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America: Bankrupt And On Borrowed Time
Submitted by Thad Beversdorf via First Rebuttal blog,
Thomas Jefferson is credited with the following sage advice, “The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered.” And so it seems sometimes the answer is right in front of us all along and we just fail to see it.
We hear a lot of talk these days about inflation. For decades the western world has been misled about a necessity for inflation to grow an economy. This is entirely false. Inflation has no relevance to economic growth; inflation is a depressive force on an economy and it can only come by way of increased money supply.
The apex of the discussion is that price increase does not equate to inflation. Inflation is but one of two paths for rising prices. More specifically, prices can rise by way of supply/demand fundamentals of an asset itself and by way of supply/demand fundamentals of the currency form being used to transact the underlying asset. The prior will raise prices in all currency forms while the latter, being inflation, will raise prices only in that relevant currency.
For inflation to occur demand for a given currency must decline relative to its supply. This can happen if consumers lose faith in a currency and thus demand less of it, or by governments increasing supply without proportional increases in demand. The latter is exactly what we’ve seen over the past 100 years but to such a grotesque degree over the past 8 years that it may have actually shattered the foundation of the economy of which it was driving. This is precisely the chain reaction that Thomas Jefferson had warned us would result from a private central banking system.
Once the economy is broken an epidemic of resource misallocation leads to an immense narrowing of income distribution, ultimately paralyzing the velocity of money; the result being an income-less society save for an elite slice. This leads to mass public and consumer debt creation in an effort to stave off the collapsing natural demand that ultimately ends in deflation when the debt efforts, after a short reprise, actually hasten the collapsing demand by hammering the final nail in the budgetary coffin. At such a point deflation is essentially infinite as people are willing to trade anything for a dollar to purchase food, or inflation is infinite as people will simply circumvent dollars and barter; an interesting paradox that in practice will be a moot point given the vast majority will have nothing to trade for food or dollars because ownership is no longer a reality.
It seems then, that Jefferson’s prediction is theoretically sound, but let’s see if we can find any empirical evidence to either support or refute his cautionary message. We know that dollar inflation has been approximately 2400% since 1913, 2000% of that devaluation coming subsequent to 1971 when Nixon moved to a pure fiat currency. The reason we moved to a fiat currency is to remove the restriction on money supply that is inherent to a convertible currency. We can see in the next chart that inflation is directly linked to money supply, which has seen around 1700% increase since 1971.
This ‘easy’ money accelerated significantly around the mid 1990′s and this has led to a misallocation of resources. To see this, let’s look at the relationship between corporate fixed capital expenditures and dividends. The idea being that fixed capital expenditures are economically productive meaning they lead to economic expansion, whereas dividends divert cash off corporate balance sheets and thus detract from capital expenditures, having a contractionary force on the economy.
The above chart clearly depicts a significant change in the economy’s allocation of corporate resources at the same time money printing accelerated. Fixed capital investment was a much larger share of GDP than dividends up until the mid 1990′s when that began to reverse. Again moving to a market environment that promotes a contracting rather than expansionary economic process. We should be able to see this effect actually taking place via declining capacity utilization. As a result of that we should then see declining labour participation rate and declining incomes from slack in the labour market. Looking at the data this is exactly what we find.
Notice that all three indicators begin to trend downward around 1998, shortly after (and one could suggest as a direct result of) the resource misallocation that began a few years earlier in the mid 1990′s. The next link in this chain should be an expansion of consumer loans in an attempt to offset the resulting demand deterioration from the weakening job market conditions.
We find abundant empirical evidence in the above charts showing an acceleration of consumer debt during the mid 1990′s and again around 2009. And this is perfectly in line with our theory and so we seem to be on the right track. Now the obvious result of massive increases in consumer debt is that ownership is being replaced by indebtedness. That is, to a great extent now we rent or borrower our assets as opposed to owning them.
