Over the Memorial Day weekend there were a lot of issues discussed among family and friends–the sports scores of the local baseball teams, the Hockey playoffs, the NBA playoffs, how well the respective NFL teams did in the recent draft, the latest summer box office films and the general emptiness of economic purchases. But the extent of discussion about what is really important, topics like politics and philosophy, only general rumblings about President Obama made the cut. Over the weekend, my father-in-law turned 70 and we wanted to treat him to the movie Godzilla. Along the way to the theater, from his very affluent neighborhood and the surrounding area which is well above average in per capita income—economic activity was vibrant. Restaurants were full, stores were packed, and the movie house was crowded—there was no trace of the generally terrible economic news which is about to hit America. All seemed well.
After the movie there was a very nice party for my father-in-law who loved the Godzilla film and was enjoying his birthday to a live blue grass band hired for his personal entertainment. I watched the party goers closely, mostly avoiding the devastating news that the American economy is nowhere near as good as it appeared. There is trouble coming, which is in evidence by the fact that the news no longer covers the terrible events of Greece, Italy, or Cyprus, because there is no end in sight for them to prosper economically. Their financial crises did not go away—they just stopped being covered—and the same fiscal cliff is headed for our shores in North America.
I thought of an article I had just read by Brandon Smith of Alt-Market.com which did a good job of painting a picture of how bad the economy actually is caused in part by the Federal Reserve quantitative easing practices. While reading it I thought of my father-in-law who has been fiscally very successful and came a long way in his life, and he has seen it all. He saw the post World-War II boom, the communist years of the 60s, the economic destruction of the 70s, the vibrancy of the 80s, and 90s, and the sharp decline of American economic power since the terrorist acts of 9/11 occurred in 2001. It would be important to note that the intent of those attacks was to shatter not just the symbol of American capitalism—The World Trade Center—but the actual economy itself. Now $17 trillion dollars in deficit spending later the picture is clear—America will not recover easily from this economic tsunami. When one does the math, if America spent all of the profit of its GDP for the next 20 years on reducing the deficit—it would not succeed. The enemies of America know it. Most people are vaguely aware of it—but they avoid naming it as thought by refusing to acknowledge its existence, a different reality will present itself. But it won’t. To illustrate this condition I refer you dear reader to Brandon Smith’s article—at least a very relevant portion of it. The whole article can be seen at the link below.
On the surface, the economic atmosphere of the U.S. has appeared rather calm and uneventful. Stocks are up, employment isn’t great but jobs aren’t collapsing into the void (at least not openly), and the U.S. dollar seems to be going strong. Peel away the thin veneer, however, and a different financial horror show is revealed.
U.S. stocks have enjoyed unprecedented crash protection due to a steady infusion of fiat money from the Federal Reserve known as quantitative easing. With the advent of the “taper”, QE is now swiftly coming to a close (as is evident in the overall reduction in treasury market purchases), and is slated to end by this fall, if not sooner.
Employment has been boosted only in statistical presentation, and not in reality. The Labor Department’s creative accounting of job numbers omits numerous factors, the most important being the issue of long-term unemployed. Millions of people who have been jobless for so long they no longer qualify for benefits are being removed from the rolls. This quiet catastrophe has the side bonus of making it appear as though unemployment is going down.
U.S. Treasury bonds, and by extension the dollar, have also stayed afloat due to the river of stimulus being introduced by the Federal Reserve. That same river, through QE, is now drying up.
While many people assume that the stimulus measures of the Fed are driven by a desire to save our economy and currency, I see instead a concerted program of destabilization which is meant to bring about the eventual demise of our nation’s fiscal infrastructure. What some might call “kicking the can down the road,” I call deliberately stretching the country thin over time, so that any indirect crisis can be used as a trigger event to bring the ceiling crashing down.
In the past several months, the Fed taper of QE and subsequently U.S. bond buying has coincided with steep declines in purchases by China, a dump of one-fifth of holdings by Russia, and an overall decline in new purchases of U.S. dollars for FOREX reserves.
With the Ukraine crisis now escalating to fever pitch, BRIC nations are openly discussing the probability of “de-dollarization” in international summits, and the ultimate dumping of the dollar as the world reserve currency.
The U.S. is in desperate need of a benefactor to purchase its ever rising debt and keep the system running. Strangely, a buyer with apparently bottomless pockets has arrived to pick up the slack that the Fed and the BRICS are leaving behind. But, who is this buyer?
At first glance, it appears to be the tiny nation of Belgium.
While foreign investment in the U.S. has sharply declined since March, Belgium has quickly become the third largest buyer of Treasury bonds, just behind China and Japan, purchasing more than $200 billion in securities in the past five months, adding to a total stash of around $340 billion.
http://beforeitsnews.com/economy/2014/05/who-is-the-new-secret-buyer-of-u-s-debt-2-2625144.html
The article may be dismissed by Keynesian economists as the work of conspiracy theorists but it is actually quite true in content. Power is being divided up throughout the world and America is not being considered a player in that effort. Rather the very rich, who already know of the coming crises have mostly sold off their investments in America so they can capitalize off its fall from power. Belgium, as a small country is suddenly interested in American Treasury bonds? This is no accident.
Sadness washed over me at the event for my father-in-law as the sun set on the horizon and the blue grass music played on and darkness shrouded everyone listening, and talking. The metaphor was a proper one, and soon in America what used to be clear in the light of day and taken for granted would be cloaked in darkness and difficult to see without assistance. The economic vitality that virtually everyone was taking for granted was coming to an end, and nobody wanted to know it—even though they can feel the chill in the air of a coming darkness in American history.
The economic collapse is a military strategy, not a purely fiscal accident—and every American celebrating Memorial Day should see it for the threat that it is. This attack is not with tanks and troops, but of quantitative easing and Treasury bonds—sold to Belgium of all places—and the chanting fools of old Europe who wish once again to take their homeland and make it the most relevant place on earth—once America is out-of-the-way and no longer in charge.
Thomas Jefferson said in 1802:
“I believe that banking institutions are more dangerous to our liberties than standing armies.
If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property – until their children wake-up homeless on the continent their fathers conquered.”
Rich Hoffman
The Overmanwarrior 