Ladies and gentleman I have said it many times before and I will say it to you again today: AMERICA IS FINISHED. What do I mean by that? The standard of living, the way we have known and understood life in America is over.
This topic is very loaded and will no doubt be filled in most people’s minds as a GIANT CONSPIRACY and is just fictitious talk from an Individual (me), looking for attention. I am here to tell you once again YOU ARE WRONG. YOU ARE WRONG and once again YOU ARE WRONG. I advise you not to tune out. Pull your head out of your textbook for five minutes and read this piece. I write these columns because I am trying to protect YOU! Yes, as crazy as it sounds, I am trying to advise people and wake them up in effort to PROTECT them! So, for the moment, worry not about the grades your professor dangles over your head. Play not the rat in the maze in search of the cheese because I am hear to tell you there is no cheese at the end of the maze.
The Truth: If U.S. Monetary policy, consumer consumption, personal savings and lifestyle are not turned around immediately, what awaits all of us at the end of the maze is truly an Economic Armageddon.
Now, I have laid out the reason America is headed toward Economic Armageddon in my past columns. However, in this column I will forecast my predictions for the inevitable dollar collapse and predict how the U.S. will respond to the crisis.
Before ascending to power, candidate Obama boldly and correctly stated we are amidst “The great economic crisis sense the Great Depression”. The problem with stating the crisis in this manner is that people are quick to assume this crisis is the SAME as the Great Depression of the 1930s. This, however, is false. While the immediate results of the two might be similar (High unemployment, loss of prosperity, foreclosure, etc), the outcomes of the two disasters will be radically different.
I will try to make this short, sweet and to the POINT: Before the Great Depression and well after it ended, the United States of America was the world’s largest creditor nation. America had no trade deficit. America was the world’s largest exporter of goods. America’s industry was expanding at a rapid rate. During this time Americans lived within their means, did not borrow money they could not repay, and learned the importance of personal savings.
Now, many years later (Short, sweet and to the point). America is the largest debtor nation. America has massive trade defects. OUR GDP is 70% consumption! We do not create goods and export them like we used to. Our biggest export is DEBT. We also live in a culture of entitlements. Since the Depression of the 1930s we have established Social Security (We may have to work, but we do not have to worry about savings because Uncle Sam will ensure our financial security once we happen to retire). Nation Health Care! Can you believe it? The U.S. actually already has Socialized Medicine and it is destroying us! With Medicaid, Medicare, VA hospitals and taxpayer funded Emergency room visits. (We do not have to worry about saving money to protect our health. We can spend that money on goodies. We can eat whatever we want, smoke, drink and be fat! It doesn’t matter because worse case scenario we wind up in an emergency room and other hardworking Americans will pay the bill. Even if we aren’t citizens! Yay!) Also, in the past few years it has suddenly became a God-given right to own a home and a car. Which also further perpetuations the impending doom.
All of the entitlements listed in the previous paragraph can now be classified as UNFUNDED liabilities. It has been estimated that within in ten years both Social Security and Medicare will be bankrupt. Estimates have been as high as 100 trillion ($100,000 billion) dollars over the horizon! What is the problem here?
The problem is fiat currency. The U.S., since the establishment of the Federal Reserve in 1913 and the complete abandonment of the Gold Standard, has been allowed to print money to NO END.
Instead of writing a book on the subjects of the Federal Reserve and the Gold standard, I will simply and quickly summarize it for you. Because of these two key items, The U.S. government has been allowed to spend with no limits, print as much money as they need, and have unlimited mobility to institute entitlements and fund wars without the limits of a backed monetary standard.
This is important to understand in the context of today’s problems. The reason the U.S. has gotten away with it UNTIL today is for the very reasons I have already mentioned. The U.S. has had the privilege of being the world’s reserve currency and therefore being allowed this “Wiggle Room” in terms of its monetary policy. The reason we have been able to contain the problem until today is because other nations such as China have been buying U.S. debt.
So what do I mean we are a 70% consumption based economy? What do I mean when I say we have massive trade deficits? What I mean is we have NO REAL WEALTH. By selling debt to the Chinese, we are selling our FAKE money exchange for their REAL WEALTH. They have real wealth because THEY PRODUCE. They do not have trade deficits, they HAVE massive exports, etc.
So now what are the forecasts? What is happening is the world is now waking up. The world now realizes that the United States is playing games and will never be able to repay all the borrowed and printed money. If you have read the news the last few weeks, you will see that other nations are FED up (no pun) with the United States and what we are doing with our money. They realize we are ripping everyone off.
People often say, “The world needs us because WE CONSUME their goods!”. Let me point you to an quick few paragraph article of why this is a lie.
http://www.theviewfromthepeak.net/newsblog/2007/03/crash-proof-peter-schiff.html
Quickly though: 5 individuals on an Island. 4 Asians.1 American. 4 Asians do all the work. The America does nothing all day and at night consumes 70% of what the other Asians do and they consumer what remains. Problem? They do not need the America to survive! Once they CUT HIM OUT, they will have more for themselves!NOW. THE MOMENT OF TRUTH.
My prediction: Just as we have seen in the news, the world will continue to cry out at the United States for their idiot monetary policy. These “outcries” will continue to have influence on the Chinese and other Asian Governments that buy U.S. debt and allow our party to continue. The diminishing confidence will lead to a major event, perhaps the Chinese refusal to buy more of our debt or the Middle East decoupling from the dollar for Oil Reserves. Once this major event takes place a chain reaction of events will take place which will lead to a total unpegging from our dollar.
This will now force the U.S. to swallow the bad medicine- the very medicine that has been only worsening from our continued irresponsibility. We will experience an ECONOMIC ARMMAGGEDON lead by hyperinflation which will destroy the value of dollar making the prices of goods skyrocket to unheard levels.
Once the U.S. lays down its sword and must face Wrath. I predict anarchy. I think we will have massive street violence. Because of our worthless paper money in our bank accounts and pockets, Americans will be scrambling to attain anything of inherit value to trade for life essentials (food, water, shelter, clothing, security).Black Berries, Iphones, Xbox 360s, and Laptops will be of no use other than fancy doorstops. The violence that will ensue will include home burglaries and personal theft. Starving individuals looking to provide for themselves and their families will resort any means necessary to provide these “life essentials” I mention.
IN CONCLUSION
In times of peril, individuals often look to surrender more of their personal liberty and look to BIG BROTHER government for answers. I suggest you immediately abolish this foolish mindset. Why does it make sense to look for security from the very individuals that pushed you down the black hole in the first place? I recommend now you cease your consuming habits and become to live within your means as MUCH AS POSSIBLE.I hope people will read this and comment. If you read this, please leave a comment. If I am able to get a good amount of responses, It will persuade me to immediately write a follow up. Like I said before, I am looking to protect you. In my next column I will layout steps you as an individual, especially broke college students, can do to protect yourself for the coming disaster. Please comment! We need each other more than ever! Americans have fought and won some of the toughest battles the world has ever seen. This will be the Ultimate test of that “Strength”. Do not blow each other off.
Brian