In the above chart we see that home ownership is now back to the level it was before we ended Bretton Woods in 1971. And it’s not just housing, today about 75% of new car sales are being financed and with longer maturities than ever before. In short, ownership of the 2 major assets typical to the traditional American family has been on a sharp decline for the past 10 years with no signs of slowing.
The American dream is built on ownership because it represents substantive progress by way of building a family’s net worth. A net worth that has declined by 40% since 2007 for all but the very top of the economic food chain. But it’s not only the American dream that is in retreat. The reality is that over the past 8 years increases in public debt have outgrown increases in GDP. The nation is borrowing more than it’s producing and spending more than it’s collecting every quarter. A trend that is to continue and to worsen each and every new year according to the CBO’s own projections.
Where does this leave America and really the rest of the western world whose data will mirror the US?
Bankrupt and on borrowed time.
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And the answer the Federal Reserve would give to TJ today would be, "sorry, we don't understand gold, oil, interest rates, or financial markets".
Sociopaths and public liars they are, because they know they are bankrupt.
Please turn in all your gold and silver coins for this fancy linen, backed up by EPSON toners.
Yes, and that last chart CLEARLY indicates to me that the plan for a new/altered/changed/ financial system or dollar is coming. No other way out since default is not an option to the bankrupt ass-hats.
Associated sorta OT....
Russian hackers hack White House. Gosh, so that's why Obama wants the goobermint in charge of all cyber security.
http://www.cnn.com/2015/04/07/politics/how-russians-hacked-the-wh/index....
To hell in handbags
? Frank Zappa
But the candidates vetted by AIPAC and which are heavily promoted on AIPAC members' controlled mass media outlets, assure me I am free and my vote counts.
Of course your vote counts. And it's much appreciated by whatever ZioCon-approved Congresscritter you give it to.
"first by Inflation, then by deflation..." is a great line, whoever said it, but I thought the Jefferson attribution had been debunked..
http://news.yahoo.com/las-vegas-man-kills-himself-casino-revoked-lifetim...
Merikans are 'ceptional!
Sweet!
Pls link his burial site as I want to shit on his grave.
Though sage the opening quote may be, Jefferson never said any such thing.
The use of the term "deflation" in an economic context didn't come about until the 1920s.
If you're going to quote people, dear Mr. Bevesdorf, at least use things they actually said. Otherwise when people find out that you just stupidly and sheepedly copied your prattle from the world wide error-net, you credibility rightly gets called into question.
Here are some actual things Jefferson said about banking:
"That we are overdone with banking institutions which have banished the precious metals and substituted a more fluctuating and unsafe medium, that these have withdrawn capital from useful improvements and employments to nourish idleness, that the wars of the world have swollen our commerce beyond the wholesome limits of exchanging our own productions for our own wants, and that, for the emolument of a small proportion of our society who prefer these demoralizing pursuits to labors useful to the whole, the peace of the whole is endangered and all our present difficulties produced, are evils more easily to be deplored than remedied." (1810)
"Like a dropsical man calling out for water, water, our deluded citizens are clamoring for more banks, more banks. The American mind is now in that state of fever which the world has so often seen in the history of other nations. We are under the bank bubble, as England was under the South Sea bubble, France under the Mississippi bubble, and as every nation is liable to be, under whatever bubble, design, or delusion may puff up in moments when off their guard. We are now taught to believe that legerdemain tricks upon paper can produce as solid wealth as hard labor in the earth. It is vain for common sense to urge that nothing can produce nothing." (1816)
"The system of banking we have both equally and ever reprobated. I contemplate it as a blot left in all our Constitutions, which, if not covered, will end in their destruction, which is already hit by the gamblers in corruption, and is sweeping away in its progress the fortunes and morals of our citizens." (1816)
"And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale." (1816)
And my favorite Jefferson, and maybe my favorite of all-time:
"The tree of liberty must occasionally be refreshed with the blood of patriots and tyrants." (1787)
Seven years of disaster scenarios from ZH. Endless conspiracy theories, endless diatribes that the sky is falling, endless stories of how the USA is about to go off a cliff, endless dire warnings about stock market crashes, I say these are just endless bullshit. The USA IS DOING JUST FINE. Time to recognize that point somewhere. Oh right it doesn't sell.
