One Last Look At The Real Economy Before It Implodes Part 6 of 6

April 25, 2015

One Last Look At The Real Economy Before It Implodes Part 6 of 6

by Brandon Smith

(Editor’s Note: Here is the final installment.)

One Last Look Part 6 of 6


One Last Look At The Real Economy Before It Implodes – Part 5 of 6

April 18, 2015

One Last Look At The Real Economy Before It Implodes – Part 5 of 6

by Brandon Smith

(Editor’s Note: Brandon surprised me! He has two more installments of this series! Here is Number Five. I do not agree with all of Brandon’s conclusions, but he does understand that the American economy…as well as the US Government…is on a headlong rush to the cliff’s edge.)

One Last Look Part Five


Happy About The Election Results?

November 7, 2012

By Russell D. Longcore

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I am happy…but not for any reason you may think. Happiness depends upon your perspective and ultimate goals. Cause and effect issues here. If an unexpected event causes other events to happen that move you toward your ultimate goals, it’s good. More later.

Mr. Obama will be with us for another four years. Deal with it.

The Republican Party allowed Willard “Mitt” Romney to buy his way onto the Presidential ticket. And that is as it should be. As 20th Century humorist Will Rogers said:

“We have the best politicians money can buy.”
“The short memory of voters is what keeps our politicians in office.”
“Be thankful we’re not getting all the government we’re paying for.”

CONGRESS has made the rules whereby campaigns are run nowadays. Therefore, when smart guys figure out how to game the system, they should do it. Mitt is a smart guy.

No one in America has fronted the ridiculous notion that Mitt was the best man that the Republicans could find to be the presidential candidate. He just outspent and outlasted the others. And his campaign staff, in league with the Republican National Committee, blackballed Ron Paul.

No one in America has fronted the ridiculous notion that Americans rejected Mitt as president because they rejected his core beliefs. That is because nobody knows what Romney’s core beliefs are. He was the Chameleon Candidate. Reminded me of the 80s hit record “My Obsession” by Animotion. In the chorus, the singer sings, “who do you want me to be to make you sleep with me?” Mitt would be anything you needed to get elected. Remember he ran for Senate in 1994. He’s been doing anything he can to get elected to some office for 18 years. He got the governorship in 2002, only serving one term.

The Republicans made a mildly compelling case that America should fire Mr. Obama. However, they did not make a compelling case that America should hire Mr. Romney.

Think about the HUGE thing that Romney AVOIDED in his campaign…Obamacare. Had he solemnly vowed to abolish Obamacare as President, he probably would have won. Even though he invented Romneycare in Massachusetts, he could have made a convincing case that what works on a state level does not translate to 315 million people…especially when Washington runs it. Or, if his ego wasn’t so enormous, he could have repudiated it.

Think about Mr. Obama’s own words about his “one-term” presidency. Mitt should have beat Barry about the head and shoulders with that for months. But nary a word was heard.

Think about the debates. Romney pulled his punches over and over, refusing to go for the jugular on issues like the Benghazi Embassy deaths.

In Texas Hold-’em parlance…Mitt was not “all in.” He was not willing to get some blood on his hands, so to speak.

American politics is a blood sport. Republicans are not willing to play rough. In NASCAR there is a saying…”Rubbin’ is Racin’.” A NASCAR driver has to be willing to exchange a little paint with other cars or he will not win. But Republicans are not willing to get mean or use a little saucy language. They are not willing to get up in somebody’s face and raise their voices. Give me a candidate who would tell a reporter to “fuck off’ when he asked a stupid question. Give me a candidate who would use some four-letter words in a speech. And give me a candidate who can speak without a teleprompter…a candidate who had such deeply-ingrained core beliefs that he could defend them on the fly. Remember Ross Perot? There was a guy who didn’t put up with a bunch of crap. Scrappy little dude that cost George HW Bush the race against Bill Clinton.

Democrats are always willing to get down in the mud and mix it up. I’m not saying it’s right…just saying that if you know that the rules of the game are that there really are no rules, the one who wants it most usually wins. Barry was fighting for his political legacy and his place in history. Mitt Romney was running to enhance his resume. Who wanted it most?

