Keynesianism

Ron Paul Nevada GOP Debate On CNN: All Questions And Answers – ‘I Would Cut All Foreign Aid’ – ‘We are On A Bankruptcy Course’ (Video – Oct. 18, 2011)

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YouTube Added: 18.10.2011

These are your ‘alternatives’:

– Presidential Candidate Jon Huntsman Wants Preemptive Iran Strike: ‘I Cannot Live With A Nuclear-Armed Iran. If You Want An Example Of When I Would Use American Force, It Would Be That’

– Presidential Candidate Mitt Romney Argues For Increase In Military Spending To Ensure US Military Dominance Over Other Nations

– Presidential Candidate Herman Cain: ‘There’s No Reason To Audit The Federal Reserve’

– Presidential Candidate Rick Perry Open To Send US Military To Kill Drug Cartels IN MEXICO

Ron Paul is correct on Guantanamo:

– Bush, Cheney and Rumsfeld ‘Knew Guantánamo Prisoners Were Innocent’:

George W. Bush, Dick Cheney and Donald Rumsfeld covered up that hundreds of innocent men were sent to the Guantánamo Bay prison camp because they feared that releasing them would harm the push for war in Iraq and the broader War on Terror, according to a new document obtained by The Times.

See also:

– Change: Obama Creates INDEFINITE DETENTION system for prisoners at Guantanamo Bay

– Obama Administration Abandons Guantánamo Closure Plan

Letter to George Washington, Regarding Paul Krugman

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Flashback:

– The No.1 Trend Forecaster Gerald Celente’s Dire Warning For The World

– Gerald Celente Special Trend Alert: The 1st Great War of 21st Century Has Begun!

– Letter to George Washington, Regarding Paul Krugman (Gonzalo Lira, August 16, 2011):

I wrote a letter to George Washington, the pseudonym for a well-known finance and economics blogger, with regards to a blog post he wrote on August 15.

The letter might sound a bit like score-settling—but there is a serious point to it, a point that applies to both the Left and the Right. So be patient.

Here is my letter to him in full, with a few light editorial touch-ups:

Hi GW,

It’s been so long!

I’ve been skiing like a madman down here in Chile—but I did catch something you wrote, which I’d like to comment on, now that a blizzard has hit the slopes and I’m stuck inside with not much to do.

You wrote a post yesterday, picked up by Zero Hedge and others, pointing out that Paul Krugman is advocating war as a fiscal stimulus solution.

Read moreLetter to George Washington, Regarding Paul Krugman

James Turk on the US Dollar, the Euro, Hyperinflation, Gold And Silver

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James Turk’s presentation on the gold price and the US dollar

Added: 05.06.2011

James Turk of the GoldMoney Foundation speaks about currency devaluation and the rising gold price. How the gold price is rising against all major currencies and monetary policy is political, having abandoned all pretence of seeking monetary stability. He warns of the dangers of a hyperinflationary crisis. James also explains why gold should be considered money and not an investment.

He also talks of the coming dollar collapse and the waterfall decline in the dollar, especially since Ben Bernanke’s words on QE. He talks of different examples of hyperinflation from paper money hyperinflation in Weimar Germany to deposit currency hyperinflation in Argentina. The presentation was held on 29 April 2011 in Munich, Germany.

Adolf Hitler, Silver And COMEX

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It has been done before (here, here and here) and it certainly will be done again. In the meantime, here is Adolf, reprising in his now traditional role as Jamie Dimon, learning that the Comex is out of silver.


Added: 20.04.2011

Submitted by Tyler Durden on 04/22/2011 08:52 -0400

Source: ZeroHedge

Eric Sprott on Silver: ‘THERE IS NOTHING LEFT’

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And this is the Greatest Depression!

Eric Sprott made an appearance at Casey Research Gold and Resource Summit where in addition to providing a succinct summary of all his monthly letters from the past year, whose forecasts are all gradually panning out, he spoke about the prospects for gold, and particularly silver.

We will leave it to readers to parse through the brief must watch clip, but here is the punchling for those wondering why increasingly more distributors are reporting indefinite lack of physical silver inventory:

“There’s $22 billion of silver available in the world, of which the ETFs already own half, and between you guys and us we probably own the other half… Which means there’s nothing left.”

Submitted by Tyler Durden on 02/23/2011 15:05 -0500

Source: ZeroHedge

Paul Craig Roberts: Obama’s FY 2012 Budget Is A Tool Of Class War

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Paul Craig Roberts was Assistant Secretary of the Treasury during President Reagan’s first term. He was Associate Editor of the Wall Street Journal. He has held numerous academic appointments, including the William E. Simon Chair, Center for Strategic and International Studies, Georgetown University, and Senior Research Fellow, Hoover Institution, Stanford University.

paul-craig-roberts

Obama’s new budget is a continuation of Wall Street’s class war against the poor and middle class.

Wall Street wasn’t through with us when the banksters sold their fraudulent derivatives into our pension funds, wrecked Americans’ job prospects and retirement plans, secured a $700 billion bailout at taxpayers’ expense while foreclosing on the homes of millions of Americans, and loaded up the Federal Reserve’s balance sheet with several trillion dollars of junk financial paper in exchange for newly created money to shore up the banks’ balance sheets.

The effect of the Federal Reserve’s “quantitative easing” on inflation, interest rates, and the dollar’s foreign exchange value are yet to hit. When they do, Americans will get a lesson in poverty.

Now the ruling oligarchies have struck again, this time through the federal budget. The U.S. government has a huge military/security budget. It is as large as the budgets of the rest of the world combined. The Pentagon, CIA, and Homeland Security budgets account for the $1.1 trillion federal deficit that the Obama administration forecasts for fiscal year 2012. This massive deficit spending serves only one purpose–the enrichment of the private companies that serve the military/security complex. These companies, along with those on Wall Street, are who elect the U.S. government.

