FedUpUSA

Archive for the ‘Financial Crisis’ Category

We have all been lied to.  For decades, the leaders of both major political parties have promised us that they can fix our current system and that they can get our national debt under control.  As the 2012 election approaches, they are making all kinds of wild promises once again.  Well you know what?  It is all a giant sham.  The United States has gotten into so much debt that there will be no coming back from this.  The current system is irretrievably broken. 30 years ago the U.S. debt was a horrific crisis that was completely and totally out of control.  If we would have dealt with it back then maybe we could have done something about it.  But now it is 15 times larger, and we are adding more than a trillion dollars to the debt every single year.  The facts that you are about to read below should set America on fire with anger.  Please share them with as many people as you can.  What we are doing to our children and our grandchildren is absolutely nightmarish.  Words like “abuse”, “financial rape”, “theft” and “crime” do not even begin to describe what we are doing to future generations.  We were the wealthiest nation on earth, but it wasn’t good enough just to squander all of our own money.  We had to squander the money of our children and our grandchildren as well.  America has been so selfish and so self-centered that it is hard to argue that we don’t deserve what is about to happen to this country.  We have stolen the future of America, and yet we strut around as if we are the smartest generation that ever walked the face of the earth.

All of this prosperity that we see all around us is just an illusion.  It is a false prosperity that has been purchased by the biggest mountain of debt in the history of the world.

Did you know that if you added up all forms of debt in the United States and divided it up equally that every single family in the country would owe more than $683,000?

We are a nation that is absolutely addicted to debt, and the U.S. debt crisis threatens to destroy everything that our forefathers built.

Yes, everything may seem fine for the moment, but what do you think would happen if the federal government suddenly adopted a balanced budget?

1.3 trillion dollars a year would be sucked right out of the economy and we would be looking at an “economic readjustment” that would be mind blowing.

Enjoy this false prosperity while you can, because it is not going to last.

Debt is a very cruel master, and our day of reckoning is almost here.

The following are 34 shocking facts about U.S. debt that should set America on fire with anger….

#1 During fiscal year 2011, the U.S. government spent 3.7 trillion dollars but it only brought in 2.4 trillion dollars.

#2 When Ronald Reagan took office, the U.S. national debt was less than 1 trillion dollars.  Today, the U.S. national debt is over 15.2 trillion dollars.

#3 During 2011, U.S. debt surpassed 100 percent of GDP for the first time ever.

#4 According to Wikipedia, the monetary base “consists of coins, paper money (both as bank vault cash and as currency circulating in the public), and commercial banks’ reserves with the central bank.”  Currently the U.S. monetary base is sitting somewhere around 2.7 trillion dollars.  So if you went out and gathered all of that money up it would only make a small dent in our national debt.  But afterwards there would be no currency for anyone to use.

#5 The U.S. government spent over 454 billion dollars just on interest on the national debt during fiscal 2011.

#6 The U.S. government has total assets of 2.7 trillion dollars and has total liabilities of 17.5 trillion dollars.  The liabilities do not even count 4.7 trillion dollars of intragovernmental debt that is currently outstanding.

#7 During the Obama administration, the U.S. government has accumulated more debt than it did from the time that George Washington took office to the time that Bill Clinton took office.

#8 It is being projected that the U.S. national debt will surpass 23 trillion dollarsin 2015.

#9 According to the GAO, the U.S. government is facing 34 trillion dollars in unfunded liabilities for social insurance programs such as Social Security and Medicare.  These are obligations that we have already committed ourselves to but that we do not have any money for.

#10 Others estimate that the unfunded liabilities of the U.S. government now total over 117 trillion dollars.

#11 According to the GAO, the ratio of debt held by the public to GDP is projected to reach 287 percent of GDP by 2086.

#12 Others are much less optimistic.  A recently revised IMF policy paper entitled “An Analysis of U.S. Fiscal and Generational Imbalances: Who Will Pay and How?” projects that U.S. government debt will rise to about 400 percent of GDP by the year 2050.

#13 The United States government is responsible for more than a third of all the government debt in the entire world.

#14 If you divide up the national debt equally among all U.S. taxpayers, each taxpayer would owe approximately $134,685.

#15 Mandatory federal spending surpassed total federal revenue for the first time ever in fiscal 2011.  That was not supposed to happen until 50 years from now.

#16 Between 2007 and 2010, U.S. GDP grew by only 4.26%, but the U.S. national debt soared by 61% during that same time period.

