Ike Was Right!

Authored by Bill Bonner via Bonner & Partners,

We wait for the world to fall apart.

The Dow is still more than 1,000 points below its high; so we presume the primary trend is down. Treasury yields – on the 10-year note – are near 3%… twice what they were two years ago. So we presume the primary trend for bonds is down, too.

If we’re right, we are at the beginning of a long slide… down, down, down… into chaos, destitution, and destruction.

Faked Out

Our working hypothesis is that General Eisenhower was right.

There were two big temptations to the American Republic of the 1950s; subsequent generations gave in to both of them.

  1. They spent their children’s and grandchildren’s money. Now, the country has a government debt of $21 trillion. That’s up from $288 billion when Ike left the White House.

  2. And they allowed the “unwarranted influence” of the “military/industrial complex” to grow into a monster. No president, no matter how good his intentions, can stop it.

A corollary to our major hypothesis is that the rise of the Deep State (the military/industrial/social welfare/security/prison/medical care/education/bureaucrat/crony complex) was funded by the Fed’s fake-money system.

Now, investors, businesses, households, and the feds themselves have all been “faked out” by a fraudulent money system. None of them can survive a cutback in credit.

For nearly 30 years, central banks have backstopped markets and flooded the world with liquidity.

But last week, the Fed turned the screws a little further. It now targets a 2% Fed Funds Rate and claims to be on the path of “normalization.”

And the European Central Bank (ECB) made it official, too; it hasn’t quite begun tightening, but it’s got its toolbox open. And command of the ECB work crew is set to change hands next year anyway, passing on to a German engineer.

Scarred Psyche

The German psyche has been scarred by its awful experience in the last century. Even though today’s Germans didn’t live through it themselves, the entire country seems to have a race memory of it.

Still preparing for hard times, the household savings rate in Germany is at least three times higher than in the sans souci U.S.

Germany’s apocalypse, too, can be described in Eisenhower’s terms – too much debt (arising from World War I)… and too much influence in the hands of the military/industrial complex.

Debt led to hyperinflation. But the damage done by Germany’s hyperinflation of the early ’20s lead to far more than just wiped-out mortgages and billion-dollar cigars.

It discredited the traditional elite of the country – its institutions, its culture, and its politics. Germany had the world’s finest artists, composers, and philosophers. Its writers, engineers, and scientists were second to none.

Even in the early ’30s, Germans could still look to the East – to the madness, purges, and famines of Russia – and say to themselves: “Ah, that couldn’t happen here; we are so much more civilized.”

But by then, civilization was on the run, from the Rhine all the way to Siberia. And in Germany, the old elite was being chased out of leading posts in academia, the military, and the government.

Ruined by hyperinflation and chaos – and hounded by extremists – thousands emigrated from Germany to England and America. Those left yielded to mob spirits and rabble-rousing upstarts – communists, anarchists, and national socialists – who fought it out in the streets.

The national socialists – the Nazis – won. Even though it was prohibited by the Versailles Treaty, they quickly began building up the military/industrial complex.

Then, as Madeleine Albright phrased it, “What good is it having such a powerful military if you can’t put it to use?”

As it transpired, Germany attacked the Soviet Union. By then, the average Russkie may have hated Stalin, but he rallied to defend Mother Russia.

By the end of World War II, eight million Germans would be dead, with millions more condemned to die in prisoner-of-war camps or from starvation.

By 1945, Germany had been bombed so thoroughly that nothing much was left of its once-impressive industrial capacity.

Its farms had been starved of investment (the money went to the military) for the previous 10 years. And the country had been cut in half, with foreign troops ruling over every aspect of life.

Runaway Money

And today, 73 years later… there are still foreign troops garrisoned on German soil… and the Germans still fear letting the money system get out of control.

They’re right to be wary of runaway money. It turns honest wage-earners into paupers, while the speculators get rich.

Worse, it gives the meddlers a source of almost unlimited financing. Then, there’s no telling what mischief they will get up to. Revolution? War? Or simply a complete economic collapse?

News also came last week that the inflation rate in Venezuela has reached 24,600%. In other words, if you bought a pack of cigarettes for $5 last June, you could expect to pay $1,230 for the same pack today.

When the money goes, everything seems to go with it. The economy, government, order, morality, right and wrong – all sink into a greasy stew where you don’t know which parts are edible and which are poisonous.

This year’s rise in oil prices was supposed to give Venezuela a little break. Oil is the country’s biggest asset and its major export. And the state-owned oil giant PDVSA was supposed to rescue the nation.

