I reported last night on ACT! for America’s legislative briefing that took place at the Capitol on June 23rd. During a break between speakers that morning I happened to encounter a well-known Republican congressman in the corridor, and had a brief chat with him.
This congressman is a real fiscal conservative. I had met him on previous occasions, and highly respect him. He’s been in Congress for a while, but has managed to hang on to his principles. If the rest of Congress were like him — even if just the rest of the Republicans were like him — the country might not be careening towards financial disaster.
During the presentations that morning several speakers had mentioned the national debt, and how crucial debt reduction is for our national security. They cited the current figure of $14.1 trillion, emphasizing this unacceptably huge accumulation of debt.
And it is unacceptably huge. But the actual national debt is far larger than the official figure. Even if we assume that we won’t borrow more money — which we cannot avoid, since the sluggish economy and depleted tax revenues will force us to raise the debt ceiling just to meet the interest payments on the existing debt — our current debt is much higher. If Congress and the president were honest, they would add in our obligation to the Social Security “trust fund”, which now contains nothing but IOUs. If those were included, how many more trillion dollars would be added to the national debt?
And then there are the unfunded federal pensions, the expected steep increase in Medicare and Medicaid (with or without Obamacare), the possible future bailouts of bankrupt states like California, and on and on. The actual debt is many trillions of dollars higher than the official figure, and getting higher every day.
With all that in mind, I approached the congressman, shook his hand, and told him how much I appreciated his work. I emphasized that the criticism I was about to voice was not directed at him.
Then I said:
“They’ve been talking about the national debt in there, and how it has to be reduced. But it’s grown so large now that it can’t possibly be paid off.
“No matter how much we raise taxes or cut spending, there’s no way it can be done, not without inflating the currency.”
His facial expression became very somber and serious, and he replied:
“You’re right. We’re going to have to monetize the debt. There’s no other way.
“It’s a terrible thing. It will be disastrous.
“God help this country.”
Then he had to go, and I had to go, so we shook hands again, said our goodbyes, and parted company.
I’m an amateur on economic issues, and also a paranoid crank when it comes to the Fed, the currency, and the national debt. I realize the extent of my crankdom, however, so I refrain from buttonholing strangers on the topic, and tend to rant and rave only to my wife and close friends.
So this was a rare validation of my own idiosyncratic conclusions. A congressman of some years’ experience, who sits on various committees that oversee fiscal matters, says without hesitation that the national debt will have to be monetized.
The magnitude of what this means to the future of United States of America is difficult to imagine. There is no historical precedent for what is about to happen, so the consequences can’t be fully predicted. There has never been a single world reserve currency before, and now it is on the verge of being massively inflated.
Anyone who says he knows what is going to happen is pulling your leg.
Since our banknotes can no longer be redeemed for anything of permanent value, the purchasing power of the dollar depends entirely on how much faith our creditors place in the dollar reserves they hold. That faith is rapidly disappearing: the Chinese have divested themselves of about 95% of their treasury notes. In other words, our biggest creditor has realized that we can no longer be expected to make good on all our debts, and is prudently refusing to loan us any more money.
Without enough new lenders, the only solution for us is to monetize the debt, a process which used to be known as “printing money”. In an age of universal electronic transactions, however, it is no longer necessary to crank up the printing presses at the Treasury Department. We have much more creative ways to increase our dollar holdings, and “quantitative easing” is simply the latest strategy. Now that QE2 has been retired, our government will no doubt come up with some ingenious new stratagem to acquire more cash without access to additional reserves having actual value.
Based on our level of debt, the dollar must lose 80%-90% of its current value, and possibly more, before the national debt is paid down to a reasonable level. This process has already begun, but it’s hard to recognize, because the three other major world currencies — the pound, the euro, and the yen — are also being inflated. If you want to see signs of the coming inflation, watch the prices of silver and gold. Or consider the value of the Norwegian kroner and the Swiss franc, which are rising against the other currencies.
Who will bear the brunt of the coming inflation?
Needless to say, the very rich will likely escape the worst of the consequences. They will hedge their assets, acquire non-perishable commodities, and retreat to safe locations where they can wait out any civil unrest.
The working poor, who live from paycheck to paycheck, will not see as much change as most of the rest of us, provided that they manage to remain employed.
