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The 21st Century Economic Breakdown


This crisis is the most challenging and dangerous in US history.

Debt + Dollar + Delusion + Depletion = Decline

Political leaders and the mainstream media have been blindsided by the country's sudden mood shift in the last few years. The reason is because they believe world history is linear. These people think the world only progresses. The facts indicate otherwise. History is cyclical. History is replete with grand empires like Rome, Spain, and Britain. It's also replete with dark ages, depressions, and wars.

Politicians have voted for bailouts of criminal banks run by Boomers, voted for hundreds of billions of dollars in pork projects for their corporate constituents, delegated their constitutional duty of declaring war to the executive branch, voted for the Patriot Act and creation of a Department of Homeland Security, which have stolen freedoms and liberties from the citizens, and have deferred the critical cuts that must be made to entitlement promises they've made to the American public in order to get elected.

These politicians have doubled the national debt of the United States to $12.4 trillion in less than eight years. It took 213 years to accumulate $6 trillion of debt ($5.6 trillion added since 1971) and only eight years to add another $6.4 trillion. These same politicians have approved current budgets that will add $1.5 trillion to $2 trillion per year to the national debt for the next 10 years. Progressives put forth the preposterous idea that piling on more debt will solve a problem created by too much debt. They've pressed the accelerator to the floor as we approach a turn on a mountain road.

The current millennial crisis that we're attempting to grasp was commenced by the combination of a housing collapse caused by loose Federal Reserve monetary policy, no regulation of financial institutions, and corrupt greedy bankers on Wall Street. The depth and breadth of this financial disaster is being exacerbated by government borrow and spend policies and the free-market globalism mantra of big business being sold to the American public. This fraudulent economy has been supported by a world awash in cheap oil. The American people have been scammed. Free-market globalism didn't benefit the middle class and the era of cheap oil is running out.

We've sold out America for cheap Chinese hair dryers, inexpensive Mexican apparel, economy packs of Fruit of the Loom from Indonesia, and yellow smiley face stickers for our kids. As reward for gutting the American economy by shipping jobs overseas, American CEOs have enriched themselves at a rate 500 times higher than the average worker's pay.

Wall Street bankers were paying close attention to how corporate CEOs were able to reap ungodly profits while socializing the costs. With a clear signal from Alan Greenspan that the Federal Reserve would save anyone on Wall Street who got in trouble, the gluttonous MBAs created exotic financial products and convinced the world they could spin gold from straw.

The CEOs of the five biggest investment banks (including Goldman Sachs' (GS) Hank Paulson) convinced the SEC to waive their 12-to-1 leverage ratio and leveraged their Wall Street gambling casinos at 40 to 1. This excessive leverage, combined with financial products designed to confuse and bamboozle investors, generated billions in profits for these banks and hundreds of millions in pay and bonuses for their Boomer leaders.

When the crooked house of cards collapsed under the weight of lies and fraud, these banks were essentially insolvent. At that point, Paulson, who was now Treasury Secretary, and Ben Bernanke decided to socialize their losses by having the US taxpayer pick up the tab. Middle class Americans lost 8 million jobs and Wall Street bankers used the taxpayer bailout to generate billions in fake profits while paying themselves hundreds of millions in pay again. The resentment of average Americans is boiling over and will play a main role in the unfolding crisis.

The anger and disillusionment of the population are seen as worrisome and disturbing by those who believe history is linear. The entrenched ruling elite should be apprehensive. During a crisis existing institutions are torn down as the social fabric of the country undergoes wrenching changes. Those in power are rightfully fearful of the masses they have screwed for decades. President Barack Obama, Bernanke, Timothy Geithner, and the majority of economists and TV pundits are convinced the crisis has passed and they have successfully maneuvered the country through the worst, avoiding a second Great Depression.

History suggests otherwise. We have yet to experience the nastiest part of the crisis. We can expect to encounter private and civic choices analogous to the cruelest ever confronted by ancestral generations. The recently submitted Obama budget, adjusted for reality, will add at least $12 trillion to the national debt in the next 10 years. That would bring the national debt to $24 trillion in 2019. At a modest interest rate of 5%, the country would be paying $1.2 trillion per year in interest. The more likely scenario would be a 10% interest rate, resulting in annual interest costs of $2.4 trillion. The entire spending of the Federal government was only $1.2 trillion in 1990.

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