BIGGEST FOREIGN POLICY BLUNDER IN HISTORY

The hubris of a bankrupt imperial empire is not a pretty sight. Luckily, we educated the Chinese hackers at our best schools. The scenario may seem far fetched to linear thinkers. It is not far fetched during a Fourth Turning. Wait until a hard line Prophet Boomer moves into the White House in 2013. Paul Farrell writes some pretty provocative stuff.

Secret China war plan: trillions in U.S. debt

Commentary: Today an economic battle; later, combat

By Paul B. Farrell, MarketWatch

SAN LUIS OBISPO, Calif. (MarketWatch) — Yes, Americans love war. Yes, wars cost money. And pile on debt, new taxes. Still, we love war. Why else let the military budget burn 48% of your tax dollars? But why is it “off the table” when the GOP talks “deficit cuts”?

Why? We love war. We’d rather attack with a macho battle cry like “damn the torpedoes, full speed ahead!” than listen to a warning from historian Kevin Phillips: “Most great nations, at the peak of their economic power, become arrogant, wage great world wars at great cost, wasting vast resources, taking on huge debt, ultimately burning themselves out.”

Which dominates our Congressional deficit hawks? Which is China’s military strategy?

Admit it, we love war. Marine Corps posters grabbed me as a kid. Trained me as an aviation weapons system tech. So I couldn’t resist Erik Sofge’s edgy thriller, “China’s Secret War Plan,” about a China-U.S. war. Like a fast-paced Tom Clancy thriller. In Popular Mechanics: One of my favorites as a kid working in a small-town magazine store.

Yes, war’s popular. Locked in our DNA long ago. Sofge’s thriller was based on war games played by Pentagon generals and Rand Corporation strategists.

Americans love war. Can’t resist videogames, war movies: “Hunt for Red October,” “Platoon,” “Dirty Dozen,” “Star Wars,” “Terminator.” War turns us on, a testosterone virus in our brains. Our love blinds us to costs, collateral damage, unintended consequences, new debt for our kids. Besides, they’ll grow up loving war. DNA is passed on. Can’t resist.

That hot button was pushed recently with “secret” photos of China’s new stealth bomber exposed during the state visit of China’s President Hu Jintao. Sofge’s thriller begins:

Aug. 9, 2015, 0400. China’s war for “Taiwan starts in the early morning. There are no naval bombardments or waves of bombers … 1,200 cruise and ballistic missiles rise from heavy vehicles on the Chinese mainland … Taiwan’s modest missile defense network. a scattered deployment of I-Hawk and Patriot interceptors, slams into dozens of incoming warheads … a futile gesture. The mass raid overwhelms the defenses as hundreds of Chinese warheads blast the island’s military bases and airports.”

Do taxpayers have a choice? Plan for big wars, get bigger deficits?

The GOP wants to cut America’s massive debt. But “off-the-charts” military spending is “off the table.” Back in the ‘40s, WWII consumed 57% of our GDP. Today, war eats up about half America’s budget.

We’re sinking under Iraq war debt. Nobel economist Joseph Stiglitz estimates Iraq at $3 trillion, with $2 trillion for future costs, like VA medical. The Afghan war, maybe another $3 trillion. Plus endless terrorist threats. Future wars are “planned” years, even decades in advance, strategies based on Pentagon-Rand war games.

America talks peace. But deep inside our collective brain is a dark monster: We’re little kids who love playing war. Age 10 I had a collection of model fighter planes, played air wars. Age 15, owned three guns for hunting. Then the Corps. Like a moth to the flames, we cannot resist our destiny in war. Sofge brings alive the action in our brains:

“Taiwan’s air force is grounded … Taiwanese troops mobilize in downtown Taipei and take up positions on the beaches facing China, just 100 miles to the west. But they know what the world knows: This is no longer Taiwan’s fight. This is a battle between an old superpower and a new one.” Games or reality, it’s all in our heads.

Or is this how WWIII starts? Between an aging America that loves war, won’t surrender without a fight, and the world’s rapidly emerging superpower, predicted to have a population one billion larger than America’s by 2050. Plus an economy 40% of the world’s GDP, dwarfing America’s GDP predicted to fall to just 14%. Yes, China’s the emerging new superpower, a crafty enemy laughing as we waste our economic resources.

Listen as Sofge quotes retired Rear Adm. Eric McVadon, former naval attaché in Beijing: “They are obsessed with Taiwan. On some given day, it’s entirely possible for people to be standing around a table in the Politburo in Beijing, and someone gets the ball rolling. And when it stops, we’re at war.”

Warning: That toxic thinking may well happen again when new neocons, a future Rumsfeld/Cheney team, gets the same paranoid itchings at the same time as China’s generals, all driven by inflated egos, irrational obsessions and a propensity to make the same kind of misjudgments that launched the Iraq War.

Warrior mindset sabotages our economy and superpower status

”Right now the Chinese seem to have taken the lead in this new arms race,” warns Sofge: “When Rand released a report in 2000 describing the potential outcome of a Sino-American conflict over Taiwan, the United States won the war handily. Nine years later, the nonpartisan think tank revised its analysis, accounting for Beijing’s updated air force, its focus on cyber warfare and its ability to use ballistic missiles to take out American satellites. Rand’s new conclusion: The United States would ultimately lose an air war, and an overall conflict would be more difficult and costly than many had imagined.”

Warning, just nine years from 2000 to 2009: The Iraq-Afghan Wars were supposed to make America stronger. Wrong. Those nine years are a perfect example of how war distorted America’s collective brain. Our neocon mindset about the Iraq war resulted in what’s now the “biggest foreign policy blunder” in history. Sofge captures this insanity:

”Ever since 1949, when Nationalist forces retreated to Taiwan following the Communist victory in the Chinese Civil War, Beijing has regarded the island as a renegade province of the People’s Republic. Now, in 2015, only the United States can offer Taiwan protection.” But “the nearest aircraft carrier is the U.S.S. Nimitz, which had just left the Japanese port of Yokosuka on Tokyo Bay … at least two days for the carrier to reach the strait … The closest other carrier group, near Pearl Harbor, is six days out.”

Yes, too late: The war’s over in less than 24 hours. Ironically, the Iraq/Afghan wars have not only weakened our economy and weakened our ability to fight future wars, they weakened America’s superpower status by indirectly handing the war-game victory to China. Worse, our irrational, neocon war brain is now demanding Americans “double down,” insisting defense cuts are “off the table.” Yes folks, America loves war; in that mindset, we will take on trillions new debt, even go down in flames.

Powerful new war strategy: China’s army of “cyber-attack” hackers

Suddenly, Sofge’s thriller exposes China’s fabulous new high-tech strategy: “Until the Nimitz arrives, it’s up to Kadena Air Base in Okinawa, 400 miles northeast of Taiwan, to defend the island. By 0515 hours, Air Force pilots are taking off in 40 F-15E fighters … airborne when Kadena comes under attack.

Error messages begin popping up on computer screens. Modern air defense systems share sensor information but this connection is going to become a liability. An army of hackers operating throughout China swarms the base’s networks, tying up communications with gibberish and cluttering the digital screens of radar operators with phony and conflicting data.”

Future wars: New “army” of hackers, tech geeks, game players, search-engine geniuses. Today Chinese compete with Google, X-Box, Facebook. Later they’re China’s cyber warriors, trained by China’s war-loving generals. The Pentagon knows: They’ll add trillions to our budgets, taxes and deficits, preparing for future wars. Forget cuts.

Hackers score many victories disabling Taiwan: “Early-warning satellites detect the infrared bloom of 25 ballistic missiles launched from the Chinese mainland. Five detonate in orbit, shredding American communication and imaging satellites … partially blinds U.S. forces.” So much for all that money wasted on a satellite defense system.

The pace of Sofge’s thriller accelerates like the final swift dogfight in “Top Gun:” China’s “20 remaining missiles re-enter the atmosphere over Okinawa … Kadena’s Patriot batteries fire missiles … but they are off-network … in disarray. Ten missiles are struck by multiple interceptors … equal number slip through … hit Kadena. … GPS-guided warheads contain bomblets … crater the base’s two runways … air-bursts devastating barracks, radar arrays and hangars … F-15s on the way … F-22 stealth fighters now cannot land on the bases shattered runways … Kadena’s satellites gone, the Nimitz and its flotilla of eight escorts … Aegis-guided missile destroyers … submarines … steaming toward an enemy possessing one of the world’s largest submarine fleets … an arsenal of land-, air- and sea-launched anti-ship missiles.”

Want more? Read Sofge’s “China’s Secret War Plan” thriller in the December 2010 Popular Mechanics. See how America could lose WWIII to China … in less than a day.

But Sofge hedges: “Chances are that a war between China and the United States will not happen in 2015, or at any other time. Under normal circumstances, a war for Taiwan would simply be too costly for either side to wage, especially given the chance of nuclear escalation. But circumstances are not always normal.”

In fact, history tells us wars are never “normal,” always unpredictable. Imagine this new cyber war, with an “army of Chinese hackers” beating America’s high-tech and very high-cost military.

China vs. USA, WWIII. Too costly? That never stops nations. Especially when leaders on both sides have macho egos, love war, act irrational. Add up China’s new stealth bomber, the deterioration of America ego losing those Pentagon war games and a resurgence of neocon war-loving politicians and you have to conclude that taxpayers will keep spending trillions preparing for the next global war, years in advance.

If not with China in 2015, then with some other boogeyman lurking the dark shadows of our collective brains, bad guys that will dominate the thinking of military generals for decades to come, for as the Bush Pentagon put it: “By 2020, warfare will define human life.”

So to be ever-vigilant, we’ll spend trillions, prepare for anything, anyone, anytime. Why? We love war!

MURDER HE WROTE

I came downstairs this morning to a horrific murder scene. There on the family room floor was the lifeless body of goldie, our priceless 3 year old goldfish won at a local fair through the herculian efforts of one of my sons throwing a ping pong ball into his bowl. He had survived countless days of us ignoring him and forgetting to feed him. He learned to survive eating his own shit. But he never learned to live outside his tank, the poor bastard.

It seems our two cats had formulated a master plan. They would hover above his tank for hours watching his every move. They were always drinking the water in his tank. We thought it was harmless, so we ignored it. Little did we know it was part of their murderous plans. In retrospect, it seems so obvious. They eventually drank the water down to a level where escape was futile. Then under the cover of darkness, they attacked. I have concluded that Cookie was the lookout and Smokey committed the dastardly deed. Both are denying all involvement and claim that goldie leapt to his death on his own. They have both lawyered up.

Smokey claims it was Colonel Mustard.

The saddest part of this story is that Avalon will never experience the joy of transporting goldie to the shore or her mother’s house again. She would utilize an old lemonade container for these trips. Once while coming home from the shore she thought goldie needed more air, so she took the lid off the container. As she was turning to get on I-95, the bowl tipped over and goldie went under the car seat. Avalon pulled over and tried to find him to no avail. She gave him up for dead, but he flopped out and she was able to put him in the 2 inches of water left in the container. When we went on our cruise, she used the same container to transport him to her mother’s house and it fell over and broke, spilling most of the water. Now you know why I don’t like to drive in our minivan.

So ends the sad story of Goldie the goldfish. RIP

SMOOT-HAWLEY REDUX (Featured Article)

This article originally appeared in the November 2010 edition of the Casey Report.

As the Greater Depression continues along a parallel pathway with the Great Depression of the 1930s, Congress is about to commit the same blunder it made in 1930. The rocket scientists in the House of Representatives in September passed the Currency Reform for Fair Trade Act, which aims to crack down on Chinese currency manipulation by targeting imports from China and other countries with currencies that are perceived to be undervalued.

The vote was 348 to 79, with more than 100 Republicans voting in favor of the bill. It died in the Senate before the mid-term elections, but Representative Sander Levin, Representative Tim Ryan and Representative Tim Murphy are expected to reintroduce the bill when the House returns in February from a congressional district work break. Senators Shumer and Casey are also planning legislation to punish the Chinese for unfair trade practices.

The head rocket scientist, Nancy Pelosi, declared:

“For so many years, we have watched the China-U.S. trade deficit grow and grow and grow. Today, we are finally doing something about it by recognizing that China’s manipulation of the currency represents a subsidy for Chinese exports coming to the United States and elsewhere. We owe that to American workers.”

This legislation is part of the Democrats’ “Make It in America” initiative that endeavors to increase domestic manufacturing and creating new American jobs. In classic congressional fashion, they are attempting to pass a bill that will make them look good in the eyes of their constituents, but will exacerbate already dangerous world trade imbalances.

You can count on Congress to pander to unions, protectionists, and America Firsters with hollow legislation, when 40 years of bad decisions, bad policies, and bad choices placed us in this situation. When you have made legislative choices that will require the U.S. government to borrow another $6 trillion in the next four years and you already owe someone $868 billion, it is not a good idea to punch them in the nose.

The U.S. is running an annual trade deficit exceeding $500 billion per year. It has not run an annual trade surplus since 1975. The trade deficit peaked at $769 billion in 2006, subtracting 5.7% from GDP. The enormous trade deficits are a result of government spending policies, Federal Reserve monetary policies, and corporate outsourcing that have gutted the industrial base of the U.S. These policies resulted in personal consumption expenditures surging from 62% of GDP in 1970, to 71% of GDP in 2009.

The trade deficits are not the fault of the countries selling goods to American consumers. Trade subtracted 3.5% from growth in April through June, the most since 1947, as imports surged at the fastest pace since 1984.

The trade deficit with China reached a record level in August of $28 billion, as imports skyrocketed. The U.S. is on track to exceed the 2008 record trade deficit with China of $268 billion. The facts that you don’t hear from the protectionist crowd is that exports to China are on track to reach $84 billion in 2010, 20% higher than the previous peak in 2008. Exports to China have increased by 525% since 2000, while imports from China have increased by 340%. The storyline about China not allowing U.S. imports into their country is false. Putting tariffs or quotas on goods coming from China will not create jobs in America and will only deepen and lengthen the current depression, just as it did in the 1930s.

Protectionism During the Great Depression

The complete collapse of worldwide trade during the 1930s, with its root in trade protectionism, did not cause the Great Depression, but it certainly didn’t help. In 1929, exports totaled $5.9 billion and accounted for 5.7% of GDP. By 1933, exports had plunged to $2.0 billion and accounted for only 3.5% of GDP. Imports plummeted by an equal amount. Global trade declined by 60% as tariffs were imposed and retaliation created a downward spiral. The U.S. provoked the trade war with the passage of the Smoot-Hawley Tariff Act.

