WHEN AMERICA RULED THE WORLD

I used to rule the world
Seas would rise when I gave the word
Now in the morning I sleep alone
Sweep the streets I used to own

I used to roll the dice
Feel the fear in my enemy's eyes
Listen as the crowd would sing
"Now the old king is dead! Long live the king!"

One minute I held the key
Next the walls were closed on me
And I discovered that my castles stand
Upon pillars of salt and pillars of sand

Coldplay – Viva La Vida

America has squandered the human sacrifice, blood, sweat and tears of two generations in less than seventy years. We have been an independent country for 226 years. From 1783 until 1946 was an unrelenting upward trajectory for the beacon of the free world. With the end of World War II, America was the last country standing. Germany and Japan were in shambles. Russia had lost millions of citizens, with Stalin about to murder millions more. Great Britain was a shell of its former self. The American Empire had been born. We were the manufacturer to the world. We rebuilt Europe and Japan. Our military was dominant. We made the best automobiles. We built 41,000 miles of national highway over two decades. In 1946, one in three U.S. workers was employed in the manufacturing industry. Today, less than one in ten workers makes something.

In the years following World War II, the United States ran trade surpluses of 2% to 4% of GDP. We regularly ran surpluses until the late 1970’s. Since the late 1970’s, the United States has run increasingly large trade deficits, reaching 6% of GDP in 2007. For the last three decades, Americans have tried to spend their way to prosperity. The government politicians and their moneyed backers have sold the idea that Americans could be the thinkers for the world, while other countries could do the menial work of producing stuff. After thirty years we are left with a hollowed out economy of paper pushers. It may be a reach to transition the Wall Street geniuses who created MBSs, CDSs, and CDO’s into jobs building bridges. The manufacturing jobs are gone. Our workers are left to sweep the streets they used to own.

Source: www.globalpolicy.org

After three decades of burning our furniture to keep warm, we are left owing the rest of the world $2.7 trillion. Many of these countries don’t like us. Ben Bernanke is actively trying to drive the value of the U.S. dollar down, while decreasing interest rates paid on this government debt. As Ben prints trillions of new dollars, the value of China’s, Japan’s and the oil exporting countries’ holdings goes down. The U.S. will run a $2 trillion deficit in the next year. We need these foreign countries to buy at least $1 trillion of our new debt. We are sure they will do so. Our reasoning is, what else can they do. From a purely financial standpoint, it is insanity for a country to make an investment in an asset paying 2.5% interest, when in one day last week the Federal Reserve purposely knocked the value of the dollar down 5% in one day, wiping out two years of interest income.

The truth is that foreign countries are not stupid. They are already changing their strategy regarding American debt. The Treasury Department released their monthly analysis of international purchases and sales of U.S. assets for February, last week. Below is directly from that report.

Net foreign purchases of long-term securities were negative $43.0 billion.

Net foreign purchases of long-term U.S. securities were negative $18.8 billion. Of this, net purchases by private foreign investors were negative $10.2 billion, and net purchases by foreign official institutions were negative $8.5 billion.

U.S. residents purchased a net $24.2 billion of long-term foreign securities.

Net foreign acquisition of long-term securities, taking into account adjustments, is estimated to have been negative $60.9 billion.

The Chinese are not fools. They can clearly see that the U.S. will try to devalue our way out of our financial mess. They are going to put the $500 billion of USD holdings to work, before it becomes worthless. Recent examples reported by the Washington Post have been:

· On Feb. 12, China's state-owned metals giant Chinalco signed a $19.5 billion deal with Australia's Rio Tinto that will eventually double its stake in the world's second-largest mining company.

· On Feb. 17 and 18, China National Petroleum signed separate agreements with Russia and Venezuela under which China would provide $25 billion and $4 billion in loans, respectively, in exchange for long-term commitments to supply oil.

· On Feb. 19, the China Development Bank struck a similar deal with Petrobras, the Brazilian oil company, agreeing to a loan of $10 billion in exchange for oil.

· Iran announced that it had signed a $3.2 billion agreement with a Chinese consortium to develop an area beneath the Persian Gulf seabed that is believed to hold about 8 percent of the world's reserves of natural gas.

The Chinese have a long-term plan to rule the world. They are buying up natural resources throughout the world. The walls are closing in on the U.S. The U.S. solution is to print more dollars, borrow from future generations, and tax their citizens more. Ben Bernanke has rolled the dice, but the fear is in his eyes, not our enemies’. We will shortly realize that our castles were built upon pillars of salt and pillars of sand.

Bubble, Bubble

Never in the history of the world has a bubble burst halfway. Every bubble has collapsed to its starting point or below. The self serving pundits on CNBC and on Sunday talk shows continue to predict a stabilization of the housing market. They are wrong. The bubble is still deflating and will not end until home values are back to 2000 levels, if we’re lucky. Examples of bubbles that fully deflated include the tulip bubble of 1637 - 1638, the South Sea bubble of 1719 - 1722, the Nikkei bubble from 1983 until today, and the NASDAQ bubble from 1999 – 2003. The United States has three bubbles that are deflating simultaneously, compliments of the Federal Reserve, George Bush, and a criminally incompetent Congress. Housing, consumer spending, and U.S. total debt are all at different phases of bubble deflation. No matter what politicians attempt, these bubbles cannot be re-inflated. They will deflate fully.

“It is a characteristic of wisdom not to do desperate things.”

Henry David Thoreau

Tulip mania struck Holland in 1637. The whole nation was consumed by tulip bulbs in the first recorded speculative bubble. Contract prices for tulip bulbs reached astronomical levels and then suddenly collapsed. At the peak of tulip mania in February 1637, tulip contracts sold for more than 10 times the annual income of a skilled craftsman. In a matter of seven months, fortunes were made and lost. The bubble popped completely.

Tulip Mania

Source: mysmp.com

The South Sea Company was the AIG of the 1700’s. It was a British joint stock company, founded in 1711. The company was granted a monopoly to trade as part of a treaty during the War of Spanish Succession. The company assumed the national debt England had incurred during the war. In 1719 the company proposed a scheme by which it would buy more than half the national debt of Britain (£30,981,712), again with new shares, and a promise to the government that the debt would be converted to a lower interest rate, 5% until 1727 and 4% per year thereafter. The purpose of this conversion was similar to allow a conversion of high-interest but difficult-to-trade debt into low-interest, readily marketable debt and shares of the South Sea Company. These are the games that declining empires play when they have overreached in their empire building. The plan sounds a lot like Timmy Geithner’s Good Bank Bad Bank scheme. Shuffling debt from one entity to another entity doesn’t get rid of it. It is just a scam paid for by taxpayers.

“Any fool can make a rule, and any fool will mind it.”

Henry David Thoreau

The price of South Sea Company stock went up from £100 a share to almost £1,000 per share. Its success caused a country-wide investing frenzy by peasants, businessmen and lords. The price reached £1,000 in early August and the level of selling was such that the price started to fall, dropping back to £100 per share before the year was out, triggering bankruptcy among those who had bought on credit. The English Parliament reacted to the crisis exactly the way our current clueless bunch of moron Congressmen are reacting to the AIG debacle. The estates of the directors of the South Sea Company were confiscated and used to relieve the suffering of the victims, and the stock of the South Sea Company was divided between the Bank of England and East India Company. A resolution was proposed in parliament that bankers be tied up in sacks filled with snakes and tipped into the Thames River. I’m sure Barney Frank is preparing a similar resolution regarding AIG executives. No one can calculate the madness of men.

South Sea Bubble Chart

Source: Elliott Wave

Japan Inc. was going to dominate the world. From 1983 until its peak in 1989, the Nikkei rose from 7,500 to 38,900, a 500% increase in seven years. Following World War II Japan implemented tariffs that protected their industries from overseas competition. This resulted in large trade surpluses and an appreciating yen. With artificial protections, Japanese companies made mal-investments. Easy money and false confidence led to a frenzy in the stock market and real estate market. Japanese banks had financed this speculative bubble with high risk loans. The PE ratio of the Nikkei reached 78 in 1989. Twenty years after this peak, the Nikkei hit a low of 7,500 this year, the same level it started at in 1983. This has occurred despite spending billions on make work stimulus programs, reducing interest rates to zero, and artificially reducing the value of the yen. The ultimate outcome has been a national debt that is 150% of GDP with a rapidly ageing population and no way out. See any similarities?

[$nikk-monthly.png]

Source: Mike Shedlock

To prove that Japan didn’t have a monopoly on foolishness and speculative frenzy, the U.S. had their bubble in 1999 and 2000. The NASDAQ market rose from 1,000 in 1996 to 5,132 in 2000. The introduction of the internet convinced millions that we had entered a new era. Wall Street did what it does best, and hyped the can’t miss riches to be gained from investing in any company that added a dot.com to their name. When AOL acquired Time Warner in January, 2000, the top was marked. The over-hyped fear of the Y2K “disaster” that awaited our worldwide computer systems resulted in a surge of computer purchases. Alan Greenspan did what he did best and flooded the system with liquidity. These all combined to produce a blow-off top in March 2000. The PE ratio of the NASDAQ reached 264, as most of the hyped dot.com stocks had no earnings. Nine years later, the NASDAQ stands at 1,457, 72% below its peak at 1998 levels. The bubble burst fully.