People on fixed incomes — the elderly, the disabled, welfare recipients, etc. — will be hard-hit. Our government has already gamed the cost-of-living index so that the real rate of inflation will far exceed the official level that drives the annual increases in pensions and benefits.
The middle class will presumably bear a disproportionate burden. The real value of 401(k)s, mutual funds, and most pensions is likely to plummet, and the scythe of unemployment will cut down many “symbolic analyst” positions. As the purchasing power of the middle class evaporates, what will happen to the rest of the national economy, which depends so heavily on consumer spending?
Tough times lie ahead. If Iran doesn’t hit us with an EMP, our government may have to sell off a big chunk of federal real estate to the Chinese, or lease them the mineral rights to all our national parklands. Or devise some other creative last-ditch strategy that I can’t think of.
I’m not predicting when any of this will happen — I’ve learned my lesson over the last three years: the Fed and the Treasury Department can display enormous ingenuity when staving off the inevitable.
Yet it has to happen. There’s no avoiding it. The debt will be monetized.
It may occur in six months, or two years, or five years.
But the change will come — and relatively soon.
I was leafing through William Shirer’s book on the Third Reich not long ago, and as I read this article, I couldn’t help thinking of the state Germany was in as Hitler rose to power.
Which country does the antichrist rise up from again?
I’ll tell you how this will end. The same way this problem always ends. WAR. People will kill one another.
I’m the same way as Baron. I would have thought the whole system would have crashed by now. I also thought Israel would have attacked Iran by now as well –another domino leading to the same result. Nevertheless, the modern-interdependant world is about to GO.
I think the AntiChrist is Mohammad and everything he shat into the world. Just when the world is getting ready to collapse, the world also seems to be caving in to the antichrist.
The collapse of our civilization will bring wars and famines across the world. There is NO doubt about that. Sounds a lot like Matt 24 if you ask me.
“For nation will rise against nation, and kingdom against kingdom. There will be famines and earthquakes in various places.”
Frankly, this terrifies me to within an inch of uncontrolable bowel movements. When the flares fly through the cold night air, and the murmers of concern on board the great sinking collosus are suddenly pierced by the first shrieks of terror, all semblance of continence will be lost.
God help us all.
I have the sickening feeling that the govt. will seize our retirement accounts.
The tax-favored trillions awaiting our retirement needs are simply too much of a temptation. There has already been talk on the Hill and the WH about seizing them and annuitizing them so we’ll “never run out of money”. Of course, the value of the money will then be put directly into the Treasury to be redistributed, so when we eventually make withdrawals, the money will need to be “monetized”, therefore having less value. Another, less lucrative, possibility: the govt. will insist that a certain percentage of all tax-favored accounts be invested in T Bonds.
I have a sick feeling that one of the reasons so many people in power deny the many problems we have is that they’re afraid that if the truth is acknowledged – if it is spoken out loud – then it’s game on.
I think that people are so apathetic and so self-centred that it wouldn’t be possible to band people together (as it was possible during WWII for example – that generation and their way of thinking is dying out). I think that if everything starts to collapse, it won’t be a sudden explosion that sets the world on fire – it’ll be a slow, rumbling, one-thing-after-another, inevitable descent into a hell-hole the likes of which no living Westerner has experienced.
But the ruling elite will hang on. They’ll still be there, and woe betide anyone who stands up and points the finger at them! That person will become the ENEMY. George Orwell here we come. As the Baron recently pointed out, the machinery for that is already being manoeuvred into place.
Yes I think that if everything really starts going to hell in a handbasket, most people will be either unable or unwilling (or both) to do anything about it.
And the people who are supposed to be running our countries just now will still be there. Just because the country you’re living in has run out of fuel and ground to a halt, it does NOT mean ‘regime change’.
On the contrary, the only thing we can expect is that the state will exert even more control over its own citizens in an effort to stay in power.
Haven’t you heard that when the theoretical debt ceiling was reached, the FED started raiding our retirement accounts. This has already happened.
Baron, the timing of your post is interesting because I too have been obsessed with finance over the past month. I started reading Zerohedge daily and don’t see any good solution to our debt problems. At least not during our current societal mindset.
