on, but it’s also true that the problem is so gargantuan that they do not see how they can correct it without throwing the country into complete chaos, and since that’s what’s coming anyway, they see no point in hurrying the matter.

Some have concluded that Bernanke is taking this up now in order to try to help Obama’s re-election, and while there may be some truth to it, the fact is that the situation has been and remains much worse than you’re being told by the media.  We have been in a bottom-bouncing depression since at least 2009, and nothing has animated us very far from the floor.  As I have written many times, they stimulate via the printing press and the deficit, and we get a brief improvement, but then the increased costs in the market come home to roost, and we’re set back to a place no better than before as the costs, driven in large measure by the inflationary effects of the stimulus that quickly act as a brake upon the alleged “recovery” that never materializes.

Elsewhere on Williams’ site, you can find a detailed examination of his treatment of unemployment, and the numbers will shock you.  Add to this the tidbits about the deficit and inflation, and you will begin to understand how you’ve been misled, not only by the media and the administration, but also by decades of shoulder-shrugging politicians in both parties.  By Williams’ assessment, it may be impossible to rescue our nation any longer.

Ladies and gentlemen, I have been urging you since the inception of this blog to make preparations to the best of your abilities.  I hope you’ve been diligent.  Check out Williams’ Hyperinflation report, and think it through carefully.  The evidence of your own daily lives has been telling you all of the happy-talk about “economic recovery” had been a farce.  Like the approach of a colossal asteroid, the government’s ability to hide the impending disaster or disguise the seriousness of our worsening situation has begun to fail.  That is really the only significant meaning of the latest downgrade.  They can’t hide it much longer.  The Piper will be paid.

Some are choosing to ignore all of this in the hope that a change of administration might give us one last chance at a way out, but irrespective of the outcome in November, the chances that our currency survives three more years in its current form is probably fewer than one in ten.  The possibility that we will survive as a nation may be somewhat less.  Fixing this problem will require the institution of spending cuts on a scale that may cause complete social collapse.  Do we expect John Boehner to take on such a monumental chore?  Even if the Republicans take the Senate, Mitch McConnell isn’t exactly the picture of courageous and vigorous leadership.

Saving our nation is no longer simply a political problem in the sense of replacing certain politicians.  It’s a cultural and economic crisis as well, and with all that is going on abroad, it may come down to a matter of literal survival.  It’s time that we begin to face up to this, because our politicians aren’t going to address the  problem until it no longer matters, at which point, they’ll do nothing, but we’ll pay the price.  We always do.  People have asked me what we could do to remedy the problem, but when I tell them, they look away, because they don’t want to face the implications that attend the proposed actions.

At present, we have an annual published deficit of around $1.3 Trillion.  As Mr. Williams’ report makes plain, if the government were forced to use GAAP(Generally Accepted Accounting Principles) in their accounting, the actual annual deficit is in the neighborhood of $5 Trillion. The added $3.7 Trillion consists of new future obligations that the government does not pay, but has promised at some future date.  Many refer to these as the “unfunded liabilities” of our government, but they add up to a staggering amount, in the range of $80 to $120 Trillion dollars in promises.  When one makes promises on this scale, it is sure to affect one’s creditworthiness, never mind one’s credit rating.

Consider the fact that our government collects approximately $2.5 Trillion in taxes, fees, and the like throughout the year, but that this is still well short of the $3.8 Trillion it spends, and then propose cuts in response.  Here’s a dirty, ugly secret the DC crowd won’t point out to you: If you cut everything that is not an entitlement program or debt service, you would still have a deficit.  That’s right, if you eliminated every bureaucrat, soldier, judge, roads project, education expenditure, and all of the other things that government does apart from pay interest on its debt or send payments to individuals through entitlement programs, you could not balance the budget.

What this makes clear is that the problem exists not on the “discretionary” line of the ledger, but entirely on the “non-discretionary” lines in the book.  Leftists will argue that the problem is the lack of revenues, but that’s an absurd hoax. Anything done to increase revenues at this point will actually cause them to decline.  Increased tax rates?  People will earn less to avoid the taxes.  Even those who want to earn more won’t be able to because there will be insufficient demand in the marketplace to provide the commerce needed to generate the revenues we have now.

The only answer to this problem is sharp cuts in government spending, combined with a cessation of Quantitative Easing.  The entitlement programs have become such a massive anchor on our economy that it cannot recover, and they have squeezed out all other spending.  This is why people look away when you explain to them the problem.  They know what it implies about all of our sacred cows in the entitlement sector of government.  As with the old lament, everybody is in favor of massive government cuts until we arrive at their favorite Federal program.  At that point, you are given a stack of excuses, complaints, and ultimately: “Never mind.”

I have news for you, and it’s not pleasant:  These programs will end.  Virtually all of them.  None of them will survive in their current form, if at all.  We are like Greece, only worse, and much larger.  The question our elected leaders have not faced is whether to break the news to us now, while there is some small hope of recovery, or whether they shall just “get while the getting’s good,” and make off in the dark of night after the collapse, leaving us to figure it out.  The fact is that I can’t blame them for opting toward the latter, because we will be worse than Greece in every dimension and measure, both in size, but also in degree, and I believe when a responsible politician ever tells this truth, he will be pilloried, at first in media, and then later by mobs.  Paul Ryan has had just the first taste of this.  Sarah Palin was mocked for such warnings to an extent I’ve never seen for simply stating the dangers of QE2 and all the money-printing.  She was right, naturally, as is Paul Ryan on the matter of entitlements.