Senators Reed Smoot and Willis C. Hawley sponsored the bill, and it was signed into law on June 17, 1930, by Herbert Hoover. It raised U.S. tariffs on over 20,000 imported goods to the highest levels since 1828. The new tariff imposed an effective tax rate of 60% on more than 3,200 products and materials imported into the United States, quadrupling previous tariff rates. According to the U.S. Statistical Abstract, the overall effective tariff rate was 13.5% in 1929 and 19.8% by 1933.

It seems politicians never change. During the 1928 presidential campaign, Herbert Hoover promised to help beleaguered farmers by increasing tariffs on agricultural products. After getting elected, Hoover asked Congress for an increase of tariff rates for agricultural goods and a decrease of rates for industrial goods. The Republican-dominated House and Senate did him one better and increased tariffs across the board.

In May 1930, a petition was signed by 1,028 economists asking President Hoover to veto the legislation. Henry Ford begged him to veto the legislation. Hoover opposed the bill and called it “vicious, extortionate, and obnoxious” because he felt it would undercut his pledge to international cooperation. Then he proved that he was a standard-issue weak-kneed politician by signing the bill. Hoover’s initial instinct proved correct. The international community levied their own tariffs in retaliation after the bill became law. Canada, Britain, and other European countries immediately imposed their own tariffs. World trade came to a grinding halt.

Germany, with its war reparations, was particularly vulnerable to this contraction. Ironically, the U.S. was the lender to the world during the 1920s. American lending propped up the entire world economy. Former allies paid war-debt installments to the U.S. chiefly with funds obtained from German reparations payments, and Germany was able to make those payments only because of large private loans from the U.S. and Britain. Similarly, U.S. investments abroad provided the dollars, which alone made it possible for foreign nations to buy U.S. exports.

By killing world trade with the Smoot-Hawley tariffs, the U.S. shot itself in the foot and contributed to worsening the Depression in Germany. This inadvertently led to the rise of Hitler. Talk about unintended consequences.

Decades of Bad Choices

Blustering politicians like Nancy Pelosi and Chuck Schumer are attempting to ram through populist legislation in order to appear to be on the side of the American people. The Treasury secretary of the United States has declared China a currency manipulator. Chinese Premier Wen Jiabao responded in kind:

“If we increase the Yuan by 20% to 40%, as some people are calling for, many of our factories will shut down and society will be in turmoil. If China saw social and economic turbulence, then it would be a disaster for the world.”

They are playing a high-stakes game of chicken, and the ante is much higher than it was in 1930. Exports account for 12.5% of our GDP today, versus 5.7% prior to the Great Depression.

The United States was a net exporter when the 1970s started. Our enormous trade deficits, which subtract from GDP, were not imposed on us by foreign countries. We are in this predicament because we made appalling choices.

We chose to allow the Federal Reserve to inflate away 95% of the purchasing power of the USD since 1971. We chose to elect politicians that have driven the national debt from $371 billion in 1970 to $13.6 trillion today. We chose to support “free trade” legislation that allowed corporate CEOs to gut our industrial base and ship good-paying jobs to China, while filling the pockets of these executives with millions. We chose to spend rather than save and invest in our country. We chose to become a consumer debt-centered society, relishing in the cheap goods we could buy from China on credit. We chose low prices at Walmart over small-business owners and sustainable domestic production of goods. Decades of bad choices cannot be reversed through taxation, tariffs, and quotas.

The Chinese have pegged their currency to the USD since 1995. For a decade, the U.S. was just fine with the peg, as American consumers got cheap goods, American corporations reaped huge profits from outsourcing, and banks raked in billions by lending money to everyone. Now that we have entered the Greater Depression, the finger pointing and accusations have begun.

Politicians and the people who elected them want someone to blame for their bad choices. The Chinese are the bogeyman that forced Americans to buy on credit. They forced American corporations to offshore millions of U.S. jobs. If the U.S. had a strong dollar policy, ran surpluses, and lived within its means, the Chinese peg would be meaningless.

U.S. GDP has grown by 335% since 1985. Over this same time frame, exports to China have grown by 1,800%, and imports from China have grown by 7,700%. Do politicians actually believe that imposing 30% tariffs on all Chinese products will magically create new manufacturing jobs in America? The 42,400 factories that have closed since 2001 and the 5.4 million manufacturing jobs lost are not coming back. A 30% upward revaluation of the yuan or 30% tariffs on Chinese products would devastate an economy that is still 70% dependent upon consumer spending. Just as in 1930, protectionist measures would boomerang and smack America in the back of the head.

If the pandering politicians in Washington D.C. are myopic enough to ignore the lessons of the past and start a trade war with China and/or the rest of the world, the possible implications would be:

An immediate increase in the prices of goods from China, which would proportionately hurt the lower and middle classes who shop at Walmart.
Retaliatory tariffs and protectionist policies by other countries, resulting in a decline in U.S. exports.
A net loss of U.S. jobs as the decline in consumer spending-related jobs will far outweigh any benefits to exporting businesses.
A decrease in world trade, resulting in a deepening of the current worldwide depression.
Possible unintended consequences similar to what happened in Germany after the hyperinflationary collapse of their currency (dictators, war, chaos).

The investment implications of trade barriers, tariffs, quantitative easing, and currency debasement are clear. Gold, silver, and virtually all commodities are likely to soar in this environment. To find out how to profit from this certain trend, check out Casey Research’s BIG GOLD REPORT.

INFLATION vs DEFLATION

Well RE is going to get his wish. His friend at Automatic Earth is going to debate Gonzalo Lira regarding whether we are headed for a deflationary or inflationary crash. Does it really matter at the end of the day? A crash is a crash. If Bernanke was not printing at hyper-speed we would have experienced a deflationary crash already. If he continues to print and ramps it up, we will experience an inflationary crash. It sucks either way. Here is a link to the site.

It’s on Thursday, Feb. 10, at 9pm EST. The link is here: http://fosslira.blogspot.com/

Maybe I should charge $45 to watch me thrash Smokey and SSS like rag dolls about Boomers destroying the world.

Deflation vs. Hyperinflation

Where is the United States headed?

• A 1930s-style deflationary depression?

• Or a Weimar-style hyperinflationary crisis?

For the first time ever, two of the most prominent writers on this issue will face one another in a live online debate, to be held on Thursday, February 10, 2011.

NICOLE FOSS, a.k.a. “STONELEIGH” at The Automatic Earth, ranks among the most prominent of the deflationists. She maintains that the ongoing contraction of jobs and overall income in the US will lead us into a sustained deflationary depression. Consequently—and in direct contradiction to the advice of hyperinflationists such as Lira—Foss strongly recommends Americans stay liquid in US Dollars and avoid going into any debt. As jobs and many businesses disappear, Foss foresees a crash in the money supply, leaving most people without cash or credit, and a minority hoarding the little that remains.

GONZALO LIRA has emerged as one of the web’s most high-profile hyperinflationists. Drawing on personal experience from Chile in the early 1970’s, Lira says the same hyperinflationary crisis will soon take place in the United States, due to the massive oversupply of debased U.S. dollars chasing after a finite supply of tangibles. He argues that Americans would be well-advised to structure their investments and their own personal lives in anticipation of a rapid and stunning hyperinflation.

This live online debate will be moderated by Jay Carter of Financial Survival Radio.

Stoneleigh & Lira will be taking audience questions—live. Attendees are advised to have a microphone attached to their computer, in order to ask spoken questions in the live Q&A, though written questions will also be taken.

DATE & TIME: Thursday, Febrary 10, 2010 beginning at 9:00 PM EST

STONELEIGH vs. LIRA

Live, 9pm EST, February 10, 2011.

It’s clear that some type of economic depression is coming to the United States and to much of the rest of the world. In many ways, it has already begun.

Deflation vs. Hyperinflation

It’s clear that some type of economic depression is coming to the United States and to much of the rest of the world. In many ways, it has already begun.

Where is the United States headed?

• A 1930s-style deflationary depression?

• Or a Weimar-style hyperinflationary crisis?

For the first time ever, two of the most prominent writers on this issue will face one another in a live online debate, to be held on Thursday, February 10, 2011.Stoneleigh & Lira will be taking audience questions—live. Attendees are advised to have a microphone attached to their computer, in order to ask spoken questions in the live Q&A, though written questions will also be taken.

DATE & TIME: Thursday, Febrary 10, 2010 beginning at 9:00 PM EST

COST: $45

This live online debate will be moderated by Jay Carter

of Financial Survival Radio.

STONELEIGH vs. LIRA

Live, 9pm EST, February 10, 2011.

REGISTER HERE:

BLACK HISTORY MONTH

Today is February 1. As everyone knows, it is the start of Black History Month. Amazingly, this has been going on since I was in Catholic grade school, 37 years ago. I probably didn’t get the irony of going to school with 1,000 other white kids spread across 8 grades, with not a black kid to be found, and us celebrating Black History Month. It always involved writing some sort of report about a famous black person. In a grade with 100 kids you would end up with 35 reports on Martin Luther King, 30 reports on Harriet Tubmann, 20 reports on George Washington Carver, and 15 reports on the dude that discovered plasma and then died in a car accident because the white hospital wouldn’t give a black dude plasma (I forget the dude’s name).

What month is White History Month? I’m pushing hard for Irish History Month. Kids could write about the inventor of irish whiskey, how to blow up an English Protestant, 1,000 uses for a potato, is there really an Irish curse, why does cabbage smell like shit.

In honor of Black History Month, I think we should post a tribute to a different black person every day of the month. I would like Smokey to lead off.

Black Chef Defends “Racist” Lunch Menu

An African-American chef is fighting back against allegations of racism for her choice of a Soul Food lunch menu celebrating Black History Month.

The controversy started last Thursday after a cellphone pic of the NBC commissary menu was taken by Jimmy Fallon Show drummer, Questlove. Titled “In Honor of Black History Month,” the lunch offered fried chicken, collard greens, and other delicacies associated with African-Americans. The Roots drummer tweeted the pic to his followers, implying that Human Resources should investigate the issue for possible racism.

Racist?

The pic was quickly re-twittered by thousands of Questlove’s followers and soon broke into the mainstream news. In a few hours, NBC took down the questionable sign and issued an apology.

“The month of February is Black History Month,” explains NBC chef Leslie Calhoun, “so we [at the NBC commissary] have always been trying to get something [on the menu in celebration of the month].” After getting the ok from the Head Chef, a trial menu was tested last year with great success.

This year, Calhoun was given the right to choose NBC’s lunch menu for Black History Month, and selected food that “people would enjoy eating, as well as what I would personally eat.”

Calhoun is also worried that, after fighting for 8 years to get the right to pick the menu for Black History Month, the controversy may prevent her from doing so next year.

Now that Calhoun has spoken out, Questlove has backed off his militant posturing. “i think I need a twitter break. i done started something. and now I must put out fire,” he twittered after the news broke.

MISS BLACK HISTORY

AMERICAN EULOGY (Featured Article)

The Founding Fathers described the kind of country they were shaping on July 4, 1776 with the most well known sentence in the English language:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. – Declaration of Independence

In 1776, America was an idea born of noble intentions. An idea that every citizen had the opportunity to succeed, prosper and achieve based upon their hard work and abilities. The government did not provide advantages or a safety net for its citizens. People were free to succeed or fail based upon their own merits. America had a frontier spirit because it was still a frontier. Individual effort, intellect and willingness to sweat allowed you to move up the socio-economic ladder. The government provided a National Defense, and very little else. In 1794, the country had a population of 4.4 million and a GDP of $310 million. Government spending totaled $7.1 million, or 2.3% of GDP, and was split between Defense and interest on the Revolutionary War debt. Today, Federal Government spending totals $3.7 trillion, or 25% of GDP.

James Truslow Adams in his 1931 Epic of America described the America that once existed in reality, but only exists as a phantom today:

“The American Dream is that dream of a land in which life should be better and richer and fuller for every man, with opportunity for each according to ability or achievement. It is a difficult dream for the European upper classes to interpret adequately, also too many of us ourselves have grown weary and mistrustful of it. It is not a dream of motor cars and high wages merely, but a dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position.”

“The American Dream that has lured tens of millions of all nations to our shores in the past century has not been a dream of material plenty, though that has doubtlessly counted heavily. It has been a dream of being able to grow to fullest development as a man and woman, unhampered by the barriers which had slowly been erected in the older civilizations, unrepressed by social orders which had developed for the benefit of classes rather than for the simple human being of any and every class.” – James Truslow Adams – Epic of America

His assessment of the American Dream was made in 1931. He saw signs that the American Dream had begun to die. He was right. The American Dream began to develop a terminal illness in 1913 with the creation of the Federal Reserve and the passage of the 16th Amendment to the Constitution, creating a permanent income tax.

Song of the Century

Sing us a song of the century
It sings like American Eulogy
The dawn of my love and conspiracy
Forgotten hope and the class of 13
Tell me a story into that goodnight
Sing us a song for me – American Eulogy – Green Day

At the outset of the last century America was still a vital, free, growing country on the rise. The song of the century began as a joyous ballad and ended as a funeral dirge. The creation of a Central Bank, which could create inflation on demand, and allowing politicians the ability to buy votes through pork spending, paid for with ever increasing taxation, have sucked the life out of the American Dream. According to the Federal Reserve’s own website, their mandates were clear. Below are those mandates and an assessment of their success.

Conducting the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates.

Due to loose monetary policy in the 1920’s, the Federal Reserve created a stock bubble, a stock market crash of 89%, a decade long Great Depression, and unemployment of 25% in the 1930’s.
Due to loose monetary policies in the 1970’s, the Federal Reserve created raging inflation that reached 14% in the early 1980’s and needed to raise interest rates to 18% in order to break the back of inflation, resulting in unemployment surging to 9.7% in 1982.
Due to loose monetary policies in the early 2000’s, the Federal Reserve created the largest housing bubble in history, with the subsequent collapse bringing the financial system to within hours of collapse, and driving unemployment to 9.9% in 2009.
Due to the loosest monetary policy in history, today, inflation has begun to rage across the globe, leading to riots, protests and bloody revolutions, with more on the way.
The Federal Reserve has achieved their stable prices mandate by inflating away 96% of the purchasing power of the US dollar in less than 100 years. The price of gold continues to soar, as faith in the US dollar diminishes by the minute. I guess stability is in the eye of the beholder.

Supervising and regulating banking institutions to ensure the safety and soundness of the nation’s banking and financial system and to protect the credit rights of consumers.

The Federal Reserve’s supervisory and regulatory expertise can be observed in the graph above. This graph doesn’t do the Fed justice, as it begins in 1934. Sixteen years after its origination, the Fed managed to let 10,000 out of 25,000 banks in the country fail between 1929 and 1932.
Their glorious history also includes residing over the failure of 2,800 banks during the 1980’s S&L crisis.
While protecting their mega-bank Wall Street masters, the Fed has allowed over 300 small banks to go under so far. There are 900 banks on the troubled list that will eventually meet their maker.