But it is too late.

The vernacular – the vast web of thoughts and deals that make up everyday life for everyday people – has been so corrupted and distorted that it can’t react normally. Venezuela can no longer take advantage of opportunities or respond to crises. The New York Times reports:

Desperate oil workers and criminals are also stripping the oil company of vital equipment, vehicles, pumps and copper wiring, carrying off whatever they can to make money. The double drain – of people and hardware – is further crippling a company that has been teetering for years yet remains the country’s most important source of income.

Wages could not keep up with inflation. The NYT highlights the case of a typical rig worker who stayed on the job for the entire month of May, yet earned only enough to buy one chicken.

No longer able to feed their children, workers walk off the job. Or drive off.

Trucks disappear. So do wrenches and copper pipes. Even with a higher oil price, income falls for the company… the state… and the remaining employees.

What’s a man to do?

Leave! Venezuelans are rushing the borders to escape, often taking little more than the clothes on their backs with them.

But wait… Americans are civilized people with full employment, a solid dollar, and a military that is bringing order to a troubled world. What possible significance could Germany 1920–1945 or Venezuela 1999–? have for us?

And Eisenhower was just an old worrywart, wasn’t he?

Comments

ebworthen Fri, 06/22/2018 - 21:07 Permalink

Ike was right, the M.I.C. in league with the bankster/corporation/insurer cabal has destroyed the U.S.A.

End the FED, hang the money-changers, and we can get started on destroying the M.I.C.

Bring our troops home.  Absolutely ZERO reasons for having any of them overseas.

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In reply to by wadalt

Escrava Isaura p4424119 Sat, 06/23/2018 - 01:02 Permalink

Ike right or wrong, who cares. So predictable rural.

Look at the big ‘human’ picture.

 

Exploitation of others is the essence of race, religion, capitalism, and education.

Just read the Chineses and Koreans that were under the Japaneses control.

Read the Muslims that were under the Christian’s control for 800 years.

Check the Czechs that were under Russia control.

And look what Trump wants to do with the waiters and busboys in America?  

 

There are two types of people: The peasants and everybody else.

The peasants are the only one that don’t exploit others.

Everybody else wants to plunder ‘exploit’ them...........And everybody else, mutual self-destruction.

 

In reply to by p4424119

Truth_Hoits Escrava Isaura Sat, 06/23/2018 - 09:24 Permalink

The peasants are the only ones who don't exploit others? Spoken like a true peasant.

Your logic is flawed.

Your entire post is discounted because you lack knowledge (although you do possess piece of it, you can't piece them together to form something coherent and logical).

 

How sad is it to see you try to come across as enlightened... You're dust... Wet dust...Meaningless, wet dust. 

 

You're so predictable and rural.

 

Truth Hurts

In reply to by Escrava Isaura

RedBaron616 Adolfsteinbergovitch Sat, 06/23/2018 - 07:02 Permalink

" . . . subsequent generations gave in to both of them."

Sorry, stop blaming the voters. Only the UniParty is on the ticket, so the most we can do is not vote, which we are doing in massive numbers. Also, we have jobs, families, etc. so that, unlike the Socialists/Communists, we can't really drop everything and run to DC and protest. So stop blaming US! The politicians are the responsible parties, especially in a Republic.

In reply to by Adolfsteinbergovitch

Truth_Hoits Ace006 Sat, 06/23/2018 - 09:37 Permalink

Ace006 wrote: You fools who pat each other on the back about not voting make me sick.

 

i hope it's terminal. 

 

You fools who circle jerk one another about electing a politician make me laugh out loud.

 

The reason the forefathers created this system was to minimize the human flaw. It's the best system,... Nevertheless, it's still flawed. More so now than 200 years ago.

Stop getting sick, you pansy. 

lol feeble response to life. 

Hey, I'm Ace006, I'm living in The Matrix, and I'm not going to take it anymore,... after I die.

In reply to by Ace006

Endgame Napoleon Deep Snorkeler Sat, 06/23/2018 - 09:05 Permalink

America is not to blame for all of the problems of every country on Earth, and America has its own problems. America has a “great” economy, especially if you do not count all of the underemployed American citizens, adding up to the MAJORITY of those deemed “employed,” not to mention the motherload of working-age Americans out of the worlforce.

