Guest Post: This Country Defaulted Long Ago
Submitted by Jim Quinn of The Burning Platform
This Country Defaulted Long Ago
“There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system involved.” – Ludwig von Mises
The final collapse of our credit expansion boom approaches. We have a choice over the next week. We could voluntarily abandon further credit expansion by voting for a Balanced Budget Amendment to the Constitution or we can raise the debt ceiling, pretend to cut spending far in the future, and allow our currency system to experience a catastrophic final collapse.
We’ll take what’s behind door #2 Johnny. The vested interests in Washington DC and Wall Street only care about power and wealth. They will never abandon credit expansion. It’s their drug. They must have it. They are addicted to it. They will keep injecting it into our system until they overdose America.
The mainstream media acts as if not raising the debt ceiling by next Tuesday will result in America defaulting. This is a crock. America chose to proceed on a path to default decades ago. We are just finally reaching our destination. Below are the choices we made as a people and a country to default on our obligations and eventually destroy our country:
- The enactment of the 16th Amendment to the Constitution in 1913 allowing the government to impose a tax on your income, thereby opening Pandora’s Box to a 60,000 page tax code and allowing politicians to sell their votes to the highest bidder.
- The signing into law of the Federal Reserve Act by Woodrow Wilson in 1913, transferring control of our currency system to Wall Street banks. The man made inflation created by the Federal Reserve has reduced the purchasing power of the USD by 97% since 1913 and has allowed politicians to promise $100 trillion of benefits to Americans, that can never be delivered.
- The Social Security Act signed into law by Franklin Delano Roosevelt in 1935, supposedly to help widows and orphans, morphed into a giant ponzi scheme used by politicians to make Americans think it was a retirement plan and the money was in a lockbox. The scam continues, but ponzi schemes always collapse.
- Fannie Mae was created in 1938 as a government agency and Freddie Mac was created in 1970 as a quasi-government agency. By promoting home ownership and subsidizing loans to people who should have never gotten loans these agencies caused hundreds of billions in mal-investment. As tools of politicians, they were used to push social agendas. The result will be in excess of $300 billion in losses to the American taxpayer.
- The Korean War set a precedent where the President did not need to seek Congress to declare war as required under the Constitution. This has allowed the President the freedom to fight undeclared wars around the world for decades, while spending trillions, with no approval from Congress.
- LBJ’s Great Society programs such as Medicare and Medicaid were sold to Americans as cost saving programs that would improve healthcare for all Americans. We now spend 17% of our GDP on healthcare and these two programs have an unfunded liability of almost $100 trillion.
- Nixon closing the gold window in 1971 removed all restraint on the Federal Reserve, banks and politicians. With a fiat currency backed by nothing but promises, it was only a matter of time before the greed and corruption of bankers and politicians overcame any self imposed fiscal responsibility. The result has been the National Debt going from $400 billion in 1971 to $14.4 trillion today, a 3,600% increase in 40 years. Meanwhile, GDP only increased 1,350% over this same time frame.
- The embrace of consumer debt by the Baby Boom generation beginning in 1980 created an atmosphere of living for today and not worrying about the future. This attitude has left 50% of all the households in the country with a net worth of $70,000 or below.
- The repeal of the Glass Steagall Act in 1999 unleashed the hounds of hell upon America, as the soulless blood sucking vampires on Wall Street proceeded to rape and pillage the American economy with their financial derivatives of mass destruction and marketing of debt to the clueless masses. The housing bust and impoverishment of the middle class can be laid at the feet of these evil greedy bastards.
- Bush’s unpaid for wars of choice, his reckless tax cuts, and his foolish expansion of a bankrupt Medicare program in the midst of two wars turbo charged the country on its path to default.
- By bailing out Wall Street on the backs of the middle class in 2008/2009, the politicians in this country showed their hand. They will protect their fellow power brokers and contributors and throw the American people under the bus. Wall Street controls Congress.
- The Keynesian schemes rolled out by Obama and his minions have just added trillions of debt while depressing the economic system and doing nothing to help the average person. The Fed created inflation has inflamed revolution through out the world and further impoverished the middle class who need to eat and fill up their cars.
- In the midst of a Depression Obama chose to create a brand new healthcare bureaucracy, add 30 million people into the government controlled system, and commit the US taxpayer to trillions of future healthcare costs.
As you can see, next Tuesday means nothing. The debt ceiling means nothing. We chose to default as a nation many years ago. The destination was certain, only the timing was in question. Time to step on the gas.
“Credit expansion is not a nostrum to make people happy. The boom it engenders must inevitably lead to a debacle and unhappiness.” – Ludwig von Mises
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It's not officially a default if the debt is priced in paper that you can just print in whatever quantity you want.