NASDAQ Dot.Com Bubble

Source: Wikipedia

Toil & Trouble

I’ve scrutinized the four most well known bubbles in history. They all deflated completely. There are hundreds of other bubble examples throughout history and none of them deflated halfway. This brings us to the housing market today. The following chart from Gary Shilling’s newsletter clearly shows that home prices went into a classic bubble frenzy after Alan Greenspan reduced interest rates to 1% and urged Americans to take out adjustable rate mortgages. Americans believed the hype from the National Association of Realtors and Wall Street shills that home prices would go up forever. You may notice that home prices will need to fall another 21% to reach pre-bubble levels. Jim “I haven’t gotten one right yet” Cramer is calling for a June 2009 bottom in housing. It looks like he won’t break his streak of great predictions. I’m sure Jon Stewart will remind him.

“Our houses are such unwieldy property that we are often imprisoned rather than housed by them.”
Henry David Thoreau

There are 75 million houses in America. Twenty four million don’t have a mortgage. Of those 51 million homeowners with a mortgage, approximately 15 million are underwater. According to Mr. Shilling, with the further decline in prices a given, 25 million homeowners will be underwater to the tune of $1 trillion. Anyone predicting a recovery by the end of 2009 is delusional.

Real Quality-Adjusted Home Prices

Source: Gary Shilling

“Most of the luxuries and many of the so-called comforts of life are not only not indispensable, but positive hindrances to the elevation of mankind.”

Henry David Thoreau

The next bubble just peaked in 2008, so it has a long way to go on the downside. Consumer spending as a percent of GDP peaked at 71% in the 2nd quarter of 2008. Americans allowed their savings rate to drop below 0% and counted on their home appreciation to fund their retirements. They believed the Wall Street hype about 10% long term stock returns. This overconfidence led millions of Americans to borrow and spend at excessive levels. In order to get back to pre-bubble levels of 62% of GDP will take years. With home prices down 25% and retirement funds down 50%, only an insane person would continue to spend at previous levels. Ben Bernanke and the Obama administration are praying that Americans will continue the insanity. They will not. Consumer spending will decline by $1.3 trillion annually for years to come. This bubble will not burst halfway.

Consumer Spending as a % of GDP

Source: Gary Shilling

“Most men lead lives of quiet desperation and go to the grave with the song still in them. “

Henry David Thoreau

The last and most dramatic bubble is total U.S. debt. There is no doubt that it is unsustainable. It currently amounts to 340% of GDP. It would need to go back to 200% of GDP or below to retrace its bubble path. This would require $20 trillion of debt to be paid off or written off. The implications of this are staggering. The Federal Reserve and politicians running the country will fight the deflation of this bubble with all of their might. It won’t work. Bubbles always burst. This bubble bursting will change America forever. The American standard of living will decline significantly. Not many people are prepared for this wrenching future. The mantle of ruling the world will be passed to some other lucky country. The government is trying to keep all three bubbles from popping. Their solutions are dangerous and could result in a collapse of our economic system.

Source: Chris Martenson

“If the machine of government is of such a nature that it requires you to be the agent of injustice to another, then, I say, break the law.”

Henry David Thoreau

Civil Disobedience

“There's nothing that I detest more than the stench of lies.”

Colonel Kilgore – Apocalypse Now

The National Debt of the United States from the creation of the country in 1783 until 1986 was $2 trillion. The National Debt of the United States has increased by $2 trillion in the last 18 months from $9 trillion to $11 trillion. It has increased by $1 trillion in the last six months. The independent Congressional Budget Office, which has been overly optimistic over time, projects that the Obama budget plan will add $9.3 trillion to the National Debt by 2019. This will drive the National Debt as a percentage of GDP to levels above the peak years reached during World War II. The difference is that in 2019 the unfunded liabilities totaling $56 trillion for Social Security, Medicare, and Medicaid will sweep over the country like a tsunami. If our government follows the path it has chosen, our country will be bankrupted.

Source: 911review.org

Many Americans who have lived by the rules are angry, frustrated, and appalled at what the government is doing. They feel helpless to change the course of the country. The housing, spending, and debt bubbles will burst completely, no matter what the government does. Following the current path will lead us into the Japanese model of a 25 year downturn, if we’re lucky. When I read many of the responses to my last article about ways to reclaim your life, I was struck that We The People actually hold all the cards. The government is at our mercy. Americans can change the course of the country through passive resistance. American consumer spending makes up 70% of the U.S. economy. No matter how much liquidity the Federal Reserve creates out of thin air, we do not have to spend the money. American citizens pay $1.2 trillion in Federal Income taxes per year. If they decided not to pay these taxes, the empire would come to a grinding halt. American citizens have more control then they know.

I came across an essay by Henry David Thoreau called Civil Disobedience (Resistance to Civil Government), published in 1849. It argues that people should not permit governments to overrule or atrophy their consciences, and that people have a duty to avoid allowing such acquiescence to enable the government to make them the agents of injustice. The definition of civil disobedience is the active refusal to obey certain laws, demands and commands of a government, without resorting to physical violence.

“Resistance” also served as part of Thoreau’s metaphor which compared the government to a machine, and said that when the machine was working injustice it was the duty of conscientious citizens to be “a counter friction” – that is, a resistance – “to stop the machine.”

Disobedience is the true foundation of liberty. The obedient must be slaves.
Henry David Thoreau

Thoreau’s most famous quote from the essay was:

“That government is best which governs least”

Mr. Thoreau was a man of principle. He believed that citizens should follow their moral conscience above the laws of the state. He believed that slavery was immoral and that the invasion of Mexico to acquire land was not right. He refused to pay his taxes in protest and was jailed for this action. Thoreau’s argument was as follows:

“How does it become a man to behave toward this American government to?day? I answer that he cannot without disgrace be associated with it. I cannot for an instant recognize that political organization as my government which is the slave’s government also.”

Thoreau’s essay was the inspiration for both Mohandas Gandhi’s Indian independence movement and Martin Luther King’s civil rights movement. Both men admired him for his bravery and morality.

“Thoreau was a great writer, philosopher, poet, and withal a most practical man, that is, he taught nothing he was not prepared to practice in himself. He was one of the greatest and most moral men America has produced. He went to jail for the sake of his principles and suffering humanity. His essay has, therefore, been sanctified by suffering. Moreover, it is written for all time. Its incisive logic is unanswerable.”

Mohandas Gandhi

“I became convinced that noncooperation with evil is as much a moral obligation as is cooperation with good. The teachings of Thoreau came alive in our civil rights movement; indeed, they are more alive than ever before. Whether expressed in a sit in at lunch counters, a freedom ride into Mississippi, a peaceful protest in Albany, Georgia, a bus boycott in Montgomery, Alabama these are outgrowths of Thoreau’s insistence that evil must be resisted and that no moral man can patiently adjust to injustice.”

Martin Luther King

Americans have a duty to not sit idly by and enable the government to be an agent of injustice. The reckless actions taken by politicians and the Federal Reserve in the last eighteen months and their inaction regarding our $56 trillion of unfunded future liabilities are immoral, cowardly, and evil. David Galland, from Casey Research, reflects my anger in his recent column:

“But it is our generation that should take the hit. It is us who should feel the pain of the collapse. We did it to ourselves by standing idly by while the government and its many friends in the banking sector got us into this mess. And don’t forget the orgy of spending and personal debt that the population engaged in, encouraged every step of the way by the government’s easy-money policies. This all happened on our watch, but instead of taking our medicine, we the people are now encouraging the government in its many efforts to re-inflate the bubble, fully aware all we are really doing is trying to shift the mess onto the backs of our children, and their children, and probably their children’s children. What a bunch of cowards we are.”

The bailout of corrupt bankers by corrupt politicians with money printed and borrowed from future generations is a criminal act and must be overturned by civil disobedience on the part of Americans with a moral conscience. The government has stepped over the line and we must act before it is too late. The brilliant John Hussman describes what Geithner, Bernanke and Congress have done in the last two weeks:

“Ultimately, funding the bailout of lousy assets comes at the cost of debasing our currency and selling our good assets to foreigners. Make no mistake - we are selling off our future and the future of our children to prevent the bondholders of U.S. financial corporations from taking losses. We are using public funds to protect the bondholders of some of the most mismanaged companies in the history of capitalism, instead of allowing them to take losses that should have been their own. All our policy makers have done to date has been to squander public funds to protect the full interests of corporate bondholders.”

Americans formed this country by revolution. We are not a country of laws. We are a country of citizens with consciences. If government becomes so corrupt and out of control that they threaten our very existence as a country, they must be cast aside. Americans have an obligation to do what is right. Thoreau voiced the right of people with a conscience 160 years ago:

“All men recognize the right of revolution; that is, the right to refuse allegiance to and to resist the government, when its tyranny or its inefficiency are great and unendurable.”