But keep in mind that Romney is the guy that got beat by McCain who got beat by Obama in 2008. He got the Runner-up trophy in 2008. This year, he gets the Miss Congeniality tiara. Romney is only the best that the oligarchy could find to do their bidding. It is over for Mr. Romney and his quest for the White House.

Apparently, he is not The One.

The big joke is that The One doesn’t exist. Obama is not The One. He is merely The Current One.

Both men are textbook Sociopaths.

So, what are you going to do over the next four years? You may not be happy, but are you going to just bitch about it, or are you going to take control of your own life? Don’t you think that NOW is a good time to seriously consider secession?

In military operations, there is a strategy known as the “OODA loop.” It is one of those famous military acronyms like AWOL, FUBAR and SNAFU (Google them). OODA is Observe, Orient, Decide and Act.

Let us Observe:

• The collapse of the American Dollar the American economy, and subsequently the collapse of the world economic system that is built upon the Dollar, will continue apace. But the pace might quicken. I do not think that Romney would have slowed it, even though he said he would. But it will certainly move ahead now.
• Washington will continue to devour privacy and individual liberties a bite at a time. Or, now that Obama has nothing to lose, the bites might get bigger.
• The Federal Reserve will continue with QEIII in their clueless desperation, intending to kick the can down the road just a little farther on the calendar.
• The Eurozone will continue its slow-motion collapse.
• Washington will continue to foment a shooting war in the Middle East.
• China will continue to very quietly produce and buy gold now that they have the world’s largest gold reserves.
• China will continue to very quietly go around the world and negotiate shrewd trade deals with other nations.
• China, Brazil, Russia, India and South Africa will continue to work toward a new world reserve currency, with China’s money as lead dog.
• China will continue to offer financing to those other nations in the renminbi, their currency. The other nations will gladly accept it.
• When the American economy collapses, and hyperinflation rages, there will be widespread chaos and blood in the streets of most cities.

Then comes Orient:

Orientation usually is done based upon our cultural traditions and experiences… our preconceptions and world view. Orientation is the pair of glasses we wear and through which we see our world. Only this time, very little of our old world view will be true any more. Orientation will have been stood on its head. We must develop a new, functional world view seemingly overnight. Most will not be up to the task. Compare this to the Pentagon. They are still fighting the last big war. But warfare has gone into its Fourth Generation orientation. The days of carriers, battleships and submarines are past. They are stuck in the Third Generation.

Secession serves as a perfect new world view…if you can call it “new.”

Next is Decide:

The best player in an OODA loop moves at a faster tempo than his adversaries, thereby getting into their OODA loop and f**king it up. It creates confusion and a perception of unpredictability about the best player. It also fits perfectly in the strategies proffered by Sun Tzu in the legendary book The Art of War.

Once you see the inevitable progression of events that is going to happen, and come to realize that Secession is the only way to restore individual liberty and property rights to North America, a decision should be made whether or not to participate. Here is a thought…at some point, crossing the Mississippi River westbound may be a problem. You might want to do that before TSHTF. Thought 2: if you want to expatriate, you might want to do that before TSHTF.

Finally, Action.

Action involves testing what works and what doesn’t. Once you act, you begin the OODA loop all over again. Secession action might be moving your family to a secession-friendly state and getting involved in a secessionist group. Expatriation takes a little more planning.

Think. Use your brain. Do not let anyone tell you how to think. Question ALL authority. Free Your Mind.

Secession is the only hope for humanity. Who will be first?

DumpDC. Six Letters That Will Change History.

© Copyright 2012, Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.


Flash Editorials March 10, 2012

March 10, 2012

By Russell D. Longcore

This has been a news-filled week!

To view this article as an entertaining animated video, click below.

The Nation I: Breitbart’s revenge: On Wednesday night on the Sean Hannity Show on Fox, the Obama video footage was shown. It shows Barry on the Harvard University campus, speaking to a crowd of students, asking the students to “open up your hearts and minds to Professor Derek A. Bell.” Who is that? Bell…now deceased…was the first tenured black professor at Harvard, and was a Professor of Law. He was the leading American proponent of the Critical Race Theory, which basically holds that white people have systematically oppressed blacks and Latinos over centuries. His writings moved radical thought and led to the recent aberration of criminal law into “hate speech” and “hate crimes.” That’s YOUR president, folks. Derek Bell’s philosophy was integral to Obama’s “hope and change” and “fundamental transformation of America.”