Maintaining the stability of the financial system and containing systemic risk that may arise in financial markets.

Generally, maintaining the stability of the financial system and containing systematic risk doesn’t include allowing the worldwide financial system to come within hours of collapse as described by Rep. Paul Kanjorski:

“On Thursday [the 18th], at about 11 o’clock in the morning, the Federal Reserve noticed a tremendous drawdown of money market accounts in the United States to a tune of $550 billion being drawn out in a matter of an hour or two. The Treasury opened up its window to help. They pumped $105 billion into the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks.

They decided to close the operation, close down the money accounts, and announce a guarantee of $250,000 per account so there wouldn’t be further panic and there. And that’s what actually happened. If they had not done that their estimation was that by two o’clock that afternoon, $5.5 trillion would have been drawn out of the money market system of the United States, would have collapsed the entire economy of the United States, and within 24 hours the world economy would have collapsed.

Now we talked at that time about what would have happened if that happened. It would have been the end of our economic system and our political system as we know it.”

Providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation’s payments system.

It seems this is the only mandate the Federal Reserve has taken seriously is providing services to its owners, the banks. Did the bankers and politicians that met on Jekyll Island to mastermind this Central Bank envision that those services would include: buying $1.5 trillion of toxic mortgages from the banks; allowing the mega-banks to borrow from the Fed at 0% and reinvest those funds at 2.5% risk free; pumping $600 billion directly into the stock market through their QE2 scam; allowing banks to falsely overstate the value of their mortgage and commercial loans; and never ever enforcing basic risk management regulations.
While providing Wall Street banks with billions of unearned risk free profits, 0% interest rates further impoverish the savers and senior citizens of the country. The Federal Reserve has fulfilled their unstated mandate of enriching bankers at the expense of middle class Americans.

To strengthen U.S. standing in the world economy.

The Federal Reserve’s affect on the world economy is best revealed in a pictorial tribute to their policies:

TUNISIA

ALGERIA

EGYPT

The Federal Reserve has not been alone in killing the American Dream. Politicians since 1913 have done their part in suffocating the dream. The tax code consisted of 400 pages in 1913 and tax rates ranged from 1% to 7%. In less than a century politicians of both parties have carved out 70,000 pages of payoffs, entitlements, and bribes for their contributors and constituents. Tax rates now range from 10% to 35%. Those 70,000 pages of rules, regulations and tax breaks do not benefit the average middle class American. They benefit those who had the money and power to buy off a Congressman.

The Federal Reserve and the US Tax Code bastardized the American Dream, created barriers to economic advancement, and supported the accumulation of wealth and power by a select few. The ruling elite have used their power and control over the media to convince the majority of Americans that the American Dream is about accumulating material possessions with debt. The American Dream no longer meant attaining the fullest measure of your capabilities, but living in the biggest McMansion, driving the nicest BMW, watching the biggest TV and wearing the latest fashions, all acquired with debt. America is dying.

Mass Hysteria

Red alert is the color of panic
Elevated to the point of static
Beating into the hearts of the fanatics
And the neighborhood’s a loaded gun
Idle thought lead to full-throttle screaming
And the welfare is asphyxiating
Mass confusion is all the new age and it’s creating a feeding ground for the bottom feeders of hysteria

Hysteria, mass hysteria!
Mass hysteria!
Mass hysteria!
Mass hysteria! – American Eulogy – Green Day

Green Day captures the essence of America since the turn of the century. The country has been in the throes of mass hysteria since 9/11. The once independent, self sufficient individualists that populated this country have become dependent, government reliant, quivering shadows of the frontiersmen that created this country. In the name of safety and security, the American people have allowed their government to accumulate complete control over every aspect of our lives. Only a country in the grip of mass hysteria would allow their leaders to run the National Debt from $5.8 trillion to $14.1 trillion in less than 10 years. Only a country in the clutches of mass hysteria could believe they could get rich by trading internet stocks and houses to a greater fool. Only a country seized by mass hysteria would allow its leaders to promote democracy at the point of a cruise missile as we continue to fight $3 trillion wars in the Middle East, while nearly tripling the amount spent on Defense to more than $1 trillion per year.

Defense Budget Breakdown for 2011

Defense-related expenditure	2011 Budget request & Mandatory spending	Calculation
DOD spending	$721.3 billion	Base budget + “Overseas Contingency Operations”
FBI counter-terrorism	$2.7 billion	At least one-third FBI budget.
International Affairs	$10.1–$54.2 billion	At minimum, foreign arms sales. At most, entire State budget
Energy Department, defense-related	$20.9 billion
Veterans Affairs	$66.2 billion
Homeland Security	$54.7 billion
NASA, satellites	$3.4–$8.5 billion	Between 20% and 50% of NASA’s total budget
Veterans pensions	$58.4 billion
Other defense-related mandatory spending	$7.5 billion
Interest on debt incurred in past wars	$114.8–$454.2 billion	Between 23% and 91% of total interest
Total Spending	$1.060–$1.449 trillion

If you had told someone on September 10, 2001 that ten years later America would be running $1.5 trillion annual deficits, fighting two wars of choice in countries that despise our presence, and had not only not addressed the $100 billion of unfunded welfare liabilities but added billions more with Medicare D and Obamacare, they would have thought you were a crazy doomster predicting the end of the world. They would have put you away in a padded cell if you had further predicted that politicians would cut taxes three separate times, that the Wall Street banks that leveraged themselves 40 to 1 and destroyed the financial system were handed $2 trillion of taxpayer funds so they could pay themselves multi-million dollar bonuses, and that the Federal Reserve would triple its balance sheet to $2.45 trillion by running its printing presses at hyper-speed and handing the money to those same Wall Street Mega-Banks.

What caused the mass hysteria that has destroyed the soul of America? Was it just the madness of crowds? Or was it something more sinister?

True sounds of maniacal laughter
And the deaf-mute is misleading the choir
The punch-line is a natural disaster
And it’s sung by the unemployed
Fight fire with a riot
The class war is hanging on a wire because the martyr is a compulsive liar
When he said “it’s just a bunch of niggers throwing gas into the ….” – American Eulogy – Green Day

Whenever an act doesn’t make sense and seems irrational, you need to ask yourself, “who benefits?” Who has benefitted from the hysteria? The answer is in plain sight. The moneyed interests benefitted. The military industrial complex benefitted. The Federal Government bureaucracy benefitted. Wall Street bankers benefitted. Mega-corporations and their CEOs benefitted. The top 1% ruling elite gained more wealth and more power. They created the mass hysteria with the assistance of their corporate owned mainstream media and completed their pillaging of the middle class with the cooperation of regulators, rating agencies and their ultimate weapon, the privately owned Federal Reserve bank, that has enriched its owners while impoverishing those whose only aspiration was to do an honest day’s work, raise their families, and live in relative comfort, safety, and happiness.

I Don’t Wanna Live In The Modern World

I don’t wanna live in the modern world!
I don’t wanna live in the modern world!
I don’t wanna live in the modern world!
I don’t wanna live in the modern world!

I am a nation without bureaucratic lies
Deny the allegation as it’s written (fucking lies!)

I want to take a ride to the great divide
Beyond the “up to date” and the neo-gentrified
The high definition for the low resident
Where the value of your mind is not held in contempt
I can hear the sound of a beating heart
That bleeds beyond a system that’s falling apart
With money to burn on a minimum wage
I don’t give a shit about the modern age – American Eulogy – Green Day

The modern world in no way resembles the world James Truslow Adams wrote so passionately about in 1931. Green Day’s version of bureaucratic lies, high definition TVs for the poor, contempt for those who use their minds, and a debt flooded system that is falling apart is an accurate assessment of America today. The modern world is ruled by the few with wealth and power, sustained by government. The misinformation and propaganda dished out by the mainstream media creates a smokescreen that obscures who wields the true power in this country. The corporate mainstream media has done such a good job spreading the Big Lie that a vast number of Americans actually admire and worship the ultra-rich.

Most Americans still believe the fairy tale of the American Dream, that no matter how humble your beginnings, everyone has a fair chance to become rich in America. The truth is that the wealthy ruling class owns the country. The top 1% control 43% of the financial wealth of the nation. The top 10% control 83% of the financial wealth of the nation. There is a misperception that the ultra-rich earn their wealth. The facts show otherwise. In 2008, only 19% of the income reported by the 13,480 individuals or families making over $10 million came from wages and salaries. Remember the financial crisis of 2008-2009 that wiped out 7 million jobs, cut the value of many homes in half, and required a taxpayer bailout of Wall Street? According to research done by economist Edward Wolff, “there has been an “astounding” 36.1% drop in the wealth (marketable assets) of the median household since the peak of the housing bubble in 2007. By contrast, the wealth of the top 1% of households dropped by far less: just 11.1%. So as of April 2010, it looks like the wealth distribution is even more unequal than it was in 2007.”

Source: William Domhoff

The bottom 90% own less than 19% of stocks and mutual funds in the country. Reality is that the 10% richest Americans own the country. The top 1% control 50% of the investment assets and only 5% of the total debt in the country. The bottom 90% control 12% of the investment assets and are burdened with 73% of the total debt. You can clearly see that the Wall Street bailout and the current Federal Reserve QE2 plan to boost stock prices have only benefitted the top 10% richest Americans. What is good for Wall Street is not good for Main Street. The American middle class has been lured into debt by the purveyors of debt, the ultra-rich elite who control the financial industry. The further into debt the bottom 90% descend, the greater the enrichment of the ruling class. This is why Wall Street shysters, political hacks and the corporate mainstream media have urged Americans to whip out those credit cards and “Save America” by spending money they don’t have, again. It is reminiscent of President Bush’s heartfelt plea to the American public to defeat terrorism by buying a GM car with 0% down.

The propaganda that is constantly pounded into the brains of Americans about “death taxes” and the rich paying more than their fair share of taxes is part of the Big Lie perpetrated by the powerful ruling class. The “huge” issue of estate tax impacts only the few thousand richest Americans. According to a study published by the Federal Reserve Bank of Cleveland, only 1.6% of Americans receive $100,000 or more in inheritance. Another 1.1% receive $50,000 to $100,000. On the other hand, 91.9% receive nothing (Kotlikoff & Gokhale, 2000). The richest families in the country provide the funding for the mainstream media propaganda needed to eliminate estate taxes.

The lies about the ultra-rich paying more than their fair share of taxes are refuted in the graph above. The top 1% actually pays a lower percentage of their income than the next 9%. The tax code isn’t 70,000 pages for nothing. The ultra-rich have used their wealth to great advantage by having loopholes and tax dodges inserted into the tax code by their bought off congressmen. The average American can’t afford high powered tax specialists and lawyers to help them stash their wealth in off-shore tax havens in the Caribbean and Switzerland. The consistent theme in America today is that the middle class gets screwed and the ultra-rich ruling class accumulates more wealth and power.

The Death of America

“Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet that did not commit suicide.” – John Adams

Two hundred and thirty five years ago, our Founding Fathers declared that we all had the unalienable rights of life, liberty and the pursuit of happiness. These rights have been restricted and bastardized over two centuries. Liberties have been severely restricted as your government tracks you through your social security number, is able to monitor your phone and internet communications, and regulates your education, healthcare, business, and a thousand other daily activities. The right to happiness was based upon James Treslow Adams’ view that we were free to attain “the fullest stature of which they are innately capable”. The happiness of becoming a success through your individual exertion, intelligence and efforts has been subverted by the happiness of material goods acquired through the use of debt, peddled by the ruling class.

The American Dream where every person had the opportunity to live a richer and fuller life began to die in 1913. Every generation born in this country had an excellent chance to live a better life than their parents. Relentless progress was the American way. I have three teenage sons. Based on the actions of this country’s ruling oligarchy, I doubt that my sons will live a richer and fuller life than myself. The debts are too extreme, the military overreach too excessive, the looting by the financial class too great, the political corruption too extensive, and the opportunities too few. The dream of a social order where everyone could rise to the highest level of their capabilities regardless of their birth has been systematically squashed. With 66% of households making less than $65,000 and college costs out of reach for 80% of Americans without incurring crushing levels of debt, the chances for most Americans to climb the social ladder through educational advancement are nil. Even if they do graduate from college, the CEOs in corporate America, who “earn” 300 times the average worker, have outsourced their jobs to China and India.

The ruling class provides their children with private schooling and necessary preparation to keep their place in the social order. Wealth begets wealth. The elite send their kids to the elite Ivy League schools and use their connections with their fellow ruling elite to get them jobs on Wall Street, the prestigious connected corporations or government jobs in Washington DC. The wealth of the few has erected barriers to advancement of the many. America has progressively become a stratified class oriented society that has begun to spiral downward as the ruling class has gone too far. The revolutions flaring across the globe are occurring because the ruling class went too far and took too much. The ruling class in America should take note. They have shattered the American Dream and the retribution from those who have been swindled will be unexpected and violent.

http://www.youtube.com/watch?v=bunhVPAXcJA

ALL YOU ZOMBIES (Oldie but Goodie)

With the events of the last week pushing the world further into Crisis, I thought this November 2009 article would be appropriate to rerun. I’m finalizing an article that I hope will be a bookend to this piece.

The LORD saw how great man’s wickedness on the earth had become, and that every inclination of the thoughts of his heart was only evil all the time. The LORD was grieved that he had made man on the earth, and his heart was filled with pain. So the LORD said, “I will wipe mankind, whom I have created, from the face of the earth—men and animals, and creatures that move along the ground, and birds of the air—for I am grieved that I have made them.” But Noah found favor in the eyes of the LORD. – Genesis 6

Everyone is familiar with the story of Noah. God was angry at the evil and wickedness of mankind. God instructed Noah to build an ark in order to save his family and two of each animal on earth from the coming flood. Noah could have ignored God’s warning and continued to live his life as before. By heeding God’s warning and building the ark, Noah was able to save himself, his family, and two of every animal from death and destruction. The warning signs regarding the current American Crisis have been discernible since the 1990’s. The un-sustainability of the government’s fiscal social guarantees, the inevitability of peak cheap oil, and the policing of a far flung empire with troops in 130 countries, were all known during the 1990’s. Americans had swelled their use of debt since 1980 and had not saved enough for their looming retirement years. The culture wars fractured the country. Just like a squirrel prepares for winter by collecting acorns and storing them in his nest, Americans had an opportunity to prepare for the coming winter. Instead we squandered the remaining days of autumn, ignoring our monetary problems, buying $45,000 SUVs, borrowing at 125% of the value of overpriced McMansions, initiating wars of choice, expanding our empire and enlarging our police state.