7 years is about right for another blowup, it's in the charts Ratso. FYI, ZH posts very few "conspiracies" and lotsa facts and data. Amazing that idiots like you (probably a computer) would have one believe this place is all about "conjecture" when in FACT (asshole) that's what your daily news feed is, conjecture, shallow, lacking any historical perpective, lightweight, propaganda-ish, flat out lies....No conspiracy needed here, just upayable debt levels, endless wars on terror and idiots like you FATSO.
Do you think that computer is damaged now? Not.
You seem to like the Coolaid.
By defining the middle class demographically, they find that families falling into the murky category of "neither rich nor poor" are under much more crushing economic pressure than the sheer numbers indicate.
http://www.latimes.com/business/hiltzik/la-fi-mh-why-the-middle-class-is...
Nice. You made it this far. I can see a little bit of that light through that crack of a doorway into your mind. Try to open it just a little bit more. I promise it gets easier. Yes, for sure it is scary learning that the world you thought existed is absolutely nothing like the truth of it. Yes, your also right that you are a bit old to be exploring these options. The world is an open book when you can think for yourself. Turn that TV off for just 20 minutes more a day, and eventually it will be off for good. Now run along, and learn even more, and yes even the scary stuff because that is where you will grow the most...
Thanks for the pep talk! I think we can shut ZH down now boys! Not going to need this site any longer...USA is back! And stronger than EVAR!!!!
"The USA IS DOING JUST FINE. Time to recognize that point somewhere. Oh right it doesn't sell."
92 Million not in labor force. 50 Million on Food stamps. America has become a utopia! /Sarc
Yes, because America is so much better off today than it was in 2007! </sarc>
Inflation allows the government to borrow more, which they always do to fulfill campaign promises...if you don't give shit away then how do you get elected? The problem is these fuckers (politicians) keep borrowing to buy shit to fulfill promises to the people who voted for them. The problem is the people who voted for them don't realize that someday they are going to have to pay off that bill...kind of like the the guy that has the trophy wife that gives him great sex and buys him a $10k watch Christmas present using HIS credit card...figuratively they both give each other something and fuck each other at the same time. This is all a result of corrupted system run by corrupt poiticians who want power, and, stupid people who vote for them...its not going to change, in part becasue politicians love stupid people who like 'free' shit.
Yet the default cards remain the surprise, the trick, the treat, and the feat.
The FED is the bad bank. Audit the FED movement is controlled opposition and part of the plan. They will bankrupt it, create popular opposition to it, shut it down and start a new one with the same owners.
I posted this in other thread but it's more appropriate/relevant here.
Go to safe harbors.
2015 is going to be bad for "risk on", unhedged longs all over the globe, and this dovetails nicely if it occurs in late 2015 with the 2016 Presidential Election Cycle, too.
Average Joes & Jills that went into heavy debt to finance large scale purchases such as houses, etc., couldn't have done so at a worse time with the possible exception of 2005-2007.
This is also why publicly traded corporations are literally throwing all white collar personnel at getting as many M&A deals and bond (aka debt) offerings done as quickly as possible; Fed will have to raise rates a symbolic amount this year to keep narrative of growing economy alive, yet even symbolic hike in fed funds rate is going to turn bond & equity markets upside down given the near zero lower bound rate we've been working from for 6 long years (if you know an attorney, accountant or other such type at a publicly traded, well-capitalized company, ask them about the rush to merge, acquire and float bonds).
The last time we were facing macro/global economic (and geopolitical) risks like we now see before us was in the early 1930s.