#17 During Barack Obama’s first two years in office, the U.S. government added more to the U.S. national debt than the first 100 U.S. Congresses combined.

#18 When you add up all spending by the federal government, state governments and local governments, it comes to 46.6% of GDP.

#19 Our nation is more addicted to government checks than ever before.  In 1980, government transfer payments accounted for just 11.7% of all income.  Today, government transfer payments account for 18.4% of all income.

#20 U.S. households are now actually receiving more money directly from the U.S. government than they are paying to the government in taxes.

#21 A staggering 48.5% of all Americans live in a household that receives some form of government benefits.  Back in 1983, that number was below 30 percent.

#22 Back in 1965, only one out of every 50 Americans was on Medicaid.  Today,one out of every 6 Americans is on Medicaid.

#23 In 1950, each retiree’s Social Security benefit was paid for by 16U.S. workers.  According to new data from the U.S. Bureau of Labor Statistics, there are now only 1.75 full-time private sector workers for each person that is receiving Social Security benefits in the United States.

#24 The U.S. government now says that the Medicare trust fund will run out five years faster than they were projecting just last year.

#25 Right now, spending by the federal government accounts for about 24 percent of GDP.  Back in 2001, it accounted for just 18 percent.

#26 If the U.S. government was forced to use GAAP accounting principles (like all publicly-traded corporations must), the U.S. government budget deficit would be somewhere in the neighborhood of $4 trillion to $5 trillion each and every year.

#27 If you were alive when Christ was born and you spent one million dollars every single day since that point, you still would not have spent one trillion dollars by now.  But this year alone the U.S. government is going to add more than a trillion dollars to the national debt.

#28 If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.

#29 A trillion $10 bills, if they were taped end to end, would wrap around the globemore than 380 times.  That amount of money would still not be enough to pay off the U.S. national debt.

#30 If the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 470,000 years to pay off the national debt.

#31 If Bill Gates gave every penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for 15 days.

#32 According to Professor Laurence J. Kotlikoff, the U.S. is facing a “fiscal gap” of over 200 trillion dollars in the future.  The following is a brief excerpt from a recent article that he did for CNN….

The government’s total indebtedness — its fiscal gap — now stands at $211 trillion, by my arithmetic. The fiscal gap is the difference, measured in present value, between all projected future spending obligations — including our huge defense expenditures and massive entitlement programs, as well as making interest and principal payments on the official debt — and all projected future taxes.

#33 If you add up all forms of debt in the United States (government, business and consumer), it comes to more than 56 trillion dollars.  That is more than$683,000 per family.  Unfortunately, the average amount of savings per family in the U.S. is only about $4,735.

#34 The U.S. national debt is now more than 5000 times larger than it was when the Federal Reserve was created back in 1913.

But do our leaders care about statistics such as these?

No.

In fact, Barack Obama says that we need to raise the debt limit by another 1.2 trillion dollars.

The absurdity of raising the debt limit when we are already in so much debt is beautifully illustrated by the video posted below….

I just thought that video was so well done.

The “huge cuts” that Congress has agreed to are absolutely meaningless when compared to how rapidly our debt is exploding.

Calling those cuts “pocket change” would be an insult to pocket change.

But it is not just U.S. debt that is the problem.  The European debt crisisthreatens to completely unravel in 2012 and Japan actually has the highest debt to GDP ratio in the entire industrialized world.

In 2012, a total of 7,600,000,000,000 dollars of debt must be rolled over by the G-7 nations, Brazil, Russia, India and China.

That doesn’t even count new borrowing.  That number just represents old debts that are coming due that must be refinanced.

Anyone out there that insists that this debt bubble can be fixed under our current system is lying.

A massive amount of financial pain is coming.

It is time for Americans to wake up from their television-induced comas.

It is time for Americans to get very angry.

Your future has been destroyed and the future of your children and grandchildren has been destroyed.

You better take action while you still can.

The Economic Collapse

If so – IF this is really about “the 99%” – then you need to understand a few things. 

Some of you already do.  To those, this article is redundant.  To the rest, and to the majority of the people in this nation, it is not.

Last night I appeared on Dylan Ratigan’s show.  You can watch the segment, and should.  I used the word financialization, which a few people emailed me about and asked me to explain.

Thus, this Ticker.

So what is financialization anyway?  It is the process by which something very ordinary (say, a TV set) becomes financed. In doing so there is inherently created the use (and usually the abuse) of leverage.

What is leverage?  Leverage is simply the ability to act as though you have much more of something than you really do.  For example, you can use leverage to pry off the lid on a beer bottle.  Your raw strength is multiplied by the lever (the bottle opener) to lift the cap.