America has been trapped in an economic quagmire since it's peak prosperity around the end of the 20th century.
http://www.planbeconomics.com/2011/07/27/america-is-stuck-in-an-economic-quagmire/
Quagmire! Alllright:
http://www.youtube.com/watch?v=sr-0-El9cqs
CHF is soaring to historical highs.
euro humpty dumpty about to fall off the wall
greenback ain't in better shape: the first domino of dollar dumping starts.
Cambodia shuns the greenback: http://www.marketwatch.com/story/cambodia-edges-away-from-us-dollar-2011...
My friend says Kampuchea is a very nice country - very peaceful and safe, has internet.
Why not take some of your gold coins with you, brace yourselves for a groping by the TSA and head off for an extended holiday?
Better not say that too loud. High Plains Drifter will get his panties in a twist over your personal decisions and wax eloquent about how he will not let you back in after he's done remaking the country.
Peak credit expansion you mean. The peak prosperity goes back to the 50's.
Agreed that relative peak prosperity happened in the 1950s.
But I'd say we felt 'richest' (regardless of how it happened) in terms of global purchasing power around 2000. Some would argue that 2006 was when we felt 'richest', but I discount that because of the destruction of DXY since 2000.
The housing bubble gave the appearance of wealth. Just think about all the refinanaces that bought pools, toys, cars(SUVs), to pull those toy trailers and boats, trips to Disney, Hawaii, Sandals etc. life has been great. Now just default. Even works at the personal level.
Don't you just love BHO's new comment. "I will not allow those who pay no taxes bear the burden of those who are not paying their fair share"
http://www.smbc-comics.com/comics/20061114.gif
"I want change!" ---says the homeless guy
I'm pretty sure he meant Emmelt and GE will not bear the burden.
Encore presentation:
Dark Harbor
Where has she gone
with her lamp held high
beckoning outcasts who would live free or die?
There, in the east!
What? She stands as if caged...
her eyes remain steady yet her heart's disengaged
Once revered by the nation
(those who would not be ruled)
but her people grew weaker and now they are fooled
“Liberty!” they greet her
for they seem well acquainted
but she views them as strangers, with her wisdom untainted
While yet in her youth
the year nineteen thirteen
she was tied to an altar by hands so unclean
As freedoms were stolen
from that day to this
her children sat idle and did not resist
Now forced into shadows
for one hundred years
she stands in the harbor imprisoned by fears
She waits for the hour
for her torch reignited
by the courage of people from a nation united
When truth is revealed
from the flame in her eyes
those who once chained her will see their demise
And the elegant lady
once more we'll defend
and her principled nation will rise once again
© TorchFire 2011
Giggidy, giggidy!
The President said repeatedly this morning..."we don't have to do this". Translated this means the President wants to continue and expand deficit spending, more Govt regulation, less jobs in the free market, more outsourcing, higher Corp profits, more power for the elite, etc. The President knows the country is on a high, sub prime on drugs and coming off the drugs will mean his defeat in 2012. So hell yes, he wants to continue and expand, pretend and extend...whatever it takes to get reelected. Then he can do whatever he wishes.
He's kidding himself, if he believes he has even the remotest chance to win in 2012. He's renegged on ever campaign promis he's made:
Shutdown Gitmo? No
End the Wars,Remove troops from the Middle East? No Started three new ones:Libya, Pakastan, and Yemen
Prosecute those that commited fraud in Wall St? No, instead promoted them and gave them immunity from criminal prosecution
Shutdown gov't spying on Americans? No, Doubled down with increased spying
End BAU in Washington? No, Doubled down on making much worse
Obama did everything Bush did wrong times 10. I don't think even his wife will vote for him!
Obama has assured the destruction of the United States and the beginning of the Divided States of America!
I share your general opinion of Obummer with less intensity. (I only think he is twice as bad as Bush, not ten times) but that does not disable his chance for re-election.
The Powerz/owners have the media and money to select his opposition. Effectively they run both campaigns They will certianly have many agents in their puppet's campaign staffs. Depending on what dirt they have on the candidates, whether they decide to use it, what campaign gaffes are engineered and the media spin on these, they get to pick the winner most of the time.
Sadly, all that means is that the republicans can now slip another of their utter losers on us -- why waste a good candidate on a gimme? And if the big O is sufficiently discredited, we might have to face Hillary again. Yuck.
We lose whoever wins, haven't you learned that yet?
