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On December 9, 2008, $65 billion of investor money
was at peace. On the fear / greed seesaw that is said to characterize
investor emotion, fear was down on the ground, while greed was high in the
sky, having all the fun. Greed was earning a steady 1% per month, making fear
look like an over-cautious fool. On December 10, 2008, six simple syllables
transformed that greed into lead, sending it crashing to earth while
launching fear to the moon.
The syllables were these: "It's all just one
big lie," and they were spoken by Bernard Madoff, in an admission that
his investment fund was nothing but an illusion and a fraud. They represented
a savage truth that would wipe out the savings of thousands, and toll the
bell for the rest of the world's investing public. Those six syllables
possessed powers far beyond their size. They forced $65,000,000,000.00 to
vanish back into the thin air from which they had materialized. Thin air has been
busy these days, as you will see.
The fact that a mere six syllables could cause a
multi-year, $65,000,000,000.00 fraud to implode is testament to the truth's
simplicity and power. The truth represents intellectual gravity, and sooner or
later, all things fall into its arms, whether they want to or not. The truth
does not need phalanxes of lobbyists, czars, public relations personnel,
pundits, pontificators, propagandists, pollsters, or politicians to express itself. Rather, it represents magnetic north, toward which
the human consciousness is naturally inclined. In the beginning of the
revelation of a truth, only those with courage can see it; in the end, it is
clear to everyone.
[Editorial note: In this article, we will express
numbers in digits. The government, financial "services" industry,
and television talking heads, to name a few, are currently bombarding society
with the terms "billions" and "trillions." The constant
repetition of these terms has given people a false sense of familiarity with
them, and made them appear "normal" and "everyday." These
colossal sums are anything but normal and everyday.
They are monsters that are tearing apart our fiscal, financial and monetary
systems. Those who casually throw around a trillion here and trillion there,
such as the steady parade of CNBC commentators, try to act as if they
understand the magnitude and implications of these sums, but they don't,
because the sums are incomprehensible and their systemic consequences are
totally unknowable and unpredictable. This is patently obvious given the
extreme financial crisis afflicting our nation and the world. Also, only
"two" of something, such as trillions, doesn't seem like very much
to most, whereas the written expression of that same number, in this case
$2,000,000,000,000.00, does.]
Compared to current fiscal, monetary, economic and
financial reality in the United States, Madoff's losses were modest, even
quaint. The USA's fiscal year 2009 federal loss (which is euphemized for the
masses by the term "deficit," which sounds technical, econometric,
and not nearly as bad as what it really is, a loss) will exceed
$2,000,000,000,000.00, more than 30 times Madoff's $65,000,000,000.00 loss. Keep
in mind that it took Madoff a professional lifetime to lose that money; the
United States will lose $2 trillion in just one year, and according to
official budget projections will continue losing hundreds of billions more,
annually, for decades to come. (More on this in a minute.)
The cost of the government's
financial-crisis-related bailouts and guarantees currently exceeds $13,500,000,000000.00, which is 200 times larger than the
Madoff scandal. And the nation's unfunded contingent liabilities, for
programs such as Social Security, Medicare, Medicaid, government pensions and
the like stand at $75,000,000,000,000.00, 1,150 times larger than Madoff's
fraud. They should let Madoff out of jail and put him in charge of the
Treasury. Maybe America could get some relief. Of course, these numbers make
laughable the government's righteous indignation and shocked disbelief that a
"Ponzi scheme!" as "large" as Madoff's could have
operated in the United States. The government's response is a textbook example
of the intelligence industry's attention-diverting technique known as
misdirection.
In June, 2009, the Congressional Budget Office, a
government entity, issued its "Long Term Budget Outlook" for the
period 2010 through 2080. The executive summary begins with these words: "Under
current law, the federal budget is on an unsustainable path -- meaning that
federal debt will continue to grow much faster than the economy over the long
run." While that statement might seem stark, it is the verbal equivalent
of morphine compared with the actual numbers in the CBO's long term budget
projection, which are nothing short of terrifying. According to the CBO, over
the next SEVENTY fiscal years, the federal government will NEVER have a
surplus. Rather, the United States will continue to suffer massive,
escalating, multi-hundred billion dollar losses ("deficits") each
and every year for the next SEVEN DECADES, which is when the budget
projection stops. Under both CBO budget scenarios (catastrophic and worse
than- catastrophic), losses in fiscal year 2080 will be the largest of the
entire 70 year series, meaning that the budget crisis will continue well
beyond 2080. In the best case, the 2080 loss will be 17.8% of GDP; in the
worst case, it will be 42.8% of GDP. To put this in context, the 2009 federal
budget loss is projected to be 11.9%, in this, the worst financial crisis in
American history. So 2080 will be 50 - 300% worse than now. Who the CBO
thinks will fund these trillions of dollars' worth of forever losses, they do
not say. Apparently, America is headed back to the Stone Age, thanks to our
profligate politicians and corrupt financial elite.