But note that there is no free lunch.  While the opener may multiply the force applied to the cap, the distance the opener moves is proportionally reduced compared to the movement of your hand.

In economics, leverage is the use of debt to pretend to have more economic surplus (that is, purchasing power) than you really have.

Let’s take a TV set.  If you save up the money to buy one, then go into the store and pay for it, you now own a TV set.  There is no leverage involved; you took your economic surplus form working (which you didn’t need for food, energy, shelter and clothing – thus, it’s a true surplus to you) and you expend it on a TV set.  The transaction is simple; once it is completed there are no residual effects.  If you lose your job the next day, you still have the TV set and will forever more until it either breaks, wears out or you dispose of it in some way.

But what if the TV set costs $500 and you only have $100?  Well, you could financialize your acquisition of the TV.  That is, you could borrow $400 by buying the TV on installment payments with a $100 down payment, and now you have a TV.

Or do you?

Actually, the bank (or the store) owns a TV.  You may have custody of a TV set, but you don’t own a TV set. You owe a debt.  You have promised to work tomorrow to cover the expense of the television. You don’t own the TV until you pay it off.

This is all fine and well up until you lose your job.  Now the bank comes after you and wants the TV back, plus whatever deficiency there is on reselling the TV set to cover your debt.  You suddenly discover, much to your chagrin, that you never owned it at all.

This all sounds pretty ordinary, except that the economic effect of financializing that transaction isn’t, in fact, ordinary at all.

See, in economics there is this thing called “supply and demand.”  The more demand there is for something with a given supply, the higher the price tends to be.  In ordinary times a gallon jug of drinking water in a store is a dollar, and from the tap it costs so little we don’t ordinarily put a price on it.  Yet if there was just a hurricane, and there is no fresh water available, what would the price of that same gallon be?  Ah, now we have much demand and very short supply, and as such the price will be quite dear.  Perhaps the price of that water might be several gallons of gasoline (for the seller’s generator, of course.)

So what has happened to our economy over the last three decades?

In short, things that never should have been became financialized. And as the goods and services became financialized, demand was shifted upward – people were made “able” to allegedly “buy” things they could not otherwise afford.  The expected response in the marketplace to such a thing, predicted by basis economics, was that prices would rise.

Prices, in fact, did exactly what you’d expect.

If you’re wondering why you can’t afford to pay for college by flipping burgers or pizzas in your off hours, this is the reason.  It was precisely the distortion of the government making student loan debt non-dischargeable, which made it available to almost everyone at a “low interest rate”, that drove up the price of college educations to the moon.  And to the moon they went – up 450% since the 1980s, more than five times as much as average salaries increased.

How about houses?  A middle-class house in 1960 sold for $12,000. It had three bedrooms, one bath, a living room and an eat-in kitchen. The walls were plaster (not drywall) and it was of generally-stout construction.  The average family income in 1960 was $6,691 or about 1/2 of the price of a house.  The average family size was just over 3 persons and about 32% of women were in the workforce; the remainder typically stayed home and raised the kids.  That wasn’t so hard to do when you could buy a house at twice the average income.

What happened when we financialized houses?  Prices went up.  A lot.  They went up much faster than did incomes.  First to 3x incomes, and in some parts of the nation in the 2000s they went to utterly ridiculous multiples, like 5, 6 even 10x.  How?  Nobody ever really actually owned the damn house; the bank owned it and you were turned into a financial slave!

How about cellphones?  Oh, they’re cheap; we didn’t financialize those, did we?  The really nice ones are $199 at the store.  Uh, no they’re not.  Ever notice that the price of the service is twice that of prepaid?  Why do you think that is?  That’s simple – the difference between $100/month and $50/month is, well, $600/year.  Oh, and that was a two-year contract you signed, so that $500 cell phone that you got such a “deal” on at $199 actually cost you nearly $1,500.  That’s right – that nice “smartphone” was financialized and you’re paying three times as much for it as a consequence, rather than buying it right now for cash on a prepaid plan..

How about medical care?  In the 1960s your parents wrote a check to the doctor.  If it was really serious they probably had insurance; they got billed and then filed a claim.  Bankruptcy due to medical costs was extremely rare, and you could almost always afford whatever you needed medical attention for by paying with the money in your wallet.