The U.S. has no enemies except those that the U.S. creates by bombing and invading other countries and by overthrowing foreign leaders and installing American puppets in their place.

China does not conduct naval exercises off the California coast, but the U.S. conducts war games in the China Sea off China’s coast. Russia does not mass troops on Europe’s borders, but the U.S. places missiles on Russia’s borders. The U.S. is determined to create as many enemies as possible in order to continue its bleeding of the American population to feed the ravenous military/security complex.

Read morePaul Craig Roberts: Obama’s FY 2012 Budget Is A Tool Of Class War

Pathetic World Economic Forum Endorses Fraud

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Related info:

– Davos World Economic Forum 2011: Live (Telegraph)

World Economic Forum 2010:


(Click on image to enlarge.)

Still wonder why the World Economic Forum is endorsing pathetic BS?

Sometimes pictures really do say a lot more than a thousand words.

See the summary at the end of the following article.

World Economic Forum Endorses Fraud; Steve Keen Mocks the WEF Report, So Do I; The Purported “Need to Double Credit in 10 Years”

A few days ago I received an email from the World Economic Forum regarding a need to double credit over the next 10 years. Here is that email.

New York, USA, 18 January 2011 – Credit levels will need to double over the next 10 years, growing by US$ 103 trillion, to support consensus-projected economic growth. This doubling of credit could be achieved without increasing the risk of major crisis, finds More Credit with Fewer Crises: Responsibly Meeting the World’s Growing Demand for Credit, a report released by the World Economic Forum in collaboration with McKinsey & Company. The study develops a detailed global credit model using historical credit volumes and forecasting potential credit demand to 2020 across 79 countries, representing 99% of world credit volume. The study applies a sustainability methodology to the projected credit demand, using newly developed metrics to answer the following two questions: Will credit growth be sufficient to meet demand? Is there a risk of future credit crises and, if so, where?

The accompanying PDF entitled More Credit with Fewer Crises is 84 pages of economic claptrap. The main mission of the World Economic Forum appears to cram more credit down the throats of a world so stuffed with credit it cannot possibly be paid back.

Australian economist Steve Keen found three major flaws in the report. There are many others. Inquiring minds will certainly want to read Keen’s WEF-mocking analysis entitled How I learnt to stop worrying and love The Bank.

Read morePathetic World Economic Forum Endorses Fraud

Meltup (Documentary): The Beginning Of A US Currency Crisis And Hyperinflation.

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Added: 13. Mai 2010

The No.1 Trend Forecaster Gerald Celente: Greece Only The Beginning; Wall Street Plunge; Bailout Bubble Bursting; 2010 Global Crash; Gold

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“I Have 80% Of My Assets In GOLD.”


Added: 7. Mai 2010

If Nostradamus were alive today, he’d have a hard time keeping up with Gerald Celente.
– New York Post

When CNN wants to know about the Top Trends, we ask Gerald Celente.
– CNN Headline News

There’s not a better trend forecaster than Gerald Celente. The man knows what he’s talking about.
– CNBC

Those who take their predictions seriously … consider the Trends Research Institute.
– The Wall Street Journal

A network of 25 experts whose range of specialties would rival many university faculties.
– The Economist

More from Gerald Celente:

– Gerald Celente: Obama’s Financial Reform Is Just A Show

– The No.1 Trend Forecaster Gerald Celente on ObamaCare, Dollar Devaluation And Gold

– Gerald Celente: This time they will close the Banks & Wall Street (03/27/10)

– Gerald Celente: ‘It’s the greatest bank robbery in world history and the banks are doing the robbing.’

– Gerald Celente: ‘The Crash is Coming in 2010.’

– The No.1 Trend Forecaster Gerald Celente: Financial Mafia Controlling US and Wall Street

– Survivor, America: ‘It’s Only Going to Get Worse,’ Gerald Celente Says

– The No.1 Trend Forecaster Gerald Celente: The Terror And The Crash of 2010

German Professors Challenge Greek Bailout Legislation, Declare it Unconstitutional

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Commentary:

Greece should (arrest the Goldman Sachs banksters) default on those bonds that are unpayable and let the stupid investors/banksters eat the losses.

Instead the people in Greece and the EU will be presented with the bill, created by corrupt elite criminals.

Now Germany is portrayed as not willing to help the people of Greece.

The Greek bailout is not about helping the people.

It is about looting the people in the EU (and everywhere else) until there is nothing left. This is happening everywhere.

– Max Keiser on Greece: ‘The IMF is a Financial Mafia’:

“The only solution for Greece is to arrest the Goldman Sachs bankers immediately and all those involved in the fabrication of Greek economic data in 2000, when you became a member of the eurozone. The next step is to nationalize all banks like Sweden did in 1993. The International Monetary Fund is that last thing you need. You will lose your sovereignty. It exercises terrorism. You will be raped in such a way, that it will be the worst pain you have ever felt.

If someone burns down your house in order to sell you charcoal, would you consider this logical? That is exactly what Goldman Sachs did to the Greek economy. They burned you down like arsonists and then they tell you not to worry they’ll give you charcoal. It’s outrageous. The IMF has said that it can provide Greece with help. The Wall Street investment hedge funds are attacking Greece’s bond market so that the Greek economy collapses. And they’re doing this for a simple reason; to force the Greek people to ask for help from the IMF. The IMF will say, we came because you asked for our help. Wall Street bankers work very closely with the IMF. It’s a financial mafia and the hedge funds are the assassins. Research conducted on Goldman Sachs in the USA and in Europe show how big a mafia it is. They are involved in illegal activity throughout the world.?