The Nation II: On Super Tuesday, Romney won six of nine contests. There was outrageous vote counting fraud, just like in every other caucus or primary. But our boy Ron Paul came in second in Virginia and North Dakota. One question that comes to my mind is: What is Ron Paul going to do with all the hearts and minds he has won during this pre-election circus? There are tens of thousands of civilians and soldiers that did not vote in the primaries and caucuses, yet have been brought over to what I call “retro-conservatism.” Watch for an article about this topic at DumpDC next week. I have a suggestion.

The Nation III: The Federal Reserve now owns more United States Treasury bonds (debt) than China. Think about what a mega-Ponzi scheme this is. The very entity that prints greenback dollars…creating money from paper and ink…prints up a few hundred billion and hands them to the US Treasury to buy debt, thereby propping up the government. It’s the highest form of counterfeiting ever witnessed in human history. The tragic part of this story is that the Fed cannot stop printing and buying. If other nations around the planet want to dump DC debt, the Fed will be forced to buy it so that the bond market does not crash. Get ready for hyperinflation, ladies and gentlemen. It’s coming to a wallet near you.

International I: What would a Nobel Peace Prize winner do in the Middle East? Especially if he were President of the USA and serious about avoiding a war with Iran? He would call a summit between himself, PM Bibi Netanyahu of Israel, Iman Khamanei and President Ahmedinajad of Iran in a neutral place like Basel, Switzerland. At that summit, he would broker a peace agreement. Part of that peace agreement would be to look Bibi in the eye and say, “On the day that you make any military moves against Iran in any manner, I will cancel ALL financial and military aid of every kind from the USA to Israel…forever. Pre-emptive air strikes are not defense…they are offense. If you still choose to make war against Iran, I will tear up all treaties with Israel and you are on your own.” That is what a Peace Prize winner who actually wanted to live up to the Prize would do.

International II: Quick quiz: Which nation has the third largest population of Jews on planet Earth? The US is #1. Israel is #2. Give up? It’s Iran. If Iran was such a threat to Israel, why do the Jews in Iran live in peace with no persecution? There has been a Jewish community in Iran since the 6th century…BC!! Oh…by the way. If Israel starts raining bombs down on Iran, it will likely be killing its own Jewish people who live there. Collateral damage??

International III: Both Germany and Switzerland have begun the process of bringing their gold reserves back to their own soil. Where do you think they have been keeping their gold? In the basement of the Federal Reserve Bank of New York. But who knows if the gold is actually still there? By the way…Switzerland has always had this legendary reputation for secrecy and security for money. Why the hell would they send their sovereign gold to America? This is going to get interesting!

International IV: The Financial Times ran a story this week stating that China has offered loans to the other BRIC nations…Brazil, Russia and India…denominated in the renminbi, China’s money. This is a HUGE move away from the world reserve currency, the US Dollar. The four BRIC nations represent the strongest economies on the planet, and almost 3 Billion people out of the 7 Billion on earth. Dear readers, when the dollar is not reserve anymore, look for massive hyperinflation. We will make Zimbabwe’s experience look like kindergarten.

International V: Vladimir Putin was elected President of Russia this week for a six-year term. Expect little to change, since Putin was effectively running the country while he was Prime Minister. But he will preside over the fall of the United States. Ironic, isn’t it? In 1989, the Soviet Union imploded from many of the same things infecting America right now…socialism being one of them. Planned economies and imperialism don’t work on either side of the Atlantic. 23 years later, it’s America’s turn to implode. Only this time…we’re going to show ‘em how to do it RIGHT. Remember…the Ruble wasn’t the world reserve currency when the USSR tanked.