The problem is now that it may be too late for any sort of remediation.  The problem has become too vast, and it is as late as that.  What we can do as individuals is to grasp the reality laid out before us.  We can prepare ourselves and our families.  We can vote accordingly.  We can make noise about it.  In the end, we may be forced to watch our nation slide back into the pre-industrial, pre-republican muck from which it emerged.  It’s been a long decline, and we’ve mostly done little but to urge it on as a people.  We’re peering down the loaded barrel, and it’s been our finger’s twitch upon which we are waiting.

One false move… A hiccough… One little lurch…

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  • http://www.facebook.com/people/Christopher-H-Fromme/1629370162 Christopher H Fromme

    The only solution is conservative leadership in both the House & Senate. It is possible to balance the budget in 3 years. All the rich government employees would be looking for work like the rest of us ‘serfs’ No more Education dept Energy, EPA i.e. Limited Government. With BHO we go off the cliff at 100 mph, Romney & RINO’s 50 mph.
    Conservatives can turn this sinking ship around with bold leadership.

    • http://markamerica.com markamerica

      What you say may well be true, but the problem is that we’ve nearly run out of time.

    • http://www.markamerica.com/ Mark America

      Christopher, You may be right, but the problem is that we have nearly run out of time.

      • http://twitter.com/mrhmyers mrhmyers

        The economy
        is not a zero sum game, and actions have consequences. When we get rid of dept
        of energy and education, and the epa we also make it easier for companies to
        create wealth. we can’t save our nation by budget cutting alone, we have to
        allow the private sector to save us. We can create wealth but making our own
        energy and cutting the cost of energy at the same time. So many other ways the
        evil businesses can help. There is hope, but as you say, it requires bold
        strokes and someone that is not afraid to be hated by many.

  • RebinTexas

    Mark – You just wrote what I have long believed is coming……you just said it better than I have. Thank you my friend……I pray you and others I know and appreciate find a way to survive this mess……….when it hits..

    Christopher Fromme – I hate to disagree with you, but the reason why Mark and I and so many others cannot cast a vote for mitt is that we do not trust him to do much, but maybe slow the speed down a tad – and, with what he’s been saying since the convention, I’m not even sure of that.
    Reb

  • the unit

    Looks like we have blind hope for change. I’m beginning to think I should never bypass road kill. Get it fresh, don’t wait til it becomes the southern definition of a possum…”that flat animal that sleeps in the middle of the road.” We got to turn this around though “somehow.”
    Unless you live on ole Rocky Top or on top of old Smokey your preparations will serve those who don’t. If that worst comes how long before my hungry neighbors recognize I’m not scrounging for grub? If not neighbors then the masses from town? Look around, don’t you see them? Worst comes to worst… they even get up to ole Rocky Top. Great I’ve got my ammo, but they will have as well. So I take out a few or many, end result is not good.
    Turn this around…start can only be with …? I’ll see what Nov 6 brings. If not good…ok…eye for an eye in my sights.

  • Romney Fan

    I’m probably clinging to a false hope, but couldn’t the wealth of oil that we haven’t yet tapped become a way out of this debt? By my estimates, at current prices, we have $220 trillion in energy… But as only one factor in the broad economy, of course this cannot be enough alone. If we can become a net exporter of oil though, it may buy us enough time to convert every state, municipal, and federal employee from an annuitized, paycheck for life with no contribution pension, to a 401k or something else.

  • bdwatcher

    I have eaten some of the first vegetables from my greenhouse, Trying to make alliances. Still working on hand well.. All we can do is prepare.. it will be here and best we can do is defend what we have. The entitled (supposedly) will be looking for other handouts.. seems we all owe them?
    Nations in the Persian Gulf awaiting Israels first strike? Hundreds of attempts into our computer systems, security, corp, grid.. Who is awaiting for National emergency? ….indefinite detention struck down, but govt immediately appealed.. “states it will harm the US” We are on a definite slippery slope. This is not the America I know.

    • the unit

      Didn’t mean don’t try to prepare. You make great point to make alliances. Keep it quite though, they might bring Janet Reno out of retirement to see about your “Compound.” Remember what BATF said prior just before convening on Koresh…”It’s Showtime.”

  • susiepuma

    I ‘liked’ your post Mark, only because of what you wrote – I do not like the coming mess and I cannot understand why so many people are ignoring this….. I understand the entitlement crowd not paying attention – they don’t care about anything except getting what they feel they are entitled to have… but I really don’t understand why the talking heads – especially the Business people – are not talking about this… if our economy collapses and the few jobs we have left just disappear – then what? It’s really scary to think about and I constantly worry about the ‘what next’ aspect… I am 67 years old and I can probably still take care of myself somewhat but I realize that I am in that ‘expendable’ group and that scares me too…

  • exodus2011

    I agree with all you have said Mark America, but a still small voice of hope persists in my mind….. if somehow [we, He] can get the NOT4SALE Proven Reformer with the Steel Spine and who carries the Banner of Transparency into 1600, she would preside over and manage the IMPLOSION of Govt at the exact same time as the EXPLOSION in development of US Energy Resources, and the deregulation of American Entrepeneurs (while the Palin Doctrine is ruthlessly enacted wrt Foreign Policy and National Security)

    I will continue to pray for my miracle … this woman has not appeared, equipped, by chance … will she be a Moses, or a Jeremiah …

  • the unit

    Uh-oh. How long we heard the message here? Since summer before last. 31 days out now. And following youtube is further message. Alan Keyes. : http://www.youtube.com/watch?v=4R4KtYVF-74