People's first obligation is to do what they believe is right and not to follow the law dictated by the majority. When a government is unjust, people should refuse to follow the law and distance themselves from the government in general. A person is not obligated to devote his life to eliminating evils from the world, but he is obligated not to participate in such evils. If we do not fight the injustice that is being inflicted on future generations by the actions of government today we are also guilty. Thoreau argued that the majority that rules through strength rather than legitimacy is worthless:

“But a government in which the majority rules in all cases cannot be based on justice, even as far as men understand it. Can there not be a government in which majorities do not virtually decide right and wrong, but conscience? — in which majorities decide only those questions to which the rule of expediency is applicable? Must the citizen ever for a moment, or in the least degree, resign his conscience to the legislator? Why has every man a conscience, then? I think that we should be men first, and subjects afterward. It is not desirable to cultivate a respect for the law, so much as for the right. The only obligation which I have a right to assume is to do at any time what I think right. It is truly enough said that a corporation has no conscience; but a corporation of conscientious men is a corporation with a conscience. Law never made men a whit more just; and, by means of their respect for it, even the well-?disposed are daily made the agents of injustice.”

Fiscal Sanity Movement

It is now time for all Americans to force fiscal sanity upon our government through the use of civil disobedience. Our current fiscal path is unsustainable. The government’s solutions will extend the pain for decades in the best case or result in an abrupt collapse in the worst case. If Americans force a fiscal restructuring upon the world it will be extremely painful, but would result in a more balanced sustainable society going forward. In both cases, Americans will need to accept a reduction in their standard of living. This is the price that must be paid for thirty years of living above our means. Some passive resistance ideas regarding the fiscal sanity movement could be:

Imagine that Americans refused to spend any money on discretionary items like electronic gadgets, furniture, and jewelry. With 70% of GDP dependent on consumer spending, this would result in the closing of thousands of unnecessary retail stores. We know that a sustainable level of spending is 62% of GDP, so let’s get there in two years rather than dragging it out over a decade.
Imagine that Americans decided to withdraw every dime of their money from all the banks that have accepted TARP funds. There are 8,500 banks in the United States. Seventy banks have accepted TARP funds. Pull your money out of these banks and put it in your local banks or credit unions that didn’t bring down the financial system. This would ruin the Treasury’s latest $1 trillion scheme of hiding toxic assets.
Imagine that Americans stopped using credit cards. The major purveyors of credit cards, Bank of America, Citicorp, American Express and Capital One would collapse under the weight of bad debt. Credit cards are a ponzi scheme dependent upon new credit issuance. Without charging 21% interest and collecting $25 late fees for being one day late, their businesses will implode.
Imagine that every working American walked into work tomorrow and changed their W-4 to 20 exemptions. This would immediately remove $1.2 trillion of taxes from the grasp of politicians in Washington. You could bet that would get the attention of the political hacks in Washington.
Imagine that no more young men and women volunteered for the military or re-enlisted. With an all volunteer military, the lack of cannon fodder would force a downscaling of the American military empire. The government doesn’t have the guts to reinstitute a draft.
Imagine that Americans refused to buy new cars and choose to get by with the 240 million existing automobiles already in use. This would force the necessary bankruptcies of General Motors and Chrysler.
Imagine that Americans refused to purchase any more 6,000 square foot McMansions. Maybe families of four could make do with a 2,000 square foot home. This would force down prices further and leave people with more discretionary income to save for their retirement.
Imagine that no one voted in the next national elections in 2010. A voter strike would send the ultimate message to the two corrupt parties. Ron Paul describes why the two parties are worthless. “Pretending that a true difference exists between the two major candidates is a charade of great proportion. Influential forces, the media, the government, the privileged corporations and moneyed interests see to it that both party’s candidates are acceptable, regardless of the outcome, since they will still be in charge. The two parties and their candidates have no real disagreements on foreign policy, monetary policy, privacy issues, or the welfare state. They both are willing to abuse the Rule of Law and ignore constitutional restraint on Executive Powers.”
Imagine a one day national strike coinciding with the largest March on Washington in the history of the Republic. This would surely change the dialogue in the country. The lightweight politicians in Washington DC would cave immediately.

It is not inconceivable that these civil disobedience measures would be met with violent countermeasures by those in power. They will do anything to retain their wealth, influence and power. Americans with a conscience will be willing to sacrifice whatever is necessary.

Under a government which imprisons any unjustly, the true place for a just man is also a prison.

Henry David Thoreau

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Posted 322 days ago

53 Comments

Vote FOR or AGAINST comments below.

Nof

Vote
22
2

Good read! As always. The deficit chart is very telling. I remember all the talk of the deficit getting bigger during the Regan years but never really understood it as I was very young then.

As far as going to 20 exemptions on your W-4, I've heard anything over 9 will set off alarms at the Alphabet agency. Why not just go exempt? Or better yet if you have a boss who is willing to listen revoke your authorization for withholding (W-4).

(a) Requirement of withholding

(1) In general Except as otherwise provided in this section, every "employer" making payment of "wages" shall deduct and withhold upon such "wages" a tax determined in accordance with tables or computational procedures prescribed by the Secretary. Any tables or procedures prescribed under this paragraph shall

(p) Voluntary withholding agreements

(3) Authority for other voluntary withholding The Secretary is authorized by regulations to provide for withholding—

(A) from remuneration for services performed by an "employee" for the "employee’s" "employer" which (without regard to this paragraph) does not constitute "wages", and

(B) from any other type of payment with respect to which the Secretary finds that withholding would be appropriate under the provisions of this chapter, if the "employer" and "employee", or the person making and the person receiving such other type of payment, agree to such withholding. Such agreement shall be in such form and manner as the Secretary may by regulations prescribe. For purposes of this chapter (and so much of subtitle F as relates to this chapter), *****KEY POINT!!!!******---->remuneration or other payments with respect to which such agreement is made ***->shall be treated as if they were "wages" paid by an "employer" to an "employee" to the extent that such remuneration is paid or other payments are made during the period for which the agreement is in effect.

From: http://www4.law.cornell.edu/uscode/26/usc_sec_26_00003402----000-.html

Again as always pay particular attention to the key terms! "wages" "employee" "employer"

IF everyone would follow the law to the letter the system WOULD collapse!

Written 321 days ago 1 reply

root man

Vote
2
37

Dream on.

Civil disobedience? That is for the French and peasants.

Stop the sky is falling collapse story.

We are too big to fail.

The rest of the world is a bigger joke.

The Chinese can not mess with the nature of the world without risking our trade barriers.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aUTIiOnyg6LQ&refer=home

We still export $1Trillion dollars worth of goods..

http://tse.export.gov/NTDChartDisplay.aspx?UniqueURL=cutbfb45gqhldf55vcy5ac2h-2009-3-22-19-1-12

We still have a $15 trillion economy.

..and these..

http://en.wikipedia.org/wiki/Nimitz_class_aircraft_carrier

http://en.wikipedia.org/wiki/F-22_Raptor

http://en.wikipedia.org/wiki/Labor_productivity

The demographic problem is the real one..

http://tinyurl.com/2rc5a9

Mr. Doom and gloom. When will you move out of the US?

Maybe you should move here..

http://www.bloomberg.com/apps/news?pid=20601109&sid=aErNiP_V4RLc&refer=home

Written 321 days ago 3 replies

JasonRines

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2
0

As an investor, statitician with a proven forecasting track record I had to have a long hard look into my soul and my reasonings to remain in this country. It is not that things are so awful I feel a 3rd world country would be better, I realize that there are better investment opportunities elsewhere. And if this economic struggle between the U.S., the EU and China/Russia bloc ever becomes a 'hot' war, America does not have adequate defense systems if things go nuclear. My decision? After two years I decided I am staying. Emerging leadership will be needed and it's not as if I can take my family or entire population of my countrymen with me overseas.

But I believe the negative votes were not based on the some of the glass half full facts you present as cheerleading, I believe negative votes are because of the lack of recognition of these problems. What are the real problems? Broken monetary model, Washington now acting as a Fuedalistic Monarchy and last challenge is what will the future demand for goods and services look like? How would America innovate and grow when $4 T of REAL wealth has been shipped overseas and is NOT returning? Requires a hell of a lot of research and development which in turn will require quite a few Patriots willing to put in double-duty of surviving, political and economic reforms etc. That all said, I love America and in the end of this era and start of a new one, we will be OK.

Written 321 days ago

rootman

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0
0

I agree. I am just saying the we are positioned to recover better than anybody else.

We do need to face the problems.

If it goes nuclear (it won't) everybody is doomed.

Written 321 days ago

justmercy

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0
0

The US is too big to fail. You are delusional. The Roman Empire, the Catholic Church, The British Empire, Nazi Europe, and the USSR all thought the same. Where are they now.

Written 320 days ago

Reply to this thread

root man

Vote
1
19

That should be..

http://tinyurl.com/rootman

We also have these...

CISCO, IBM, Microsoft, Juniper, Silicon Valley, Wal-Mart, Exxon, Chevron, GE, Boeing, FedEx, Google, Nike, AFLAC, Texas Instruments, Dell and on.. and on..

http://money.cnn.com/magazines/fortune/fortune500/2008/employers/

Written 321 days ago 2 replies

JasonRines

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1
0

Root Man. The U.S. economy was $14 T in 2008. Looking at the Q1 earnings reports over the next month and tabulating them by sector will provide a rough snap-shot of GDP. The forecasted GDP was -8 for this quarter and it was -6 in Q4 of 2008, -2 first half of 2008. Let's assume this is a classical depression and 15%-20% come off our GDP (already half way there in one year!). That makes us a $12 T economy. Now if government was reinvesting wisely as China is on future demand in the absence of lost demand that would be considered positive. When a total of $4T is to be spent on entitlements, greasing the global wheels of an empire who's government has become corrupted then the short, medium outlook is bleak indeed.