We had the power to influence history in a positive manner. Appropriate preparation could have lessened the impact of the long cold hard days ahead. Some winters are bitter and deadly. Others are mild and harmless. Since most Americans, including our leaders, think linearly they never see the turning of the seasons of history until it is too late. We are currently in the midst of a Fourth Turning, and most people have no clue. With winter approaching, it is always wise to get the heater checked, buy some firewood, make sure the snow plow has gas, store some food and water in case of a blizzard, buy some salt in case of ice, and tune up the car.

Instead of having their heater tuned up, Americans decided a new kitchen with granite counters and stainless steel appliances paid for with a home equity loan was a better idea. Instead of buying firewood, Americans bought a 52 inch HDTV using their platinum credit card. Instead of making sure the snow plow had gas, Americans outsourced their lawn care and snow removal to illegal immigrants. Instead of storing food and water, Americans decided to spend their money eating out four times per week. Instead of buying salt for an icy winter, Americans bought salt for the rims of their margarita glasses. Instead of tuning up their cars, they leased a new BMW every two years. Bitter winds have begun to blow, dark clouds are on the horizon, and winter has arrived. The country is completely and utterly unprepared.

Only Noah Saw It Coming

All you zombies hide your faces
All you people in the street
All you sittin’ in high places
The pieces gonna fall on you
No one ever spoke to Noah
They all laughed at him instead
Working on his ark, working all by himself
Only Noah saw it coming
Forty days and forty nights
Took his sons and daughters with him
Yeah they were the Israelites – Hooters – All You Zombies

The Hooters were a Philadelphia rock group from the 1980’s. The first concert I attended was a Hooters performance at the Spectrum. Their music still rings true today. The American zombies had a chance to prepare for the coming Crisis. They instead laughed at Noah. Now the pieces will fall on them. The pieces will fall on the average American and the elitist rulers in Washington and on Wall Street. When Strauss and Howe wrote their book The Fourth Turning in 1997 there was approximately a decade to prepare for the coming Crisis. They warned that the two parties needed to change their messages to prepare the country for the coming winter:

“Yet both parties are also harmfully post-seasonal. In their quest for an ever bigger harvest, Democrats want to remove sacrifice ever further from the public lexicon. They seek entitlements for every victim, including the entire middle class, without caring whether all this guaranteed consumption is sustainable. If Democrats get their way, they would impose huge debts and future taxes on Millennial children. In their quest for ever more individualism, Republicans want to make public authority ever more dysfunctional. They seek to starve all government of revenue and are willing to shut down whole federal agencies to make their point. If Republicans get their way, they would prevent Millennials from forging a positive bond with government and limit the public resources directed toward the care and schooling of the neediest children.”

The Fourth Turning requires personal sacrifice by all Americans and the government must be seen as a high functioning authority that protects its citizens and successfully accomplishes big missions. In the last twelve years, we have done the exact opposite of what was needed to prepare for the Crisis. The two Parties reached a consensus by increasing entitlements for everyone with passage of Medicare Part D, creating a new $15 trillion unfunded liability. George Bush provided rich people with entitlements of lower taxes and middle class entitlements with rebate checks. The banking industry was given free rein to rape the American public and the rest of the world with the repeal of the Glass-Steagall Act. Rather than killing or reducing governmental agencies, George Bush used 9/11 as an excuse to greatly expand government by creating the Department of Homeland Security and increasing Defense Spending by 200%. Democratic politicians, with the wholehearted support of George Bush, used their authority over Fannie Mae, Freddie Mac and threats against banks to open the mortgage market to people who had no means to actually make a mortgage payment. The two wars of choice in Iraq and Afghanistan have cost $934 billion since 2003.

In 1997, the United States spent approximately $300 billion annually on Defense related areas. Today, we are spending in excess of $900 billion in those same areas. At the end of 1997, the National Debt was $5.4 trillion. If Congress and the Presidents had chosen to prepare the country for the unavoidable Crisis period of twenty years, they would have scaled back government spending, tackled the Social Security and Medicare train wreck, developed a multi-pronged energy plan, and asked Americans to save. Instead, they pressed their foot to the accelerator as they approached a curve on a mountain road.

Today, the National Debt stands at $12.1 trillion. Our politicians proceeded to saddle us with an additional $6.7 trillion of debt in the space of 12 years, after taking 208 years to accumulate $5.4 trillion of debt. Based on current projections, the National Debt will exceed $25 trillion by 2019. These reckless actions were akin to entering winter by not paying your utility bill for a year, having your windows wide open, not having the oil changed in your car for 10,000 miles, and being two quarts low with your anti-freeze.

Strauss & Howe recommended that the country prepare in the following ways:

Prepare values: Forge the consensus and uplift the culture, but don’t expect near-term results.
Prepare institutions: Clear the debris and find out what works, but don’t try building anything big.
Prepare politics: Define challenges bluntly and stress duties over rights, but don’t attempt reforms that can’t now be accomplished.
Prepare society: Require community teamwork to solve local problems, but don’t try this on a national scale.
Prepare youth: Treat children as the nation’s highest priority, but don’t do their work for them.
Prepare elders: Tell future elders they will need to be more self-sufficient, but don’t attempt deep cuts in benefits to current elders.
Prepare the economy: Correct fundamentals, but don’t try to fine tune current performance.
Prepare the defense: Expect the worst and prepare to mobilize, but don’t pre-commit to any one response.

Rather than finding common ground and forging alliances, Baby boomer culture warriors upped the ante. The extreme wings of the Democratic and Republican parties gained control of the dialogue. Neo-conservatism has dominated the thinking in the Republican Party while ultra-liberals have dominated the Democratic Party. The culture has deteriorated, with the media perpetuating a nihilistic, selfish, materialistic attitude among the citizens. TV and movies have portrayed lives of the dregs and lowlifes of society as desirable and normal. The lives of washed up rock stars, drugged out TV personalities, vapid housewives, and brainless house flippers passes for entertainment in today’s society. Getting rich by any means necessary has been glorified.

The best and brightest MBA students graduated and trooped off to Wall Street. Working at real companies that produced something became passé. The degeneration of moral, ethical, and cultural standards has made it more likely that a fascist government could gain control during the Crisis. The dysfunction of both the Federal government and state and local governments have dramatically reduced the trust level of the American public in these institutions. During a Crisis, public faith in government is necessary for swift decisive action. With an approval rating of 26%, Congress is more despised than Osama bin Laden.

The politicians who have chosen to lie to the American people and not face up to the national problems of deficits, unfunded promises, and peak oil, have set the country up for a cataclysmic Crisis. The only statesmen who have spoken candidly about the coming Crisis have been David Walker and Ron Paul.

“Washington has charged everything to the nation’s credit card – engaging in tax cuts and spending increases without paying for them. Washington’s imprudent, unethical and even immoral behavior is facilitated by a lack of transparency. While the US government is too big to fail, continuing on our current path will have adverse implications for our economy and international standing. The sooner Washington acts, the better. Our country, children and grandchildren deserve no less.” David Walker – 9/2008

“We’re indeed stuck between a rock and a hard place, and we don’t talk about how we got here; we talk about how we are going to patch it up. The solutions proposed so far – stimulus packages, bailouts and interest rate cuts – just amount to printing more money, which will lead to greater currency devaluation, contribute to the rising cost of living, and further squeeze the middle class and our senior citizens.” Ron Paul – 8/2008

A candid discussion of these issues has been avoided at all costs by the cowards who crawl around the halls of Congress. Politicians had a chance to stem the downward slide of cynicism, apathy, and disgust with government. They failed miserably. As the Crisis deepens, Americans will turn to those who told the truth. It is a small list.

Society needed to prepare our youth for the test that awaited them during the Crisis. Civic duty, teamwork, and a sense of community needed to be encouraged by adults in our youth. The Millenials (Hero generation) will be the generation on the front lines during this Crisis. The youth of today have been coddled, protected, and have not been required to participate in community efforts. Government efforts such as No Child Left Behind have been failures, as school districts concern themselves with bureaucratic test results and bringing the poor students up to average rather than giving added support to the truly outstanding students. Overall performance of students has continued to decline. Selfish narcissistic Boomer parents have concerned themselves with materialistic trinkets and their own self actualization rather than sacrifice for their children’s future. Our youth are entering the Crisis unprepared for the harsh winter.

The youngest Boomers reached the 50’s in 1997. Government leaders needed to prepare the Boomers for less benefits in the future, which would have pushed Boomers to save more for their retirement. The 50 year average national savings rate has been 6.5%. In 1997, the national savings rate was already below average at 4%. Government leaders urged Americans to buy houses, buy cars, and spend, spend, spend. The American zombies heeded the call and drove down the savings rate to below 0% in 2005. It has subsequently risen to 3% as the Crisis has unfolded. The Baby Boomers are completely unprepared for their old age and will fight all efforts to cut their benefits. Rather than accepting cuts in benefits to secure the future well being of their children and grandchildren, Boomers continue to push for more healthcare benefits. A bitter generational war is now a certainty.

“During the Crisis, the American economy will experience the most extreme shocks to asset values, production, employment, price levels, and industrial structure in living memory. The economy may also, at some point be pushed to the breaking point in order to produce the tools necessary to save the nation and, later the infrastructure that will underlie the next saeculum.” – Strauss & Howe – The Fourth Turning

What was required was a build out of our energy infrastructure, with natural gas, nuclear, geothermal, wind, and solar all playing a part in weaning us off Middle Eastern oil. Instead, the myopic government bureaucrats, NIMBY crowd and green extremists have succeeded in driving our usage of Middle Eastern oil to new heights as we now import 67% of all our needs. Peak oil will hit the United States like a sledgehammer. Americans needed to increase the national savings rate so we would have the ability to invest in new dynamic technologies. Instead we chose a debt fueled frat party, driving the national savings rate below 0%. The government needed to run budget surpluses as we entered the Crisis period. Accepting a recession during the Third Turning would have mitigated the chances of a Depression in the Fourth Turning. A recession was unacceptable to George Bush and Alan Greenspan. Tax rebate checks and 1% interest rates, along with Bush urging Americans to defeat terrorism by shopping, buying cars and buying houses, resulted in immense deficits. Obama has since added $1.8 trillion to the national debt in one year. Tax policy should have shifted toward taxing consumption and not taxing investment. The economic path chosen by our politician leaders has ensured a 2nd Great Depression.

From a foreign policy and military preparation standpoint, our leaders have squandered an opportunity to strengthen alliances and form new alliances in advance of the coming battles. Every prior Fourth Turning has resulted in all-out war for survival. Strauss & Howe provided the roadmap to our future:

“But before the Fourth Turning catalyzes, America should gird for something else: a possible war whose scale, cost, manpower, armaments, casualties, and home-front sacrifices far exceed anything the nation would tolerate now.”

Instead of conserving our strength for the coming epic challenges, our leaders have engaged in two wars which have depleted our Treasury, stretched our manpower beyond the breaking point, used up valuable military equipment, strained our alliances, and diminished our moral standing in the world. These wars have revealed our weakness and have made it more likely that potential foreign adversaries will contest our super power status. These foreign ventures have failed to secure democracy in the Middle East or secure future supplies of oil. They have succeeded in inflaming the Muslim world and creating more terrorists than existed on September 10, 2001. The loss of credibility and moral high ground will make it more difficult for Crisis Saeculum leaders to rally the American people to a higher cause.

As I watch ancient doddering Congressmen parade and bluster while debating the Obama healthcare bill, I can’t help but think that these are the wrong people, at the wrong time, fighting the wrong war, for the wrong cause. The country is in the midst of a Crisis and our leaders have decided to expand the welfare state, bailout failures with our grandchildren’s money, expand our wars of choice, and stifle the ingenuity of the American people. This will surely not end well.

Stupid Is As Stupid Does

We know with certainty that our leaders have not prepared the country for this Crisis. As individuals, we also had the opportunity to prepare. Did you harvest the crops, fatten the livestock, cut the firewood, stockpile the propane, hoard ammunition and batten down your farmstead? Did you deepen your relationships with family and neighbors who would support you during a Crisis? With a potentially devastating howling blizzard forecast in the near future, delay could be fatal. What if the blizzard lasted five years? There is no way to avoid this blizzard. The snow has begun to fall and Americans are concerned with Michael Jackson’s corpse, the breakup of Jon and Kate, Oprah’s future plans, Britney Spears’ weight, and whether President Obama should be bowing to the Japanese emperor. Talking heads on the Sunday morning talk shows distract the public with meaningless drivel regarding polls and minor differences between the corrupt political parties. The bitter winds have begun to howl.

During a Crisis the virtues of faith, trust, reliability, endurance, perseverance, frugality and self-sacrifice are essential. These virtues were indispensible during the Great Depression and World War Two. Strauss and Howe recommended preparation by individuals in the following areas:

Rectify: Return to the classic virtues.
Converge: Heed emerging community norms.
Bond: Build personal relationships of all kinds.
Gather: Prepare yourself (and your children) for teamwork.
Root: Look to your family for support.
Brace: Gird for the weakening or collapse of public support mechanisms.
Hedge: Diversify everything you do.

Your reputation will be crucial during the Crisis. Are you a man or woman of your word? Can your family and neighbors count on you? Your honor and word will be judged by others during the Crisis. If you are seen as an outcast, loner, or opponent of the majority, you risk personal harm. The materialistic investment banker swine who have feasted off the carcasses of the American middle class and senior citizens are at extreme risk. Their gated McMansion communities and their BMW getaway cars will not save them from the angry lynch mobs. The community will require your acquiescence to their norms. A more authoritarian government will punish those who do not fall into line. It will be important that your personal relationships with authority figures be in good order. The lone wolf will not survive the deep snows of a Crisis.

The final resolution of this Crisis will depend upon the youth of today. Their ability to function in teams and use technology to overcome their opponents will be critical. Boomer parents who have smothered their children, fought their battles, did their class projects for them, and generally coddled them, have not done them any favors. If they are unprepared or unwilling to take the mantle of the GI Generation, our society may be in its final stages. Social outcasts will not fare well during the Crisis. Strong families will be essential to survival, with multigenerational households providing support and safety in dangerous times. The continued disintegration of the family unit, especially in the inner cities, will make it more difficult for many in the Crisis. Divorce rates have declined to 40% of all marriages, but marriage rates have declined to a greater degree. Children living in one parent households have increased, as millions of men have shirked their fatherhood duties.

The un-sustainability of Social Security, Medicare, Medicaid, and government employee pension plans was clear in 1997 and it is clearer today. Americans with half a brain should have seen that the government could never deliver on the social fiscal pledges they’ve made. The $100 trillion unfunded liability will never be paid. The government is going to stiff the elderly. Americans should have increased their personal economic security by saving for emergencies, saving for retirement, cutting back on their excessive lifestyle choices, distinguishing between needs and wants and ratcheting their lifestyles down to a sustainable level in an effort to prepare for hard times. Instead, millions or morons proved that stupid is as stupid does.