Germany is on the side of the Wall Street bankers. Germany doesn’t care about Greece or the euro. The euro replaced a cheap capital in order to uphold competitiveness in its export market. As long as Greece is a problem, the euro falls, which is something that is in Germany’s interest.

The European Union and the euro are competing with the dollar. Unfortunately, the crisis will destroy the euro. The financial terrorists on Wall Street intend to destroy Portugal, and other countries, after Greece. The destruction of the euro will allow the dollar to be the only international currency, the only fiscal reserve. If a country wants to buy petroleum, it must purchase dollars first. If a country wants to buy copper, it must purchase dollars first. Because these and many other commodities are only sold in dollars. This means that the U.S. is making a continuous profit. The whole world is obliged to buy dollars. The euro threatened the empire of the dollar. It was naturally not appreciated by Wall Street bankers. They are using the crisis to destroy the euro. The Greek people must stand up to the bankers, just like the Icelandic people did.”

The reality is that:

– Elite (Bilderberg) puppet Merkel urges parliament to give more taxpayer money to Deutsche Bank under pretext of “Greek bailout”

– Germany staggers under bank bailout and souvereign debt

– Faces financial meltdown with Greece

– Banks poised to buy up bankrupted countries

– Merkel urges Germany to support Greece with bail-out (BBC News):

“Quite simply Europe’s future is at stake,” Ms Merkel said. “Europe is at a fork in the road.”

Parliamentary approval is needed for the EU and IMF to start disbursing the 110bn-euro ($143bn; £95bn) bail-out.

Elite puppet President Obama, for example, added more to the National Debt in 120 days than all other Presidents did in the past 220 years, yet feels qualified to lecture Americans about ‘fiscal responsibility’.

Gordon Brown and Alistair Darling hail themselves as saviors, who saved the UK from the financial crisis.
What they are really doing is bankrupting the UK and destroying the pound.

– UK budget deficit to surpass Greece’s as worst in EU

The majority of the people is still ignorant about what all this dramatically increased government debt and policies like quantitative easing by their central banks (=printing money = creating money out of thin air = increasing the money supply = INFLATION) mean for them.

Here is (again) what it means:

“When a country embarks on deficit financing and inflationism you wipe out the middle class and wealth is transferred from the middle class and the poor to the rich.”
– Ron Paul

“Deficits mean future tax increases, pure and simple. Deficit spending should be viewed as a tax on future generations, and politicians who create deficits should be exposed as tax hikers.”
– Ron Paul

“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
– John Maynard Keynes

“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. … This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.“
– Alan Greenspan

“The one aim of these financiers is world control by the creation of inextinguishable debts.”
– Henry Ford

“I place the economy among the first and most important virtues, and public debt as the greatest of dangers.”
– Thomas Jefferson

“There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved.”
– Ludwig von Mises

And Obama knows exactly what he is doing:

“Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren,” Obama said in a 2006 floor speech that preceded a Senate vote to extend the debt limit. “America has a debt problem and a failure of leadership.”
– Barack Obama

After the elite criminals will have bankrupted and collapsed EVERYTHING they will propose the New World Order as the only solution to all the problems that they have created in the first place.

Rise up people (peaceful) … or fall and live as slaves.

Germany should leave the EU and the euro and go back to the German mark, backed with gold.

Professors to challenge Greek bailout legislation in Germany

angela-merkel
Elite puppet Angela Merkel

Karlsruhe, Germany – A group of professors who want Germany to be guided by its national interests promised Tuesday to mount a court challenge this week against legislation on bailing out Greece.

They are to demand Friday that the Federal Constitutional Court declare the legislation a breach of the German constitution.

A spokesman said he would file suit straight after Germany’s parliament is expected to pass a law committing Berlin to a 22.4-billion-euro (29-billion-dollar) share in European Union rescue loans to Athens.

The aid is unpopular among Germans, who say they have had to endure lagging wages, high taxes and retirement deferrals for years. News reports in Germany have portrayed Greece as spendthrift, corrupt and undeserving.

“We’ll hand in the docket at 12 noon and announce why,” said Karl Albrecht Schachtschneider, a retired professor of public law.

He told the German Press Agency dpa he was backed by three economics professors, Joachim Starbatty, Wilhelm Noelling and Wilhelm Hankel, as well as by retired Thyssen chief executive Dieter Spethmann.

Read moreGerman Professors Challenge Greek Bailout Legislation, Declare it Unconstitutional

Mike Krieger: This Is The Last Dance

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See also:

– Mike Krieger: Goodbye Disneyland! – The Neo-Feudalistic, Gulag Casino Economy Has Already Begun

Presenting the latest terrific analysis by Michael Krieger, formerly a macro analyst at Bernstein, and currently running his own fund, KAM LP, who joins Willem Buiter and everyone else left with a gram of prudence, in realizing that this is nothing more than the “last dance.”

“History is a set of lies agreed upon.”
– Napoleon Bonaparte

Most people prefer to believe their leaders are just and fair even in the face of evidence to the contrary, because most people do not want to admit they do not have the courage to do anything about it.  Most propaganda is not designed to fool the critical thinker, but only to give moral cowards an excuse not to think at all”
–  Michael Rivero

Every man gotta right to decide his own destiny, And in this judgment there is no partiality. So arm in arms, with arms, we’ll fight this little struggle, ‘Cause that’s the only way we can overcome our little trouble. –  Bob Marley, Zimbabwe

A Thousand Words On Conventional Wisdom

Conventional wisdom.  Many market analysts define conventional wisdom in relation to what direction the market is going to head in the future, but I think this is an utter mischaracterization of the concept.  For example, someone that is bullish on the market right now is likely to see conventional wisdom on stocks and the economy as overly bearish after ten years of no returns for U.S. equities.  In contrast, someone that expects a market collapse will say that everyone is a cheerleader and that the “conventional wisdom” after such a huge rally is for stocks to continue to go up.  This is not how I would describe conventional wisdom and all is does is drag the debate into the intellectual gutter.  Rather, to me conventional wisdom is more the “zeitgeist” of the financial and economic community at any given time.  Zeitgeist is defined by the Merriam-Webster dictionary as:  the general intellectual, moral, and cultural climate of an era.  In this sense an “era” will generally mean a lengthy period of time, several decades or perhaps even more extended periods.  That said, what is interesting is that every cycle in the global economy seems to bring forward distinct “mini-zeitgeists” that the experts create to justify market movements or give credence to economic dogma.