How about now?  Well gee, you’ve got copays and prescriptions are cheap, right?  The doctor costs $20 to see and the ‘script he writes is another $10, and you think this is great.  Uh, not so fast kemosabe.  Ever get laid off?  Ever hear of a thing called Cobra?  COBRA is a law that says that your employer has to allow you to continue your health insurance once you get fired or are laid off for a period of time.  There’s only one catch – you have to pay the entire amount of the health insurance premium yourself.  The employer is permitted a 1% (yes, really) mark-up for the service of handling your check.

I cannot tell you how many times someone quit or was fired at my company, got the COBRA paperwork and proceeded to call me and scream that I was screwing them because to keep their “health insurance” they were going to have to fork up $800 a month.  That’s $9,600 a year, incidentally, and this was in the 1990s.  They always accused me of ripping them off, never mind that it was black-letter law under penalty of prosecution that I could only charge 1% for handling the money and otherwise had to bill them at exactly what the insurance company billed us!  No, you don’t have “free” (or even reasonably-priced) health care folks.  It’s insanely expensive, and why?  Because again we financialized it.  Those who have a demand for health care now can (by law) always receive it – it’s effectively the ability to write your own infinite leverage on health services.  What has happened to the price?  It’s gone to the moon and as a consequence nobody can reasonably afford to show up in a hospital any more for even the most-routine emergency without being bankrupted if they do not have insurance.

Now it is absolutely true that we have treatments and other medical “miracles” that we didn’t 20 or 30 years ago.  But that we can do a thing on a technical basis doesn’t mean we can afford to do that thing.  We can put a man on the moon, but we can’t afford for everyone to take that flight.

By the way, you don’t happen to think that all this financialization was an accident, do you?  Of course not.  Shifting the supply and demand curve means there’s more money to be had from the transaction. 

Where do you think that money went?

Why, right in the pockets of JP Morgan, Goldman Sachs, Morgan Stanley, Citibank, Bank of America and yes, the bank on the corner.  I’m sure you’ve noticed that bank buildings tend to be quite nice.  Grand exteriors, high-rise buildings in the middle of cities (very, very expensive real estate), fabulous lobbies with marble floors and other similar visible elements of opulence.  Where do you think all the money came from to buy that stuff?  Why, from you – the rube standing there in the lobby!  Never mind the bankster’s bonuses!

Was this all the “free market” at work?  Absolutely not!  Student loan debt was given “special status” and cannot be discharged in bankruptcy.  Fannie Mae and Freddie Mac massively distorted the housing market.  Medical insurance companies are exempt from anti-trust laws, and drug makers were given the ability to legally prohibit you from doing what you’d like with what you own (specifically, reselling things you purchased and paid for.) 

All of this distortion in the market occurred due to the direct acts of government acting at the behest of fat cat banksters and industry insiders, using the threat of force to strip your wealth.

Every morning in the financial media we hear about how horrible it will be if we put a stop to this financial rape and the financial system’s size and influence shrink dramatically!

So let’s talk about the distortions and what removing them will do for a minute or two, shall we?

If we get rid of financialization in the above things, what happens?

Well, we’re told that if we cut out the student loan programs, for example, that nobody would be able to afford to go to college. 

Is this really true? 

Of course it’s not true.  You’re not dumb enough to believe that tripe out of the mouthpiece at your college or on CNBC, are you?  The college wants you to believe that, and so do the banks.  But what happens if tomorrow all the “free money” loans stop?  Now the college has empty classrooms because nobody comes any more.  Students can’t afford to attend, so they don’t.

What happens the next morning at that college?

Oh that’s simple: See, it doesn’t cost much to provide a few desks, chairs, and a roof over head along with a calculus book, does it?  Nor does an instructor cost that much when spread across a student body.  Let’s see how cheaply a college can educate you, if they’re unable to extract from you promises from the future and must instead talk you into providing them with economic surplus from your current efforts.

Let’s assume for a minute that there are 30 Calculus students in this college class and five instructional hours in a day, so we can serve 150 students in one room.  Figure the room is 1,000 square feet, which is more than sufficient (5×5 per student * 30 students plus room for the chalkboard, desk at the front and free space to move around; a 25×40 space should be more than sufficient.)  A buck-a-foot a month ($12/year/foot) is certainly doable in most areas if you’re looking for usable space, not gilded BS.  Four months is one term, so this is $4,000 for the space.  Figure another grand for the rental on the chairs and desks and we’re up to $5,000.