Whats worse, is that the U.S., the EU and Russia/China blocs are all now competing for the international monetary peg prize. Such an economy conflict assures a downgrade of our AAA status, making the U.S. a very mediocre choice for the next 10-15 years for the global investor. If we avoid WWIII I will also be amazed.

Now, I am an all American, glass is half full kind of guy. I will also say I am taking direct action as a serious technology innovator to connect and collaborate online on problem solving, meeting massive pent-up demand and frustration by our population that wishes to begin problem solving but having to deal with an 800 lb gorilla in Washington. But let's be serious about the scope of the problems - The U.S. is feeling the effects of a broken monetary model (or should I say one that has been proven to fail for a nation every time since the 1600's). American's first need to solve the political problem at the House of Representatives level. Then with far less resources then in other depressionary era's (this one is like the 1870's also known as the Era of Mean) we need to create the products and services and meet the demands of a changed world.

Written 321 days ago

rootman

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0
0

You do not honestly think that we will loose AAA status?

How do we know what China is doing? It is a police state, nightmare dictatorship. Do you believe what they tell us?

I agree we need to face the facts.

Written 321 days ago

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Didier de St.Germain

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A very interesting read (as usual).

The Elite that has used the USA as its tool for many decades, has gone completely international now, in my opinion. This instrument is not needed anymore.

As a last scam, I expect a complete crash of the USD, caused on purpose. Everybody with USD will suffer and be impoverished, the Elite will take a position in Euros and come out stronger than ever before.

The USD foreign debt can be easily repaid then, by buying back USD for cents on the dollar (paying in Euros) and paying the rest of the world in then-worthless USD. Afterwards there could be a new currency, like the Amero - legal tender for the USA, Canada and Mexico.

The future will tell ..............................

Written 321 days ago

Broadlands

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“Many Americans who have lived by the rules are angry, frustrated, and appalled at what the government is doing.”

Very true… but how many? As each year passes there are fewer and fewer of those who feel that way and more and more of those who are dependent on government largesse. During each election cycle these “many” are being registered and encouraged to vote. Few of them will vote with their consciences against the hand that feeds them.

Sadly… We are were? a country of citizens with consciences. Americans have had? an obligation to do what is right.

Not a pleasant thought for our grandchildren as we face this spectre.

Written 321 days ago

Broadlands

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Rootman writes:

"The demographic problem is the real one.."

http://tinyurl.com/2rc5a9

Another good read. BUT...too many people? Or, too few? Read this little-cited paper, published 22 years ago in an obscure journal, by a man who was a member of the US National Academy of Sciences. The high correlation (99.85%) remains the same today. Damned if we do and damned if we don't?

Title: Carbon dioxide and people.

Author: Newell ND; Marcus L

Source: PALAIOS. 1987;2:101-3.

Abstract: The correlation between population growth and steady buildup of atmospheric carbon dioxide (CO2) is almost perfect (.9985). Both growth rates rise exponentially simultaneously. Human activities account for atmospheric CO2 growth, not population growth itself. They include burning of fossil fuels and wood, changes in agricultural methods, and deforestation. They exceed changes in all natural sources including weathering of rocks, ice melting, warming of sea water, decay of vegetation, seasonal defoliation, and volcanic activity. Demographers and environmentalists can use the rise in CO2 as a gross index of land development, population growth, climatic changes, change of natural environments, and industrialization. CO2 analyses can reinforce censuses and supply data from periods between census surveys. CO2 data collected at the US Mauna Loa weather station and the South Pole show that, in 1958, atmospheric CO2 was 315.2/ppm and the world population was 2.9 billion. Ice core analyses in Greenland find that CO2 levels were 225/ppm 18,000 years ago and rose somewhat to 271/ppm around 1300 A.D. when the continental glaciers melted. The extent of CO2 fluctuates sizably with the seasons. Changing patterns of climate, energy use, and deforestation correspond to irregularities in the rising trend of CO2. This rise in atmospheric CO2 provides us with a sensitive gauge of the rate of economic development and follows the expanding blows humans exert on the environment, e.g., the 1973 OPEC price hike of petroleum. Population growth stymies all activities to lower the poverty level. Reduced energy use at present population levels would mean reduced productivity and increased hardship, but most of the world is reluctant to confront it. International cooperation beyond what human behavior had ever done before and attrition are needed to avoid catastrophe.

Written 321 days ago

Demosthenes20XX

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@rootman:

don't get too comfy with "our" companies...they could easily change corporate domiciles in the face of confiscatory tax policy and a belligerent anti-business attitude (and/or laws) from the US gov't. Throw in the rapidly growing share of corporate earnings coming from non-US sources an you've got quite a recipe.

Ex: Halliburton is an "American" oil company that just opened a shiny new HQ in Dubai in 2007.

A commercially-operated corporation by its very nature is driven to the pursuit of maximum profit for the benefit of its shareholders; when the majority of revenues and/or profits are derived from somewhere not in the US, it would only make sense to base itself out of a non-US area provided that there is nothing artificial (e.g. advantageous lower corporate tax rate, etc) which holds it to a US-based domicile. Companies (as unemotional decision makers) are ultimately not loyal to geographies, only to proverbial greenbacks.

An increasing number of US corporations with foreign operating segments are deriving significant portions or absolute majorities of their profits from foreign operations. Halliburton is only the first in a wave of corporate "relocations to better align with business interests" that will happen over the coming years.

Unless we give them a practical economic reason (e.g. lower corporate taxes, etc) to stay, businesses (who view it as in their best corporate interest) will eventually leave to go somewhere else. The "unique human capital" argument for them staying US-based is old and tired...citizens of the US are (on the whole) no more intelligent or capable than many other countries in which labor costs are much lower.

The key determinants to retaining large business in the US over the long-term will be corporate tax policy and educational levels.

Written 321 days ago

Coy Ote

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Jim Quinn,

I still carry a copy of Walden in my vehicle--I am 65 years of age. His earthy, solid conservative principles have been an inspiration to me since my youth.

I agree with the general tone and points of your article, and hope it is read widely.

On the point that the Chinese "want to rule the world" though I am not convinced. Certainly they have had their share of despotic leaders during this century and remnants of the "Mao strain" remain, but they are also, as a people, amazingly independent, hard working, and resilient. Somehow they manage to keep a billion+ people in a workable state.

When, during the Clinton administration, we bombed Baghdad--including the Chinese embassy--their response was much more restrained, I thought, then would have been the case had the tables been reversed. I like to emphasize our best connections, like when they helped our bombing crews after Doolittle's Raid, etc.

The fact that we are in economic decline (of our own doing) and China is, perhaps, experiencing incline does not mean that we must become enemies. I hope our relations continue to improve.

Most of all I wish we had more voices like yours being heard, and appropriate policies along the lines you describe, being implemented.

Thanks,

Mike McKillip

Written 321 days ago

JasonRines

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Here's my take Coy. The Chinese culture is not expansionist by general nature. However, there growth requires massive amounts of new energy sources. There is no way for the Chinese to NOT compete for a ever increasing share of energy resources. National wars are always fought over limited resources be them economic or hot wars. So I agree with Jim's general perspective but just narrowing down what I view as objectives the Chinese have. They always were competing with us, they just have happened to learn much and apply the learning wisely in the last decade.

Written 321 days ago 1 reply

Anonymous

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as an immigrant american citizen living in these confusing economic times, it strikes a chord with me, as i always believed in frugal living, and it inspires me to read 'walden' by thoreau now.

Written 321 days ago

Lee

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I guess I am a lot less antigovernment than a lot of people posting here. There are a lot of government services that I willingly pay for with my taxes, because I believe there are some services best done by the government than the private sector. But then there are all those other things the government and the private sector are doing....how can I influence them? I don't know.

I've actually done a lot of the things on the fiscal sanity list already. Some thoughts -

1. I've pretty much done this one. My discretionary outlays are modest by most people's standards, and I cover with cash. There is some discretionary spending that may be worth doing. Note on art: I would hate to see all jewelry craftsmen or artisans that create things of beauty be thrown out on the dung heap. If your going to buy some jewelry, support a local shop or artisan creating something with items that doesn't have someone's blood on it. After seeing "Blood Diamond" and what people do to each other and the landscape for hard pebbles, I'm done with "precious" stones. Ditto for gold. Do some research on modern goldmining techniques and see how many tons of earth get moved for microscopic quantities of gold so people can stick it on their finger or put it in a vault.The human race is nuts.

2. I'm interested in this one. Anybody got a link to the list of TARPers?

3. Could stop using my CC totally. I typically only use it for gas and paying bills online and pay the balance in full every month, but they are still collecting fees from those merchants. Booking travel and renting cars is hard to do without a card, though. My CC company has also not personally screwed me over (yet), but I am vigilant about paying my bill. I can remember the days when you had to pay an annual fee for a credit card, back when they were mostly used for business travel - they are still a good service to have for that purpose, and the intent was, the balance was to be paid the next month. If balance carrying drops off (which it needs to) CCs probably will return to this operating model of for-fee credit cards. NOTE: You all probably know this, but if you need a big ticket service or item (like a tooth crown from your dentist) you may get a price discount if you pay cash. They have priced in the fee they pay to the credit card company in their quoted price. My dentist knocked about 50 bucks off my bill because I wrote a check. I laugh at the credit card companies like Discover that encourage people in their advertising to use their credit card for every little piffling purchase so people can track what they spend on coffee. Anybody see that TV ad? Good grief. They want all the transaction fees they can get. Spend smarter, they say! And they can track your every move as well.