When I define conventional wisdom in this manner what I have found is that I almost always disagree with conventional wisdom.  Two very interesting recent periods were fall 2007-July 2008 and then mid-2008-early 2009 period.  In the first period, it was clear to me that decoupling was impossible because the U.S. was too large and it was clearly on the verge of collapse and, more importantly, that China and the U.S. were joined at the hip in a Keynesian economic Frankenstein that would not be easily severed.  Despite what I thought was pretty obvious at the time, conventional wisdom was that the BRICS had decoupled and all would be well.  Rather than seeing the commodity surge as the flight out of the dollar due to the distinct money policies of the U.S. Fed and everyone else, the rally was seen as evidence of decoupling.  This is mainly because conventional wisdom tends to view rising assets as a signal of prosperity.  I believe this was and is generally due to a misunderstanding of economics (we are all taught mostly rubbish in schools) and a shocking ignorance of the global financial system, how it really works and who/what is pulling the levers.

Read moreMike Krieger: This Is The Last Dance

US: Death-Spiral Intercept

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Well well well…. ( The origins of the next crisis – William White, the former chief economist at the Bank of International Settlements (BIS) gave an important speech at George Soros’ Inaugural Institute of New Economic Thinking (INET) conference in Cambridge.):

In essence, White was saying: “it’s the debt, stupid.”  When aggregate debt levels build up across business cycles, economists focused on managing within business cycles miss the key ingredient that leads to systemic crisis. It should be expected that politicians or private sector participants worried about the day-to-day exhibit short-termism. But White says it is particularly troubling that economists and their models exhibit the same tendency because it means there is no long-term oriented systemic counterweight guiding the economy.

This short-termism that White refers to is what I call the asset-based economic model. And, quite frankly, it works – especially when interest rates are declining as they have over the past quarter century. The problem, however, is that you reach a critical state when the accumulation of debt and the misallocation of resources is so large that the same old policies just don’t work anymore. And that’s when the next crisis occurs.

It seems that Mr. Harrison has it figured out.  He goes on to spend a lot of digital ink on the periphery of the bottom line, which is that we continue to think of debt in terms of service costs (indeed, you’ll hear Bernanke talk about it, but never about the actual gross financial system debt outstanding.)

When you boil all this down, however, you get to the following chart (trendline added by moi):

usdoomloop

You can see what’s going on here – each “crisis” leads to lower lows and lower highs.

This presents two problems:

Read moreUS: Death-Spiral Intercept

US: THE Most Important Chart of the CENTURY

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Keynesianism (Deficit Spending, Obamanomics) in general is outdated and wrong.

Interesting article nevertheless.

The latest U.S. Treasury Z1 Flow of Funds report was released on March 11, 2010, bringing the data current through the end of 2009. What follows is the most important chart of your lifetime. It relegates almost all modern economists and economic theory to the dustbin of history. Any economic theory, formula, or relationship that does not consider this non-linear relationship of DEBT and phase transition is destined to fail.

It explains the “jobless” recoveries of the past and how each recent economic cycle produces higher money figures, yet lower employment. It explains why we are seeing debt driven events that circle the globe. It explains the psychological uneasiness that underpins this point in history, the elephant in the room that nobody sees or can describe.

(Click on images to enlarge.)

diminishing-productivity-of-debt-in-the-us-economy

This is a very simple chart. It takes the change in GDP and divides it by the change in Debt. What it shows is how much productivity is gained by infusing $1 of debt into our debt backed money system.

Back in the early 1960s a dollar of new debt added almost a dollar to the nation’s output of goods and services. As more debt enters the system the productivity gained by new debt diminishes. This produced a path that was following a diminishing line targeting ZERO in the year 2015. This meant that we could expect that each new dollar of debt added in the year 2015 would add NOTHING to our productivity.

Then a funny thing happened along the way. Macroeconomic DEBT SATURATION occurred causing a phase transition with our debt relationship. This is because total income can no longer support total debt. In the third quarter of 2009 each dollar of debt added produced NEGATIVE 15 cents of productivity, and at the end of 2009, each dollar of new debt now SUBTRACTS 45 cents from GDP!

This is mathematical PROOF that debt saturation has occurred. Continuing to add debt into a saturated system, where all money is debt, leads only to future defaults and to higher unemployment.

Read moreUS: THE Most Important Chart of the CENTURY

US Senator Judd Gregg Warns of ‘Financial Meltdown’ Risk

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I don’t think that the US has five to seven years left before it will experience the greatest financial collapse in history.

The US is heading for a debt-driven “financial meltdown” within five to seven years, according to Judd Gregg, the outgoing Republican senator for New Hampshire.

In a robust and at times testy video interview for the Financial Times’s View from DC series, Mr Gregg also complimented China for showing rising alarm about the US’s mounting levels of public debt.

“We have had China say that they are looking for other places to put their reserves and that is probably a smart decision on their part,” said Mr Gregg, who will not seek re-election in November. “So the warning signs are pretty clear and the path is unsustainable and, at this point, unless we take different actions, unavoidable.”

Related article: China to Purchase 191.3 Tons of IMF’s Gold

But the senator, who was the most high-profile Repub­lican invited by Barack Obama, the president, to join his administration last year, an offer Mr Gregg accepted and then turned down, said he doubted that the two parties would get together to tackle it.