Shameless Plug: Nearly everyone over 16 buys insurance. But is it a good idea to switch companies? Are any of the TV commercials by insurance companies telling the truth about switching? How often should you shop for new coverage and lower rates? Does loyalty to one particular company matter anymore? How do you find the best value in insurance? A new way to shop is online. But low price is not everything. Learn to think like an insurance adjuster, not like an insurance agent. To learn more and get FREE quotes online, go to: www.InsuranceQuoteHQ.com

Business: We read today that certain executives of MF Global, currently in bankruptcy, are actually going to get bonuses this year. The Court actually approved the bonuses, said to be in the millions. Remember that MF Global embezzled hundreds of millions from their own customers in wildly risky commodities investments. Men who should be in prison are getting bonuses. This is what is happening in high finance in 2012.

Economy I: The number of actual new unemployment claims under state programs, unadjusted, totaled 355,754 in the week ending March 3rd, a 31,000-claim increase over the week previous. The real unemployment rate, calculated by ShadowStats.com, a highly reliable DC Watchdog, is above 22% overall, and much higher in pockets of the country like Detroit. Looking for a job? North Dakota cannot find enough people to fill all the positions available. True unemployment in North Dakota is around 2%, which is statistically zero.

Economy II: Dr. Gary North’s articles can be found very regularly at LewRockwell.com. He has written a new book about money entitled “Banks, Bubbles and Busts.” If you click on that link, you can get a free copy. Do it. Do it NOW.

Sports: Peyton Manning seems to have become addicted to adoration. Why else would a superstar NFL quarterback who has had FOUR neck surgeries in the last TWO YEARS want to continue to play in the NFL? Manning has been paid perhaps a hundred millions dollars over his football career. Can you really imagine that his wife wants him to risk becoming a quadriplegic by playing again? Does anyone think that the opposing defensive squads would treat him softly so he doesn’t get another neck owwie? Apparently the owner of the Indianapolis Colts still has some common sense, and has placed Manning on waivers. Peyton…retire already. Don’t become pathetic…or become Christopher Reeve. You are magic in front of a TV camera. Take a color commentator’s job with a network for a couple million a year and relax. You’ll never buy a drink in another bar for the rest of your life.

Entertainment: The Hunger Games movie opens March 23rd at a theater near you. Based upon the books by Suzanne Collins, the movie is a loose update to the theme in the 1987 Schwartzenegger movie, ”Running Man.” In a post-collapse America, the nations goes buggy over the annual Hunger Games, in which only one contestant survives. The main character is a 16-year-old girl, Katniss Everdeen, who wins. (Spoiler Alert) I hear the film has a good anti-government message, so I’ll be seeing it first week it’s open.

DumpDC. Six Letters That Can Change History.

© Copyright 2012, Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.


Flash Editorials January 7, 2012

January 6, 2012

By Russell D. Longcore

The time for Secession is coming to your neighborhood very soon. Read on.

The Nation: The theater production called the Iowa Caucuses is over, with Romney winning by an eyelash over Rick “No Chance in Hell” Santorum. The vote tabulation was done in an undisclosed location, not in easy view of voters and vote watchers. Even though I suspect massive vote fraud, Ron Paul still got over 21%. The neocon leadership had been openly announcing for two weeks that they would not allow Ron Paul to win Iowa. They weren’t lying.

The Nation II: The right third party candidate could win this election. And I submit that the right candidate would be Ron Paul. It would be even better if he chose his son as his running mate, Senator Rand Paul. I also submit that any third party that does not offer a substantive anti-Washington choice would be a waste of time and money, and would likely place Obama back in the White House. But I believe that Ron Paul as a third party choice could beat both Republicans and Democrats. There is only one man that is an actual conservative, obey the Constitution, shrink the Federal government candidate available. Ron Paul. I believe that if a Ron Paul/Rand Paul candidacy emerged, they could take 35% in November 2012. The biggest problem is getting on the ballots. They could go write-in, but that’s unlikely. The state-to-state election rules have been written expressly to keep viable candidates out of the races. The other big challenge is the electoral college. Paul would have to take some pretty big states to win.

The Nation III: My prediction of the presidential election in November 2012 is that no matter which candidate the Republican Party chooses, the Republicans will win in an astonishing landslide. Barack Obama may not win in a single state. This will be the widest margin of victory in American history. In addition, a wave of Republicans will win in Congressional and Senate races. But don’t think for a moment that this will divert the American train from the economic derailment ahead. Just a different crew on the train when it crashes.