We have 150 students so the facility costs them $33 each for this class.  What’s the professor cost?  We’ll pay him $100,000 a year; we’re not pigs and this is Calculus, a typical “first year” college class, not a grad school thing.  He therefore makes $33,000 teaching class for this semester (four months.)  That’s $220.  We’re now at $250 per student for a four hour per week class, or about $60/credit hour.  Note that the professor is teaching four days in the classroom and has one for office work and grading; he works a five-day week of five hour days.  Not a bad gig if you ask me.

If the average student’s full load is 15 semester-hours tuition is $900 per semester to cover costs.

Guess what – in the late 1970s and early 1980s it wasn’t that much more than that. I remember paying it.

It doesn’t have to be today either.  It is because it can be.  Because you can pay due to the financialization, even though you’re not really paying — your promising to pay tomorrow – prices have gone to the moon.  Supply and demand were distorted, you got screwed and the banksters skimmed off the extra money, along with the college administrators.  Oh, and neither of them were honest with you about what happened either.

The important point here is that if we cut off the financialization of college you will still get an education.  The schools will scream and many will go bankrupt, but soon on the same ground where there was a bankrupt college there will be a new one, and this one will charge $2,000 a semester to attend instead of $10,000 or $20,000.  The difference?  You’ll have to pay cash, but you’ll be able to work a part-time job for the two grand and thus you’ll have no debt!

Who wins?  You do.  Who loses?  The fat cat college administrators with their half-million dollar salaries and the banksters who can’t hold your college loans over your head and threaten you with wage garnishments until you’re 80!

Houses are no different and neither is medical care.  The screaming about how “nobody will be able to go to the doctor” or “nobody will be able to buy a house” is a lie.  The doctor can set his fee at $100,000 for his services if he wants but if nobody can or will pay him $100,000 then he sells no service.  That doctor goes bankrupt immediately, soon there will be a different doctor (or maybe the same one after he goes through bankruptcy) and suddenly medical care will be much-more reasonably priced!  After all, if nobody can buy then the seller can’t make a living either, can he?  Prices will be forced down to what the ordinary person can afford to pay.

When it comes to drugs and devices its even worse.  Our government allows blatant price-fixing.  Viagra is 10% of the cost per pill in America just a few miles away in Canada.  It’s illegal, however, for you to re-import it from Canada back into the US.  Why?

Simple: Canada’s single-payer health system won’t pay more than $2 for the pill.  The manufacturer wants to sell them, so they do.  They make a profit.  But only on the “copy” of the pill – there’s no profit for the R&D in that price.  So who gets to pay for the R&D of virtually every drug and device in the medical world today?  You do, and it’s literally forced upon you at gunpoint because our government prohibits under penalty of law people from selling that which they first bought and paid for!

There is no way that such a price disparity would hold for more than 10 minutes were these laws to be dropped.  You get screwed on your prescriptions and devices you buy intentionally by our government through their protection of these industries.  You get financially raped so that everyone in the world can enjoy our medical technology at the mere reproduction cost and the banksters and drug companies can get rich.  It’s an outrage and again, it happens due to financialization of the medical industry and the force of government coercion, NOT the free market.

Here’s the question when you get down to it: Do you want to fix this or not?

If you do then the demand is not for “single-payer health care” or “free college educations” or “debt forgiveness.”

Those demands, if you succeed in obtaining them, will make the problem worse.  You will become more of a slave through those demands, not less.

The demand you must issue is that all the special protections that are currently afforded by government are to be dropped.  The government props under home lending are taken away.  The government mandates that people be treated medically irrespective of ability to pay and are able to cost-shift their care to others go away.  The non-dischargable nature of student loan debt goes away.  And government protection prohibiting the resale of anything someone owns that is legitimate (e.g. a truck load of Viagra) goes away.

Now, if you are a student with a lot of debt, you can file for bankruptcy.  Sure, your credit gets trashed if you file bankruptcy (and it should as you did foolishly take the loan) but the entity who loaned the money foolishly with not a care in the world if you could actually pay loses their money!  They will immediately, of course, stop making foolish loans — like lending kids $75,000 to study history.  The price of college educations will immediately fall back in line with ability to pay via a part-time job just as it was for more than a hundred years before we financialized college educations.

Without Fannie, Freddie, FHA and similar, along with demanding that before you foreclose you must be able to show actual transfer and ownership of the note house prices will collapse.  Yes, you’ll need a lot of money for a down payment in percentage terms, but this is good, not bad.  The average home price will be $100,000 or less against an average household income of $50,000, not $200,000, $300,000 or more.  You’ll have to save $20,000 before you can buy, but that’s ok too.  You’ll have immediate equity and you won’t be so far in debt.  If you want to buy a house you’d like prices to be low, not high, right?  House prices will return to where they were in relationship to incomes before we financialized them, and you will be able to buy a house!