The United States has already reached the point
where it is arithmetically impossible for it to pay its debts or keep its
promises, unless it devalues its currency to the point where it impoverishes
its citizens and creates international financial chaos. And even devaluation
as a means of ending the country's budget nightmare will be difficult, given
that so many government programs have cost of living escalators, making
inflation a No Exit horror story. This is not subjective opinion, but rather
objective, arithmetic fact, now supported even by government agencies
themselves, such as the Congressional Budget Office. As John Williams of
shadowstats.com has observed, even if personal incomes were taxed at 100%,
the United States still could not pay its bills.
Astonishingly, given this fiscal context, the
government now proposes to effectively nationalize the nation's health care
industry, with projected additional losses of $1,000,000,000,000.00, a number
we can be 100% certain will prove to have been grossly understated.
Additionally, it has created $13,500,000,000,000.00+, so far, to bail out
Wall Street, at the direct expense of America's citizens, adding to the
nation's debt misery and hopelessness. All the while, government has looked
on with apparent admiration, envy and awe as Goldman Sachs announced that
despite America's financial catastrophe and despite the fact that it gorged
earlier this year at the feed trough of taxpayer bailout money, they will
reward their staff with record bonuses in 2009, totaling some
$20,000,000,000.00. They are taking the taxes paid by everyday people such as
nurses, teachers, auto workers and fast food clerks, and stuffing their
pockets with it. Of course, that is just the tip of the iceberg. The rest of
Wall Street will lavish itself with taxpayer-funded bonuses, too.
Even more astonishingly, on June 26, 2009, in the
midst of America's employment and economic meltdown, Congress approved
$108,000,000,000.00 in loan-guarantee funding for the International Monetary
Fund (IMF), so the IMF can provide financial assistance to "poorer
nations." No citizens on earth are as indebted as Americans, given the
nation's $11,500,000,000,000.00 federal debt, and more than
$85,000,000,000,000.00 of combined federal debt and unfunded contingent
liabilities. So how the world's most indebted nation proposes to provide
assistance to "poorer" nations is a fiscal mystery, the solution to
which is apparently known only to the spendthrifts in Washington. Unless, of
course, the money were slated to return to the United States as "foreign
aid," but that is not the plan. What arrogance, callousness and conceit
on the part of our government, to strap this added tax burden onto the backs
of American citizens, who are already the most debt-enslaved people in the
world.
The IMF funding is in ADDITION to the government's
June 26, 2009 $106,000,000,000.00 supplemental war appropriations bill, which
was supposedly meant to pay for continuing military operations in Iraq and
Afghanistan, but which includes U.S. taxpayer gifts of $660,000,000.00 for
Gaza, $555,000,000.00 for Israel, $310,000,000.00 for Egypt, $300,000,000.00
for Jordan, $420,000,000.00 for Mexico, and $889,000,000.00 for the United
Nations, for so-called "peacekeeping" missions. War is peace.
Orwell must be laughing himself sick, six feet under. Congress is in such
massive denial about the fiscal and financial crisis they have already created
that their spending orgy continues without restraint. In fact, the
out-of-control spending is now so outrageous that one can seriously argue
that Congress, the Treasury and the Fed are deliberately trying to destroy
the United States. Bob Chapman (www.theinternationalforecaster.com), a
brilliant analyst and publisher of one of best newsletters in the world, has
long argued that what is happening is part of a systematic plan to bring this
country to its knees so a one-world government-for-profit, owned and operated
by global power brokers can be implemented. His ideas deserve deep and
thoughtful consideration, because his track record thus far has been nearly
perfect.
The fact is that the United States is suffocating in
what has become an airless House of Lies. Social Security is a promise that
cannot be kept with anything even remotely resembling America's current money,"
and is therefore a lie. Medicare and Medicaid are promises that cannot be
kept, and are also lies. SSI benefits cannot be paid into the future, and are
lies. The federal debt cannot be paid, and is a lie. Government pensions
cannot be paid, and are lies. The prescription drug program is unaffordable,
and is a lie. Food stamps and other forms of welfare are unaffordable, and
are lies. And the list goes on and on. Arnold Toynbee wrote, "An autopsy
of history would show that all great nations commit suicide." This is
exactly what we are witnessing today in the United States: fiscal and
economic suicide.