International: The insane nations of the West continue to threaten Iran with economic sanctions to punish Iran for having a nuclear fuel program. Of course, it’s OK for thirty other nations to have nuclear power reactors, and OK for 10 nations to already have nuclear weapons. Meanwhile, Iran sells the West oil and natural gas. All Iran must do is to stop delivering to the West and sell it to China. Oil prices will quickly hit $400 per barrel and a gallon of gasoline will cost $15-$20.

International II: A Japanese restauranteur paid over $736,000 for ONE single Blue Fin Tuna caught off the Japanese coast this week. This 592 pound fish, once cut up, could cost 5,000 Yen per slice.

Business: Ann Barnhardt posted articles this week that showed how the MF Global debacle is beginning to cause huge waves in the commodities markets. Here’s the problem. A grain farmer sells his harvest to a grain dealer who keeps it in a grain storage facility, like a grain elevator. The farmer gets paid as the grain sells over time. And the grain broker sells or buys futures contracts, which are nothing more than bets on what prices will be like in the future. If the broker is right, he makes money. But if he’s wrong, he’s got to settle a margin call. Recently, futures brokers are finding it tough to find those who will play the game. And if a broker goes bankrupt, the farmer cannot just back his truck up to the elevator door and take back his harvest. The stored grain becomes assets of the broker to be liquidated. The farmer stands at the back of the line of creditors, hold his warehouse receipts and futures contracts in one hand and his balls in the other.

MF Global was one gigantic futures bet that they lost. And MF was using its own customers’ segregated funds to bet with, which is worthy of jail time or death.

The commodities marketplace is so leveraged that it will not be able to meet margin calls (or collateral calls) if futures contracts implode. This is yet another financial market that is likely to collapse, and with its collapse, could trigger the complete economic collapse of the US economy and the Dollar. It is inevitable, friends. When the system is built on debt, fiat money and fractional reserve banking, those three things will take it down. Live by the sword, die by the sword.

Business II: More about MF Global. The Feds have turned the bankruptcy proceedings upside down, and set the stage for the confiscation of YOUR money in bank accounts, retirement accounts, and stock market accounts. In the MF bankruptcy, the Feds are placing the other big banks at the front of the line of creditors. The customers of MF who had their money invested through MF, and in escrow accounts, are not even being allowed to stand in line. That means the customer’s money is going to be used as assets to pay off the other big financial institutions, not the assets of the corporation. This sets a precedent previously unknown in Bankruptcy law. That also means that when the other big financial institutions fail, depositors and investors will have their assets confiscated to pay off other people’s debts. If you have paper assets in any financial instrument whatsoever, you now have a new market risk. That is the market risk of no Rule of Law. The very government agencies that you would run to for protection are now the agencies dedicated to screwing you. You will have no recourse. Your only option is to get your assets changed from paper to hard currency and take delivery at home or at a local depository.

Shameless Plug: Heard about SOPA yet? The Stop Online Piracy Act purports to protect intellectual property on the Internet, but critics say the bill will give the entertainment industry the power to censor your website if THEY deem that you are infringing somebody’s copyright. They could actually block your domain name or Internet Protocol (IP) address. Don’t expect your Congressman to read this bill. They don’t read bills anymore. Bob Parsons, Founder of GoDaddy.com, took an early position in favor of SOPA. But the “free market” spoke to him, and he pulled his support. We here at BigGenieDomains.com are completely opposed to SOPA, and we know that the law is unconstitutional. Come see us for all your domain registry and webhosting needs.

Economy: Friday night’s network news broadcasts were all a dither with the announcement that the unemployment rate had dropped to 8.5% just since last month. What they did not speak about is the 372,000 NEW unemployment claims in the last seven days, or the fact that the new unemployment claims numbers were above 400,000 WEEKLY for the last six months. Folks, if you do not see how stupid Washington thinks YOU ARE, you’re lying to yourself. These monthly unemployment numbers are entirely fabricated by this Administration. Remember that when an unemployed person’s weekly benefits expire, Washington stops counting them in the numbers. They also do not count persons who are unemployed but have part-time jobs. The REAL unemployment rate is above 18% nationally, and in certain places like Detroit, is FAR HIGHER.