The average 401k balance for those over 60 years old is only $93,000. This is skewed higher by a few high savers. The median balance is in the range of $60,000. The Boomer generation has proven to be the most spendthrift, irrational, delusional generation in history. The life expectancy of a 60 year old is twenty years. How do these people expect to live twenty years on $60,000 to $100,000? A rational human being approaching 50 years old in 1997 with $50,000 in retirement savings should have realized their dire predicament and maxed out their savings for the next fifteen years.

Average 401(k) Balance by Age Group

Age 2007 Balance        2008 Balance
20s          $9,190 $6,690
30s $40,990                $27,360
40s          $93,350                $62,580
50s          $138,660              $99,420
60+          $115,700              $93,470

Source: Hewitt Associates

Instead of acting rationally, the Boomers went on a glutton-like spending spree, buying McMansions, beach houses, Mercedes, 60 inch HDTVs, electronic gadgets, and taking exotic vacations to the Far East. Household debt as a percentage of GDP soared from 90% in 1997 to over 135% today. Over this same time, personal savings plummeted. The delusional Boomers convinced themselves that 10% annual gains in the value of their houses for eternity would fund their every material desire and pay for their comfortable retirement.

Option ARM loans, home equity withdrawals, auto loans, and credit card debt were the weapons of choice. In the last two years zombie Americans have learned a brutal lesson they should never forget. Home prices can drop 30%, but the debt remains like an anchor around their necks. Consumers increased their debt from $5 trillion in 1997 to over $13 trillion today. Most Americans are completely unprepared financially for a harsh winter.

The American financial system’s near disintegration in 2008, initiated by the housing crash, revealed who was swimming naked. If Americans had diversified their portfolios with foreign stocks, bonds, gold, and commodities they would have survived the stock market crash with minimal losses. We sit here late in 2009 with thousands of Boomers reaching the age of 60 every day. They are racked with immense debts, have saved little for their retirement, and have trillions of government IOUs in their pockets. The only way the government can pay these obligations is to double taxes on the children and grandchildren of Boomers. Will Boomers be selfish and egotistical enough to rob their kids because they chose not to prepare for winter?

Ten Years Have Got Behind You

Ticking away the moments that make up a dull day
You fritter and waste the hours in an offhand way
Kicking around on a piece of ground in your home town
Waiting for someone or something to show you the way
Tired of lying in the sunshine
Staying home to watch the rain
And you are young and life is long
And there is time to kill today
And then one day you find
Ten years have got behind you
No one told you when to run
You missed the starting gun
And you run, and you run to catch up with the sun, but it’s sinking
Racing around to come up behind you again
The sun is the same in a relative way, but you’re older
Shorter of breath and one day closer to death – Pink Floyd – Time

America has frittered away ten years. Americans missed the starting gun. If you had prepared for the Crisis and it hadn’t touched you personally, the loss of material satisfaction would have been a minor inconvenience. Strauss & Howe describe the implications of not preparing:

“If you haven’t prepared, you will have put much at risk. History warns that saecular winters can be searing times for everyone, especially for those who are caught entirely by surprise. No matter what your age, sex, income, race, family status, or line of work, sensible choices today could help you avoid truly desperate choices in the Fourth Turning.”

The sad truth is that the nation and most of its citizens did the exact opposite of what Strauss and Howe recommended in 1997. The nation and its people are now destined to experience a terrible winter on par with the Civil War and World War II, with no safety net. The politicians driving the country into this Crisis period continue to think linearly and will be blindsided as the Crisis deepens. Politicians in Washington continue to do business as usual, passing laws and programs that will only worsen the Crisis. Every prior Fourth Turning has seen a Grey Champion Prophet figure appear on the scene to lead the country through the storm. Washington, Lincoln, and FDR proved their mettle in times of extreme danger. Barack Obama is not today’s Grey Champion. He will be cast aside in 2012. A Boomer leader must arise to lead the country through the difficult days ahead.

With a National Debt projected to reach $25 trillion by 2019, a government that has promised Boomers $100 trillion more than it can deliver, the end of the cheap oil age, looming resource wars, and nuclear proliferation, it is hard to fathom a happy ending to this Crisis. We appear to be hurtling towards the abyss and no one in charge seems capable of averting disaster. Americans need to understand the danger that is approaching. The final outcomes of this Crisis range from Armageddon to a restoration of the American Republic. The final pages of the Fourth Turning are truly frightening. The possibilities according to Strauss & Howe are:

The next Fourth Turning could mark the end of man. It could be an omnicidal Armageddon, destroying everything, leaving nothing.
The Fourth Turning could mark the end of modernity.
The Fourth Turning could spare modernity but mark the end of our nation.
Or the Fourth Turning could simply mark the end of the Millennial Saeculum. Mankind, modernity, and America would all persevere. Afterward, there would be a new High.

Several months ago my University repaved the walkway leading to my building. Along with the new bricks they placed stones within the walkway with words of wisdom from Ben Franklin. Every morning I walk across the same words and ponder their significance. “Lost Time, is never found again.”

The nation and its citizens have not made good use of our time. We have entered this Crisis severely weakened and vulnerable. Our appalling fiscal choices and failure to address the coming energy crisis have set us up for a calamity of epic proportions. The linear status quo statists argue that our ingenuity and technological prowess will save the day. They ignore the fact that our best and brightest have spent the last three decades focused on creating financial weapons of mass destruction, pilotless drones that make war as easy as playing on your PS3, improving the distribution chain for aerosol cheese, and inventing the drive thru fast food window. The corporate fascists who have Congress in their back pockets, supported by the Federal Reserve and the banking cartel, have raped and pillaged America to the point that there is nothing left for the middle class. The ruling elite have no intentions of relinquishing their wealth or control without a fight.

I’m just an average guy who has lived his whole life in suburban America. I’m the guy at the little league baseball field and the local ice hockey rink cheering my sons on. I shop at Wal-Mart and I take my family to the Jersey shore on vacation. I decorate my house with multitudes of Christmas lights every year after I untangle the ball from the previous year. I’m an average guy who is also a wide eyed realist. My heart and my mind tell me that our leaders have failed us mightily. The next 15 years will be full of pain, suffering and angst. In the previous two Crisis periods, America entered with the moral high ground. The Civil War was ultimately seen as a moral war to free the slaves. World War II was fought against evil Nazis and Fascists. I fear that America’s next Great War will be fought for oil. The shortsighted narrow-minded morons who have controlled our nation will try to cover-up their epic failures by falsifying the reasons for war. I have said this once in a previous article. I will not sacrifice my sons for oil. That is not a cause worth fighting for. Hell no, they won’t go.

I do not believe Americans will fall into line behind a leader whose cause is fighting to secure some other country’s oil. I do believe that the credibility and honesty of our politician leaders has been destroyed through their own corrupt immoral actions. A splintering of the country into competing factions and/or regions is a distinct possibility. There is precious little time left, as the howling blizzard gains strength. You will need to hunker down for a long hard winter. Build close relationships, protect your family at all costs, don’t trust government officials, don’t expect the government to honor any fiscal promises, don’t trust the mainstream media, learn to live locally, buy a gun, buy some gold and silver, and be prepared to fight for the truth.

X-Files on Dead Pentagon Illuminati Apparatchiks

OK, here is a really interesting story to speculate on. Who offed this Pentagon Military Intelligence official and why?

————-

Front Page

AFP/Getty Images

John P. Wheeler 3d died from blunt-force trauma.

Del. report: Wheeler died from blunt-force trauma

By Kathleen Brady Shea and John P. Martin

Inquirer Staff Writers

The former Pentagon adviser whose body turned up last month in a Wilmington landfill was fatally assaulted, authorities said Friday.

John P. Wheeler 3d died from “blunt-force trauma after being assaulted,” Delaware’s chief medical examiner said. The ruling answered one question about Wheeler’s Dec. 31 death, but left many others unanswered.

The one-paragraph statement offered no new details about Wheeler’s unexplained behavior in his last days – when he was seen wandering around Wilmington disoriented – or clues to who killed him and dumped his body in a Newark, Del., trash bin.

Carl Kanefsky, a spokesman for the medical examiner, said the office released the ruling after getting toxicology results, the last piece of evidence it needed for a determination.

Kanefsky refused to elaborate on or release those results, but acknowledged they were a factor in determining the cause of death – effectively ruling out any suggestions Wheeler might have been poisoned or overmedicated, or might have passed out on his own.

Lt. Mark Farrall, a Newark police spokesman, said the investigation was continuing.

“The only thing I can say is to reiterate what I’ve said before: We’re looking for information on how Mr. Wheeler got to Newark,” Farrall said.

A 66-year-old New Castle, Del., resident, Wheeler had been scheduled to take a train Dec. 28 to Wilmington from his consulting job at Mitre Corp., a defense contractor outside Washington.

The next night, an employee at a Wilmington parking garage reported seeing him coatless, confused, and holding one shoe. The next day, he was captured by a surveillance camera in a downtown building, again looking disoriented.

That was the last time he was seen alive.

His body tumbled out of a truck as it delivered trash to the Cherry Island landfill in Wilmington just before 10 a.m. Dec. 31. Farrall said investigators have determined that the truck made 10 pickups that morning in Newark before going to the landfill.

Wheeler’s tragic end contrasted with a lifetime of achievement: a West Point graduate and veteran who worked as secretary at the Securities and Exchange Commission, aide to Pentagon leaders, and executive director of Mothers Against Drunk Driving.

One unresolved mystery concerns the four-year dispute Wheeler had with a neighbor who was building a house across from his. Wheeler felt the project was out of scale for the historic neighborhood.

A law enforcement source has said police linked Wheeler to an arson attempt at that house days before he disappeared. But there has been no evidence disclosed that it played a role in his death.

OBAMA THE PROSTITUTE

Gotta love Marc Faber. Anyone who calls Obama a prostitute is OK in my book. Smokey should note Faber’s opinion about China.

Marc Faber’s Most Provocative Interview Ever: Compares Obama To A Prostitute, Goes Long Treasurys

Submitted by Tyler Durden on 01/25/2011 19:58 -0500

Earlier, Marc Faber appeared on Bloomberg TV, in what may go down in history as his most scandalous interview ever. When asked, in advance of the SOTU address, what he thinks of the president, Faber, who appears to have had enough with all the bullshit, propaganda, and lies, replies: “I think he’s done a horrible job and I think that will continue, I think he is a dishonest person, and nothing has changed… Some politicians are more honest than others. I don’t think that I have a very high regard for politicians, I have a high regard for businessmen and for people who work, and not for people who abuse the system continuously. And in comparison to other politicians, I think he came in on a platform as a president that would want to change the government in Washington, and actually he’s made it worse… We foreigners, we just laugh at someone like Mr. Obama. I was very critical of Mr. Bush, but at least he had one line and he stuck to that line, and at least he set out to do a thing and he was relatively straight on the thing that he did. He may have been wrong, but at least he didn’t change his mind continuously, and didn’t prostitute himself.” If nothing else, how many other people do you know who will compare, in front of a live Bloomberg audience, the president of the formerly greatest country in the world to a whore?

As for what Faber thinks the real state of the union address should be, he says:

“I think what should happen in the US is for the president to tell the US, you have to tighten your belts. ‘We have to go through hard times for 5 years to repair the damage that was committed over 20-25 years by the Federal Reserve, by the Treasury, by the politicians, and somebody has to tell the truth. But the politicians keep on fueling the illusion that you can spend yourself out of the misery, and that by printing money you will improve the economy, which is not the case.”

On the topic of the Fed and relative performance:

You don’t know. Maybe [Bernanke] will resign. After he sees the disaster he has created he may resign. Or he may be disposed, who knows. But all i want to say is in terms of investments we have a very interesting situation, because from the March lows, the EM universe has performed fantastically well, and industrial commodities have done fantastically well, and the US has underperformed everything. And now we have a change: the US may outperform, it may not go up, but may go down less than emerging markets.

On his latest opinion on Treasurys

In the long-run, for sure US Treasurys and most government bonds are a suicidal investment. But as a shorter-term timeframe, and I think for the next three months or so, I think we have a situation where stock markets have become very overbought, and emerging markets in January, most of them failed to make new highs above the November, December highs, and recently some of them have sold off very considerably, plus the Chinese market is giving you a signal that something is not right in the Chinese economy, because it is going down. For the next three months you have to shift out of the Emerging Markets, they may correct 20-30%, out of industrial commodities, on a relative basis. And I think the sentiment, just recently, was overly optimistic on the reflation trade, and overly negative about treasury bonds, so treasury bonds right now are oversold, and as of tonight I got the buy signal on US Treasurys. I think Treasury are the best place for the next 3 months, as is the US dollar. I think a correction is coming in the range of 10% in the S&P and 20-30% in the emerging markets.

On all the current batch of Davos participants:

I dont think the ‘thinkers’ are in Davos. I think it’s a group of liars, and people that go along with the system, and perpetuate fraud and abuse, and dubious practices in the financial system.

As for what he thinks of Keynesianism, and gold, well, we’ll just let you hear that for yourselves.

CHINA’S FOURTH TURNING

“If foreign societies are also entering a Fourth Turning, this could accelerate the chain reaction.” – The Fourth Turning – Strauss & Howe -1997

“In foreign affairs, America’s initial Fourth Turning instinct will be to look away from other countries and focus total energy on the domestic birth of a new order. Later, provoked by real or imagined outside provocations, the society will turn newly martial. America will become more isolationist than today in its unwillingness to coordinate its affairs with other countries but less isolationist in its insistence that vital national interests not be compromised. The Crisis mood will dim expectations that multilateral diplomacy and expanding global democracy can keep the world out of trouble. Even before any conflicts arise, people will feel less anxiety over the prospect of casualties. Old Unraveling-era strategies (flexibility, stealth, elite expertise, stand-off weaponry, and surgical goals) will be replaced by new Crisis-era strategies (mass, intimidation, universal conscription, frontal assault, and total victory) more suitable to a fight for civic survival. By then, people will will look back on the Unraveling as the time when America evolved from a postwar to a prewar era.” – The Fourth Turning – Strauss & Howe -1997

L.E. Moore provided a link to his article about China and their generational dynamics. The Strauss and Howe theory is based upon the life phases of populations. It is not just applicable to America. It can be analyzed across all countries and cultures. I had not seen a detailed analysis of the Strauss & Howe theory in relation to China. Moore does an excellent job detailing the Chinese thought process and providing a chart showing the Turnings in Chinese modern history versus the American turnings. Based on this research, both China and the US are in a Fourth Turning now.

What I found interesting was his contention that the Han Chinese see themselves as the center of the universe and consider us as barbarians. They feel superior to America and consider themselves the patron to us being a client that owes them hundreds of billions.