4. I dunno. As an attention-getting gesture, maybe, but as a means of actually starving revenue from essential services, no. Don't want to throw the baby out with the bathwater. Another option is to just stop working and live off retirement savings while they are still worth something. For a variety of reasons, I am considering it.

5. Too old and too gimpy for them to want me. A lot of people enlist because they feel it is their best financial option. In a world of limited options, which a lot of young Americans are faced with, they will continue to enlist. That is a sad fact.

6. I think this is one about cars is actually happening already. Most people are not buying cars unless they absolutely have to. I am sad about the U.S. losing one of its last big manufacturing industries, even though they mis-managed for years. People don't seem to realize that when an industry leaves a country, the capability, experience and knowledge also leaves. Manufacturers of a variety of goods have sold off, probably for pennies on the dollar, the manufacturing equipment to whatever country makes the item now. Tooling back up would be prohibitive. My faint hope is that out of the ashes, new innovation in vehicle manufacturing will bring us much more fuel efficient vehicles. I noticed gas price has jumped about 10 cents a gallon in the last week....glad I have a little fuel efficient car that hopefully will last years yet. I got 12 years out of my last car before it got too costly to maintain. I still think about walking to work on occasion but haven't done it yet.

7. I have a little postwar house, built in 1948. It is about 1200 square feet, with an added addition, was less than that without it. These were built for starter homes after the WWII. Little rooms, dinky closets, three bedrooms, 1 little bathroom, single car garage, for a family of four or so. It shows how much more crap people have accumulated in the last 60 years and how expectations have changed. For single me, it is a luxury, and I could actually live in about a third the space in reasonable comfort, if decent places that small were built in my town (which they aren't, but that may change). Do some research on "tiny houses". There are architects designing ultra-small homes that efficiently use all the space. A larger family wouldn't fit, but for singles and couples, especially for those looking to "downsize retirement", it is a clear option. Another idea whose time has more than come - decently contructed condo/apartment complexes containing small living space built with adequate soundproofing. There are apartments in Manhattan where I couldn't even hear a voice coming from the next room inside the apartment, much less from outside the apartment. If people didn't have to hear their next door neighbor belch, snore,fornicate and fart, economical communal living would be a lot more pleasant. I know it is possible to built such places, and people would pay for that soundproofing.

And so forth. We are collectively changing. Some changes can be made faster than others. Think of every dollar you spend as a vote. Who and what are you voting for?

Written 321 days ago

root man

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@broadlands

At first just different ages (more old folks). In fact the population will probably rise for a while then it could crash.

Global warming is a scam.

http://tinyurl.com/globalwarmingisascam

Peak oil is a lie.

http://tinyurl.com/peakoilisalie

Look into the club of rome, agenda 21 etc.

Look into the elites belief in eugenics and their drive to reduce population and to use synthetic terror and false environmentalism to make the people of the world the enemy.

http://www.tarpley.net/

http://www.indymedia.org.uk/media/2005/07/317436.pdf

http://tinyurl.com/aerosolcrimes

@Demosthenes20XX

You are correct. Profits from everywhere are good. A rising tide floats all ships. I am willing to bet that the US has a favorable balance of regulation, taxation, market, education, stability etc. to compete with any country. We have seen that India the EU, china and Russia have huge problems.

@Didier de St.Germain

You are almost correct. I don't see the dollar crashing. It may go gown and our exports will go up. Who can replace us? Nobody. The elites are reducing the power of the us with the fraud, waste, wars, false flag psyops etc. The talk of "collapse" and "crash" is just not likely. The squeeze will go on but it is not in the interest of the freaks that run the world to break it. They do want a china model for the entire world. The problem is that china is a joke. Their demographic, environmental, political, social problems are huge.

The eu is not comparable to the US. They have no unity, no democracy and Germany is the only one that produces. The pigs (portugal, italy, greece, spain) and eastern europe plus the demograpic problems, socialism, low productivity etc. make the EU a joke compared to the US.

http://en.wikipedia.org/wiki/PIGS_(economics)

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/

Written 321 days ago

JimQ

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Link to the list of TARP recipients.

http://online.wsj.com/public/resources/documents/st_BANKMONEY_20081027.html

Written 321 days ago 2 replies

Pera

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I think it's wrong to see Chinese as "enemies". They're wisely spending their $ to boost their future growth. There is nothing anti-US in this. You did it to yourself by printing money like crazy. Sure they have to protect their wealth. It took them 20 years to aacumulate this money, and Geitner and guys are creating 1000bn in one day. They just press a few keys in the FED balance sheet, and there you go. New simulus is born.

Written 321 days ago

jakgaph

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Mr. Root Man,

Your list of companies is indeed impressive, however I think you fail to realize the laws of supply and demand. Almost every company listed makes the lion share of their sales to US consumers, the US consumer is BROKE, this is a fact. So the growth of these companies was fueled by excessive debt. Now I am not taking away the innovation of these companies, but rather asking, who is going to buy their goods in the present and the future ? Keep in mind that millions of Americans have lost their jobs in the past 2 months, more will lose their homes, and more companies profits will get whacked leading to more layoffs...Its called a downward spiral.

The above reminds me of the question of what is worth more, a flawless 10 ct Diamond or a glass of water...the answer depends on the buyer, If you are dying of dehydration in the middle of a desert I would assume you would trade the diamond for the water in order to save your life. The average American household has perfectly functioning computers, TV(s) Ipods, sneakers, clothes, gadgets, toys etc etc etc...In fact the average household has a surplus of such items. Take away the CREDIT and who will replace a working laptop with a "new" one to the tune of $600-3000 when they are unemployed ?? Keep in mind this is TODAY, the tax increases and the dollar devaluation are coming so now the average household has LESS buying power than prior to and ZERO credit ??

The US dollar is dead..The US is a net IMPORTER, so a devaluing currency makes things we need cost more (like OIL) sure it makes exports cheaper in theory, but not if the costs of shipping negate the savings...

Moving forward, regarding Global warming and Peak Oil, does it matter if they are factual ?? My point is that our entire foreign policy and the military industrial complex are fueled (pun intended) by the US addiction to Oil, the quicker we get away from oil, the better off we will all be, less war, less BS, cleaner Air. To me healing the environment is a secondary benefit to getting away from Oil, If Global Warming Hype and/or Peak Oil hype get us there, so be it...LESS WAR is a HUGE benefit to everyone on the Planet !

regarding the US dollar and the EU I highly encourage you read this http://www.marketoracle.co.uk/Article9480.html

you may also want to study this http://jsmineset.com/index.php/2009/02/08/jims-mailbox-74/

you stated "The eu is not comparable to the US. They have no unity, no democracy and Germany is the only one that produces. The pigs (portugal, italy, greece, spain) and eastern europe plus the demograpic problems, socialism, low productivity etc. make the EU a joke compared to the US."

Lets break it down very quickly ?

Unity - I guess the dems and Reps are united...in protecting banking interests and their jobs

Democracy ? - Really I dont see people cheering the decisions being made, but I do see them getting mad as hell and taking to the streets pretty pissed off at the elected SERVANTS...Are these people doing what is best for their employers (i.e. the US citizens) I think NOT.

Productivity ? What do we produce here besides creative & toxic securities that are incorrectly rated , autos that are inferior to the competition and more costly, junk debt, and phony money...Thats not productivity its Bullshit and the rest of the world knows it...

Demographic Problems ?? Too much to list but 90% of our nations wealth is in the hands of the top 1%...

Socialism ?? You are kidding right ?? While industry is laying off in record numbers and profits are disapearring the Government is on a hiring spree

I think the joke is on you my friend.... The people running our once great nation are not the ones who built it, nor do they have any concept whatsoever as to why we became great in the first place...Its like picking a college football team to win a game because they were a dynasty in the 50's...different players, different equiptment, different coaches, different game plan. We are very close to becoming a banana republic http://en.wikipedia.org/wiki/Banana_republic

GREAT ARTICLE JIM ... SPOT ON !!!

Written 321 days ago 1 reply

Mista' Bone

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You don't offer a solution, though. Revolution and overhaul of our completely corrupt political system is absolutely necessary. Unfortunately, such a small percentage of the population would ever take the time to read an article of this length (or subject matter), we can never have a realistic debate.

Please don't give me the "we could live here" argument. The fact that large portions of the rest of the world are so much worse off is their corrupt forms of government and views on women's rights and human rights. Plenty of people in India getting rich while you drive to Walmart and buy cheap junk made in an Indian sweatshop by people making $1 a day.

If our labor is so productive, why did we ship our manufacturing overseas? We should be able to make anything that is machine-intensive cheaper here, assuming raw material costs are even. Throwing 50 Vietnamese factory workers at a project versus 2 skilled American machinists never did make sense but we continue to try to "outsource" for "cost savings".

Pull your head out of the sand. While the author tends to use a lot of rhetoric, it is at least backed up with meaningful historical and factual analysis.