To get back on our feet, we’ll need to rid ourselves of this hopeless mentality and countless benefits for our parasitic masses. If that can ever be accomplished, we might still be left with a very wealthy country. We have tons of food producing land, water, energy stores,…
I just hope they don’t destroy or sell all our wealth first. Sadly it seems that a fire-sale of the country’s natural treasures is in store for the Greeks. Afterwards, debt slavery for the population.
I agree with everything you said except the sudden collapse. I think that once people lose faith in the dollar, there will be a run on it similar to a run on a bank. That WOULD be a sudden affair. An Israeli attack on Iran would suddenly wreck the entire system as well. In this kind of scenario, the developed world would degenerate into Mexico and then Somalia. People will be SO desperate to put food back on the table, to have order, and peace, that the ONLY way to bring back global harmony and the prosperity associated with it, will be to sell out to the by then hysterical Islamic masses. If this happens, then the European dominos will be the first to fall. One by one, the world will cry: “Zeig heil! Give us Barrabus! Alluha Akbar!” The good people of the world will no doubt be appalled by this and point out that the whole thing is nothing but a farce. No doubt they will end up seeing eye-to-eye and have their backs to the wall by the very end.
This thing wont test our religion. It will test our character. Will we be like Geert Wilders, or like the sell-out fanatical nazi masses?
Only two truths will be viable explanations for what is going on. Its either A) the victory of Islam and the “miracle” of its conquest of the world, or B) the truth of the christian message: that good people are one way, and bad ones another.
We will see. What is certain is “interesting times” (unfortunately). As for the rest, perhaps I am the victim of an over-active imagination…..but I don’t think so.
Good luck, guys.
Another thing. A possible objection to this hypothetical turn of events is that there is too much friction between Sunni and Shia for there to be a massive sell out. I think that this is mistaken. If the Muslim world can force Europe and then the rest of the world to cry “there is no god but allah and mohammad is his prophet” on wednesday, then there will be a fight over whether the world’s bones are shia or sunni on a thursday which will never come.
Muslim fanatics will no doubt also turn on their decent but brainwashed coreligionists in their insatiable blood-lust, and then they too will see eye to eye with the rest of the decent world.
And as for Israel, “Let those in Judea flee to the mountains.”
All this is hypothetical…but I can’t shake the scenario out of my head. Its not much fun at all.
I guess we’ll have to take it day by day, right?
Does this sound plausible to you people, or am I just bat-poo crazy?
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Gates of Vienna’s rules about comments require that they be civil, temperate, on-topic, and show decorum. Your comment violated the last of these rules. We keep a PG-13 blog, and exclude foul language, explicit descriptions, and epithets. This is why I deleted your comment.
Use of asterisks is an appropriate alternative.
When thinking about the [excrement impacting the circulation device], its pretty obvious who the elites are going to pin the blame on and it certainly wont be the muslims let alone the left (who brought this current situation about) that is for sure.
I hope it wont be the case though history and most of the world’s acceptance of increasing Jew-hatred pretty much makes it inevitable.
I’m still receiving my pension, and my previous employer sees no impediment to my continuing to receive it. Also, I still have my tax favored private retirement savings (IRA, 403b). So the pensions raided belonged to others.
STill — sorry to hear that.
Jew-hatred IS sadly inevitable. Not only will we see it on the part of the liberals (who have already in essence sold out to Islam, along with so-called conservatives, for that matter)and the self-hating jewish allies of the liberal elite (like George Soros), but we will see it in a resurgence of the far-right as well. Its baaaaack.
Because Jews are over-represented among our elites, especially the banking sector, people will pin ALL the blame of the financial collapse on “the joooos”. And since elites by definition hold power, all kinds of conspiracy theories will combine with racial/religious hatred to produce, well, we’ve seen it before, haven’t we? Keep your eye on Alex Jones.
Its going to be ugly. And since ANY criticism of Judaism or the Jewish people has automatically been stamped out with cries of “Nazi!”, rabid anti-semites will wrap their hatred pointing out cultural pathologies (such as the tendency to consider themselves a racial aristocracy) that were not allowed to be discussed before as a pseudo excuse for their behavior. Of course for every ounce of validity in the criticism of “the Jews” (as if they were a homogenous whole to begin with), there will be 8,000 pounds of pure, unadulterated b.s..