Sports: I predict that the 2012 Superbowl will be the New Orleans Saints against the Green Bay Packers, and the Saints will win. But for this weekend…playoffs, Baby.

Entertainment: This weekend, I am filling out my final ballot for the Grammy Awards. Your editor has recorded 17 CDs on the Telarc label with the Atlanta Symphony Orchestra and Chorus. Five of those CDs have won Grammy Awards. I am a First Tenor in the Chorus. I joined the National Academy of Recording Arts and Sciences in 1998 after winning the first Grammy and have been voting for the Grammy Awards ever since. Some hobby, eh?

DumpDC. Six Letters That Can Change History.

© Copyright 2011, Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.


A Run on the United States Government

July 16, 2011

by Michael S. Rozeff

A “run” is a mass withdrawal of cash funds from a borrower. We are in the midst of a continuing worldwide credit crisis, punctuated by “runs” of varying prominence and publicity.

These runs are rational, not panics and not due to quirks of psychology. They occur when investors realize that their funds are endangered in an institution. They try to get them out before they lose them.

The danger comes when the institution no longer is getting cash inflows in sufficient amounts to pay off all its obligations. In businesses, this comes about through sour investments. In governments, it comes about through wasteful spending that fails to be recovered in tax revenues.

In the year 2008, we saw runs on major Wall Street investment banks, money market mutual funds, domestic banks and foreign banks. Now we are seeing runs on governments in Europe such as Greece and Portugal. Sovereign debts are being sold down hard as investors flee from them, converting their bonds into currency.

Three years from the 2008 credit crisis, the Federal Reserve is still providing massive credit to U.S. banks. This props them up against bank runs. Every so often, the FED extends credit to foreign central banks to prop them up so that they can prop up their financial institutions. These are stopgaps. All of this propping up depends on faith in one currency: the U.S. dollar.

Runs on various institutions often show up as a flight into short-term U.S. treasuries, i.e, the dollar. This is because the treasury market is deep.

Since the dollar is also a credit instrument, it is subject to credit risk. What happens when trust in the dollar drops sharply? What happens to all these financial institutions being propped up by creating dollars when trust in the dollar fails? That is when the financial system cracks wide open. That is when governments will be tempted to freeze funds in banks and prevent withdrawals the way that Argentina did. That is when the FED will be tempted to guarantee almost any institution against cash withdrawals, but when such a guarantee will be ignored. That is when gold will soar in price against the dollar and all other fiat currencies.

I am describing a run on the United States government. This will be a withdrawal of cash financing from the U.S. government. This is the ultimate credit crisis upheaval. This will be accompanied by mass social unrest and political reorganization. Stock and bond prices will fall sharply. The S & P 500 will lose at least 60 percent. Government bonds will yield at least 10 percent. This event is foreseeable. It is also avoidable, but not without much pain and travail. Hence, although foreseeable and avoidable, it may still occur.

Whether we like it or not, we are all currency speculators now. This is hardly a burden we can relish.

Whether or not a run on the United States government occurs is in the hands of its creditors. It depends on their trust in the dollar. Their trust depends on their understanding of America’s political economy.

Anyone who looks objectively at actions being taken by the U.S. government to bolster its credit or cause its credit to deteriorate has to reach a very negative conclusion. Why? Simply because the country’s leadership has been taking it downhill for decades on end. America is like a bright and fresh red apple in which rotting has been proceeding inexorably. The apple still has some edible portions but large parts of it are gone. The seeds need to be planted and a new tree grown.

Dagong Global Credit Ratings Co. Has 15 categories of ratings of sovereign debt (AAA, AA+, AA, AA-, A+, A, A-, BBB, BB+, BB, BB-, B+, B, B-, CCC.) The U.S. has a rating of A+. Dagong lowered it from AA- to A+ in November 2010 after the FED announced a new QE program.

In a remarkable statement made in mid-June 2011, Dagong’s president said “In our opinion, the United States has already been defaulting.” Dagong has spent $1 million to enter the U.S. market, but the SEC has so far turned it down.