This is worth debating, as whether you want to admit it, we are in deep trouble here. Good news is, we can change course and save the situation. Bad news is, we elected a quasi-socialist government to replace our quasi-socialist government and now they are making ridiculous moves, while pretending to be appalled by the bonuses that they included in the legislation they passed. It's disgusting and we do need a revolution at the polls.

Written 321 days ago

rootman

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@jakgaph

Yes the companies are impressive. The whole world will buy from many of them.

The current downturn will not last forever.

"Excessive debt" depends on the details. If a company is making money a certain amout of debt is part of the process.

The "problems" faced by americans are relatively minor. Anybody that lives within their means can live well here even on a low paying job. Sure lots of Americans are idiots that didn't save and got in debt.

If the dollar loses value and imported items cost more that will be good for our industry. "The dollar is dead" cries go on and on. The rest of the world is trying to devalue their currencies and we are crying that ours will "crash"? If you look at the information I provided you will see that we have plenty of oil here in the US.

It matters if global warming and peak oil are lies. The freaks that run the world will use those scams to justify extreme policies that will hurt our economy and kill lots of poor folks.

Unity as in one language (mostly) one ethic etc. Americans are Americans. The EU is an artificial broken construct. Yes our Constitutional republic is not functioning well. At least we have a constitution. The joke eu can not get its members to pass their joke constitution... They will keep "voting" till the "voter" get it right. The "representatives" elected in the EU have no power. They can make suggestions to the unknown beauracrats behind the sceens. Study up on how the EU functions.

I provided a link to what we produce. $1trillion and rising. Socialism here is not in the same realm as the EU.

We are in no way close to being a banana republic. All this exaggeration does no good. Have you traveled to a real banana republic?

I agree we have problems and that we have freaks running the world and the US. My point is..

What is the solution? Dreams of a gold standard need not apply.

What country should we emulate? What country do you live in? Why haven't you left?

The constant crying over a mythical past and never ending predictions of doom are just boring and mostly incorrect.

Here is one for you..

http://www.consciousmedianetwork.com/members/lmoret.htm

http://www.consciousmedianetwork.com/members/lmoret2.htm

Written 321 days ago

rootman

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@mista bone

I have agreed with everybody here that we have problems.

What are your solutions?

Making comparisons to the rest of the world is valid especially since the author neglected to do so.

http://home.earthlink.net/~root.man/exports.pdf

I have no problem with low tech, slave labor type jobs going to the rest of the world.

We have a 21st century economy. The future is ours..

http://www.2100.org/Nanos/NSF.pdf

Written 321 days ago 2 replies

JasonRines

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Here is my solution Rootman: http://ragingdebate.com/about . This engine you are using is from the companies that I own. A loose think tank fine polished and is still polishing the blogging code. Next comes the debate engine in May that facilitates problem solving. Jim Quinn is on the Board of Directors. As a giant online collaboration, we are all lending the talents we have. There is no U.S. cavalry coming Rootman, it is We the People. I will give credence to your point the U.S. still has a lot going for it, but make no mistake the government is acting like any bankrupt nation attempting to stave off the inevitable day of reckoning. Some of that reckoning you already see as depression. The U.S. will claw it's way back but cheerleading doesn't cut it, nor does just educating or speaking the truth to the masses. Both are actually needed, but as you mention, the problem solving mechanisms are not yet there. But very soon they will be. Now hundreds of people working on this project. You will see 1,000 Jim Quinn style websites in a year and 100,000 within 3 years. Glad to see you here, stick around. This is a well educated group of people on economics.

Regards,

Jason Rines

CEO

Raging Debate

Written 321 days ago

rootman

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Thank you for your reply and your efforts.

If you look at my webpage you will see I am far from a cheerleader.

I am not an economist, which may be a good thing.. I know a few things about some other subjects though.

I don't agree with some of the hyperbole I see here.

I am not claiming a cavalry is coming. I have confidence in the productivity and ingenuity of the people in this country.

I agree the gov. is an out of control nightmare.

I am happy to debate with folks that don't attack and resort name calling.

I wish you luck in your efforts.

Written 321 days ago

Reply to this thread

Matt Holbert

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"Our houses are such unwieldy property that we are often imprisoned rather than housed by them."

The same can be said with respect to all of the institutions -- education, work, religion -- that represent the status quo. Those who are in denial about our financial predicament, and all other predicaments, are unable to see themselves doing anything other than what they were trained and educated to do. The same can be said for religion. Most of those who profess to be religious adhere to (are imprisoned by) the doctrine and dogma of their formative years. In other words, our institutions imprison us in the same way that our unwieldy property (and inefficient) system imprisons us.

The goal is to establish an institution that by design is a system that grants us freedom. It is hard to label this institution because it would integrate the functions of banks, universities, retail, and religion. (Some would say that retail is our religion.) It just happens that a well-designed integrated alternative will accomplish all of the goals that Jim lists at the end of the article. It can also be designed in a way that will have us engaged in productive and satisfying and enjoyable work rather than remaining in denial and hoping that everything will turn out ok.

It will have to be a ground-up endeavor and it will have to serve as a way to store wealth without resorting to usury. This is feasible because it can be structured as a hedge against inflation and deflation. It will be focused on quality of life with high standards.

Written 321 days ago 1 reply

magicvent

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Jim --

You indicate that the standard of living in America is going to decline significantly. Could you be more specific as to what you see? I assume this is more than living in smaller homes, driving older cars, etc.

Written 321 days ago 1 reply

jakgaph

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Root:

"The current downturn will not last forever."...>>>>Really and you base this on what ?? It may find a bottom, but that doesn't mean it will rise again...Jim showed an example in Japan...There are many many others..Im sure they thought Rome would never fall either, or Germany, or Egypt, or the USSR...The US does not have immunity from failure !

"Excessive debt" depends on the details. If a company is making money a certain amout of debt is part of the process.">>> In your definition it is not excessive debt it is managable debt ?? WaMU, IndyMac, AIG, Merril, Bear, Lehman, Freddie, Fannie were all making money too...you have no idea what your are talking about.

The "problems" faced by americans are relatively minor..>>>>With the exception of the largest deficit in mankind, the Wars we are losing, no industry, massive foreclosures, massive Job Loss, Over printing of money, Lost Liberties, and an ignored constitution , then yes all is fine....You are hysterical

Anybody that lives within their means can live well here even on a low paying job. Sure lots of Americans are idiots that didn't save and got in debt. ... >>>They can SURVIVE here in a low paying job because we are a welfare state...MOSTLY ALL Americans are in debt and for the 1st time in our history we had a negative savings rate...Could it be because we americans are taxed too much to support useless government initiatives any promote crony capitalism ??

If the dollar loses value and imported items cost more that will be good for our industry >>>You cant be serious, really have you ever studied economics... A slight devaluation of a currency will only benefit a nation that is a net EXPORTER, the US is NOT.

"The dollar is dead" cries go on and on. The rest of the world is trying to devalue their currencies and we are crying that ours will "crash"? Because they understand basic economics...Have you ever played monopoly ??

If you look at the information I provided you will see that we have plenty of oil here in the US....(1) Who cares (2) you have to factor in where it is and cost and time to get at it. Oil is OLD technology stop trying to prevent a paradigm shift that is well past its time.

It matters if global warming and peak oil are lies. The freaks that run the world will use those scams to justify extreme policies that will hurt our economy and kill lots of poor folks. >>>>Like Weapons of mass destruction, Bailouts and ignorance of our constitution...give it up

Unity as in one language (mostly) one ethic etc. Americans are Americans. ... America is a melting Pot and we became the world leader in part due to our diversity, also, America is a Union of multiple states each with their own constitution.

The EU is an artificial broken construct. Yes our Constitutional republic is not functioning well. At least we have a constitution.... Yes we have a constitution the problem is that it has become void in our policy and the very basics of it have been dismantled

"The joke eu can not get its members to pass their joke constitution... They will keep "voting" till the "voter" get it right. The "representatives" elected in the EU have no power. They can make suggestions to the unknown beauracrats behind the sceens". ... >>>The EU like the US has been mismanaged...here we agree, but understand the the EU is modeled after the US, independent states with their own constitutions and their own branches of govt. ?? You have read US history no ??

"Socialism here is not in the same realm as the EU"....>>>Not yet but coming soon and BTW it will be worse at this pace.

"We are in no way close to being a banana republic. All this exaggeration does no good. Have you traveled to a real banana republic?" >>>. Yes I have, and yes we are...did you read the definition ??

What is the solution? Dreams of a gold standard need not apply....>>>Really seems as though the Gold standard worked pretty damn well, with a GS we would not be able to have excessive debt

What country should we emulate? What country do you live in? Why haven't you left? >>>We should emulate the Republic of the USA, the one that put us on the map, the one that grants liberty and property rights and respects its constitution...I live in the US...I haven't left because I love my country and I want it back, Im not going to sit and watch as it is destroyed.

The constant crying over a mythical past and never ending predictions of doom are just boring and mostly incorrect....>>>Hardly a mythical past my friend, the US introduced more innovation in its first 200 years than any other nation in the history of time combined, it was accomplished by freedom, free markets, open immigration, a genius constitution and small government...These are not predictions nor are they incorrect they are substantiated with thousands of examples.

I think the Author clearly gave examples as to what we can do as ground work towards solutions...As far as solutions go we need a sound money system above all, and that begins with eliminating the FED and removing Income Taxes, If you do not understand this you are a lost cause.