Without the ability to cost-shift medical care, drugs and devices the price of this care will collapse.  Some advanced technologies will become rare and remain expensive, simply because they are technically very difficult and thus do have an actual high cost.  Most people will not be able to afford these medical technologies.  But routine and expected medical care will become much cheaper, simply because it has to in order for the doctor, hospital and drug company to remain in business!  You will still be able to go see the doctor, your broken leg will still get set, and most medical care and procedures will remain available for far less than is currently charged, simply because the firms and people involved in providing it want to continue to have jobs and as such they must charge what can be paid from your personal economic surplus, not your ability to demand that an “infinite source” of money cover the bill.

You can’t fix this any other way folks.  I am well-aware that this goes against the grain of “I need it right damn now” that has imbued our society, but mathematics simply doesn’t care about whether you agree or disagree.  It just is.

We can de-fang the banksters.  It’s not even particularly difficult to do.  The hard part is understanding that you’re not screwing yourself by taking this step and you won’t lose. Oh the banksters, the universities, the doctors and the Realtors will all lie to you and claim you’ll never go to college, you’ll never see a doctor and you’ll never own a house, but the fact is that they’re all lying.  The fact of the matter is that supply and demand governed the ramp in prices of all three of these categories of goods and services, and when demand collapses that very same economic law will govern the price collapse too!

You can bet the banksters, universities, medical societies and housing industry insiders know this, and they’re scared.  They know that if you figure it out their income is cut in half or more.  They are returned to middle-class working people rather than the fat cat status they enjoy today.  Doctors, college professors, home builders, bankers and Realtors used to be middle-class citizens, not gold-clad elites driving around in Lamborghinis and living in mansions!

What’s worse (to them) if you succeed in breaking the back of financialization, these people will lose the ability to enslave you.  You will have returned to yourself the power to choose when you work, how hard you work, and what you do with your own economic surplus, instead of having pledged it to the bank to buy the car, the bank to buy the house, and the insurance company in the event you get sick.

More importantly than your personal interest in this is that as a society we’ve reached the limits of the ability to financialize our lives.  That’s why the markets, housing and economy crashed in 2007.  We had used financial leverage to live beyond our means for the previous decade but in fact the imbalances and intentional distortions in the market date back to 1980.  There has not been one three month period where we have not abused leverage and financialization since that time.  Not one.

This is the choice we have before us.

We did not find ourselves here because of the “free market.”  We are here because the rich and powerful demanded special protections from government that allowed them to enslave you, they enticed you into taking that first hit off the crack pipe of cheap money, and then once you were hooked good they used the jackboot of the government to screw you through changes in the law and special protections for themselves so that you could not easily escape.

The solution is not to demand “free stuff” or “fairness.”

The only solution is to remove the excess leverage from the economy – to get rid of the debt that has been accumulated and force recognition of the fact that not only are many people bankrupt but the financial institutions are as well.  Only when the balance sheets on both sides are cleared can the economy recover.

This is the choice we face ladies and gentlemen.  We can either demand changes that are mathematically sustainable or we will fail at our goal and the spiral you’re seeing right now in Greece will come here.

To wit….

“The present government has done absolutely nothing during the last 12 months to speed up privatizations, reduce the public sector or open up closed professions,” (elided), a leading economic analyst, told me recently in an interview. “In these 12 months it has not fired even one civil servant. The only thing it is doing is trying to tax the private sector out of existence. Why should we believe that they will do something different now?”

Oh wait….. we’re not talking about America in this regard, are we….

Oh yes we are.  The same disease infests us as infests Greece.  While Obama prattles on about hiring more cops, hiring more teachers, protecting the civil servants of all stripes — and not only during their tenure, but also in retirement — he at the same time proposes taxing the private sector out of existence.

Isn’t it funny how The Wall Street Journal is all to happy to print that OpEd regarding Greece, but not a word on the same subject in America?

The ancient Roman rhetoricians developed rules for their oratory. They began with “the exordium,” an emotional or ethical appeal to put the audience in a receptive mood. The “narratio” followed, a narrative of the events leading to the situation to be discussed and an explanation of their manner of treatment.

The main body of their speech delivered the proof of their argument, confirming their conclusions and refuting their opponent’s claims. They developed techniques called “the praemunitio” and “the amplificatio,” which cleared away obstacles and amplified their case with a rhetorical flourish. They concluded with another appeal to the sympathies of their audience.