This spells serious troubles, what the central banks working in collusion for 6 years now, have sewn, this.
counterfeiters
Inflation is also theft of productivity increases. It's only counted compared to last year's prices, not accounting for any increased productivity. Only electronics manufacturers have managed to outpace it, recently (lower prices for superior products despite FED created inflation). This is how they've managed to reduce 'real' homeownership down to only 1 in 6 who are mortgage free. We've already passed TJ's prediction into peak debt.
So many ways to come to the same conclusion...America (and all advanced economies) are bankrupt.
http://econimica.blogspot.com/2015/02/fundamentally-flawed-chapter-31-why.html
Thomas Jefferson is credited with the following sage advice, “The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered."
Thomas Jefferson never said that. Why is it that you people can't actually LOOK UP a quotation before citing it????
http://www.monticello.org/site/jefferson/private-banks-quotation
@cheapy The article doesn't claim he said that. It states that he is credited with it. Rightly or wrongly, it is true that he is credited with that statement.
"We people" (at least some of us) have looked up that quote, and yes we understand that it is false attribution. But the sentiment involved still has traction because even though Jefferson never said that, he should have and probably would have.
I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.globe-report.com
Would you just go the fuck away and not badger us with your MLM bullshit?
Net worth going straight to hell since 2010.
Glossy-eyed numbed brain Americans will stand by and become debt serfs without a fight.
At least the Greeks will stand up on their hind legs and give it a go.
Normally you guys are down on all fours?! Sounds like my kind of place.
Good article tho, and is exactly what I have been saying to people. We reached our maximum economic potential in the 90's.
Every time I pass through a newish commercial or industrial park I wonder what it is going to look like with 60-70% vacancy.
This is gonna get..... Weird.
Tim Cook says that, “Opposing discrimination takes courage,” and we agree. We call on Mr. Cook to live up to our shared principles by pulling Apple out of Nigeria, Qatar, Saudi Arabia and Iran until they stop their official government policies of jailing and murdering gays and lesbians.
"Those chinks do some good work for pennies on the dollar."
Amurika! How symbolic that the iGadget of self-absorption and narcissism is made by a company that now floats the DOW and uses what is essentially slave labor to make it while off-shoring the majority of their profits and doing stock buybacks.
If it weren't for Israel keeping a constant floor in AAPL Tim Cook wouldn't have a job.
You think Tim Cook cares about any gay person with a net worth under $1 million.
Equality only matters if it can make money for the Tribe, because in the eyes of the Tribe everyone other than them is worth less than a goat.
LOL they top ticked AAPL almost perfectly! But I guess when you have pockets that reach your ankles you can wait it out.
This is me....in 20 years without a pension, social net, and a devaluing Dollar that I sepnt a lifetime accumulating in a 401K in the great stock casino.If anyone believes the Dollar will be more valuable then tinder they are delusional.
" the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered."
How did we get from Jefferson to Obama. What the hell happened?
Obama is a symptom – nothing more.
Greatest president in the 55 years I been alive.
Americas future never looked brighter.
Republicanism did not do as well and libertarianism was what we pretty much had before the new deal and the only reason things can get bad is you dumb asses allowed both republicans and democrats to erode its protection.
When the rich have to pay a lot of tax for welfare the get off their asses and create some jobs without that over their head you have no leverage.
Whelp back to the yacht long as my wealth cant be eroded and my stocks never go down I dont have to work or run a business thats for gentile's
I really think some of you would buy a bridge.
Surely no one was stupid enough to think it was one man..... crickets
RIPS
what do legalized counterfeiters have endless amounts of?
Friends.
Shoot, we've had statists around since Hamilton, BUT they were not in the majority of politicians until around the turn of the last century. Daniel Webster was a very influential one, dishonest Abe also, and hence the humble beginnings of statism led to more and more until we have Obama.
So, who is running or likely will run in 2016 that is NOT a statist and will dismantle any of the bureaucracy?