Written 321 days ago

rootman

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@jakgaph

Yes you are correct.

I surrender to your superior intellect.

I am hysterical.

The downturn will last forever.

We will never get out of debt.

The dollar will be worthless soon.

We live in a police state.

The US will fail.

I have no idea what I am talking about.

I have never played monopoly.

The EU is just like the US.

I have not read any US history.

The socialism here will be the worst on earth.

I know nothing about economics.

The gold standard would save us.

I am a lost cause etc.

Have a nice life.

Written 321 days ago

Detroiter

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"If our labor is so productive, why did we ship our manufacturing overseas? We should be able to make anything that is machine-intensive cheaper here, assuming raw material costs are even. Throwing 50 Vietnamese factory workers at a project versus 2 skilled American machinists never did make sense but we continue to try to "outsource" for "cost savings"."

I believe our government regulations tilt the scale in favor of outsourcing. When your manufacturing facility must be staffed with environmental, safety and health personnel to ensure everything is free of all possible hazards, when your operators must be trained, protected and follow prescribed procedures, when standardization is a requirement for efficiency and accounting, when your building itself must conform to federal, state and city regulations, when all materials, liquids and parts themselves must be documented and recorded to meet hazard material requirements, etc. ... when you examine the costs of these requirements versus those of some of our competitors and then toss in the higher wages, America is not as competitive.

Take a look at huge amount of outsourcing the domestic auto industry has done in recent years, particularly in China. They have dispatched thousands of engineers, managers, and other personnel to set up shop in China. Some of the supply chain followed suit after being pressured to continually cut costs. As a side note, it is ironic is when we're told to "buy American-made cars," especially by those who shop at W-mart (i.e. which, by the way requires their Chinese suppliers to find greater efficiencies to continually lower costs or risk losing the business).

Some of the best and most productive manufacturing plants in the US are built with substantial, foreign-made tooling (the US used to lead the machine tool industry until Japan surpassed us).

Our solution seems to be "beefing up" the education system to produce better minds and establishing "technological centers" near major universities to leverage the talent. While that may eventually help, our government must also support industry rather than believe that they know what's best for manufacturing. If some of those in charge of government regulations had industry experience, I might be more inclined to believe their decisions would aid manufacturing in this country rather than continue to add to the cost of manufacturing. Also, this needs to be accomplished without bailouts.

Mr. Quinn is doing us a service in issuing a wake up call to the leadership and all Americans. If we do not change, other competitive and more competent businesses/countries will do to us what was done to the British empire when they reigned supreme in auto manufacturing, ship building, etc. We have the knowledge and we have the resources but what we lack is leadership that is not self-serving or focused on re-election.

Written 321 days ago

paul94611

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What has been happening is a process whereby the economy became totally unsustainable by the sum total of those governed by it. In order to sustain it more and more capital from future economic activity was/is being "harnessed" to sustain current "activity". An economic model that is unsustainable by the sum total of the carrying capacity of those governed by the system will revert to sustainable levels and most likely "overshoot" to the down side.

One of the primary issues now is that many of the "assets" and income streams of future economic activity are encumbered to the present system creating additional hazards to restructuring. Additionally, with the issue in residential & commercial real estate we are facing a short & mid term issue of capital constraints on the free flow of human capital and business activity. The free flow of human capital is one of the lynch pins of current and future sustainable economic activity.

A democracy works well until the ruling elite realize they can bribe the citizenry with its own money and the citizens realize that they have been had with their own money and power.

Written 321 days ago

jimbo

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If your going to buy some jewelry, support a local shop or artisan creating something with items that doesn't have someone's blood on it. After seeing "Blood Diamond" and what people do to each other and the landscape for hard pebbles, I'm done with "precious" stones. Ditto for gold. Do some research on modern goldmining techniques and see how many tons of earth get moved for microscopic quantities of gold so people can stick it on their finger or put it in a vault.The human race is nuts.

So that means the dollar is evil. People rob banks for them. Guns are evil but I always thought that it was people that used the guns? Things can be used for good or for evil. In the next few years Lee, dude, you will wish that you have a bit of gold, jewerly or silver or things similar stashed away.

Written 321 days ago 1 reply

Lee

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No, I don't think gold itself is evil, diamonds are evil, etc. Gold is just a metal and diamonds, at least the pretty ones, are just gems. I like them, actually. They both also have some industrial applications, but what drives their price is scarcity and desire for possession as "precious" metal and stone. What is evil and crazy, to me, is that not just a few individuals, but whole countries get torn up over their trade and/or the environment gets ripped to shreds over something that can't be eaten, can't be drunk, can't be used to raise food, erect a shelter, keep out the cold, power a vehicle, etc. Diamonds and gold just sit there and glitter. The buyers then become (perhaps unwitting) accomplices in this act because it takes demand to drive the engine of destruction. Diamonds and gold have been used as mediums of exchange, but in and of themselves they won't keep you alive. Hence jakgaph's comment on diamond vs. glass of water when you're dying in the desert. And if we are creating deserts and wastelands to mine them out, what will we collectively have left to actually live on? If that is the true price for me to acquire them, then no thanks.

Watch "Blood Diamond" if you haven't already, which hit on the human side. Read up about the wars in Africa. Read about the diamond trade - efforts have been made to legitimize it, but I suspect they are still imperfect.

Read this recent article (link below) about gold in National Geographic, about what is currently being done to mine it in places like Indonesia. Look at the picture gallery with the article. There is info there about mining companies apparently treating the employees pretty good over there, but at what environmental cost? When they finish digging out the huge hole and dumping all the waste in the ocean, what then?

http://ngm.nationalgeographic.com/2009/01/gold/larmer-text

There are some other interesting stats in this article, like there have only been 161,000 tons mined in all of human history, and that would fit in two Olympic swimming pools (gold is dense, heavy stuff). Half of it has been mined in the last 50 years. Given the number of people on the planet, that is not many ounces to go around.

I know there are a lot of gold bugs posting here. I've traded small amounts of palladium bullion and gold coins in the past myself. That doesn't make us horrible evil people. But it is my belief, if we get down to a world of guns for gold, gold for guns, and diamonds for dynamite, then we're pretty doomed. Blood Diamond gives a pretty good snapshot of what that world will be like.

It is a bit disconcerting to look into these sorts of things. I haven't come close to turning over all the rocks I should be looking under when it comes to making buying choices, and what I'm supporting when I buy something. I've made a decision about certain materials used in jewelry. That's all.

Written 319 days ago

Reply to this thread

Hardrock

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Great article again James. Did my best to spread it around the 'net'.

One thing that must be mentioned over and over is the fact that we are witnessing the collapse of a Marxian, socialistic regime that is being used by the 'super rich' elite to enslave the world through the massive debt bubble being allowed to collapse as they position themselves to pick up the pieces and force it into a 'one world' currency system which will put an end to all dissent and of course....freedom. This is the real danger we face yet, all we seem to care about is protecting our assets and our comfy lifestyle. We will lose all if we fear losing blood and life. What little effort needed now pales in comparison to the effort that will be needed by our posterity to free themselves from the terrible constraints we will leave them bound.

Written 320 days ago

Anonymous

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Your graphs are too small - the axes are unreadable

Written 320 days ago

Broadlands

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ROOT: "The demographic problem is the real one." "Global warming is a scam." "I have no idea what I am talking about."

All true. It is an undeniable scientific fact that carbon dioxide, methane, CFCs are greenhouse gases. What is debatable is that the clear-cut human increase (as shown by the 99.85% almost perfect correlation for CO2 and world population) in each of them is really of sufficient magnitude to create a serious warming problem. Regardless, if there is natural-caused global warming, humans have added to it. World population is now decreasing so the greenhouse gas problem, if real, may be lessened over time. Unfortunately, other problems emerge...

http://www.newamerica.net/publications/policy/the_population_implosion

Written 320 days ago

Anonymous

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The solution to this financial crisis can best be summarized as: "The long-term solution to this and any financial crisis is that consumer debt must be reduced to manageable levels relative to wages."

It says it all. Essentially without jobs capable of supporting a standard of living commensurate with U.S. citizenry much less global expectations and the reciprocal sustenance of firms that provide such relative wages everything else is white noise. There will always be debtors and creditors in every modern economy based on fiat currencies. In fact, reasonable lending and monetary practices are needed to fuel modern economies and act as levelers during times of intermittent downturns. But now we have a gross imbalance and just like the proverbial assayer's scale there must be an adjustment in the weights on either side of to have equilibrium. We are going through this adjustment in a major fashion.

The critical part of this re-weighing process is how precisely and equitably the balancing adjustments are conducted. Is the government the best entity to do this or is it free markets? Ultimately it is always free markets that have the final say as Mr. Quinn and others have opined. Where it has been attempted in the past that government performs the balancing to the exclusion of equitable and just participation by its citizenry then forms of communism, fascism, socialism and other ruling aberrations which eliminate capitalist-fueled freedom such that then all that is left is the remnants of poverty, outright rebellion, and eventual collapse of the society as a whole.

We are at that tipping point.

Written 320 days ago

siddhant

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Root :

Global warming is scam >> clearly you think US is world and rest of countries are out of this planet. Avg temperature in March in Central India, where I belong, has increased to 40 degree from 32 degree in last decade. Monsoon seaon is smaller than ever and we have to wait for rain for longer now.

