Full Circle. The Pride and the Shame, The Day our constitution had a stroke

[peternap]

http://news.oldva.org/?p=116

[glenn kangiser]

Thanks for posting that, Peter.  Our current administration has destroyed the Constitution with signing orders. We are at the same point again.

"You need only reflect that one of the best ways to get yourself a reputation as a dangerous citizen these days is to go about repeating the very phrases which our founding fathers used in the great struggle for independence."

Spoken by Charles Austin Beard

(1874-1948)

[sparks]

  Well Glenn, it's just like the main man said, "It's just a G-D'd piece of paper!"

The anniversary of Kent State is only one of the thousounds of attrocities by this (our?) gov.

However, KS still brings a lump to my throat and a tear. What the hell is going to happen to this country??

Can 'We the People' stop it??   ......or is it too late.........

[peternap]

   
Can 'We the People' stop it??   ......or is it too late.........

Good question Sparks. My gut feeling is we can but not until it crashes. I'm keeping a close ryr on gas prices and the economy. Something will trigger the crash and gas may well be it.

[sparks]

  What do you suppose a TOTAL collapse of the USA would look like?  Europe in the 1910's? Or the 1930's or 1940's. The Deppresion of the 1930's?? Can we really survive that sort of decline in this day and age??

Are we willing to suffer the wages of war right here in our homeland??

A war from within??

The jackals are watching us, .......and waiting. And salivating.

[muldoon]

peter - thanks for posting this.  I had never heard the story before from someone involved.  I have been watching this space all week to hear it out as the bits trickled out. 

What do you suppose a TOTAL collapse of the USA would look like?

sparks, you raise an interesting question.  What would it look like depends on what the scenario entails.   I happen to take to heart an old proverb from the bible that there is no new thing under the sun.  Civilizations have been on this planet for a long time, and nearly all of them have had their triumphs and collapses.  In recent history dozens of countries have gone through varieties of total collapse; some for the same reasons some for others.  But each of them have some things in common, and some things that are unique to the situation. 

So, the debate at hand is what is the catalyst?  Is it 1930's style deflation - a contraction of available credit and available monetary base?  This concept has some possibilities, and for it to play out we would begin to see the cost of debt escalate.  Interest rates above 10% and unavailable for most americans would do this.  Once the credit goes, (or gets expensive), costs go through the floor and employment and consumption follow it.  It occured here in the 30s, and in Japan in the 90s.  Both were originated with housing booms and credit expansion at alarming rate that ignored credit risk evaluation and rewarded highly leveraged and margined accounts.  This is a possibility... maybe.  But the inflation side is strong these days as the fed fights this scenario with TAF, Window, dealer auctions and such, keeping food an energy ever higher as hedges flee to commodity markets and international currencies. 

So, hyperinflation maybe?  Can the US go the way of zimbabwe today?  The weimar germany of the 30s?  To do so would require that the US government literally turn on the printing presses and try to cover the whole 54trillion dollar debt fiasco.  Maybe, but it has not looked like it.  To date, there has been no printing, only loans from the fed based on various degrees of collateral; the TOMOS show more drains of liquidity on expiration that actual injections. What injections are made are mostly rollovers. The slosh is expanding, but still within the balance sheets.  It may come to this, but were not there yet.  It would require an act of congress and we would likely get some fair warning to stay ahead of the herd so to speak.   

Whats left?  One may say that inflation is the cost of things going up, but another way to look at it is the value of your dollar going down.  That is not exactly inflation (from an austrian economics perspective) but the effect may look the same.  As our dollar slides, and it is sliding.  Go look at the index for the dollar, http://quotes.ino.com/chart/?s=NYBOT_DX&v=dmax ...  In the past year it has declined from 82.3 to a low of 70 last month.  That is a decline of 15%,  (82.3 * .15 = 12.345), add this to your released inflation rate of 4% and you get an effective cost increase of 20%.  This is roughly inline with what I see in the grocery store.  So to me this appears to be the most likely scenario that we are facing.
[continued].. post limit

[muldoon]

[continued from above]
Where has this occurred before?

Argentina dollar devaluation in 2001
Mexico peso in the 85
Russian debt default and rouble collapse in the 90s
Civil war US 1800s
Brazil - 1960s
germany - 1920s
ukraine - 1992ish
turkey & zimbabwe - last 5 years
Thailand malaysia phillipines
france ww2 & in 1982
...
like I said above, nothing new under the sun. 

In almost all cases the governments tried to intervene and help their starving citizens by creating more money to help them stave off rising costs.  This has the undesirable effect of devaluating the currency further until it hits a brick wall.  This is called the reset.  As risk increases, international money flees the localized economy and the value continues to decrease.  The only way out of this is to make financials take their losses and raise (not lower) interest rates.  Increased risk requires increased premiums to satisfy international investors.  It's no question why citibank was taking a billion dollar loan from Abi Dhabi for 14% interest last year, or why the fed is trying now to stave this off.  International banking has seen this play out, it's not new. 