Sure Jews are over represented in the elites, but they studied harder too! When everyone else’s kid was off playing video games and watching american idol, lots of Jewish kids were studying.
Sure Jewish people have a tendency to scratch each others back to a fault, but if they weren’t so tribal, they would be absorbed in the huge sea of gentiles. What anti-semites attribute to selfish and sinister motives, is largely a cultural defense mechanism. I myself don’t particularly like it, but I can sympathize with their position.
What I definitely do NOT like are feelings of superiority based on being born their mothers children. Not all jews are like this, and many good religious jews are secretly guilt-ridden by it, but it is still obnoxious as all Hades. If that is your religion, well, there’s something wrong with it, and it isn’t anti-semetic to say it. And be rest assured it will be the FIRST thing out of the REAL anti-semites mouth, once the * hits the fan (followed by a sea of rabid hatred that largely excuses itself with the one grain of truth).
Oh well. Its gonna happen again. Especially because the elites of the financial sector are largely jewish. Only this time EVERYONE who is worth a darn is going to have to break ranks with all kinds of ideologies and identities, because the great murderous hatreds about to be unleashed will be fought under those banners.
Perhaps that is why anyone who is worth something will be “hated by all nations”, no doubt as traitors, simply for being decent.
If I was Jewish, I’d be TERRIFIED.
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Baron Bodissey – sorry about that
cumpa_29 – My concerns come from different angles, the upcoming financial collapse, the Neo-Hellenist / Self-Denying Jews angle and the Counterjihad angle.
Financial Collapse – Many people are going to look for someone or some group to blame and it’s pretty obvious that the elites intend to have Jews play the scapegoat, when you think about it that is probably another reason why the elites are importing enrichers from the islamic world, so as to make Jew-hatred once more acceptable in the name of multiculturalism after WW2 made it go underground and mostly unfashionable.
Counterjihad – While I myself support the Counterjihad many Jews and other non-muslim minorities face a bit of what I’d call the “Iberian dilemma”, referring to the period where muslims invaded Spain and Christians eventually drove muslims (and also Jews) out of the country, an era where Jews were caught in the middle of two sides that hated them as much as they hated each other. While imho it would be safe to assume that many governments will simply throw the Jewish people and the non-muslim majority under the bus and cast their lot with the ummah or paint Jews as trying to bring about the “Clash of Civilisations” to non-muslims (a view that has already gained pleny of milage), with history as a guide I still have my own reservations on what the Counterjihad will evolve into when it all goes to hell.
Will the Counterjihad be able to maintain a united front of those who follow the Golden Rule against islam which does not follow anything resembling a Golden Rule or it will become just like in Spain, where the Western World will reach a point that it decides to throw the baby out with the bath water by expelling all non-european non-christian yet non-muslim minorities together with the muslims?
Self-Deniers – One thing to bear in mind, particularly with liberal / leftist Jews is that they have basically abandoned Judaism on the altar of Liberalism (quoting Carl of Jerusalem from Israel Matzav) and are not merely content with leaving with the fold, but are also for the most part very much intent on going to war against anything to do with the Jewish people or Judaism as a system.
I would like to introduce the concept of the Mixed Multitude or “Erev Rav” as a certain outlook or meme that has constantly plagued the Jewish people in one form or another rather than as a particular group of people from the time of the exodus, which is another way of describing the Self-Denying Jews (such as soros, j-street, etc) of today, who have more or less embraced HG Well’s and Alice Bailey’s views on Jews by ridding themselves of the baggage of their forefathers and heavily investing in various utopian movements (that have countlessly backfired badly), believing in secular liberal universalism and seeking to somehow “unify” the secular / eco-mentalist West and the Islamic world as a way of fighting the Jewish people (despite having little else in common besides hating Jews), everything they stand for (from the Jewish idea of G-d to the Redemptive vision, from the idea of the Jewish state to the Jewish people, to the Judaic root of the Western World itself down to even the Ten Commandments, etc) and anything that is remotely connected with them (such as Christianity).
As for myself, I have little to do with the Self-Deniers because the only thing one can do is seperate from them as they do not represent me in the same way that the current establishment from obama to the EU do not represent America and Europe.
In a way with how things are atm, one can easily argue that both the Western World and to a lesser degree the islamic world also have their own versions of the Mixed Multitude or Erev Rav.