Last month 16 Republicans and 37 Democrats voted to establish a fiscal commission – seven votes short of what was needed to prevent a filibuster.

Mr Gregg also played down prospects for the non-statutory fiscal commission that Mr Obama set up by executive order last week. “It was just an edict that came from a Democratic president,” he said, adding, that “it’s the only game in town right now”.

Mr Gregg also disputed non-partisan economic studies that showed last year’s $787bn (€585bn, £520bn) stimulus cushioned the impact of the recession. “The facts are wrong,” he said. “I can understand how a Keynesian would make that argument. I find them absurd on their face.”

Read moreUS Senator Judd Gregg Warns of ‘Financial Meltdown’ Risk

US: GDP Mirage – The Last Hurrah

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4th quarter GDP came in at 5.7%. Discounting revisions (and probably even counting them), that was the last hurrah. Here is the story from two highly respected analysts.

Dave Rosenberg: The Houdini Recovery

First, the report was dominated by a huge inventory adjustment – not the onset of a new inventory cycle, but a transitory realignment of stocks to sales. Excluding the inventory contribution, GDP would have advanced at a much more tepid 2.2% QoQ annual rate, not really that much better than the soft 1.5% reading in the third quarter.

Second, it was a tad strange to have had inventories contribute half to the GDP tally, and at the same time see import growth cut in half last quarter.

Third, if you believe the GDP data – remember, there are more revisions to come – then you de facto must be of the view that productivity growth is soaring at over a 6% annual rate. No doubt productivity is rising – just look at the never-ending slate of layoff announcements. But we came off a cycle with no technological advance and no capital deepening, so it is hard to believe that productivity at this time is growing at a pace that is four times the historical norm. Sorry, but we’re not buyers of that view.

Read moreUS: GDP Mirage – The Last Hurrah

Obamanomics: Why Did the ‘Stimulus’ Fail to Help the US Economy?

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The stimulus has not staved off a major depression; instead, it has ensured the greater likelihood of a major economic collapse.

obama-stairway-to-heaven

William L. Anderson, Ph.D., teaches economics at Frostburg State University in Maryland, and is an adjunct scholar of the Ludwig von Mises Institute. He also is a consultant with American Economic Services.

When Congress was debating President Obama’s proposed “stimulus” last year, two of the watchwords for the near-trillion-dollar boondoggle were “jobs” and “shovel-ready.” Now, given what comes out of Washington, one needs a shovel to clean up the muck, and I appreciate the politicians and the media telling us we needed to have our shovels ready.

Now that the numbers are in, however, it seems that money spent had no appreciable effect on lowering unemployment:

A federal spending surge of more than $20 billion for roads and bridges in President Barack Obama’s first stimulus has had no effect on local unemployment rates, raising questions about his argument for billions more to address an “urgent need to accelerate job growth.”

An Associated Press analysis of stimulus spending found that it didn’t matter if a lot of money was spent on highways or none at all: Local unemployment rates rose and fell regardless. And the stimulus spending only barely helped the beleaguered construction industry, the analysis showed.

Keynesians, not surprisingly, have an answer: The government did not spend enough. They reason that economic growth can occur only if “aggregate demand” is great enough to prevent an overall “glut” of unsold goods. (Like the mercantilists before them, Keynesians believe that recessions occur because businesses cannot sell all the goods they produce. Socialists similarly claim that workers are “unable to buy back the products” they make.)

Therefore if government is to prevent the recession-causing “glut,” it must spend whatever is necessary to cover any “shortfall” in private consumption and investment spending. Out of this “theory” we get the present “stimulus,” complete with the blessing of Ivy League economists (who seem to perform the role of the High Priests in today’s political economy).

Such a “theory,” however, is doomed to fail every time, and I wish to give some reasons why.

Read moreObamanomics: Why Did the ‘Stimulus’ Fail to Help the US Economy?

Rep. Ron Paul: State of the Republic Address – ‘Dangerous Times Indeed.’

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“The collapse of the financial system is still in its early stage.”

“The social unrest will illicit cries for the government to exert unusual force to head off a complete breakdown of law and order. The ultimate trap will be set for a system of government claiming to protect a free society.”

“If more power and police authority are not given to the Federal government, it will be argued that only anarchy will result. If more government policing power is given, it will mean a lethal threat to civil liberties.”

“We are rapidly moving toward a dangerous time in our history. Society as we know it is vulnerable to political and social unrest. This impending crisis comes as a consequence of our flawed foreign and domestic economic policies, a silly notion about money, ignorance about central banking, ignoring the onerous power and mischief of out of control intelligence agencies, our unsustainable welfare state and a willingness to sacrifice privacy and civil liberties in an attempt to achieve safety and security from an inept government.”

“Dangerous times indeed.”

“The only way that we can prevent blood from running in the streets is to offer a better idea of the proper role of government in a society that desires, first and foremost, liberty.”

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The Fed and the US government are destroying America:

– America’s Impending Master Class Dictatorship! (MUST-READ!)

– The CFR Controls American News/Media

– Senate Proposes Increasing US Debt Limit to $14.3 Trillion: “If Congress does not enact this legislation, and soon, then the Treasury would default on its debt for the first time in history,” said Senate Finance Committee Chairman Max Baucus

– US: Unfunded Benefits Dig States’ $3 Trillion Hole

– Illinois enters a state of insolvency: ‘We’re close to de facto bankruptcy, if not de jure bankruptcy.’

– The No.1 Trend Forecaster Gerald Celente: Financial Mafia Controlling US and Wall Street

– Peter Schiff: The Lunacy of US Government Programs

– Former Dean of Harvard College Harry R. Lewis: Larry Summers, Robert Rubin: Will The Harvard Shadow Elite Bankrupt The University And The Country?