Right. That was his *mandate* when he got into office: finish Bush/Clinton/Bush/Reagan/Carter/etc.../etc...'s work: Roll back the middle class. Voting is a complete waste of time.
Artice is a graet summary!
Its surprising that so many here trash banksters and politicians and uber weathly elite individuals.
But the article completely overlooked the 'hidden' door: raise taxes on the 1% ???
It won't solve the problem but shouldn't it be considered one of the 'doors' or open to debate?
The 1% is not a homogeneous class. You have wage earners and business owners who create jobs and invest in their businesses and then you have the "unearned" income class. The latter probably have significantly higher levels of wealth yet are taxed at lower capital gains rates. Mostly the President talks about raising taxes on the wage earners and business owners and doesn't much address the disparity of rates the "unearned" class enjoy because of the amount of contributions he receives from that group.
I support raising rates on high income W-2 and investment income over a certain level ($500K), but not business owners who could use the money to create new jobs instead of giving it to the feds to blow on wars, foreign aid, and stupid projects. There should be no increase in taxes unless the government can get the budget back under $3 trillion. It would be like filling up the gas tank on a wrecked car.
So, you admit to being a tax whore, and we're just quibbling over the price?
Having winners and losers be chosen by Washington hasn't worked out so well for us. Why would it be any different under your guidance?
What does "official" have to do with anything?
1. I thought he 16th Amendment to the Constitution was never ratified.
2. At least one other comment has covered this but I will add mine: writing a 1 followed by 12 zeros is not difficult, so the problem does not lie here.
3. A Russian demographer calculates that socialist FDR wiped out about as many U.S. citizens in the 30's depression as the Cheka wiped out in the Ukraine.
4. Fannie Mae and Freddie Mac: boondoggles.
5. Have a look at the Line of Control and you will realise what an aggressive, provocative pack of gentlemen the US has become - you don't just fight wars, you manufacture them (and contantly bellyaching "Waaah! He hit me first!) but the wars are no longer profitable as the easy pickings are finished and now basically only the Muslims are left to rape and pillage and we are a tough nut to crack.
6. The Great Society blows another mind - Mad Magazine's take.
7. Default on gold backing of the Amerazoo, and "social" "security" are just part of the fiat scam where virtually entire populations have been so indoctrinated that it is almost impossible to find anyone who can think straight and figure out that there should be no trade in promissory notes (and no "gold backed" currency, just gold).
* And for any mentally impaired person who suggests that "gold is heavy" i prescribe a regimen of press-ups and chin-ups (I have a PhD in Economics and am eminently qualified in the area of medical economics).
* Also the pic of Liberty is wrong - she is up to her eye-balls in debt.
5-yr. yield has now crashed to 1.40% and we have a complete U-Turn on ES.
Gimme a full blown default, and we'll see the 5-yr. yield at 1.25% within hours.
Never fight Uncle Gorilla.
Uncle Gorilla is now rated less than AAA as per Obama.
He is not lying about that.
THIS General Jim (Quinn) has been predicting correctly all along.
---
I guess I am going to have to say the below all day. My duty as I see it.
To: Tea Party members of the House:
Do.Not.Give.In. Remember why we elected you. Stop the spending, stop the cozy deals. Stop the robbery of the American people. The ONLY way to right the ship (and it WILL be very painful) is to STOP the spending. You know it, and we know it.
---
To: Valued Zero Hedge readers and commentators:
Buy.Gold.Now. Tell your members of Congress: NO! To a BAD deal.
they will do the same back room deals as all the previous assclowns in office have done ... you'll see
Rolling, you might be right. On the other hand, the meme of the day is that we get a deal (which will stink), and so many people want to see it as good, that the market will zoom, and PM's correct -- for about a day or two. Then they'll read it and the reverse will happen. I'm sitting on dry powder myself to buy that dip. If I don't get it, or I don't catch it, I'll not have lost much in opportunity cost, and I can still increase over my core, non traded holdings -- I just won't make *as much* if my hypothesis is wrong.
You're right. It makes me want to throw up in my mouth and shit on congresses face but you're right. Trade like bernanke's gonna win.. For a while. We will not default. We will QE and obfuscate to the very end. There will be no spx crash... Ever. The dollar will devalue before all else. Its their only way to keep power. Fuck.
+++1625.4
Look Robotroll! Another decade low for EUR/CHF may be in.
Please just stop posting and/or kill yourself. As if the message in your ridiculous posts wasn't bad enough, you insist on using some kind of faux-trader juvenile language such as "world-record highs" and "Uncle Gorilla."
Should I sell my gold now?
Yes. I'll buy it from you.