So, back to you question,  what would it look like?  How would people deal with it?  I imagine it would look similar to the above cases where this occurred.  I do not expect massive printing from the fed.  There is history behind these actions, look into Thailand and Brazil neither of which went into hyperinflation.  It's not written in stone and it does not look like it will go that way based on where we are today.   

I do not think a civil war will break out, but mostly that is due to the extreme apathy of this nation.  No one seems to care about anything anymore.  All that is taught is tolerance and acceptance.  It's what it is, regardless of how un-american I may think it is.   I do think as a nation of people we will survive given some time.  Just like time has healed wounds in the above countries and life flourishes today so will it here.  We will likely lose some of the consumer mindset that permeates our culture... but thats not necessarily a bad thing. 

Alot of poor people will get crunched in the fold, and thats disturbing but it's always been the case for poor folks.  Those who stay just one or two steps ahead of the herd should fare well provided they reduce their dependencies where they can.

[peternap]

Muldoon, good post as usual.
If I had the power to tell the future, I'd be rich.....but my opinion has been for a long time, that we would go the way of Russia. There are a lot of similarities.

I think the catalyst is debt. That's not a new thing in this country, however, Bush has kicked it into high gear. The citizens have been bled to the breaking point. Now...what will trigger the whole thing. I can only guess that it will be something that moves the classes down a notch. The working poor to the poverty stricken, the upper middle to the working poor and the upper class to middle class.

The next thing to look for would be revenues so low that police and public services are cut way down. I think that marks the start of the breakdown. After that, who knows.

The gas prices could cause a shipping problem and raise costs to a point, it could happen.

[sparks]

Muldoon, yes, very good post. I've calmed down a little bit.


Peternap, sorry, didn't realize I'd hijacked your thread. This old dog might not learn new tricks, but
he should have minded his manners.


Sparks

[peternap]

Muldoon, yes, very good post. I've calmed down a little bit.


Peternap, sorry, didn't realize I'd hijacked your thread. This old dog might not learn new tricks, but
he should have minded his manners.


Sparks

You didn't Sparks. I have ideas about what may happen and I've seen a lot of what did happen....but the future is only an educated guess. The more of us guessing, the more likely we'll get it right.
John for instance has the muddle through economics, idea. There's a lot of merit in that viewpoint. So far, it's worked out. To me, it looks like the water's getting too deep for that to continue, but it's possible.

I'm a great believer in history repeating itself.  Just as Kent State has repeated itself so have the Hoover years and looking world wide, the Roman Empire and the British Empire and the Soviet Union. They are all just a replay of something else with a new paint job.

Remember, it's just been a tick on the world clock since China was the greatest power on earth. Then fell and is coming back up.
Remember Japan, once proud and feared around the world. They'd have whipped us if we hadn't outnumbered them and had the bomb.
Then they started making those stupid little radios....history marches on.

I'm alway open to where we're going and why.

[Sassy]

Thanks, Peter, for the postings on Kent State.  I was in my 1st year of college then - I remember it well but not a whole lot of details...  a turbulent time but students were much more brave & involved & stood up for their beliefs...  I was kinda on the sidelines although my dad & I would have debates on it - he was in Vietnam for 18 mo.  Actually stationed in Taiwan (that was to keep the #'s down that they had to declare that were in Vietnam - technically, my dad was not in Vietnam)

Not to hijack you posting, but recently, the nursing assistant from hospice who came to help my dad a couple times told us a story.  I had asked where she was from - she came from Cambodia - she said that her dad was in the Cambodian Army & at that time the communist leaders were getting rid of all the educated people, those who were in the army etc as they were a threat to their regime.  She said that they would look at the children's hands & if they weren't calloused or look like they had been working in the fields etc they would round up the children, place bags over their heads & herd them to mass gravesites.  They would have to dig their own grave & then the communist officials would hit them over the head with heavy instruments to kill them.  I wish I remember more.  Years ago, I knew a family who had adopted 12 kids.  One of them was the last kid picked up by the military helicopters that were rescuing people when we pulled out of there.  The newspapers & magazines posted pictures of the boy... 

Muldoon, good post - even though the Fed's aren't printing up a lot of money, they don't have to anymore with the electronic transfer of funds - all the billions of $$$ loaned are really just created money out of basically nothing...  just  the good faith of the USA - which most of the world is not trusting anymore...  I know if we suddenly got rid of the Federal Reserve, we'd have chaos - everytime the US got rid of the central bank, the bankers would cause monetary collapse...  but the billions, probably trillions of $$$ we pay the Feds in interest is a big part of the problem our country has financially.  Easy money so the gov't can have their wars & the politicians & bankers can make lots of money in the armament investments - with the easy money the American people don't realize how in debt we are getting -  both the gov't empire building & our own empire building...  now, those who took out the risky loans are losing what they have & it's going back the the people behind the scenes who are really in control - the original plan to consolidate the wealth to the few & as Muldoon said, to lower the classes of people - level the playing field...  continuing the slide to socialism... 

Anyway, that's my 2 cents & you know how much that's worth