The economy here is great—GREAT—if you just count the top 20% of dual-high-earner parents—the talent who are needed at work—but are on an excused, two-week babyvacation every two months, made possible by computer automation, along with their part-time-working, womb-productive servants who can afford to work part time for a pittance due to the elaborate, pay-per-birth welfare system that accrues to citizens & noncitizens when they work part time in womb-productive, single-earner households with US-born kids, staying below the income limits for welfare and refundable child tax credits up to $6,431.

It gives new meaning to current generations (of parents), stealing from (their) children’s future. .Gov rigs the labor market by jacking up the purchasing power of the womb-productive workers’ wages, granting them noncontributory, monthly welfare that covers the cost of groceries, rent, electricity and childcare (so that they can stay qualified for the welfare programs by working part time), while adding monthly cash assistance and up to $6,431 in refundable child tax credits for parents who pay zero income tax. Non-refundable child tax credits, in turn, are provided to the dual-earner parents, doubling up on breadwinner jobs with benefits per household and halving the size of the college-educated middle class, the parents who actually pay income tax.

This wage-base rigging drives wages down so much that the per-capita income across the South is $20k or below. Employers report hiring “women who have somethin’ comin’ in.” A maximum refundable child tax credit is equivalent to almost 1/3rd of the yearly wages of a non-welfare-eligible, childless, single citizen who must cover rent that absorbs more than half of his / her earned-only monthly income on the wages alone.

The workforce-participation rate glaringly reflects how work no longer pays for the US citizens who lack spousal income, a child-support check that covers rent or layers of monthly welfare and womb-productivity-based welfare from the progressive tax code, but every fake feminist has a “career,” while a $9-per-hour baby-sitter with a NannyCam, a $10-per-hour daycare worker or elderly grandparents do the work of raising her kids.

.Gov gives non-womb-productive citizens NOTHING to cushion this brutal economy; the non-womb-productive are not stealing from YOUR children’s future. The womb-productive citizens & noncitizens in their absenteeism-friendly “voted best for moms jobs,” with their 100% free & noncontributory welfare, plus their tax-code welfare, are the ones stealing from their children’s future, especially the illegal aliens, collecting pay-per-birth welfare and refundable child tax credits up to $6,431, while undercutting American wages for 40 years. They also work mostly under-the-table to stay under the income limits for the welfare programs in traceable income. 

FULL Employment in the USA:

  • 101 million working-age US citizens out of the workforce this month ~ 
  • 95 million working-age citizens out of the workforce last month ~
  • The LARGEST, young, working-age GENERATION in US history due to .gov paying citizens and hordes of noncitizens to have sex, reproduce and work part time, staying under the income limits for an ever-more-elaborate welfare structure for single-earner parents, yet a contributory Social Security retirement system that all of us pay into at either 7.65% (employed) or 15.3% (self-employed) on every penny we ever earn up to the $128,400 SS-taxation cap no longer running surpluses to support the SMALLER boomer GENERATION, and no, letting in even more womb-productive / welfare-eligible immigrants will not solve this problem ~ 
  • 78 million marginally employed / self-employed gig pieceworkers ~ 
  • 42 million employed-in-name-only, womb-productive, EBT-qualified citizens & noncitizens who are called “employed,” even though they work part time to stay under the rock-bottom-low income limits for welfare, and their wages are not even sufficient to cover their grocery bills, much less all of their other .gov-financed bills. 

Subtract those millions upon millions of underemployed or out-of-the-workforce Americans from the 324-million population of the USA, arriving at the small number of truly employed persons who can actually cover their household bills on pay alone.

In reply to by Deep Snorkeler

any_mouse waterwitch Sat, 06/23/2018 - 01:32 Permalink

Problems started under Wilson with the FED and WW1. Under FDR, the SSA and the New Deal (for corporate owners) and WW2.

Ike was giving an eulogy, not a warning. If Ike really cared about it, he had the Power for two terms. Ike only knew the Deep State. He knew no other way of life.

Ike should be remembered as the creator of "Holocaust, the Movie".

In reply to by waterwitch

Endgame Napoleon any_mouse Sat, 06/23/2018 - 09:21 Permalink
  • The overdoing of the womb-productivity-based & noncontributory welfare state, and the resulting large-scale dismantling of traditional marriage and fatherhood, started under LBJ. 
  • The military industrial complex, identified by IKE, started at a time when we were actually in a major world war, but lingered and expanded in peace time, with various (permanent) fake wars used as the excuse.
  • The nascent seeds of globalism might have been generated under Nixon, with his trip to China or under Carter’s brand of Southern mission-trip globalism, but Clinton should get the blame due to key policy decisions that ramped globalism into high gear, like NAFTA and granting MFN to China, with Bush II continuing on the same path other than imposing a few, token steel tariffs.