GREAT ARTICLE, most of my favourite rants all together. 60'000 pages tax code? No way, it's much more. The last law was 20'000 pages. Either you have a huge team of lawyers or you are a second class citizen.
Yes, SELL-SELL!
To me...now.
Might as well dump it quick for $1400 an oz too, just to be sure it all sells fast.
' ... honey, that raging wildfire is getting very very close to our house ... looks like it has a very good chance of hitting us very soon... what do you think, should we cancel our homeowner's insurance now ? '
All parabolic moves end in an epic bust.
http://1.bp.blogspot.com/-KfmgOaqyfII/TimeGKsq3GI/AAAAAAAAAEw/kQO41lqrew8/s1600/US+debt-GDP.jpg
"Full Faith and Credit" will appear on the tombstones of Greenspan, Paulson, Bernanke and Geithner.
Famous last words.
Watch this.
It's different this time.
I am not addicted to fiat crack.
Don't forget...
Fuck it, thats good enough.
I can fly!!
Obama seems like a good candidate
....and 'Check's in the mail'.....' all locked on'........'got ya covered'......
also............
Yeah, I'm pretty sure it will work like that.
Debt shall set you free.
Who's going to honor them with a burial?
Money printing is default by another name. Results are the same.
Who cares as long as we don't have to eat our peas, right?
Again:
I guess I am going to have to say the below all day. My duty as I see it.
---
To: Tea Party members of the House:
Do.Not.Give.In. Remember why we elected you. Stop the spending, stop the cozy deals. Stop the robbery of the American people. The ONLY way to right the ship (and it WILL be very painful) is to STOP the spending. You know it, and we know it.
---
To: Valued Zero Hedge readers and commentators:
Buy.Gold.Now. Tell your members of Congress: NO! To a BAD deal.
While sympathetic to the need to reign in spending, I am extremely leery of their corporate backers, Koch Industries, Rupert Murdoch, Dick Armey's Freedom works, etc whom I am convinced do not have my financial interests in mind nor that of their tragically duped placard waving followers.
Shameless plug for my coming article later today regarding the Washington DC and Wall Street addict and how it relates to our own enabling.
I look forward to your piece CigDis.
Am I allowed to read it first and throw up when I finish? What if projectile vomiting happens first? Would that be OK? It would be MY keyboard after all.
:(
Check your email, but please wait until it hits ZH, then make sure to include a link back to ZH. But you have your sneak peak waiting for you now.
There's a serious problem with the analogy. They may be the addict, but an over dose doesn't kill them. It kills us instead.
Silver, I gave you No. 3. Great insight.
+ $1620 (?)
Agree also.
Here's another analogy: credit expansion is like the enzyme mosquitoes inject to keep your blood flowing while they suck. The bankers are addicted to our life energies (work, products, money,etc). They couldn't care less what method they use. Vamps!
DoChen: you mentioned your web site a while back. I also went expat - would be interested in seeing it.
Send me a gmail at my name for the link to my lil ol blog, promise me you will behave.
Think of 'them' as the drunk driver that parties like a rock star and only drives because he is too fucked up to walk and takes out a family on their way home from a theme park on a sunday night, that would be a great analogy!
I said nothing about an overdose. The bold I applied to the quote was what I was talking about. I pulled the entire quote to give the bold some context.
You might want to read the article before condemning the analogy.
There is no such thing as a perfect analogy. Using an analogy implies a similarity, not a perfect copy.
My post was not meant to call you out, CD. I was only joining the conversation with a follow up thought.
Much respect,
SD
My bad for assuming the worst.
Drugs, addicts, overdose... sounds jolly, upbeat, when is it out?
Sometime around 4 PM East Coast Tribe Time.
Banzai7 and I are talking about carpet bombing ZH at the same time. :>)
Hide the women and children because mine ain't gonna be pretty.
EDIT: Not going at 4. Looks like Banzai7 and I will be holding off for a day or two.
Closing the gold window was a default in all but name.
Even earlier: Removing the Gold clause was a default. Lots of talk about violation of contracts recently. We haven't seen anthing quite like what they did in 1933.
The Gold Reserve Act had economic ramifications far beyond national finance. At that time many contracts stipulated that their monetary terms could be demanded in gold. Such gold clauses were intended to protect against the United States devaluing the dollar. When the Emergency Banking Act of 1933 and the Gold Reserve Act of 1934 outlawed the use of gold such contracts became sources of controversy. In the gold clause case Norman vs. Baltimore & Ohio Railroad Co., 294 U.S. 240 (1935), the U.S. Supreme Court ruled that gold clauses were invalid.
http://en.wikipedia.org/wiki/Gold_Reserve_Act
Don't forget fiat33 for us domesticted animals. 1971 was the final default to foreigns.