The debate over the debt ceiling, like all Washington debates, is throwing off negative signals about U.S. credit. Obama is the key person. He is airing various proposals in public in press conferences. If he were serious about any of them, he’d be working closely with key Congressmen in private behind closed doors. He would not be trying to box in Republicans or embarrass them in public or score political points. He would have been working on controlling the budget long before this. He would have shown leadership on this long ago. One does not place multi-trillion dollar proposals on the table and expect them to be taken seriously, debated and acted upon within 2 or 3 weeks. Obama’s credibility on serious budget control is nil. The Republicans and even members of his own party have little reason to trust him when he paints himself as on a high road and willing to compromise. Any compromise will be on his terms to further his agenda. The debate, such as it is, can’t be taken seriously.

Did the near-miss of the 2008 credit crisis prod the U.S. government into corrective action? Sure, bailouts and wars and deficits and the absorption of Fannie Mae. The U.S. government has had three years to enact measures to revive the economy, clean out the bad debts in the banking system, and get the U.S. budget under control. Make that thirty years or more. At this moment, I can’t think of one good step it has taken. Look for yourself. Do I see healthcare in there as the centerpiece along with Wall Street reform? Don’t make me laugh.

The U.S. government has no credibility in terms of restoring America. The government is living off its past reputation, like a once great entertainer grown tired and going through the motions.

Under these conditions, trust in the dollar and all the other fiat currencies that are linked to the dollar will continue downwards.

Unless there is a change in these conditions, someday there will be a run on the United States government. I see nothing that suggests a change in these conditions.

Michael S. Rozeff is a retired Professor of Finance living in East Amherst, New York. He is the author of the free e-book Essays on American Empire: Liberty vs. Domination and the free e-book The U.S. Constitution and Money: Corruption and Decline.

Copyright © 2011 by LewRockwell.com.


America’s Oil Price Inflation Crisis is Yet to Come

July 5, 2011

courtesy The National Inflation Association

(Editor’s Note: We were also stunned when Barry (The One) dipped into the Strategic Oil Reserve for no apparent reason, at a time when world oil prices were dropping. Clearly, the US President has no clue whatsoever what supply and demand means. But he is certainly a Marxist, since he believes in government intrusion into the market. God help the USA when idiots are in the highest offices.)

NIA is very disturbed by President Obama’s decision to sell off oil from the U.S. emergency oil reserve, in an attempt to drive down oil prices. One week ago it was announced that the U.S. and other oil-consuming nations that are a part of the International Energy Agency (IEA) will begin releasing 60 million barrels of oil from their reserves, with 30 million barrels coming from the U.S. government-owned reserve. They hoped that by flooding the market with excess supply, they would cause an artificial forced liquidation of oil futures contract holders who bought using leverage.

The U.S. Strategic Petroleum Reserve is the world’s largest government-owned stockpile of emergency crude oil reserves and is maintained by the U.S. Department of Energy (DOE). It holds 727 million barrels of oil reserves at four different sites along the Gulf of Mexico. Considering that the U.S. is releasing 30 million barrels of oil from these reserves, we are reducing the size of our emergency reserve by 4.1%.

After Obama’s decision was announced on June 22nd, crude oil prices originally dipped as much as $5.71 per barrel from $95.41 per barrel down to a low of $89.70 per barrel on June 23rd. Oil prices declined slightly more during the next two trading days, reaching a low this past Monday of $89.61 per barrel and closing Monday at $90.61 per barrel. However, oil prices have surged $4.81 during the past three days and are currently $95.42 per barrel. Oil has recovered the entire dip that came after Obama’s decision was announced and is now a penny higher than before his announcement. Unlike 2008 when most oil futures contract holders were hedge funds using leverage in an attempt to make short-term profits, today most oil investors are much stronger hands who bought with cash, because the world is now flooded with dollars thanks to Federal Reserve Chairman Ben Bernanke.