As America's "leadership" injects financial
poison into the country's veins, the citizens stand by and watch, having not
a clue about what to do to stop the destruction. Today's unavoidable reality
is that tens of millions of American citizens are going to die financially
before they die physically, thanks to government losses and crony payoffs
that enrich and empower a small, shameless, greed-stricken minority at the
expense of the entire nation. This latter point is amply demonstrated by
Washington's race to Wall Street's defense via the recent bailouts, where
trillions of taxpayer dollars were handed over to centimillionaires
for nothing, while for the past 20 years, it stood by and did nothing as the
lives of millions of American workers were turned upside down when they lost
jobs that migrated overseas thanks to statesponsored
globalization, another moronic and disastrous market intervention.
Despite the CBO's calm outline of the next seven
decades' worth of ceaseless, staggering American operating losses and surging
debt, we are fast approaching endgame. One of the greatest prize fights in
all of history is about to begin. In one corner of the ring will be a
scrawny, sick-looking contender called The Lie, coached by Washington, D.C.
and Wall Street. In the other corner will be a 250 pound, aerobically
perfect, experienced fighter called The Truth, coached by the collective
wisdom, experience and technique of Time. Once the fight starts, it will be
over in a second. The same way Madoff's fund was knocked out with one punch,
once he put his Lie into the ring with The Truth.
Speaking once again of Madoff, as a citizen, you
must ask yourself this: what if an official at the Federal Reserve or the
Department of the Treasury woke up one morning, seized by his or her
conscience? What if this official could not continue to lie about America's
finances? What if, in a moment of personal honesty and catharsis, that
official repeated in public, say, at a Congressional hearing, those six simple
syllables spoken by Madoff? What if someone in authority admitted that,
"It's all just one big lie"?
What would happen to the bond market? The stock
market? The financial system? Your local bank? The Federal Reserve Note? It
seems logical that all of these would all suffer, probably mightily. And the
prices of gold and silver? Wouldn't they go up, potentially by an order of
magnitude, as millions scrambled for financial sanctuary?
The financial laws of gravity are exactly that:
laws. The narcotics of hope and denial cannot repeal them, just as they
cannot make a butterfly turn into a 747, convert lead into gold, make
America's debt disappear, or transform Bernanke into a mangod
who can make the consequences of gross fiscal and economic dereliction go
away, just because he says so. The financial laws of gravity say that it is
impossible to indebt a society into prosperity, or moneyprint
everyone rich. In fact, reality says the exact opposite: endless debt and
money creation impoverish and enslave a people, while enriching to a
grotesque degree a relatively few opportunistic, immoral, greedy, insider
manipulators, just as we have seen and continue to see.
If government were genuinely trying to fix this
mess, then perhaps we could have some hope, even though we are already beyond
the fiscal point of no return. But recent actions, such as the June, 2009
$108,000,000,000.00 ($108 BILLION) added funding for the IMF, and the
proposed nationalization of health care, to cite just two relatively minor
examples, demonstrate that Washington is, at best, incapable of recognizing
the seriousness of the country's circumstances, or, at worst, is spending us
into oblivion on purpose. (Collectively, could they really be this reckless,
stupid and destructive? Is that conceivable? Or is something far more evil
and diabolical at work?) Pinning one's hopes to "change" is an act
of insanity given the situation. The only change in America is the total lack
of it.
There is a solution: It is called the truth. The
United States government must irrevocably admit that its wanton, escalating experiment
with socialism, which is now veering into something even more sinister,
called corporatism, which is another word for fascism, has failed
catastrophically, just as it has failed every other time throughout history
that it has been attempted. And the people must be told that this nation can
return to greatness only if they and their government will re-embrace the
virtues that made it great in the first place: honesty, responsibility,
restraint, ingenuity, hard work, self-reliance, morality, character, dignity,
honor, duty, sacrifice, patriotism and an abiding belief in something greater
than ourselves.
Each reader can make his or her own decision as to
whether America and its "leadership" will have the strength to face
the truth, or not. If they do not, then we will soon enter a period of
personal and financial survivalism. If you believe
that the nation will not face reality, then you must immediately begin to put
your affairs in order. Those who think ahead will be able to survive the
whirlwind that denial will unleash. But those who stand before such a tornado, unprepared, have poor and more likely tragic
prospects. The odds that you, the reader of this article, will find a way to
prevail are good. But unfortunately for your fellow citizens, you are in a
small minority. You are distinguished by courage, thoughtfulness, an ability
to face facts, resourcefulness, and a genuine concern not just for yourself,
but for all who are dear to you. Those virtues were required to get you to
this point in this difficult article. Those same virtues will save you as the
flag of the future unfurls.
Stewart Dougherty
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