Even after a 'default', and a currency collapse, the main issue will remain:
YOUR OBLIGATION.
It's not about spending, regulation, jobs, the economy, or Grandma's check.
It's about your bondage. Perpetual debt servitude. Peonage.
The land you live on, the air you breathe, all owned by your masters. And you will pay your debt to society, or you will not survive.
Debt Jubilee will set you free.
Don't bogart that joint, man, let us have some too.
Spot on! Remember it's their money. Theirs' to inflate, to devalue, to do what it takes to maximize return. Even the pennies on your eyes when your dead.
Nice quote From Mises. Here's a sweet gem from Murray Rothbard, back in 1991;
Yes, and reset the whole damn thing.
Murray was a true prophet of the coming economic doom and the phrase 'TBTF' he uttered long before the current crisis which makes me know 'TPTB' have read and understood his work. The only question is how long have 'TPTB' been planning this mess. I am only sad that Murray did not live to see his life's work be validated before his eyes.
Mises? Think deeper dude. the rabbit hole is deeper indeed...
https://libertyrevival.wordpress.com/2010/11/29/austrian-school-of-econo...
That article is full of shit. Austrians have the most contempt for the Federal Reserve and the Fractional Reserve banking System of any on this planet. Here's Rothbard take on the Feds
http://mises.org/daily/3823
As for the claims that the Rockefellers founded it, what tripe. Carl Menger founded it in the mid 19th Century in central Europe (the clue is in the name) the name was originally a derogatory name from the Statist economists of the day who feared Menger and his beliefs on liberty for all.
No doubt the dork who wrote that is a Keynesian who expects statists privileges for life.
thanks for sharing...........
Go LONG, stay STRONG, even a negative GDP can't take this market down. I wonder how many 'other forums' readers went short SP500 futures on margin with money borrowed from a 29.9 APR credit card, in their wifes name.
Tyler's "Compression Trade" algo was right on the money.
I swear that thing is now 5 for 5, near perfect record.
The problem is two unfunded wars, irresponsible tax cuts for the wealthiest, and a financial sector out of control.
I realize that we are in the hysteria stage now and have to work through it, but at the end of the day, that is what
took the US off the tracks. It was not an act of God, it was acts of pigmen. And so men and women can solve the problem.
+ $1620 Jesse. One of my next stops.
Green one from me.
I guess I am going to have to say the below all day. My duty as I see it.
To: Tea Party members of the House:
Do.Not.Give.In. Remember why we elected you. Stop the spending, stop the cozy deals. Stop the robbery of the American people. The ONLY way to right the ship (and it WILL be very painful) is to STOP the spending. You know it, and we know it.
---
To: Valued Zero Hedge readers and commentators:
Buy.Gold.Now. Tell your members of Congress: NO! To a BAD deal.
Gold Sound Money? hummm
https://libertyrevival.wordpress.com/2010/06/22/honest-and-sound-critici...
/vomit Funny, you left out government welfare. I guess spending is okay with you as long as it is stealing from the "rich" to provide for the "poor," huh?
"I will not allow those who pay no income tax to bear the burden of those not paying their fair share" BHO
+1 amazing gag reflex suppression. Must've hurt going down, though.
-1 for not understanding that our currency is debt that can never be paid back. The point being that you run along on your hamster wheel your entire life, always falling a little further behind, funding your masters while believing you are free. Your obligation is always increasing. The further you get ahead, the more indebted you are. And when the scheme crashes, you will beg, cry out, demand a Strong Leader to take over. Worked for Germany, worked for Russia. You'll get what you want. Good and hard. Vaseline is for sissies.
The problem is $66 - $144 trillion in unfunded liabilities for Medicare, Medicaid and Social Security.
Any way to delete a duplicate post?
nope, you can edit it to not be a dupe before someone replies.
...and now it's too late! I couldn't agree more. The communists always scream and holler about warfare (welfare for corporations), but they always seem to forget the welfare for individuals. Shut down the entire DoD, even the constitutional parts, and we would still have a gargantuan spending problem. The truth doesn't matter to angry people focused on classism however. There's nothing wrong with capitalism. It is fascism and communism that are to blame here.
Default solves the problem. It repairs the balance sheet. It is the solution. Whether through hyperinflation or repudiation doesn't matter to the government.
Default only works if the spending stops. What is true for individuals is still true for governments in the long run.
Default and we won't be able to borrow anymore for several years. The spending will have to match the revenues. In the meantime, we can pass a balanced budget amendment.
The problem is human nature, there is no way around it.