Obama is a wholly-owned cypher who does as instructed. As such he has little responsibility for America's current disaster, just made everything a little worse. If he were not totally under control he'd never have made it beyond being a community organizer in Chicongo.
Among other things? The Civil War and Reconstruction. A mongrel who by rights should have been put down along with his nigger sire, whose proof of guilt of raping a white woman he was, can now by the will of the banksters be the Current Occupant of the White House, and proof that it no longermatters who the occupant is, all real powers of government having been usurped by Wall Street in 1860.
There it is again, a shit storm of unsound money and debt since the Dollar was unhinged from Gold.
Because of the creation of the Non-Federal Banker's Bank - the labor of an individual and household has been cheapened, debased, and robbed to the point where the money changers had to offshore production and career employment while creating a parasitic economy dependent upon ZIRP, money printing, and outright tyranny against citizens.
What died in 1913 was the truth, and what has thrived since is lies built upon corruption and skullduggery.
+100
Not as long as we can press ctrl+p
Don't worry. On a long enough timeline . . .
It has not been established that Jefferson actually said that. In fact, I'm not even sure that inflation and deflation were in the founding fathers' lexicon. Jefferson, did, however, hate banks. Here is a quote of Jefferson's in a letter to John Taylor:
Money isn't money.
All the graphs look like something happened in early 1970s, say 1971.
Anyone know of anything that happened then?
What could that be?
"America: Bankrupt And On Borrowed Time"
America is not bankrupt, the DC US is. Morally and financially.
American is being plundered and oppressed by the criminals of the DC US.
The banksters need to repay us.
My guillotine can tell time.
A very straight forward article; it seems to state the obvious in none of the FEDs "What comes out of a north bound bull heading south horse pucky."
Thank you sir for your excellent article. Milestones
.
What fake money and the Federal Reserve has grown is Government - in all forms, bread and circuses, wars and welfare. The craziest or most untenable ideology can be supported by government when they have the funds to do it.
Want to kill Progressivism and Socialism in the USA? End the Federal Reserve
You are an ANTI-SEMITE HATER!
so would that mean he is pro palestinian or anti-nazi?
"Give me control of a country's Currency, Hydrocarbons and Water, and I care not who makes its laws" -Kirk, (c) 2015
If you're still unclear, I refer you to the Borg mantra. Or ask a Ziocon.
UGH, I am at a loss Kirk, nothing is making any sense anymore, NOTHING! Currency only would do the trick, much less the others!
Soylent Green, I tell you!!!!!!!!!!!!!!!!!!
As I go about quietly paying my bills, with no money...or very little, living on borrowed time.
Krieg Kommt!
Ya mein hier! welt welt krieg drei...
All that seems to matter in the US is political corrrectness and that the stock market keeps going up.
Working or the obeying the constitution don't matter anymore.
Sure is bankrupt, in more ways than one.
...and any of this is new you say? I could have a wart on my nose, and it would be plainer to see...velocity indeed, we have now reached takeoff speed.
Queue music...
Jefferson where are you now
When everything's gone wrong somehow
The men that steal, men of power
Are losing control by the hour.
/Genesis (seasonally adjusted)
"America: Bankrupt And On Borrowed Time"
So now they lend out Time also? Paid back with Interest?
The more you dig into history, the more you find that centralized banking and the power to print money out of thin air has been the cause of every evil act in history. Those that fight against the concept of central banking end up being hung, mutilated, crucified, assasinated, or bombed into submission.
Since the time of Sumeria, usury has destroyed every empire. It is because those who cannot produce created a way to enrich themselves without lifting a finger. The promise of being able to have something now without having the means to pay for it has always been a most effective lure.
The cycle can not end until those who worship interest as a god are burned.
.
I think the idea that Tom Jefferson came up with the quote at the beginning ofthe article isn't substantiated by historical research. Still, the sentiment is great, whoever came up with it.