If you have gone to school in your life you should know that oxygen % is fixed and if u burn a candle inside a glass, it's place will be taken by residual gases. The more we burn Oil, more is CO2 and other harmful gases.

Sidds

Written 320 days ago

justmercy

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Great article. The writings of Thoreau are inspiring. King might have claimed to follow them, but i do not think that he did. Thoreau was not looking for any gain in his writings or actions. He actions was his reward. King was looking for political power and could not even put ink in the pen of Thoreau. Me and my family have been following most of your list of advises for some time now. We have stopped spend to necessary items only. We do not use credit cards. We will not use a TARP funded bank. We will stop or delay all income taxes. I plan on voting 3rd party from now on. - Our government has become illegitimate. The people was against the bailout and they still passed it. The people are against illegal immigration and they refuse to listen. They refuse to follow the will of the people or the law of the land which is the constitution. They have become illegitimate.

Written 320 days ago

gumby

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Root,

Read history. Back your arguments with REAL evidence, not opinion. Start with why you think an ounce of gold has the same purchasing power today as it did in 1920. EIGHTY-NINE YEARS Root. Do you know when gold was removed as COLLATERAL for the U.S. Dollar Root ( in other words, when the U.S. no longer held the dollar to the gold standard)?

In Los Angeles, the average house sold for $300,000 in 1995--750 ounces. Could you buy a house in LA using those 750 ounces? You bet. In fact, you could buy the house, and amply furnish it. Why? 750 ounces of gold is worth $675,000 today. Wise people are stocking physical gold because gold rises against all currencies.

THAT is the power of USING GOLD AS COLLATERAL AGAINST THE DOLLAR. GET IT YET ROOT? THE DOLLAR WILL NEVER HOLD ITS VALUE. IT IS DESIGNED TO DEPRECIATE-ALL FIAT CURRENCIES EVENTUALLY COLLAPSE. WHY? NO COLLATERAL, NO RESTRAINT.

Written 320 days ago

Kraut

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James Quinn's articles are outstanding. However, there is a little historical inaccuracy: After World War II, Germany and Japan rebuilt themselves with the help of US funding.

According to the original Morgenthau Plan both countries were supposed to be stripped of their heavy industry (also to 'repay' for their debt as beeing the aggressors, similar to the fate of Germany after WW I). The paradigm shift occured when the US realized the former Soviet Union to be the future threat, which required to strengthen them as buffer zones, resulting instead in the Marshall Plan.

One should notice the US didn't leave Germany and Japan empty-handed. As a prize they brought uncountable industrial patents back to the US (the rocket patents being the most popular ones).

Thus, I'm afraid to say, a substantial part of American ingenuity after WW II was rather based on assimilation than invention.

Considering that Germany and Japan are worldwide leading export nations, one might consider the conclusion that both nations developped their native know-how in the decades after WW II while the US did not develop its assimilated know-how, which was a contributing factor to the US's trade deficit.

Written 319 days ago

Ponder This

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The Truth will set you Free.

Can someone prove this as being incorrect, when you sign your voter registration form you are voluntarily

Swearing under oath, That you live in the District of Columbia, or one of its subdivisions, and want to be treated as a corporate slave with NO Constitutional Rights as a corporate citizen? And also that the Social Security Number is the nexus, that makes you that slave in the corporate matrix?

This is the correct Elector Registration Form for a Citizen of one of the 50 Countries of the Union

Your County Clerk and Recorder

Street Domicile

Any town, Ohio [zip]

01/01/2008

John Galt

215 Mesa Street

Any town, Ohio [zip]

Elector Registration-notice of changes

Nativity-natural live birth, 01/01/0000 in Any town, Iowa. Not in a Territory or possession of the United States.

I have lived in Ohio since January of 2008.

I have lived at my present domicile 215 Mesa Street, Anytown in Ohio, since January of 2008.

I am a Citizen of Ohio and America. I am an Ohioan and an American.

I am a free black, yellow, red, brown, white Man/Woman.

Party Enrollment - Unaffiliated.

Remove the Social Security Number from the registration card. The Social Security Number is the Property of the Social Security Administration and I DO NOT own it. And therefore it is not mine to give out.

I was not born in the United States. (Washington D.C. - The District of Columbia, Federal areas, Territories, or possessions thereof)

I am not a citizen of the United States (Washington D.C. - The District of Columbia, any Territory or possession of the United States).

I am not a United States person.

I am not a corporate person, citizen or individual.

I do not currently have a residence nor have I ever resided in the United States. (Washington D.C. - The District of Columbia, Federal areas, Territories, or possessions thereof)

Ohio is not a part of the United States. Federal areas inside Ohio are Territories of and a part of the United States.

I do not live in a Federal area, also known as in the State, or within the State, or a Territory of the United States.

I do not live in a State, or any geographical area that is a part of the United States. (Territories or possessions of Washington D.C. - The District of Columbia.)

Definitions from USCS:

26 USC Sec. 7701 (a)

(9) United States - The term "United States" when used in a geographical sense includes only the States (any Territory or possession of the United States) and the District of Columbia.

(10) State - The term "State" shall be construed to include the District of Columbia, where such construction is necessary to carry out provisions of this title.

(30) United States person. The term 'United States person' means-

(A) a citizen or resident of the United States.

(B) a domestic partnership.

(D) any estate or trust (other than a foreign estate or foreign trust, within the meaning of section 7701(a)(31)).

THE STATES 4 USCS Sec. 110

As used in sections 105-109 of this title-

(d) The term "State" includes any Territory or possession of the United States.

(e) The term "Federal area" means any lands or premises held or acquired by or for the use of the United States or any department, establishment, or agency of the United States; and any Federal area, or any part thereof, which is located within the exterior boundaries of any State (Territory or possession of the United States), shall be deemed to be a Federal area located within such State (Territory or possession of the United States). (Inside the outer boundaries of, but not part of, the 50 countries of the Union)

28 USC Sec. 1746: Unsworn Declarations Under Penalty of Perjury.

(1) If executed without the United States: "I declare under penalty of perjury under the laws of the united states of America that the foregoing is true and correct." Executed on (date). (Signature)

(2) If executed within the United States, its territories, possessions, or commonwealths: I declare under penalty of perjury that the foregoing is true and correct." Executed on (date). (Signature)

Since I was not born, and do not live, or work in the United States. (Washington D.C. - The District of Columbia, Federal areas, Territories, or possessions thereof)

I declare under penalty of perjury under the laws of Ohio and under the Constitution for The united states of America that the foregoing is true and correct. Executed on 01-01-2008.

Sincerely,

John Galt

PS. On all contracts, Voter/Elector Registration, Drivers License, Mortgage, Employment, Traffic Tickets, Bank Account, Rental, that you put your signature on, first thing to do, is write above where you will sign- All Rights Reserved –this throws the contract that it is written under, the UCC Code -UNIFORM COMMERCIAL CODE, that all CORPORATIONS operate under, back into common law. This will protect your Constitutional Rights. This will move you one-step higher above/over the corporate matrix, and back to being the Master over the corporate matrix, instead of being a slave under the corporate matrix.

PPS. I have this on file with the county clerks office and I elect the least offensive scumbag that I can.

Written 319 days ago

Anonymous

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What a thoughtful, incisive, article! Unfortunately, the slide cannot be stopped. Americans are too drugged, too televised, too school-standardized, too controlled, too red-necked, to "imagine" anything. The few of us who can still think, who are aware and who care, must devise a strategy that will save all of us. We must find a way to outlaw bribery (aka campaign financing and lobbying) avoid riots (which the media are trying to convince us are the solution), stop the CIA, FBI, and others from assassinating their opponents (e.g., King, 3.5 Kennedys, Malcolm, Reuther, Pat Tillman . . .), and target instead the handful of men who plan and execute such assassinations and who, besides, caused the coming economic and environmental collapse.

Written 319 days ago

zh'ou x'iao ch'unn

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do Atm's in west provide yuans yet?
Geli , cheri autos on sale in s.hai now.

get silk suit of clothes made while you shop, pay in pandas plz. chao

(fan)

Written 314 days ago

ptownman

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Coming from where I came from, middle class America in the 50's, when just about everyone had a hulla-hoop and we all traded with silver..... The butter on the buttered popcorn at the movies was real butter and just about all ice cream tasted like Hgaen-Daz..... The corner pharmacy was own and operated by the pharmicst and fountain Coca Cola would back up in your nose..... And most of all one parent could afford to stay home.... Oh how we have fallen, it all seems so surreal that our standard of living has fallen so far due to the inflation and the debt and in the end we have no one to blame but ourselves.... Because I assure you if 100 million Americans started walking on the intersates tomorrow morning and told them to put a stop to this maddness, we will take the pain, then they would have no choice but to STOP.

Written 298 days ago

bobc

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Oct.2008: George Soros betted against us and made a killing in the market....a few weeks ago, Hungary fined him for tanking their economy.

A couple of months ago, Henry Kissinger, interview by a UK newspaper, said he had Obama's ear now and will probably see his vision of:

1. a global political system

2. a global tax system

3. a global financial system

It is the same belief of Soros.....this whole thing has been planned and well on it's way.....the result is the USA we are broke and have given our jobs away....the UN must be just as pleased as many others in our government.

Written 284 days ago