Read moreRep. Ron Paul: State of the Republic Address – ‘Dangerous Times Indeed.’

America’s Impending Master Class Dictatorship!

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This article is a MUST-READ!

This is not a conspiracy. This is politics and economics.

Wake up America! You will lose everything, if you do not act NOW.

Prepare yourself for a complete controlled meltdown. The greatest financial collapse in world history.

A hyperinflationary depression. THE Greatest Depression.

The Fed and the US government are destroying America!

(More information at the end of the following article.)

“The people no longer have elected representatives; they have elected traitors.”

stewart-dougherty

By Stewart Dougherty

Stewart Dougherty is a specialist in inferential analysis, the practice of identifying historic and contemporary patterns and then extrapolating their likely effects upon the future. Dougherty was educated at Tufts University (B.A., magna cum laude), and Harvard Business School (M.B.A. and an academic Fellow).

FOREWORD: At certain times, focusing on the big picture is important not just for investment success, but for personal welfare, and even survival. We believe such times are here. It is estimated that 98% of Americans have never held a gold coin in their hands. Yet 100% of Americans regularly handle Federal Reserve Notes. From a contrarian standpoint, the financial message from those two statistics is clear. Even so, gold is much more than money or an investment medium; it stands for liberty and throughout history has facilitated escape and ensured freedom. Never having touched a gold coin is the monetary equivalent to never having breathed fresh air, felt the warmth of sunshine, looked up at the stars or risen from the gutter. Fiat Federal Reserve Notes are becoming nothing more than sewage decomposing in the vast, toxic septic tank of predatory Washington politics, epic Federal Reserve arrogance and error, blatant Wall Street fraud and outright Master Class plunder. Below, we outline America’s troubling and compounding predicament, and urge you to think about how to protect yourself from its consequences, both financially and personally.

Thanks to the endless barrage of feel-good propaganda that daily assaults the American mind, best epitomized a few months ago by the “green shoots,” everything’s-coming-up-roses propaganda touted by Federal Reserve Chairman Bernanke, the citizens have no idea how disastrous the country’s fiscal, monetary and economic problems truly are. Nor do they perceive the rapidly increasing risk of a totalitarian nightmare descending upon the American Republic.

One stark and sobering way to frame the crisis is this: if the United States government were to nationalize (in other words, steal) every penny of private wealth accumulated by America’s citizens since the nation’s founding 235 years ago, the government would remain totally bankrupt.

According to the Federal Reserve’s most recent report on wealth, America’s private net worth was $53.4 trillion as of September, 2009. But at the same time, America’s debt and unfunded liabilities totaled at least $120,000,000,000,000.00 ($120 trillion), or 225% of the citizens’ net worth. Even if the government expropriated every dollar of private wealth in the nation, it would still have a deficit of $66,600,000,000,000.00 ($66.6 trillion), equal to $214,286.00 for every man, woman and child in America and roughly 500% of GDP. If the government does not directly seize the nation’s private wealth, then it will require $389,610 from each and every citizen to balance the country’s books. State, county and municipal debts and deficits are additional, already elephantine in many states (e.g., California, Illinois, New Jersey and New York) and growing at an alarming rate nationwide. In addition to the federal government, dozens of states are already bankrupt and sinking deeper into the morass every day.

The government continues to dig a deeper and deeper fiscal grave in which to bury its citizens. This year, the federal deficit will total at least $1,600,000,000,000.00 ($1.6 trillion), which represents overspending of $4,383,561,600.00 ($4.38 billion) per day. (The deficit during October and November, 2009, the first two months of Fiscal Year 2010, totaled $296,700,000,000.00 ($297 billion), or $4,863,934,000.00 ($4.9 billion) per day, a record.) Using the GAAP accounting method (which is what corporations are required to use because it presents a far more accurate and honest picture of a company’s finances than the cash accounting method primarily and misleadingly used by the U.S. government), the nation’s fiscal year 2009 deficit was roughly $9,000,000,000,000.00 ($9 trillion), or $24,700,000,000.00 ($24.7 billion) per day, as calculated by brilliant and well-respected economist John Williams. (www.shadowstats.com) Fiscal Year 2010’s cash- and GAAP-accounting deficits will likely be worse than 2009’s, given government bailout and new program spending that is on steroids and psychotic.

Putting Fiscal Year 2009’s $9,000,000,000,000.00 ($9 trillion) deficit another way, 17% of America’s private wealth, accumulated over a period of 235 years, was wiped out by just one year’s worth of government deficit spending insanity.

Given this, is it any surprise that Treasury Secretary Geithner has announced that the release of the nation’s FY 2009 supplemental GAAP financial statements has been delayed? Remember, this is the same Secretary Geithner who bullied people to cover up the sordid details of the AIG, or more accurately, the taxpayer-funded, multi-billion dollar, Santa Claus bailout and bonus bonanza for Goldman Sachs. Do you really think this government, characterized as it is by fiscal and monetary secrecy, lies, chicanery, cronyism and stonewalling, wants the people to know what is actually happening? Obviously, it does not, so it hides from the public the inexcusable facts.

Read moreAmerica’s Impending Master Class Dictatorship!

PIMCO’S Bill Gross: ‘Let’s Get Fisical’ (… or why the US will not make it.)

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On Thursday I had posted Bloomberg’s summary on the monthly investment outlook by PIMCO’s Bill Gross:

– PIMCO’s Bill Gross warns on risks of US deficit: ‘Our government doesn’t work anymore, or perhaps more accurately, when it does, it works for special interests and not the American people.’

But that summary missed a lot of important points.