In reply to by any_mouse

Scipio Africanuz ebworthen Sat, 06/23/2018 - 06:40 Permalink

Too late to end the FED! The USA is currently not in position to experiment. The nation, is truly in "crisis existensis", any mistake now, is fatal and that's an understatement. The enemies of Trump, democrat, or republican, have their heads up their asses. They are so blinded by hatred, they fail to notice that a fire has started in the kitchen, and is rapidly spreading to the gas storage cylinders, which if reached, will blow the entire edifice sky high, into smithereens!

All the FED can do now, is ratchet up the antidote, and hope to God Almighty, that the patient recovers enough, to start healing properly. Before blaming the FED, you might wanna ask yourself what happened to the advice given by Ben Franklin, to "KEEP YOUR REPUBLIC" or that given by John Adams to be a "MORAL AND RELIGIOUS" people.

Ignoring the advice, has brought the USA to the doors of death and make no mistake, the chances of her death, are higher than that of her survival. And that's why Trump's enemies, and their foot soldiers, are truly dangerous, they're oblivious and if not oblivious, stark raving mad, and if not mad, then seriously diabolical or put differently, DEMONIC!

And if they're demonic, well then, they won't hesitate to send humanity into the depths of not hell, but the never ending abyss of never ending suffering, and that my friends, is the very definition of apocalypse.

So then, I implore you, for yourselves, your descendants, and your ancestors, if cavalry, mount your steed, if infantry, level your spear, for soon, very soon, we'll join in battle with those who desire to send us into the abyss...

In reply to by ebworthen

sgt_doom ebworthen Sat, 06/23/2018 - 13:13 Permalink

Fuck Eisenhower, who lost Vietnam early on with Truman, completely ignoring Ho Chi Minh, leaving him no choice but to seek out commie aid.

Fuck Eisenhower, whose major financial backer was Floyd Odlum, majority shareholder in United Fruit, motivating Ikey to send in the CIA to overthrow the capitalist/democratically-elected Arbenz of Guatemala.

Fuck Eisenhower, who appointed Nelson Rockefeller to reorganize the Pentagon, and to the Ex-Im Bank reorganization, allowing Rockefeller to seriously circumvent it, turning it to the bankers' interests.

Fuck Eisenhower who, along with Patton and MacArthur, was reponsible for the slaughter of men, women and children at the Bonus Marchers Village in Anacostia.

In reply to by ebworthen

LetThemEatRand Fri, 06/22/2018 - 21:09 Permalink

You'd think that when a General warned about the dangers of the Military Industrial Congressional Complex, people would have listened.  

"The actual drafter of the speech, Ralph E. Williams, relied on guidance from Professor Moos. Milton Eisenhower explained that one of the drafts of the speech referred to the “military-industrial-Congressional complex” and said that the president himself inserted the reference to the role of the Congress, an element that did not appear in the delivery of the farewell address.

When the president’s brother asked about the dropped reference to Congress, the president replied: “It was more than enough to take on the military and private industry. I couldn’t take on the Congress as well.”

Implied Violins Implied Violins Fri, 06/22/2018 - 21:44 Permalink

Wanna know another general who knew too much, and paid for spilling the beans?  Check out this dude:

 

Major General Count Arthur Cherep-Spiridovich (a Russian general)

https://en.wikipedia.org/wiki/Arthur_Cherep-Spiridovich

"...after his arrival in the US, he became associated with anti-Semite Boris Brasol, who is associated with the text, The Protocols of the Elders of Zion and Spiridovich wrote numerous Anti-Semitic leaflets himself, including "The Secret World Government". He stated that in 1922 he was ready to publish a book on the subject titled "The Unknown in History", but was stopped by armed men posing as US government officers. He also claimed the support of Henry Ford for his anti-Semitic beliefs."

 

Um, he wasn't stopped from publishing his book; here it is on Amazon:

https://www.amazon.com/Secret-World-Government-Hidden-Hand/dp/158509093X

 

He did, however, die before his book hit the bookshelves - in quite mysterious fashion:

"Cherep-Spiridovich died in a Staten Island hotel, with a gas line pipe stuck in his throat. The police reported that he had committed suicide. However, when the body was discovered at the hotel by the staff, the gas line was shut off. No autopsy was performed and no further investigation put into the case."