These rules have been used throughout subsequent history. Today, the majority of our citizens no longer require proofs from our political class. They applaud any slogan that stirs their emotions, and they conveniently forget when a promise is not fulfilled. This has enabled our political leaders on either side of the spectrum to continue the policies and spending that undermine our liberties and our economy.

Public education has been instrumental in the dumbing down of political speech. Beginning in the late 19th Century, our industrialists used their wealth and power to methodically dismantle traditional education and replace it with a progressive system based on the Prussian model. Rather than enlighten, education was redesigned as job training, a system to raise compliant citizens who always looked to the experts for answers. This schooling would become the central feature of their planned society with its planned economy, both necessary for our industrialists to maintain and multiply their wealth and power.

Using the experiential discoveries of psychology, it’s taken a century to perfect today’s public indoctrination system. The unthinking emotionally-driven perpetually-dependent products of this schooling attest to the success of their method. Our politicians are the beneficiaries and no longer need sound arguments to justify their positions.

Our political class also enjoys the advantages of a two-party system, which divides the people in two opposing camps, the “haves” and the “have-nots,” terms verbally engineered into the common vocabulary by the Left.

On its simplest level, the Left appeals to the have-nots with promises of increasing governmental assistance to ease their sufferings under Capitalistic inequalities, while the Right appeals to the haves with promises of less taxes, less government, and more liberty. Each side has a receptive core that readily applauds when their emotions are aroused through simple sound bites and slogans. And when the promised benefits are not delivered, each side points the blame at their conniving opponents, arousing anger, further dividing our country, while engendering sympathy for their tireless benefactors.

These techniques have been setting up the final solution. After we’re irrevocably divided, we’re ripe to be conquered.

This false left right paradigm has successfully served each side over the years, as our government’s bureaucracy and power have continued to grow unchecked, and the inequalities between the haves and the have-nots have increased unabated. That is, until a few small groups on the Right no longer applauded. Rather than accept the status quo of continual broken promises, these tea-partiers and libertarian groups like the Campaign For Liberty have demanded accountability. They demanded a return to sound government not in the fairy tales of their fraudulent speeches, but in a reality darkened by a fiscally irresponsible federal government that continues to reach into all aspects of daily life, as it gobbles more power and throttles liberty.

Yet, these small movements have been demonized from the start and are now blamed for bringing us to the brink of insolvency, something they alone seem concerned with preventing. In this respect, the rhetoric of the mass media is similar to that of our politicians – the truth is inconvenient to their agenda. Without the safeguards of an objective press, the status quo in Washington continues. Our debt gets deeper, our economy more mired, and our liberties more threatened. It matters little whether the Right or Left is in power. Our country continues along the path to insolvency and moral bankruptcy.

The recent Debt Crisis illustrates the false paradigm. It was engineered under a Republican President with a massive bailout of big business, and it continued under the current Democratic Administration. These opposing camps have become hired mouthpieces without the will or inertia to do anything but the bidding of those who keep them in office, the international banking elites. If left unchecked, the US Dollar will continually weaken until it is replaced as the world’s reserve currency, which will ruin our economy and facilitate our merger into one-world-government.

Amazon.com photo

And still, the underlying causes of our debt crisis have not been addressed. We have both a spending and an entitlement crisis, as an unsustainable debt piles up. Yet, we hear the same rhetoric echoing from the halls of Washington. Both sides claim the other side won’t compromise and allow an equitable solution. While the Right wants to punish the poor with spending cuts and reward the rich with no new taxes, the Left wants to soak the rich with massive taxes and aid the poor with more spending. The so-called solution was demonized as a tea-party victory. Surprisingly, or perhaps not, these patriots didn’t celebrate because it is a mirage with the appearance of spending cuts in the face of massive spending increases.

In 1966, the historian Dr Carroll Quigley thought the international bankers were too powerful to oppose when he published his smug exposé, “Tragedy and Hope: A History of the World in Our Time.” He wrote, “The argument that the two parties should represent opposed ideals and policies, one perhaps of the Right, and the other of the Left, is a foolish idea acceptable only to doctrinaire and academic thinkers. Instead, the two parties should be almost identical, so that the American people can ‘throw the rascals out’ at any election without leading to any profound or extensive shifts in policy … either party in office becomes in time corrupt, tired, unenterprising, and vigorless. Then it should be possible to replace it, every four years if necessary, by the other party, which will be none of these things but will still pursue, with new vigor, approximately the same policies.”