Here is just one excerpt as a starter:

“Here’s the problem that the U.S. Fed’s “exit” poses in simple English: Our fiscal 2009 deficit totaled nearly 12% of GDP and required over $1.5 trillion of new debt to finance it. The Chinese bought a little ($100 billion) of that, other sovereign wealth funds bought some more, but as shown in Chart 2, foreign investors as a group bought only 20% of the total – perhaps $300 billion or so. The balance over the past 12 months was substantially purchased by the Federal Reserve. …”

If that doesn’t bother you, then I do not know what will. The Federal Reserve is creating money out of thin air like there is no tomorrow and the bad news is that that is exactly what the elite that controls the US government and the Federal Reserve has planned for America:

In the next two years (or just a little more than that) we will see hyperinflation in the US, people in America will become desperately poor and the Greatest Depression will turn the US into a Third World country.

(In 2009 Bill Gross was named the world’s 32nd most powerful man by Forbes.)

Now here is the full article by Bill Gross, ‘The King of Bonds’ (Must-Read!):

Let’s Get Fisical

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Quixotic journeys often make for great literature, but by definition are rarely productive. I am, after all, referring to windmills here – not their 21st century creation, but their 17th century chasing. Futility, not productivity, was the ultimate fate of Cervantes’ man from La Mancha. So it is with hesitation, although quixotic obsession, that I plunge headlong into a discussion of American politics, healthcare legislation, resultant budget deficits and – finally – their potential effect on financial markets. There will be windmills aplenty in the next few pages and not much good can come of these opinions or my tilting in their direction. Still, I mount my steed, lance in hand, and ride forward.

Question: What has become of the American nation? Conceived with the vision of liberty and justice for all, we have descended in the clutches of corporate and other special interests to a second world state defined by K Street instead of Independence Square. Our government doesn’t work anymore, or perhaps more accurately, when it does, it works for special interests and not the American people. Washington consistently stoops to legislate 10,000-page perversions of healthcare, regulatory reform, defense, and budgetary mandates overflowing with earmarks that serve a monied minority as opposed to an all-too-silent majority. You don’t have to be Don Quixote to believe that legislators – and Presidents – often do not work for the benefit of their constituents: A recent NBC News/Wall Street Journal poll reported that over 65% of Americans trust their government to do the right thing “only some of the time” and a stunning 19% said “never.” What most politicians apparently are working for is to perpetuate their power – first via district gerrymandering, and then second by around-the-clock campaigning financed by special interest groups. If, by chance, they’re ever voted out of office, they have a home just down the street – at K Street – with six-figure incomes as a starting wage.

What amazes me most of all is that politicians can be bought so cheaply. Public records show that combined labor, insurance, big pharma and related corporate interests spent just under $500 million last year on healthcare lobbying (not much of which went to politicians) for what is likely to be a $50-100 billion annual return. The fact is that American citizens have never been as divorced from their representatives – and if that description fits the Democratic Congress now in control – then it applies to Republicans as well – past and present. So you watch Fox, or is it MSNBC? O’Reilly or Olbermann? It doesn’t matter. You’re just being conned into rooting for a team that basically runs the same plays called by lookalike coaches on different sidelines. A “ballot box” pox on all their houses – Senators, Representatives and Presidents alike. There has been no change, there will be no change, until we the American people decide to publicly finance all national and local elections and ban the writing of even a $1 check for our favorite candidates. Undemocratic? Hardly. Get on the internet, use Facebook, YouTube, or Twitter to campaign for your choice. That’s the new democracy. When special interests, even singular citizens write a check, it represents a perversion of democracy not the exercise of the First Amendment. Any chance that any of this will happen? Not one ghost of a chance. Forward Don Quixote, the windmills are in sight.

Distressed as I am about the state of American democracy, a rational money manager cannot afford to get mad or “just get even” when it comes to investing clients’ money. Still, like pilots politely advertise at the end of most flights, “We know you have a choice of airlines and we thank you for flying ‘United’.” Global investment managers likewise have a choice of sovereign credits and risk assets where stable inflation and fiscal conservatism are available. If 2008 was the year of financial crisis and 2009 the year of healing via monetary and fiscal stimulus packages, then 2010 appears likely to be the year of “exit strategies,” during which investors should consider economic fundamentals and asset markets that will soon be priced in a world less dominated by the government sector. If, in 2009, PIMCO recommended shaking hands with the government, we now ponder “which” government, and caution that the days of carefree check writing leading to debt issuance without limit or interest rate consequences may be numbered for all countries.

Read morePIMCO’S Bill Gross: ‘Let’s Get Fisical’ (… or why the US will not make it.)

PIMCO’s Bill Gross warns on risks of US deficit: ‘Our government doesn’t work anymore, or perhaps more accurately, when it does, it works for special interests and not the American people.’

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Wake up America!

– Peter Schiff on Fast Money: ‘America is broke’; ‘The Fed created a currency crisis’; ‘Dollar to collapse 50-70% or more’

– US: Public Pensions Face $2 Trillion Deficit

– U.S. Avoids Technical Default By Three Days


Gross warns on risks of US deficit

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Bill Gross

Jan. 7 (Financial Times) – Bill Gross, the influential bond fund manager who is one of the world’s biggest investors in sovereign debt, said it was unlikely that the US economy was strong enough for the government to “gracefully exit” stimulus spending programmes or that private investors would be capable of absorbing the balance in deficit funding.

In a monthly investment outlook Mr Gross, managing director and a founder of Pimco, which has $940bn under management, commented on US healthcare legislation, the resulting budget deficits and the potential impact on financial markets.

The four-page commentary, entitled “Let’s Get Fisical”, included a scathing attack on the workings of the US political system. He urged the American people to use social networking sites like Twitter to have their voices heard over individual political donors.