After further research, I found this link at Generational Dynamics regarding China’s Turnings:

http://www.generationaldynamics.com/cgi-bin/D.PL?s=pasJv5&d=ww2010.cs.ch

I found this passage about their Unraveling and future Crisis to be particularly interesting:

The era was launched by the Tiananmen Square massacre, triggering the huge movement, followers of the Falun Gong. Their leaders believe it to be the modern version of the God-Worshipper’s Society, a spiritual movement which launched the Taiping Rebellion, and was a form of Christianity combined with Buddhism. By 1999 the movement was so widespread that Beijing clamped down on it. It’s rumored that millions of adherents have been jailed.

One-child Generation (Heroes) – This generation bore the brunt of the one-child policy which has created an enormous surplus of young males, meaning that a large segment of this generation will never get married. This generation almost has nothing to lose by going to war — against Beijing, against Japan, or against the U.S. And they will be guided by the last Prophets – the Miserables — and supported by the last Nomads — the Tiananmens.

Today, China’s social structure is unraveling rapidly, as can be seen from from the tens of thousands of regional rebellions each year, over 100 million migrant workers, high food prices, high rust belt unemployment, addiction to a bubble economy, unraveling of Mao’s social structure and secessionist provinces.

What we have here is a dangerous mixture of dogmatic Prophet leaders and many young people in China and the US with nothing to lose. We have two countries with wealth being concentrated among the few. We have two countries with anger building among vast swaths of the population. We have politicians in both countries blustering about retaliation, blame and accusations. We have two countries with economic recoveries created by printing trillions of new currency units. We have two countries which import most of their oil from other countries.

No matter how you cut it, we have a volatile concotion. Any missteps, overreaction, leadership failures, or accident could set in motion a dangerous domino effect. The Fourth Turning gets more interesting by the day.

2012: Year of the Dragon

If you want some nostalgia for the American cultural high see here and scroll down to the videos.

I’ll try not to make this one too gloomy. If such things bother you then skip this one. Remember, I am working a sociological model to its conclusion. The model can be wrong.

Previously I discussed American cultural eras (here, and here) and indicated where I think we are in the cultural cycle. In this essay I compare the US cycle to the Chinese (PRC) one to see how they line up. The patterns are fairly close. We are both in secular crisis, with the PRC having started a little later than the US.

Secular crises are identity crises. The US has to decide of it will continue to be The Super Power that it has been. For the PRC, the question is: do they become The New Super Power, or, maybe we could have two super powers. I don’t think other nations are viable challengers, unless they partner up.

When I look back at the large events of American history the episodes of total war within crises always stand out: King Philips War during the Glorious Revolution, the Revolutionary War, the Civil War, and WWII. History book series tend to be defined around those benchmarks. Since American Awakenings have been relatively nonviolent they haven’t gotten much attention. You have to go back to the Puritan Awakening of the early 17^th century and the rise of Cromwell to find a violent one. Awakenings are generally ignored in US history (this blog aims to change that).

In other countries Awakenings have been violent and have led to the overthrow of governments or monarchies, such as the French Revolution and the Russian Revolution. Awakening rebellions tend to have grass roots leadership intent on correcting the abuses of those in formal power, although they may also have help from high level factions. They can also lead to long term intermittent warlord like infighting. Culture War eras start as extensions of the Awakenings and then escalate into the secular crisis.

Total wars with significant genocidal behavior are fought in secular crises; they are either state sponsored wars of complete destruction, or, they are civil wars. While, in theory, secular crises don’t have to have episodes of genocidal warfare, I have yet to find one that does not (I also haven’t looked far and wide).

Chinese history is bench marked on both secular crises and awakenings. Every 45 to 50 years they seem to have a significant outbreak of violence. The Cultural Revolution began in 1966 and here we are 45 years later in secular crisis. Also, since 1850, benchmark events have always centered on the influences of Western Civilization penetrating into Chinese culture, as if there is a need to resist or purge something Western out of Chinese culture. It seems that a new purge could come at any time. I offer some idea of what that might look like.

First and foremost the Chinese are 90% Han ethnicity. They are a proud culture that believes they are the center of the world [1]. All things are defined in relation to them. Han chauvinism is renowned. They are the Middle Kingdom. The further you go away from the center the greater a barbarian you are. The ruler leads due to the Mandate of Heaven and all others kowtow and pay tribute to him. Three hundred years of Westerners meddling in Chinese politics and one hundred years of sustained Western influence since the collapse of the Qing Dynasty does not erase 2000 years of sino-centrism. As Christ is central to the identity of a devout Christian so is Han chauvinism to the Han people. And they have hidden it very well these last few decades under the blanket of “communism” [2].

In traditional China all non-family relations were of a patron-client form (the Asian version, not the European one). One side always had the upper hand but also had to be protective of the other side because the relation would eventually fail if they did not. While both are dependent on each other the patron works to ensure that the client becomes asymmetrically more dependent. Since 1978, when China began opening up again to outside influences and trade, it has worked hard to establish patron-client relationships.

Americans typically think of partnerships as being one of equals working toward a common goal. The Chinese do not. One side always gets the upper hand.

The US is now heavily in debt to the Chinese and we are dependent on their cheep goods. To the Chinese, we are the client. Obama has bowed to their ruler. The next step is to kowtow. (They will accept a symbolic kowtow; it doesn’t have to be a real prostration).

China is ripe for a re-expression of its core identity. The great purge that is coming will be the abandonment of any pretext that they are communists. Communism is a Western idea. Purge it.

The Cultural Revolution gives great insight on this. That Awakening was a conflict between communism and Han chauvinism as Mao had tried to stamp it out from the beginning (here) but failed. In 1966 Mao tried to make communism a heavier blanket over the culture, it backfires against him, starting a successful resistance. The communists destroyed artifacts and libraries of Chinese culture, they put intellectuals into communes, but they couldn’t change the core culture of the Han. After Mao’s death in 1976 the Chinese, under Deng, made three decisions: honor Mao for being the savior of the nation [3], ignore his failure in the Cultural Revolution, and allow communism to wane. Confucianism, Buddhism and Taoism all rebounded quickly. Traditionally having been a trading culture, they slowly opened to the world and slowly gained economic power using the patron-client relationship.

Today, China is ripe to reveal itself as the Dragon it is and always has been. And on the Chinese calendar, 2012 is the Year of the Dragon, a time when dragons roam freely in the world and take what they want. Taiwan and South Korea are emeralds worthy of their taking [4].

When the time comes Americans will have to stand tall, not kowtow, and say “the Mandate of Heaven is revoked.”

Game on.
Table 1: Comparison of American and Chinese cultural eras. Some Chinese events will link to Wikipedia.

Cultural Era	US	China	Others
Secular Crisis	2001- Crisis of Confidence	2007- Global Economic Crisis
Culture Wars/Unraveling	1984-2007 Post Scientism	1989-2007 Opening of PRC to Western influences and trade; one child policy erodes demographics; SARS; human rights
Awakening	1960-1990 4^th; Consciousness Revolution	1966-1989 Cultural Revolution to Tiananmen Square; 1 to 20 million dead
Cultural High	1946-1968 American High	1950-1976 PRC under Mao; PRC mostly closed to outside world; ROC
Secular Crisis	1929-1946 Depression & WWII	1927-1950 Chinese Civil War, Second Sino-Japanese War; 20 million dead	Spanish Civil War
Culture Wars/Unraveling	1911-1936 WWI & Prohibition	1911-1937 Republic of China; Second Revolution, Warlord Era, Chinese Civil War (first half)
Awakening	1890-1920 3rd Awakening	1880s-1911 Western Imperialism ends Qing Dynasty: Boxer Rebellion, 1898-1901, a Chinese nationalist revival against western ideas (many thousands dead); Xinhai Revolution 1911	Russian Revolution, Mexican Revolution, Philippine Insurrection
Cultural High	1866-1889 Gilded Age	1861-1895 Self-Strengthening Movement, Qing Dynasty builds against Western influences.
Secular Crisis	1854-1876 No slavery Compromise	1850-1864 Taiping Rebellion; a Chinese Christian movement against the Qing Dynasty; 20 million dead; other rebellions
Awakening	1800-1830 2nd Great Awakening	1796-1804 White Lotus Rebellion; 16 million dead	French Revolution South American Revolutions
Secular crisis	1763-1794 American Revolution	1755-1757 Dzungars ethnic genocide

Notes:

1. I am aware that China is a diverse population, so don’t get hung up on generalizations here. I’ve known many Chinese nationals (from PRC and ROC) and yes they are all individuals. However, you can’t get anywhere in a cultural study with useless generalizations such as “everyone is unique.” In grad school I dated a gal from Taiwan. I once ‘complemented’ her on a wave in her hair. She slapped me so hard I had no idea what was wrong. She said that “Chinese have straight hair.” So, I had actually insulted her. And she had quite a slap. That was Han chauvinism, and, it is very apparent in the PRC leadership.

2. An old saying in China is that every black-haired child of Han wears a Confucian hat, a Taoist robe, and Buddhist sandals. To this, add a communist blanket. It’s still a Han underneath.

3. During the 1940s Chinese Civil War two strong Western influences were penetrating China. Communism under Mao and capitalism under Chiang Kai-shek. Mao “saves” China from one western influence, by using another. Now, the remnants of the second one must go away.

4. The positive qualities of the symbolic Chinese Dragon don’t suggest that the Chinese leadership would do something rash. However, the negative qualities do suggest that overreaching for something is possible. The temptations of power may be too great to resist. China, from 1950-present–what do we call this new dynasty? The PRC Dynasty?

OVERSIGHT FAILURE???????????????

Are you fucking kidding me? OVERSIGHT???? That is the actual heading for this article in my local paper. Here is the key paragraph in the article:

“State regulators ignored complaints about Gosnell and the 46 lawsuits filed against him, and made just five annual inspections, most satisfactory, since the clinic opened in 1979, authorities said. The inspections stopped completely in 1993 because of what prosecutors said was the pro-abortion rights attitude that set in after Democratic Gov. Robert Casey, an abortion foe, left office.”

This man has been murdering babies for decades. The government new he was murdering babies for decades. THEY DID NOTHING – FOR DECADES.

With the passage of Obamacare this same government will be in charge of YOUR HEALTHCARE. It gives you a real warm feeling, doesn’t it? That warm feeling is you pissing your pants.

Anyone who thinks they can rely on or trust the GOVERNMENT to protect you or your children is a fucking moron.

DA: Oversight failure enabled Philly abortion mill

PHILADELPHIA — A doctor whose abortion clinic was described as a filthy, foul-smelling “house of horrors” that was overlooked by regulators for years was charged Wednesday with murder, accused of delivering seven babies alive and then using scissors to kill them.

Dr. Kermit Gosnell was also charged with murder in the death of a woman who suffered an overdose of painkillers while awaiting an abortion.

In a nearly 300-page grand jury report filled with ghastly, stomach-turning detail, prosecutors said Pennsylvania regulators ignored complaints of barbaric conditions at Gosnell’s clinic, which catered to poor, immigrant and minority women in the city’s impoverished West Philadelphia section.

Prosecutors called the case a “complete regulatory collapse.”

“Pennsylvania is not a Third World country,” the district attorney’s office declared in the report. “There were several oversight agencies that stumbled upon and should have shut down Kermit Gosnell long ago.”

Gosnell, 69, was arrested and charged with eight counts of murder in all. Nine of Gosnell’s employees — including his wife, a cosmetologist who authorities say performed abortions — also were charged.

Prosecutors said Gosnell made millions of dollars over three decades performing thousands of dangerous abortions, many of them illegal late-term procedures. His clinic had no trained nurses or medical staff other than Gosnell, a family physician not certified in obstetrics or gynecology, prosecutors said.

At least two women died from the procedures, while scores more suffered perforated bowels, cervixes and uteruses, authorities said.

Under Pennsylvania law, abortions are illegal after 24 weeks of pregnancy, or just under six months, and most doctors won’t perform them after 20 weeks because of the risks, prosecutors said.

In a typical late-term abortion, the fetus is dismembered in the uterus and then removed in pieces. That is more common than the procedure opponents call “partial-birth abortion,” in which the fetus is partially extracted before being destroyed. Prosecutors said Gosnell instead delivered many of the babies alive.

He “induced labor, forced the live birth of viable babies in the sixth, seventh, eighth month of pregnancy and then killed those babies by cutting into the back of the neck with scissors and severing their spinal cord,” District Attorney Seth Williams said.

Gosnell referred to it as “snipping,” prosecutors said.

Prosecutors estimated Gosnell ended hundreds of pregnancies by cutting the spinal cords, but they said they couldn’t prosecute more cases because he destroyed files.

“These killings became so routine that no one could put an exact number on them,” the grand jury report said. “They were considered ‘standard procedure.”’

Defense attorney William J. Brennan, who represented Gosnell during the investigation, said: “Obviously, these allegations are very, very serious.”

The grand jury report came out a day after new Republican Gov. Tom Corbett took office. Spokesman Kevin Harley pledged that Corbett’s administration, through his new health secretary, would do more to oversee such clinics.

“What needs to be done is regulators, whether on the local or state or federal level, need to properly regulate, inspect and do their jobs,” Harley said. “The safety of our citizens should be first and foremost.”

Authorities raided Gosnell’s clinic early last year in search of drug violations and stumbled upon “a house of horrors,” Williams said. Bags and bottles holding aborted fetuses “were scattered throughout the building,” the district attorney said. “There were jars, lining shelves, with severed feet that he kept for no medical purpose.”

Prosecutors said the place reeked of cat urine because of the animals that were allowed to roam freely, furniture and blankets were stained with blood, instruments were not properly sterilized, and disposable medical supplies were used over and over.

Gosnell didn’t advertise, but word got around. Women came from across the city, state and region for illegal late-term abortions, authorities said. They paid $325 for first-trimester abortions and $1,600 to $3,000 for abortions up to 30 weeks. The clinic took in $10,000 to $15,000 a day, authorities said.

“People knew near and far that if you needed a late-term abortion you could go see Dr. Gosnell,” Williams said.

White women from the suburbs were ushered into a separate, slightly cleaner area because Gosnell believed they were more likely to file complaints, Williams said.

Few if any of the sedated patients knew their babies had been delivered alive and then killed, prosecutors said. Many were first-time mothers who were told they were 24 weeks pregnant, even if they were much further along, authorities said.

Prosecutors said Gosnell falsified the ultrasound examinations that determine how far along a pregnancy is, teaching his staff to hold the probe in such a way that the fetus would look smaller.

Gosnell sometimes joked about the babies, saying one was so large he could “walk me to the bus stop,” according to the report.