You may be correct. So while on the topic here is one or two directly attributed to him...
"All tyranny needs to gain a foothold is for people of good conscience to remain silent."
Thus pass tyrancial laws when the people aren't looking (like the Fed Reserve Act of 1913)
"Tyranny is defined as that which is legal for the government but illegal for the citizenry."
Yep.
"The price of liberty is eternal vigilance."
My personal favorite
This is only of academic interest in the current context but the banking mafia have been destroying civilizations this way for thousands of years and it's hard to see how it can ever be fixed long-term because only a small percentage of people understand the scam and a lot of those are people being enriched by it.
In the short-term the problem can be fixed in the traditional way but that has only ever worked temporarily and they always come back again eventually. The only ways I can see the banking parasite problem being fixed long-term is either a) raising average IQ or b) making anti-usury part of a religion with no exceptions.
And now for a little context.... Thomas Jefferson uttered these words because he was involved in a political war with John Adams and Alexander Hamilton.... He feared the North would be garnering too much power and weaken his slave owning southern landowners, it was, as it ALWAYS is, about money.... Jefferson was a masterful politician, nothing more
Just sayin'
Status: This quotation is at least partly spurious; see comments below.
Comments: This quotation is often cited as being in an 1802 letter to Secretary of the Treasury Albert Gallatin, and/or "later published in The Debate Over the Recharter of the Bank Bill (1809)."
The first part of the quotation ("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 them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered") has not been found anywhere in Thomas Jefferson's writings, to Albert Gallatin or otherwise. It is identified in Respectfully Quoted as spurious, and the editor further points out that the words "inflation" and "deflation" are not documented until after Jefferson's lifetime.2
The second part of the quotation ("I believe that banking institutions are more dangerous to our liberties than standing armies...") may well be a paraphrase of a statement Jefferson made in a letter to John Taylor in 1816. He wrote, "And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale."3
The third part of this quotation ("The issuing power should be taken from the banks and restored to the people, to whom it properly belongs") may be a misquotation of Jefferson's comment to John Wayles Eppes, "Bank-paper must be suppressed, and the circulating medium must be restored to the nation to whom it belongs."4
This first known occurence in print of the spurious first part with the two other quotations is in 1948, although the spurious portion actually appears after the two other quotations.5
Lastly, we have not found a record of any publication called The Debate Over the Recharter of the Bank Bill. There was certainly debate over the recharter of the National Bank leading up to its expiration in 1811, but a search of Congressional documents of that period yields none of the verbiage discussed above.
If all is correct--an excellent bit of scolarship. My thanks. Milestones
"There was certainly debate over the recharter of the National Bank leading up to its expiration in 1811, but a search of Congressional documents of that period yields none of the verbiage discussed above."
Cui bono?
Excellent collection of charts. Illustrates and explains a lot for anyone willing to think objectively about them.
I don't think he used "central banks," though he might today. The quote I l'arnt is:
"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." – Thomas Jefferson
Bullish.
The only thing America is EXCEPTIONAL in is providing a "chinese fire drill" atmosphere of theft and plundering...
I think our founding father's can not and must not be compared to our current fecal matter in congress. Well read and educated thinkers. IQ has been taking a dive lately, haven't you noticed? The narrative is third grade level.
about the time that ceo salaries were traded for stock options... imagine that.
Gerald Celente being interviewed by Christian Rev. Lindholm on the psychopaths running Wahington,D.C.Christians,Muslims,Jews and all other religious people should pay attention to who these gangsters are.You need to take back America from these political criminals;
http://trendsresearch.com/in-the-media/
Totally confused why this current group of political cocksuckers couldn't listen to the ones who made it possible for them. What a bunch of phonies. What do they not understand. They didn't build this somebody else did and we do not really want them to destroy the correct model. New politics. Just stop doing anything. We will pay them to just sit there and jack off.