“Our government doesn’t work anymore, or perhaps more accurately, when it does, it works for special interests and not the American people,” said Mr Gross. “When special interests, even singular citizens, write a cheque, it represents a perversion of democracy, not the exercise of the First Amendment.”

In highlighting that just $500m spent in healthcare lobbying by labour, insurance, “big pharma” and related corporate interests would generate a $50bn-$100bn annual return, he said, “What amazes me most of all is that politicians can be bought so cheaply.”

Mr Gross said that while he was “distressed” at the state of US democracy, a rational money manager could not afford to “get mad” when it comes to investing clients’ money. Global investment managers have a choice of sovereign credits where “stable inflation and fiscal conservation are available”, he said.

Read morePIMCO’s Bill Gross warns on risks of US deficit: ‘Our government doesn’t work anymore, or perhaps more accurately, when it does, it works for special interests and not the American people.’

Chinese central banker Zhu Min: ‘The world does not have so much money to buy more US Treasuries.’

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Here is what Zhu Min said exactly on the US dollar:

– Chinese Central Banker Zhu Says Dollar Set to Weaken (Bloomberg):

“When the U.S. has to fund its deficit through the combination of issuing more Treasuries and printing more dollars, it is inevitable that the dollar will continue to weaken,” Deputy Governor Zhu said at a forum in Beijing today.

China central banker says harder to buy U.S. Treasuries

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BEIJING (Reuters) – It is getting harder for governments to buy U.S. Treasuries because the United States’ shrinking current-account gap is reducing supply of dollars overseas, a Chinese central bank official said on Thursday.

The comments by Zhu Min, deputy governor of the People’s Bank of China, referred to the overall situation globally, not specifically to China, the biggest foreign holder of U.S. government bonds.

Chinese officials generally are very careful about commenting on the dollar and Treasuries, given that so much of its $2.3 trillion reserves are tied to their value, and markets always watch any such comments closely for signs of any shift in how it manages its assets.

China’s State Administration of Foreign Exchange (SAFE) reaffirmed this month that the dollar stands secure as the anchor of the currency reserves it manages, even as Beijing seeks to diversify its investments.

In a discussion on the global role of the dollar, Zhu told an academic audience that it was inevitable that the dollar would continue to fall in value because Washington continued to issue more Treasuries to finance its deficit spending.

He then addressed where demand for that debt would come from.

“The United States cannot force foreign governments to increase their holdings of Treasuries,” Zhu said, according to an audio recording of his remarks. “Double the holdings? It is definitely impossible.”

“The U.S. current account deficit is falling as residents’ savings increase, so its trade turnover is falling, which means the U.S. is supplying fewer dollars to the rest of the world,” he added.

“The world does not have so much money to buy more U.S. Treasuries.”

Read moreChinese central banker Zhu Min: ‘The world does not have so much money to buy more US Treasuries.’

Famous Investor Jim Rogers: Incompetence In Washington, Abolish The Fed And The Treasury

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“Mr. Geithner has been wrong about everything for the last 15 years.”


Added: 12. December 2009

Paul Krugman: Dubai or not Dubai — that is the question

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Update:

– Dubai World Unit Faces Default Test Monday With Bond Payment (Wall Street Journal):

DUBAI (Zawya Dow Jones)–Debt-laden Dubai World’s unit Jebel Ali Free Zone Authority, or Jafza, faces on Monday a coupon payment on a 7.5 billion U.A.E dirham ($2.04 billion) Islamic bond in the first key test of whether it will default.

– Abu Dhabi to aid Dubai “case by case”: official (Reuters):

ABU DHABI (Reuters) – Abu Dhabi, capital of the United Arab Emirates and one of the world’s top oil exporters, will “pick and choose” how to assist its debt-laden neighbor Dubai, a senior Abu Dhabi official said on Saturday.

“We will look at Dubai’s commitments and approach them on a case-by-case basis. It does not mean that Abu Dhabi will underwrite all of their debts,” the official told Reuters by telephone.

– Japanese banks’ exposure to Dubai at JPY100 bln -Nikkei (Reuters):

Nov 28 (Reuters) – Japanese financial institutions, including three major banks, face loan exposures of about 100 billion yen ($1.16 billion) in Dubai, the Nikkei business daily said.

– Dubai debt woes may hit U.S. property market (Reuters):

“This downturn has had more of a global impact,” said Tony Ciochetti, chairman of Massachusetts Institute of Technology’s Center for Real Estate in Cambridge, Massachusetts.

“Dubai may have to unload some very prestigious properties at distressed prices and this will drive the price of all commercial real estate lower,” wrote Richard Bove, a banking analyst at Rochdale Securities in Lutz, Florida.

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The Atlantis hotel in Dubai.

Dubai or not Dubai — that is the question. Dubai’s sorta-kinda default (a state-owned enterprise seeking a rescheduling of its debts) is, by itself, not that big of a deal. But who else looks like Dubai? What kind of omen is this for the next stage in the financial crisis?

As far as I can tell, there are three ways to look at it — three stories, if you like, about what Dubai means.

First, there’s the view that this is the beginning of many sovereign defaults, and that we’re now seeing the end of the ability of governments to use deficit spending to fight the slump. That’s the view being suggested, if I understand correctly, by the Roubini people and in a softer version by Gillian Tett.

Alternatively, you can see this as basically just another commercial real estate bust. Either you view Dubai World as nothing special, despite sovereign ownership, as Willem Buiter does; or you think of the emirate as a whole as, in effect, a highly leveraged CRE investor facing the same problems as many others in the same situation.

Finally, you can see Dubai as sui generis. And really, there has been nothing else quite like it.

At the moment, I’m leaning to a combination of two and three. For what it’s worth (not much), US bond prices are up right now, suggesting that the Dubai thing hasn’t raised expectations of default.

Read morePaul Krugman: Dubai or not Dubai — that is the question