State regulators ignored complaints about Gosnell and the 46 lawsuits filed against him, and made just five annual inspections, most satisfactory, since the clinic opened in 1979, authorities said. The inspections stopped completely in 1993 because of what prosecutors said was the pro-abortion rights attitude that set in after Democratic Gov. Robert Casey, an abortion foe, left office.

Williams accused state Health Department officials of “utter disregard” for the safety of women undergoing abortion, and said the testimony of agency officials “enraged” the grand jury. But he said he could find no criminal offenses with which they could be charged, in part because too much time has elapsed.

“These officials were far more protective of themselves when they testified before the grand jury. Even (Health Department) lawyers, including the chief counsel, brought private attorneys with them — presumably at government expense,” the report said.

The state’s reluctance to investigate, under several administrations, may stem partly from the sensitivity of the abortion debate, Williams said. Nonetheless, he called Gosnell’s conduct a clear case of murder.

“A doctor who with scissors cuts into the necks, severing the spinal cords of living, breathing babies who would survive with proper medical attention commits murder under the law,” he said. “Regardless of one’s feelings about abortion, whatever one’s beliefs, that is the law.”

Four clinic employees were also charged with murder, and five more, including Gosnell’s wife, Pearl, with conspiracy, drug and other crimes. All were in custody. Gosnell’s wife performed extremely late-term abortions on Sundays, the report said.

One of the murder charges against Gosnell involves a woman seeking an abortion, Karnamaya Mongar, who authorities said died in 2009 because she was given too much of the painkiller Demerol and other drugs.

Gosnell wasn’t at the clinic at the time. His staff administered the drugs repeatedly as they waited for him to arrive at night, as was his custom, the grand jury found.

Mongar and her husband, Ash, had fled their native Bhutan and spent nearly 20 years in camps in Nepal. They had three children. A man who answered the phone Wednesday at a listing for Ash Mongar in Virginia did not speak English, while their daughter did not immediately return a message.

The malpractice suits filed against Gosnell include one over the death of a 22-year-old Philadelphia woman, a mother of two, who died of a bloodstream infection and a perforated uterus in 2000. Gosnell sometimes sewed up such injuries without telling the women about the complications, prosecutors said.

Gosnell earned his medical degree from Thomas Jefferson University in Philadelphia and is board certified in family practice. He started, but did not finish, a residency in obstetrics-gynecology, authorities said.

Assistant District Attorney Joanne Pescatore said: “He does not know how to do an abortion. Once he got them there, he saw dollar signs and did abortions that other people wouldn’t do.”

Petty Despots, Financial “Authorities” and FRAUD

Some very interesting developments have occurred in the world of Petty Despots, namely Laurent Ghabo of the Ivory Coast and “Baby Doc” Duvalier of Haiti. Larry appears to be defaulting on some loans and has had all his Assets frozen by “Authorities” in Switzerland, while Baby Doc returned to Haiti and then was promptly arrested and then mysteriously released. This is all some very confusing stuff to try to get a handle on.

Now, Ghabo appears to have a few tons of possessible Gold keeping him nominally Rich for the moment despite the fact his other financial assets are frozen. However, it is unclear where Ghabo might go with his pile of Gold where they will allow him to keep it. One suspects wherever he goes, the “authorities” in Switzerland will send a Repo Squad to wherever he turns up and divest him of it in order to pay off some of his outstanding debts. One also suspect whatever country he goes to will cooperate with the Swiss “authorities”, since if they don’t their own financial assets might get frozen also for aiding and abetting a Financial Criminal, as defined by of course, the Swiss “Authorities”.

One of my favorite financial Bloggers, Ambrose Evans-Pritchard often uses the term “Authorities” when talking about the folks in Brussels who run the EMU, World Bank and IMF offices situated there. What I would like to know is why they have “authority” over anything? Have these folks been voted into their offices of authority by anybody anywhere? Why do they get to decide whose assets get Frozen?

At the same time Ghabo is doing a disappearing act from Ivory Coast, Baby Doc Duvalier reappears in Haiti a quarter century after being deposed. Does anyone here suppose Baby Doc did this willingly? He is returning there to Save Haiti all of a sudden? There is a popular uprising among the Quake Vicitms longing for the good old days when a Duvalier was in charge of torturing people? What?

Here is my WAG on Baby Doc. He’s been living “peacefully” in France for the last 25 years, doubtless on tons of Haitian Assets he absconded with, but with all the shit going on in Haiti now, said assets aren’t paying off anymore, and Creditor “Authorities” in Switzerland informed him that if he didn’t get his ass back to Haiti and take control of them he would have whatever assets he stole Frozen. His Job is to get those assets paying off again, which he promises to do with the help of a squad of Halliburton Mercs and perhaps some local Gangstas he might have some family connections to.

Ghabo is in a disputed election with some other despot named Ouattara, who apparently is the Most Favored Puppet by the UN Globalists, who are holding some $3B in IMF “aid’ hostage until Ghabo officially steps down. Ouattara clearly has cut deal with the IMF letting them know he is the BEST Puppet, and will make sure to give them all the cheap cocoa they want to sell at as high a price as they want on the international markets.

To an extent, this is all BAU down in the banana republics, except for the fact that for the most part the system has been in a status quo holding mode for the last 25 years, but now all of a sudden Dictators are changing faster than LLPOH swallows Smokey’s throat yogurt.

This effect isn’t limited to African and Latin American Banana Republics, the Irish are about to depose Brian Cowen, and Belgium which is home to Brussels hasn’t had a functioning Goobermint in close to a year now. Nevertheless, there are “Authorities” in Brussels who will tell whatever Goobermint does take over in Ireland exactly how they should tax their population and spend their money.

Here in the FSofA, we did a Diaper Change of Congress this last election cycle, and in the next one will likely pick a new Puppet to replace Obama, who also will take his orders from “Authorities” on Wall Street, who themselves are of course taking their marching orders from “Authorities” at the BIS in Switzerland, though of course this still goes on behind the curtain. As the FSofA progreesively morphs into Banana Republic status, its only a matter of time before the Swiss “Authorities” at the BIS attempt to take over explicit control by issuing out some new One World Currency, and doling out just as much of it as they think our “assets” are worth here.

Now, in order to keep the Gravy Train going here at the BIS, they gotta have some Protection Racket to “restore order” in all these places, which for the Banana Republics comes in the form of UN “Peacekeepers”. How many UN Peacekeepers are there anyhow? Who is funding all these Peacekeepers? Its not the boys in Brussels or Zurich, but they are calling the shots as far as where the Peacekeepers get deployed here, until they run out of Peacekeepers.

Long as these disturbances are in Banana Republics, Authorities in Brussels and Zurich can get enough Mercs from the countries that they do control to go in and bust some heads and kneecap debtors as necessary. However, once these problems work their way inward to the major countries, its going to become a whole lot harder to round up enough Mercs to do a decent job of controlling these populations. My guess would be that once Spain and/or Italy start to fail as performing assets that the UN Peacekeeping Force will be out of its League.

Meanwhile, as far as the individual Politicians and Banksters go who like Ghabo and Duvalier used their control over the economic wealth of their countries to build personal fortunes, as varying members of our political and bankster class lose control over performing assets, they will also find their personal stolen hoards Frozen by Authorities at the BIS. Try to flee to parts unknown with a Pile of Gold will be about impossible except for the most inner circle.

The Political Turmoil amongst the Petty Despots and Puppets is a sign of the Pigman v Pigman battle in progress. The small time operators are now getting flushed out and what wealth they stole is getting repoed by bigger thieves. As time goes by, bigger ones still will be thrown under the Bus. In the process, still more Political control will be lost, and just as we have failed states in places like Somalia and pretty much Mexico, eventually even the largest Nation States will become failed states.

Another form of the Petty Despot are the Hedge Fund Managers. Like Puppet Dictators, these folks control a variety of assets, just they are diversified Globally rather than being contained in a single country. In order to Perform and get big returns on their investments, these guys have to lever up to beat the band these days, and eventually the risky assets they hold are not going to be backstopped by Da Fed and there will be margin calls. State Bonds, Munis, SOMETHING here is not going to get backstopped at some point. Da Fed may get a Management Change here as Helicopter Ben is Deposed in favor of John Taylor, who might be this generation’s Andrew Mellon. Liquidate Stocks, Liquidate Real Estate, Liquidate Liquidate Liquidate! LOL. All indicators are that the Illuminati are using the SAME Playbook here, and after a massive attempt at inflation they will rapidly deflate the money supply and force liquidation across the board. Creative Destruction will take on a whole new meaning in that crash. lol.

Anyhow, we appear to be entering the beginning part of this end game. There is a LOT of Musical Chairs being played up at the top of some of the Big Name tech companies all at the same time. Steve Jobs taking a”leave of absence” for “health” reasons, Google CEO swapping seats, and practically the entire board of Hewlett Packard is being replaced. Warren Buffett also stepped off the board at That ALL of these changes are happening at the same time is unlikely to be a Coinkidink.

I have a real good Tinfoil Theory to pitch out here as I ponder on all of this stuff. We know for a FACT that the entire RE market has been one big FRAUD for the last decade, right? Is it beyond the realm of possibility that Google is one big FRAUD also, and has been cooking their books since the Dot Com Bubble collapsed? Personally, I have never really bought their revenue model for monetizing the search engine. I could easily see some Bankster creating an SIV specifically for the purpose of buying Ads on Google to inflate their income, with said SIV funded by some kind of Junk Bonds. All these bonds are basically worthless, there are no real companies behind some of the Ads or they are shell companies over in China, whatever. Accounting standards have been so lax over the last decade ANYTHING is possible here.

Similarly, are Apple’s sales numbers of I-phones and I-pads really accurate? Yes I do see quite a few more people using these toys so probably most of the sales numbers are legit, but really if they have say a 10% shortfall in the numbers they would have to sell on the balance sheet to be showing a Profit, it wouldn’t be too hard to create an SIV in say Singapore and have that fund buy up a warehouse full of I-phones and put them on ice. Da Goobermint of China is doing this with the Cars they are producing, they buy them and then stick them in parking lots.

Remember folks, we have been in a Mania period here for a full decade, and based on the Fraud that occurred in the RE market, why would similar frauds not be undertaken in the Tech market for Toys? For the Bankster originating the loans necessary for some Warehouse owner in Singapore to fill up his warehouse with Iphones the take home profit would be enormous. All he has to do is convince some investors/suckers that his Distributor in Singapore is going to bring home big profits by buying up these Iphones and selling them over in Asia. He pockets a tidy profit once he sells the securities, and the warehouse owner pockets money each time he sells a few Iphones, but most of the Iphones just sit in the warehouse. It takes a while, but eventually the Investors are left holding the bag on a warehouse full of Iphones that they can’t sell except for pennies on the dollar.

Think about the possibilities here folks! Imagine if Google is just one big Enron style Financial Fraud of GARGANTUAN proportions! If/WHEN one of these FRAUDS does exist and finally sees the light of day, there is absolutely NOTHING that could stop a massive liquidation attempt in stocks and bonds across the board. Katy Bar the Door! Defrauded Investors would lose EVERYTHING. Hedge Fund Managers jumping from Wall Street Skyscrapers, the WORKS!

This is NOT a Prediction! Its just a Tin Foil Theory fueled by a few Sam Adams. However, if it happens to be correct, you can say you heard it here first off the keyboard of Reverse Engineer. 🙂

THE FOURTH AMERICAN REVOLUTION (Featured Article)

The next Fourth Turning is due to begin shortly after the new millennium, midway through the Oh-Oh decade. Around the year 2005, a sudden spark will catalyze a Crisis mood. Remnants of the old social order will disintegrate. Political and economic trust will implode. Real hardship will beset the land, with severe distress that could involve questions of class, race, nation and empire. The very survival of the nation will feel at stake. Sometime before the year 2025, America will pass through a great gate in history, commensurate with the American Revolution, Civil War, and twin emergencies of the Great Depression and World War II. – The Fourth Turning – Strauss & Howe -1997

Harpers Ferry – 1859 Tucson – 2011

The mass murder in Tucson is another brick in the wall of this Fourth Turning Crisis. The importance of this tragic event is not what happened in that Safeway parking lot, but the reaction in the aftermath of the shooting. Turnings are not about specific events, but how generations react to the events based on their stages of life. A turning is an era with a characteristic social mood, a new twist on how people feel about themselves and their nation. It results from the aging of the generational constellation. A society enters a turning once every twenty years or so, when all living generations begin to enter their next phases of life. We entered this Fourth Turning between 2005 and 2008, with the collapse of the housing market and subsequent financial system implosion.

We have crossed the threshold into a decisive era of secular upheaval, when the values regime will propel the replacement of the old civic order with a new one. The Silent Generation (1925-1942) is dying off, Baby Boomers (1943-1960) are entering elder hood, Generation X is entering midlife, Millenials are entering young adulthood—and a new generation of child Artists are being born. Strauss & Howe have documented that a long human life of 80 to 100 years makes up a social cycle of growth, maturation, entropy, and death (and rebirth) known as a Saeculum. Within each cycle, four generations proceed through their four stages of life. Every 15 to 25 years a new Turning surprises those who only think of history in a linear way. Strauss & Howe are historians who have been able to document this generational cycle going back to the 1400s.

The Anglo-American saeculum dates back to the waning of the Middle Ages in the middle of the fifteenth century. In this lineage, there have been seven saecula:

Late Medieval (1435-1487)
Reformation (1487-1594)
New World (1594-1704)
Revolutionary (1704-1794)
Civil War (1794-1865)
Great Power (1866-1946)
Millennial (1946-2026?)

The Turnings of history are like the seasons of nature. Seasons cannot be rearranged, seasons cannot be avoided, but humans and nations can prepare for the challenges presented by each season. Winter has descended upon our nation.

We are still in the early stages of this Fourth Turning and the mood of the country continues to darken like the sky before an approaching blizzard. Generational theory does not predict the specific events that will happen during a Turning. The events, personalities, and policies that become the chapters in history books are not what drive a Turning, it is how each generation reacts to the events, personalities and policies. Someone who is 60 years old will react differently to an event than they would have reacted at 20 years old. The issues that are driving this Fourth Turning (un-payable entitlement obligations, Wall Street greed & power, globalization gutting the middle class, increasing government control, wealth distribution) were all known and understood in 1997. It took the spark of a housing market collapse and the generations being in proper alignment to catalyze the mood of the country.

