Where Is The Debt Roller Coaster Taking Us?
What is the most likely outcome of the conditions described above? The vital factor will be the continued Federal Reserve policy of fiat bailouts as a “counterbalance” to the evolving debt crisis.
As is clearly explored in the Dickens novel we discussed earlier, staving off the effects of debt by creating more debt is a temporary solution that only leads to greater calamity down the road. Anyone who believes that fiat inflation actually “cancels out” debt instability is going to find themselves sorely disappointed. At bottom, government created stimulus is not a solution to corporate engineered debt burdens, but a reallocation of debt away from banks and into the laps of the American taxpayer. The Federal Reserve and our own Treasury have not paid off anything. They merely shifted the responsibility of payment away from the banks that created the problem, and handed that responsibility to us. On top of this, they have also set the dollar up for a crushing blow of devaluation. Here is where the prison bars enclose…
If our historic debt is not being diminished, but only moved around while it expands, then this means that eventually our credit worthiness will come into question. In fact, it already has. Foreign investment in long term Treasuries has dwindled. Our own central bank is now the largest holder of U.S. debt, surpassing even China (Note: this news has so far been ignored by almost all mainstream outlets):
http://www.ft.com/cms/s/120372fc-2e48-…
So, the question of debt default turns from theoretical to quite imperative. If the Federal Reserve continues buying our debt with fiat, it means that the effects of the debt will only be delayed, the dollar will be dropped as the world reserve currency, and hyperinflation is a certainty. If they do not continue buying, then our government defaults, the country’s financial infrastructure ceases to exist, the dollar loses its world reserve status, and hyperinflation is a certainty. The banking elites haven’t just erected a prison, they’ve tossed us in Alcatraz!
The battle over yet another increase of the debt ceiling has obscured the fact that the debt has already done all the damage it needs to do. Freezing the ceiling in place becomes a battle of principle, and an important one, but it would in no way stop the dysfunction and chaos to come. At best, it might shorten the duration of the disaster by a few years. The important thing to remember is that government intervention will only incur greater loss. There is no easy way out, no magic shortcut, no last minute brilliant idea that will wrap up this mess. Years of hard work, determination, honesty, and sacrifice are ahead of us.
Inflation will be the buzzword of 2011. Endless debt facilitates endless Keynesian liquidity. Expect to see commodities double once again this year.
Household debt will probably level off through 2011, as more Americans abandon their credit habits and make more concerted efforts to save. In 2009, Visa lost 11% of its credit use, while MasterCard lost 22%. Over 8 million consumers have stopped using credit cards altogether since the end of 2009:
http://abcnews.go.com/Business/holiday-shopping-americans-cut-back-credit-card/story?id=12367547
Bank lending is still tight as creditors raise the requirements necessary to receive FHA (Federal Housing Administration) mortgages:
http://www.bloomberg.com/news/2010-11-17/home-ownership-gets-harder-for-americans-as-lenders-restrict-fha-mortgages.html
Will credit use and debt based consumption ever
return to levels similar to 2006? Not a chance. One
might predict then that savings will rise
dramatically as credit use falls, but this too is
unlikely. Why? Because over the next year Americans
will be spending far more on essential goods due to
inflation than they ever have before. Whatever
savings they would have accrued will be eaten up by
the relentless spike in commodity prices. The term
used for the combination of chronic debt, low job
growth, and burgeoning inflation, is “stagflation”.
I honestly can’t think of a worse situation than
being subject to exploding costs in light of a
dilapidated standard of living. As Dickens points
out plainly in ‘Little Dorrit’, how can a man be
expected to settle his obligations when he is
imprisoned for them?
Breaking The Cycle In The Midst Of Global Strife
Why after thirty years under the despotic rule of the Hosni Mubarak regime did the Egyptian people suddenly decide to revolt? Why now? The MSM will field a number of political tales, but the key to most popular uprisings, especially in the Middle East, has been the lack of necessities. The last time Egypt saw an uprising of this magnitude was during the Bread Riots of 1977, when the IMF terminated state subsidies of basic foodstuffs. Is it any wonder that turmoil has developed so quickly in the region as grain prices double? This is the devastating power of debt, and the so called “solutions” which merely perpetuate debt.
Tunisia, Egypt, and Yemen, are only the beginning. The sting of inflation will be unbearable as austerity measures take hold in Europe, and the potential for riots in Greece, Spain, Portugal, and Italy looms large. The most volatile environment on the planet to date, however, is the United States, which, as we have shown in previous articles, is being dismantled deliberately and viciously in preparation for IMF regulation and centralization. Today, the IMF is stalking Egypt, ready to pounce as the nation goes mad. Tomorrow, it will be us. I will be very surprised if we are not hearing about IMF intervention in the U.S. economy and the dollar by the end of this year, offering more debt, and more unaccountable governance.
The secret to breaking the circle of debt is to adopt a policy of decentralization, and self sufficiency. To take back control of our local commerce and to establish micro-economies with self contained methods of trade. Debt must be removed from the equation altogether, and systems protected by flexibility and redundancy must be applied. Savings and meaningful production would have to take the place of endless spending and outsourcing. The claustrophobic nurse-maid philosophies of globalism would have to be cast aside and replaced with goals of independence and self reliance. By cutting our dependency on the corrupt establishment, we sever its ability to feed off of us. By building a better system, we make the faulty one obsolete. Whether or not we throw off the trappings of the debt machine is entirely up to us.
Two very important steps are required; the realization that debt is not the only way, and, the realization that debt is the worst way. Prosperity is not achieved at the expense of the future. The society that finally takes this fact to heart will accomplish incredible things indeed…
Read the Entire article at Neithercorp Press
Where Is The Debt Roller Coaster Taking Us?