Future historians will wonder why we neglected to educate ourselves about a world dominated by an international elite, and why we never learned our lessons about our political class, who do their bidding with baseless rhetoric.

The Moral Liberal Contributing Editor, Robert F. Beaudine, has written authoritative articles on public education, the financial crisis, and the myth of global warming. He’s also the author of the life-affirming novel, “Based Upon a Lie,” a theological conspiracy thriller. He resides in the upstate of South Carolina.

Gulag Bound

It’s amazing what conclusions people will draw from unrelated events.  This article in the Washington Times for instance.  Of course, the Times isn’t the only place where people are attempting to establish a cause and effect through unrelated events and failing to reach an accurate conclusion from circumstantial evidence.  This is probably why our court system disallows circumstantial evidence, but that’s just an educated guess on my part. 

Glenn Beck* is also doing this with regards to the financial portion of his programs.  He too, has failed to deduce that the cause of our financial meltdown has absolutely no correlation whatsoever to those who are currently exploiting it.

None of what is written in the Times article would have even been remotely possible (assuming there are any bits of truth to this being ‘planned’) unless all the referenced Wall Street firms had already been insolvent – AND THEY WERE!  Anyone who can read a financial earnings report can conclude this merely by examining the data.  Further, anyone can currently see the former balance sheet of Bear Stearns, now happily festering on the Federal Reserve’s books, just awaiting its further taxpayer bailout.

The collapse of Wall Street was not organized by any foreign terrorists – it was created by the Wall Street firms themselves who thought they could collude to drive the prices of mortgage backed securities up in perpetuity. As long as property values were going up, these investment vehicles sold like hot cakes. When normal people could no longer afford homes, the Wall Street banks tried forcing lenders to push ‘creative’ ( a/k/a/ fraudulent) loan products to get people into homes they couldn’t afford – the more risky the loan the bigger the profit for Wall Street. That ended when everyone discovered, much to their disbelief and dismay, that home values were not a perpetual motion machine.  The result was that the portfolios of all these Wall Street firms imploded….only to be rescued by the taxpayers at the point of Hank Paulson’s gun (a/k/a ‘bazooka’).

Now, please tell me how foreign terrorists orchestrated and dictated the actions of almost every single Wall Street firm in our country (to say nothing of the investment firms world-wide that did the same thing) over the past 10 years. If you can answer that, you’ll discover that the collapse was coming regardless of who might now want to exploit it. All of these firms were going to collapse through no fault of anyone’s but their own. They were and still are insolvent and that includes the ones still operating today through taxpayer support. Without the Federal Reserve’s QE policy and without taxpayer exploitation every Wall Street firm would collapse tomorrow. It would have nothing to do with foreign terrorists, George Soros or anyone else.

It is supposition like this article and some of the things from which Glenn Beck is drawing correlations that do not prove effect, which are protecting the true guilty parties: The investment firms on Wall Street and the legislators those firms purchased with their massive profits over the past decade.

Unfortunately it is ‘conspiracy theories’ like these that obsfucate the real truth. The real truth is MUCH scarier than the conspiracy theory in this particular case. You literally have hundreds of criminals running free right now and they are doing exactly what they’ve done for the past decade, just in new areas: they’re robbing us all blind using commodities in which they ‘invest’ with YOUR taxpayer dollars through the Federal Reserve’s QE policy. That same QE and ZIRP policy is also responsible for the unrest around the globe by literally starving people world-wide.

To make this stop the real criminals need to be prosecuted. That is the ONLY answer. And the criminals are not ‘foreign terrorists’ or George Soros; they all reside on Wall Street and in Washington DC.  Understand that George Soros is not an omnicient god, he is but an opportunist who saw the stupidity being allowed to happen on Wall Street and he is now taking advantage of it for his own gains. While he may be a socialist, he makes his money exploiting the bastardized system of ‘capitalism’ we have here – that is: laws don’t apply to those with money – only to the ‘little guys’.  This is not capitalism.  We have not had true capitalism in decades.

Real capitalism is ‘equality under the law’ – NOT ‘some are more equal than others’ and the latter is what our system has become. At this juncture, anyone advocating for Wall Street is supporting fascism.

* Disclosure: I’m actually a Glenn Beck fan and greatly appreciate his efforts.  Some of what he discusses that appear to be ‘conspiracy theories’ truly are valid presentation of fact.  However, when it comes to the economic crisis (from which we are NOT recovering and is ongoing), he is missing the boat trying to tie things together in cause and effect that are just not at all related.