I read a free, on-line version of his book - which I can no longer find the link to.  It was PAINFUL to read - I mean, the guy was a complete and total narcissist - but he DID predict the start of WWII; he revealed the Satanic ritual child sacrifices of the Rothschilds; and he had an incredible number of old, damning quotes that - had his book gone "viral" - could have really changed the course of history, especially concerning the creation of Israel.  Very underrated man in history, he had the whole story much earlier than most.

 

In reply to by Implied Violins

ChaoKrungThep LetThemEatRand Fri, 06/22/2018 - 23:33 Permalink

No-one seems to realize how inescapably bad it is. Communication is now totally controlled. Protest is futile since it doesn't carry past the next block. All opposition is also controlled, as it must be in a totalitarian society, and fools the protesters into expending energy on useless goals. US society is so confused and frightened that the elites can commit their crimes openly, since they also control the "justice" system. Their crimes become law and are rewarded rather than punished. 1984.

In reply to by LetThemEatRand

any_mouse LetThemEatRand Sat, 06/23/2018 - 01:42 Permalink

BS. Eisenhower was Deep in the Deep State. Wouldthat president's happen to be David? The first Director of the Wartime Relocation Agency that relocated American citizens with Japanese ancestry away from their prime SoCal real estate to Bumfuck, Colorado and other such inhospitable locations.

Wonder which group of connected people bought that SoCal RE at bargain basement prices.

If David, or another brother, did ask the question, he did so as a service to Dwight.

DDE allowed the Dulles Brothers to run both State and CIA.

Ike probably stayed neutral during the Suez crisis upon orders from Tel Aviv.

In reply to by LetThemEatRand

holdbuysell Fri, 06/22/2018 - 21:11 Permalink

"They spent their children’s and grandchildren’s money. Now, the country has a government debt of $21 trillion. That’s up from $288 billion when Ike left the White House."

This is an intellectually dishonest statement, as anyone who spent 5 minutes studying the monetary system, knows it exists as money created as debt at interest. In order to grow the money supply as population and economic activity grow, the money supply, and thus debt must grow too, notwithstanding that it's grown far faster than it needed to. So perhaps this is Bonner's point?

Else, Bonner should know this.

"We are completely dependent on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system.... It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon." —Robert H. Hamphill, Atlanta Federal Reserve Bank 

 

holdbuysell silverer Fri, 06/22/2018 - 21:20 Permalink

Gotta pay the interest in time t on the interest from the debt issued at time t-1. But since the interest was never created, it must also be borrowed into existence at time t.

And so on, as the debt grows exponentially as a result...and here we are.

 

Edit: And Clinton's 'surplus' was nothing more than a confidence trick where he robbed social security and replaced it with IOUs, creating the illusion that the government was actually running a surplus. It was nothing of the sort.

In reply to by silverer

BabaLooey holdbuysell Fri, 06/22/2018 - 21:43 Permalink

Double Edit: Clinton's "surplus" was a big fat fucking lie.

Ten YEAR projections with a shitload of "IF'S" inserted.

Hypo - thetical to the fucking extreeeeeeeeme....

But since it was Bill....and Hill...

They could get away with it.........and even steal the fucking china out the door...

............while letting the Chinese violate our own knickers...

In reply to by holdbuysell

silverer holdbuysell Fri, 06/22/2018 - 23:38 Permalink

And when Clinton left office, the debt was 5.3 trillion. Still not bad. But the Congress always has a choice to spend or not spend. You seem to build a case that debt is necessary. US debt to GDP is 108%. Russia's debt to GDP is 16%. How in the hell did they ever manage to do that? I say debt is a choice. US elected officials chose debt.

In reply to by holdbuysell

holdbuysell silverer Sat, 06/23/2018 - 01:00 Permalink

"I say debt is a choice. US elected officials chose debt."

No it's not, since 1913; and of course they did and still do, out of necessity to preserve the status quo. The debt must grow or the monetary system collapses. That's it. Full stop. 2008 was but a taste.

There are numerous articles and videos on the monetary system.

In reply to by silverer

small_potato silverer Sat, 06/23/2018 - 16:06 Permalink

I say the magical surplus was simply the computer productivity boom coming to fruition. They made a real difference in office productivity per employee, and the rollout effect of pc's in the 1980's peaked in the 1990's. Sometimes technology actually works, and changes things, there's nothing political about it, but politicians certainly take advantage of any good news. PC's becoming universal tools was a true and unexpected tech revolution, maybe the last one of our time.

In reply to by silverer