What is the most likely outcome of the conditions described above? The vital factor will be the continued Federal Reserve policy of fiat bailouts as a “counterbalance” to the evolving debt crisis.
As is clearly explored in the Dickens novel we discussed earlier, staving off the effects of debt by creating more debt is a temporary solution that only leads to greater calamity down the road. Anyone who believes that fiat inflation actually “cancels out” debt instability is going to find themselves sorely disappointed. At bottom, government created stimulus is not a solution to corporate engineered debt burdens, but a reallocation of debt away from banks and into the laps of the American taxpayer. The Federal Reserve and our own Treasury have not paid off anything. They merely shifted the responsibility of payment away from the banks that created the problem, and handed that responsibility to us. On top of this, they have also set the dollar up for a crushing blow of devaluation. Here is where the prison bars enclose…
If our historic debt is not being diminished, but only moved around while it expands, then this means that eventually our credit worthiness will come into question. In fact, it already has. Foreign investment in long term Treasuries has dwindled. Our own central bank is now the largest holder of U.S. debt, surpassing even China (Note: this news has so far been ignored by almost all mainstream outlets):
http://www.ft.com/cms/s/120372fc-2e48-…
So, the question of debt default turns from theoretical to quite imperative. If the Federal Reserve continues buying our debt with fiat, it means that the effects of the debt will only be delayed, the dollar will be dropped as the world reserve currency, and hyperinflation is a certainty. If they do not continue buying, then our government defaults, the country’s financial infrastructure ceases to exist, the dollar loses its world reserve status, and hyperinflation is a certainty. The banking elites haven’t just erected a prison, they’ve tossed us in Alcatraz!
The battle over yet another increase of the debt ceiling has obscured the fact that the debt has already done all the damage it needs to do. Freezing the ceiling in place becomes a battle of principle, and an important one, but it would in no way stop the dysfunction and chaos to come. At best, it might shorten the duration of the disaster by a few years. The important thing to remember is that government intervention will only incur greater loss. There is no easy way out, no magic shortcut, no last minute brilliant idea that will wrap up this mess. Years of hard work, determination, honesty, and sacrifice are ahead of us.
Inflation will be the buzzword of 2011. Endless debt facilitates endless Keynesian liquidity. Expect to see commodities double once again this year.
Household debt will probably level off through 2011, as more Americans abandon their credit habits and make more concerted efforts to save. In 2009, Visa lost 11% of its credit use, while MasterCard lost 22%. Over 8 million consumers have stopped using credit cards altogether since the end of 2009:
http://abcnews.go.com/Business/holiday-shopping-americans-cut-back-credit-card/story?id=12367547
Bank lending is still tight as creditors raise the requirements necessary to receive FHA (Federal Housing Administration) mortgages:
http://www.bloomberg.com/news/2010-11-17/home-ownership-gets-harder-for-americans-as-lenders-restrict-fha-mortgages.html
Will credit use and debt based
consumption ever return to
levels similar to 2006? Not a
chance. One might predict then
that savings will rise
dramatically as credit use
falls, but this too is unlikely.
Why? Because over the next year
Americans will be spending far
more on essential goods due to
inflation than they ever have
before. Whatever savings they
would have accrued will be eaten
up by the relentless spike in
commodity prices. The term used
for the combination of chronic
debt, low job growth, and
burgeoning inflation, is
“stagflation”. I honestly can’t
think of a worse situation than
being subject to exploding costs
in light of a dilapidated
standard of living. As Dickens
points out plainly in ‘Little
Dorrit’, how can a man be
expected to settle his
obligations when he is
imprisoned for them?
Breaking The Cycle In The Midst
Of Global Strife
Why after thirty years under the despotic rule of the Hosni Mubarak regime did the Egyptian people suddenly decide to revolt? Why now? The MSM will field a number of political tales, but the key to most popular uprisings, especially in the Middle East, has been the lack of necessities. The last time Egypt saw an uprising of this magnitude was during the Bread Riots of 1977, when the IMF terminated state subsidies of basic foodstuffs. Is it any wonder that turmoil has developed so quickly in the region as grain prices double? This is the devastating power of debt, and the so called “solutions” which merely perpetuate debt.
Tunisia, Egypt, and Yemen, are only the beginning. The sting of inflation will be unbearable as austerity measures take hold in Europe, and the potential for riots in Greece, Spain, Portugal, and Italy looms large. The most volatile environment on the planet to date, however, is the United States, which, as we have shown in previous articles, is being dismantled deliberately and viciously in preparation for IMF regulation and centralization. Today, the IMF is stalking Egypt, ready to pounce as the nation goes mad. Tomorrow, it will be us. I will be very surprised if we are not hearing about IMF intervention in the U.S. economy and the dollar by the end of this year, offering more debt, and more unaccountable governance.
The secret to breaking the circle of debt is to adopt a policy of decentralization, and self sufficiency. To take back control of our local commerce and to establish micro-economies with self contained methods of trade. Debt must be removed from the equation altogether, and systems protected by flexibility and redundancy must be applied. Savings and meaningful production would have to take the place of endless spending and outsourcing. The claustrophobic nurse-maid philosophies of globalism would have to be cast aside and replaced with goals of independence and self reliance. By cutting our dependency on the corrupt establishment, we sever its ability to feed off of us. By building a better system, we make the faulty one obsolete. Whether or not we throw off the trappings of the debt machine is entirely up to us.
Two very important steps are required; the realization that debt is not the only way, and, the realization that debt is the worst way. Prosperity is not achieved at the expense of the future. The society that finally takes this fact to heart will accomplish incredible things indeed…