It certainly wasn’t worth jeopardizing the homeland security of this country by reducing our emergency oil reserve by 4.1%, just to see a $4 reduction in oil prices that lasted for only 3 days. If the White House had any faith whatsoever in Bernanke’s assertion that rising oil prices are only transitory, there would be no reason to release 30 million barrels of oil from our emergency reserve. The rising oil prices we have experienced so far is far from an emergency. The emergency will come soon when the world turns its back on the U.S. dollar and we see a rapid decline in its purchasing power. The emergency will be here when the U.S. can no longer import oil from foreigners at any price due to hyperinflation, and we are forced to live with only the oil produced in this country.

At any time that they choose, China has the power to set off in our country the economic equivalent of a nuclear bomb. China can at any time announce that they are no longer going to buy U.S. treasuries, but they are going to take their $2 trillion in U.S. dollar reserves and use them to buy gold. The price of gold would double overnight, with the U.S. dollar immediately losing half of its purchasing power. The yuan would then skyrocket in purchasing power, automatically giving China the world’s largest economy with the Chinese GDP soaring past U.S. GDP. There would be a massive rush out of the U.S. dollar with our trading partners unwilling to export any oil to us.

The U.S. currently produces only 5.5 million barrels of oil per day, but consumes about 19.3 million barrels of oil per day, with total input into refineries of 14.7 million barrels of oil per day. This means the U.S. currently needs to import 9.2 million barrels of oil per day. U.S. commercial crude oil stockpiles are currently 359.5 million barrels or enough to last for 24 days without any domestic production. In the event of hyperinflation where the U.S. is cut off from oil imports, if we were forced to live off of our own oil production of 5.5 million barrels of oil per day, our commercial stockpiles would be gone in 39 days.

Without an emergency oil reserve, in the event of a major oil shortage due to hyperinflation, after a period of just 39 days, farmers won’t have enough oil to produce food, manufacturing plants won’t have enough oil to process and package food, and logistics companies won’t have enough oil to get finished food products into our supermarkets. This is why we have an emergency oil reserve, to prevent store shelves from becoming empty in our supermarkets due to a fuel shortage.

It takes 13 days for oil from our emergency reserve to begin entering the market and once it does, the most it can add to the market on a daily basis is 4.4 million barrels of oil. Therefore, in a crisis we must first use only our commercial stockpiles for 13 days, which would cause our commercial reserve to decline down to 239.9 million barrels of oil. Beginning on the 14th day of a crisis, 4.4 million barrels of oil per day can come into the market from our emergency reserve with 4.8 million barrels of oil per day entering the market from our commercial reserve.

After 50 additional days, our commercial reserve will be depleted and all that will be left is 507 million barrels of oil in our emergency reserve. That will give us 115 more days where we can withdraw 4.4 million barrels of oil per day, but the U.S. will be forced to reduce its daily oil consumption by 33% during those 115 days. This is based off of an emergency reserve of 727 million barrels of oil. With Obama this month prematurely releasing 30 million barrels of oil from our emergency reserve, we will actually only have 108 days where the U.S. will be able to consume 2/3 of its normal oil consumption, after 63 days of full oil consumption.

The solution to high oil prices is not more government intervention, but is less government interference in the free market. Instead of trying to manipulate oil prices down using artificial methods that will only last temporarily, the U.S. government should look at the root cause of rising oil prices. Oil is rising due to the U.S. government’s deficit spending and the Federal Reserve’s willingness to monetize our deficits and debts. If they want to see lower oil prices, the government should start out by eliminating the DOE. The DOE was created in 1977 to make the U.S. less dependent on oil imports. In 1977, we imported 44% of the oil used in U.S. refineries. Today, we import 63% of the oil used in U.S. refineries. Eliminating the DOE would save this country $27 billion annually.

Priced in terms of real money (gold), oil prices haven’t been rising at all. The Federal Reserve’s QE2, in which it printed $600 billion out of thin air, has created artificial demand for oil. If it wasn’t for the Federal Reserve working tirelessly trying to prevent a much needed recession, Americans would be cutting back on oil consumption and oil prices would be declining. If the free market was allowed to operate, falling oil prices would make it easier for Americans to live with the real unemployment rate currently at 22.3%.

It is important to spread the word about NIA to as many people as possible, as quickly as possible, if you want America to survive hyperinflation. Please tell everybody you know to become members of NIA for free immediately at: http://inflation.us