The following article is one of countless examples of how the Self-Deniers effect Israel, they more or less aid the enemy even though like traitors in the West, they ARE the establishment and are one of the main reasons why Israel has not already rained blood and fire on the islamic enemy.
It does seem that you’re not crazy, and that we do seem fated to live in very interesting times.
Your remark about a sudden event bringing the world to a grinding halt, as opposed to a gradual descent into whatever it is that awaits us: I couldn’t help thinking of what Jack London wrote in his ‘alcoholic memoirs’: See link: scroll to bottom of the chapter.
How about if American started looking for oil – maybe mining offshore?
Then STOP BUYING oil from other countries – use solar energy and cut down on the use of fossil fuels.
Would that help?
Which is worse… that we have to inflate our currency to get ourselves out of debt…
… or, that in so doing, we have sold our sovereignty for the price of government entitlements?
Isn’t this what got Greece into the trouble they are in now?
gsw said… How about if American started looking for oil – maybe mining offshore?
Then STOP BUYING oil from other countries – use solar energy and cut down on the use of fossil fuels.
Would that help?
I have nothing contrary to your point, but I have a couple followup comments:
Our problem isn’t in finding oil, we know were vast reserves are that we refuse to tap.
And, yes, we should start relying on our own oil reserves rather than the reserves of other nations.. thereby pumping huge amounts of our wealth to those other nations.. nations who then use those funds often end up supporting military and/or terrorist actions against us.
As far as using solar power and reducing reliance on oil, that isn’t practical at this state of the technology development.
Solar, wind, water power isn’t as reliable as we would hope, and we have no other fuel source vast enough to replace natural petroleum reserves.
We could turn much of our farming resources into growing fuel crops, but that comes at the reduction in food crops. And solving our fuel problems by creating food problems isn’t going to help in the long run.
So, what we need to do first, is stop vilifying petroleum fuels and start focusing on how we can use our petroleum resources with a bit more wisdom.
Yea, the counterjihad will spin out in many directions. It will take a fascist turn and a spiritual one. Those who say that “all muslims are not bad people” (no matter how many times they stress that they are not in favor of Muslim immigration) will be considered traitors to the fascist cause (not to mention that there will also be racial and ethnic fascisms around as well). In the muslim world, the good and decent muslims will be attacked by the fanatical ones in their insatiable blood lust. These two groups (decent Westerners/Muslims)are the two sides of the same coin. The spiritual blood-brothers united in decency and love of the truth on opposite sides of the world will end up seeing eye-to-eye.
I think that the left (including its self-hating jewish allies) will side with the ummah, as it already has. But the far right will end up doing the same, despite the fact that they will no doubt originally fight against it. Islam IS the far right, and far-right blood-brothers will end up shaking hands, just as Hitler and the Mufti did. Hatred of the decent-hearted traitors in their midsts and across the globe; the false promise of global peace and prosperity that Islam offers; and the feeling of satisfaction that people get when religion turns their bad behavior into something good, will no doubt combine to bring this about. If you can’t beat em’, join em’ –especially when they are just like you as people, and share similar hatreds.
Like I said earlier, self-loathing far-left Jews will join the ummah. But the far-right Nazi Jews will end up doing the same, finding blasphemous satisfaction that Islam represents the consumation of their “noble” tradition. The Jews, just like the rest of the world, will be divided into those who killed the prophets, and those who honored them.
And speaking of prophets, here is a jaw-dropping quote from Hosea 3:4-5:
“For the Israelites will live many days without king or prince, without sacrifice or sacred stones, without ephod or idol. Afterward the Israelites will return and seek the LORD their God and David their king. They will come trembling to the LORD and to his blessings in the last days.”
cumpa_29 – One only needs to look at the case of leftist traitor tali fahima, who converted to islam a while back though I guess in the great scheme of things, having such a great moral and spiritual division or separation take place within humanity in the near future is ultimately a good thing, provided that one is able to keep to their convictions despite underdoing a great test of faith the equivalent of Elijah seemingly losing to the prophets of baal.
Fwiw, there is a belief held by some that the the feet of iron (Rome / the west) and clay (islam) in Daniel 2 represents the current alliance between the West and the islamic worlds.