Chapter one of this Fourth Turning is approaching its end. Chapter two guarantees to be more intense, with more violence, and periods of great danger. Strauss & Howe envisioned this chapter based upon their analysis of the issues looming back in 1997:

The risk of catastrophe will be very high. The nation could erupt into insurrection or civil violence, crack up geographically, or succumb to authoritarian rule. If there is a war, it is likely to be one of maximum risk and effort – in other words, a total war. Every Fourth Turning has registered an upward ratchet in the technology of destruction, and in mankind’s willingness to use it. Thus, might the next Fourth Turning end in apocalypse – or glory. The nation could be ruined, its democracy destroyed, and millions of people scattered or killed. Or America could enter a new golden age, triumphantly applying shared values to improve the human condition. The rhythms of history do not reveal the outcome of the coming Crisis; all they suggest is the timing and dimension. – The Fourth Turning – Strauss & Howe -1997

American Revolutions

“A Fourth Turning is a solstice era of maximum darkness, in which the supply of social order is still falling but the demand for order is now rising. As the community instinct regenerates, people resolve to do more than just relieve the symptoms of pending traumas. Intent on addressing root causes, they rediscover the value of unity, teamwork, and social discipline. Far more than before, people comply with authority, accept the need for public sacrifice, and shed anything extraneous to the survival needs of their community. This is a critical threshold: People either coalesce as a nation and culture – or rip hopelessly and permanently apart.” – The Fourth Turning – Strauss & Howe -1997

“Photo credit: ComfortBetrays.com”

There have been three prior Fourth Turnings in U.S. history: the American Revolution, Civil War and Great Depression/World War II. The American Revolution preceded the Civil War by 87 years. The Great Depression followed the Civil War by 69 years and this Millenial Crisis arrived 76 years after the Great Stock Market Crash of 1929. Essentially, each prior Fourth Turning has represented a Revolution in American history.

The First American Revolution began in 1773 when Parliament’s response to the Boston Tea Party ignited a colonial tinderbox—leading directly to the first Continental Congress, the battle of Concord, and the Declaration of Independence. History always seems easy to predict in retrospect. This is another of the many faults in human thinking. There was very little talk or thought of the colonies breaking away from the mother country during the 1760s. Up until the Boston Tea Party catalyst event, no one could have predicted the events which would occur in a chain reaction over the next 21 years. There were dark cold bitter days during this Crisis winter. In the end, George Washington’s honor, courage and fortitude symbolized the character of a new nation.

Historians Charles and Mary Beard described the Civil War as the Second American Revolution. The Civil War Crisis began with a presidential election that southerners interpreted as an invitation to secede. The attack on Fort Sumter triggered the most violent conflict ever fought on New World soil. The war reached its climax with the Emancipation Proclamation and Battle of Gettysburg (in 1863). The epic conflagration redefined America. The slavery issue was settled for good, signed in the blood of 600,000 men. The industrial might of the North was rechanneled toward progress as a world industrial powerhouse. In retrospect many will say the Civil War was entirely predictable, but that is completely untrue.

The great compromise generation (Henry Clay, John C. Calhoun, Daniel Webster) of the 1850s passed from the scene, leaving the country in the hands of firebrands on both sides. John Brown’s raid on Harper’s Ferry and subsequent execution served to increase the brooding mood of the country. The bloodiest war in the history of mankind was not predictable even one year before it began. The aristocracy of Washington DC actually took carriages in their Sunday best to watch the First Battle of Bull Run. Shortly thereafter Lincoln mobilized 500,000 men and unleashed a catastrophic spiral of butchery over the next four years that exhausted itself with the assassination of Lincoln and the surrender at Appomattox in the same week. The resolution of this Crisis felt more like defeat than victory.

Renowned American historian Carl Degler called FDR’s New Deal the “Third American Revolution”. The Crisis began suddenly with the Black Tuesday stock-market crash in 1929. After a three-year economic free fall, the Great Depression triggered the New Deal Revolution, a vast expansion of government, and hopes for a renewal of national community. After Pearl Harbor, America planned, mobilized, and produced for world war on a scale never seen in the history of mankind, making possible complete victory over the Nazis and Fascists. In 1928 did anyone foresee an 89% stock market crash, worldwide depression, vast expansion of government power, a world war more devastating than the prior war, and the usage of an atomic weapon of mass destruction? Not a chance. Only in retrospect do people convince themselves that it was predictable.

Black Tuesday, October 29, 1929 marked the abrupt unforeseen end of the Roaring Twenties. The bewilderingly rapid collapse of the worldwide financial system in the space of three years left the American people shaken and desperate. With their wealth destroyed and unemployment exceeding 20%, the American public turned to Franklin Delano Roosevelt and his New Deal promises of government social and work programs. He declared “nationwide thinking, nationwide planning, and nationwide action, the three essentials of public life”. This was truly a Third American Revolution. FDR’s policies changed the course of American history. The renewed spirit of American youth during the 1930s was essential in preparing them for the trials that awaited from 1941 through 1945. It is somewhat ironic that FDR’s revolutionary social programs, begun during the last Crisis, will be a major factor in the current Crisis – the Fourth American Revolution.

Fourth American Revolution

“The US government is on a “burning platform” of unsustainable policies and practices with fiscal deficits, chronic healthcare underfunding, immigration and overseas military commitments threatening a crisis if action is not taken soon.” – David M. Walker

No one knows exactly what events will transpire over the next 15 to 20 years as this Fourth Turning morphs from regeneracy to climax and finally to resolution. The mainstream media, most politicians, and self proclaimed progressives are blind to the cyclicality of history. They believe history proceeds in a linear upwards path. These are the people you see on TV talking about toning down the rhetoric, false gestures of bipartisanship, and soothing words about the financial crisis being a thing of the past. They fail to understand that once the mood of the country is catalyzed by a trigger event or events, there is no turning back the clock. Winter must be dealt with head on. Very few, if any, “financial experts” anticipated a housing collapse, followed by a deep recession, a 50% stock market crash, and a financial system which came within hours of total implosion on September 18, 2008 (as detailed in the documentary Generation Zero). Absolutely no one anticipated the extreme measures taken by the U.S. government and Federal Reserve to “Save” the country from a 2nd Great Depression. These measures have added $5 trillion to the National Debt in the last 40 months. It took 205 years to accumulate the 1st $5 trillion of debt.

While it is impossible to predict the exact trials and tribulations that will confront America over the next decade, the issues that will drive this Fourth Turning were clearly visible to anyone with their eyes open, many years in advance of the Crisis. Strauss & Howe clearly detailed the easily observable issues that led to the current Crisis back in 1997. Their book is not prophecy, but historically provable interactions between generations based upon the circumstances confronting society at the time.

“Sometime around the year 2005, perhaps a few years before or after, America will enter the Fourth Turning. A spark will ignite a new mood. It will catalyze a Crisis. In retrospect, the spark might seem as ominous as a financial crash, as ordinary as a national election, or as trivial as a Tea Party. It could be a rapid succession of small events in which the ominous, the ordinary, and the trivial are commingled.” – The Fourth Turning – Strauss & Howe -1997

The authors use their common sense, based upon known trends, to posit potential catalyst scenarios such as:

A global terrorist group blows up an aircraft and announces it possesses nuclear weapons.
Beset by a fiscal crisis, states begin to balk at Federal mandates leading to secession actions, militia violence, cyber attacks on the IRS, and demands for a new Constitutional Convention.
An impasse over the federal budget reaches a stalemate. The government shuts down. The President declares emergency powers. Congress rescinds his authority. Financial markets spiral out of control. Default looms.

These “theoretical” scenarios were put forth in 1997. The authors concluded that these were unlikely, but that no matter what the catalyst, the response by the generations would be predictable. It seems this Fourth Turning is being driven by a succession of smaller triggers, rather than one large trigger. The housing collapse, which began in 2005, ultimately led to the world financial system collapse in 2008. The overreach by government in attempting to repair the damage done by Wall Street and K Street led to the Rick Santelli Tea Party Rant heard round the world in February 2009. The Tea Party movement has since taken the country by storm, surprising the linear thinkers and stunning the ruling elite. Last week a congresswoman and a dozen bystanders were gunned down, further darkening the mood of the country and inflaming passions among competing political ideologies. So what happens next?

Strauss & Howe postulated on the possible path of this Crisis and I see nothing to doubt their analysis:

“An initial spark will trigger a chain reaction of unyielding responses and further emergencies. The core elements of these scenarios (debt, civic decay, global disorder) will matter more than the details, which the catalyst will juxtapose and connect in some unknowable way. It is unlikely that the catalyst will worsen into a full fledged catastrophe, since the nation will probably find a way to avert the initial danger and stabilize the situation for a while.” – The Fourth Turning – Strauss & Howe -1997

The CNBC talking heads, mainstream media pundits, clueless Washington politicians, corrupt Wall Street shysters, and non-thinking robotic masses have been convinced that the actions taken by Ben Bernanke, Barack Obama, Tim Geithner and Congress have averted a financial disaster and saved the world. One hundred years from now when Chinese historians look back on the period from 2000 until 2025 they will ask themselves, “what the hell were they thinking?” The causes of this Crisis are as clear as day to anyone willing to see. A small group of Wall Street bankers and corporate interests through their proxy, the Federal Reserve, created the largest housing bubble in the history of the world generating hundreds of billions in obscene undeserved profits, while destroying the wealth and futures of millions of middle class Americans. Once the fraudulent nature of the bankers’ pillaging of the nation’s wealth came to light, the entire ponzi scheme collapsed, as they always do. On a parallel track, the Federal government, knowing full well that its un-payable social welfare commitments could never be fulfilled, decided to engage in two wars of choice, made additional un-payable social welfare commitments, and created new bloated bureaucratic agencies in the name of security and safety.

What will truly amaze future historians is the “solutions” that our leaders chose to save the country. Despite already being the largest debtor the planet has ever seen, with a National Debt of $8 trillion in 2005, the President and Congress have added an additional $6 trillion of debt, with plans to increase that debt at a rate of $1.5 trillion per year for the foreseeable future. Despite the fact that the housing boom was created by loose monetary policy and non-enforcement of existing laws and regulations by the Federal Reserve, our leaders have allowed this bank owned entity to reduce interest rates to 0%, buy $1.5 trillion of toxic mortgages from the Wall Street banks that caused the crisis, suspend requirements for banks to report their assets at their FMV, monetize the debt spending by the Federal Government, and create inflation through the printing of money out of this air. The Federal government’s response to the crisis was to create a mandated healthcare benefit for 35 million more Americans with no means to pay the untold trillions in future costs. Our leaders’ solution to a crisis caused by excessive debt has been to create twice as much debt. A passage from the Book of Matthew which Abraham Lincoln utilized during a prior Fourth Turning Crisis is a fitting description of where we stand today:

“Every kingdom divided against itself is brought to desolation; and every city or house divided against itself shall not stand.” – Matthew 12:25

The country is deeply divided. There is a vast swath of America that has chosen ignorance over knowledge. With 50% of Americans paying no income taxes, they will vote for anyone who promises them more. The rest of America is split between those who believe the answer lies in increased Federal government coordination and control and those who want a return to liberty, individual responsibility and a vastly reduced Federal government footprint. As I have tried to figure out the most likely path of this Fourth Turning I was focused on an external conflict in the Middle East or an incident on the Korean Peninsula providing the next spark. After the shooting in Tucson, this Fourth Turning is beginning to crystallize.

What I realized was that the three previous American Revolutions all occurred on U.S. soil. The First American Revolution was fought on American soil by a loose confederation of autonomous states against the overbearing control of a great European empire. The Second American Revolution was fought by Americans against Americans and resulted in a vast expansion of Federal government power and diminishment of state power. The Third American Revolution took place under the auspices of saving America from the depths of Depression with government social programs and the birth of the Nanny State. Each Revolution has further expanded the power and control of the Federal government. I believe the Fourth American Revolution will ultimately come down to a battle between the Liberty movement and the ruling oligarchy of Wall Street, Mega-corporations and supporters of the Military Nanny State.

I trust that Strauss & Howe correctly assessed the main factor that will drive the next phase of this Crisis – the Great Devaluation:

“It could be a series of downward ratchets linked to political events that sequentially knock the supports out from under the residual popular trust in the system. As assets devalue, trust will further disintegrate, which will cause assets to devalue further, and so on. Every slide in asset prices, employment, and production will give every generation cause to grow more alarmed. With savings worth less, the new elders will become more dependent on government, just as government becomes less able to pay benefits to them. Before long, America’s old civic order will seem ruined beyond repair.” – The Fourth Turning – Strauss & Howe -1997

There is no doubt in my mind that the next downward ratchet in this Crisis will be caused by Ben Bernanke and his attempt to generate just enough inflation to make our un-payable debt load less burdensome. His track record regarding economic forecasting, assessment of housing prices and anticipation of economic distress is flawless. He hasn’t been right once. With the top 1% richest Americans controlling 42% of the financial wealth in the country, an all-time high, the next leg down will boil over into class warfare. The middle class has been devastated thus far. Another stock market collapse and more job losses would push them over the edge. The evident failure of government solutions will invigorate the Liberty Movement to become even more strident in their anti-government message. The subsequent battle between the Haves and Have Nots is likely to flair into protests, riots and increasing violence. There will be no compromises. The 2012 Presidential election could incite reactions on par with the election of Lincoln in 1860. While the country convulsively flails about, foreign adversaries will take advantage of our weakness. Peak oil will throw a further wrench into the downward spiral. Out of this tempest, the country will either turn to a strong leader and more government control or move back toward a smaller Federal government footprint and a return to rule by the people and for the people. The outcome is unknown, but the path is foreseeable. Let’s hope that Ben Franklin was right.

All of us who were engaged in the struggle must have observed frequent instances of superintending providence in our favor. To that kind providence we owe this happy opportunity of consulting in peace on the means of establishing our future national felicity. And have we now forgotten that powerful friend? Or do we imagine that we no longer need his assistance? I have lived, Sir, a long time, and the longer I live, the more convincing proofs I see of this truth-that God governs in the affairs of men. And if a sparrow cannot fall to the Ground without his Notice, is it probable that an Empire can rise without his Aid?” – Benjamin Franklin, To Colleagues at the Constitutional Convention

“History offers no guarantees. If America plunges into an era of depression or violence which by then has not lifted, we will likely look back on the 1990s as the decade when we valued all the wrong things and made all the wrong choices.” – The Fourth Turning – Strauss & Howe -1997

WHO ARE THOSE GUYS? (Oldie but Goodie)

The recent debate about the China bubble misses the point. I wrote this article in June 2009. I clearly come down on the side of this being China’s Century unless they do something really stupid to screw it up. But that does not mean that they will not create bubbles along the way, which will pop. Some people need to open their minds and let the sun shine in.

Butch Cassidy: Ah, you’re wasting your time. They can’t track us over rocks.
Sundance Kid: Tell them that.
Butch Cassidy: [after looking for himself] They’re beginning to get on my nerves. Who are those guys?

Do you ever get the feeling that we are being pursued by someone who wants to kill us? No matter what we do, they are still in pursuit. They never let up. We’ve tried deception, trickery, and frantic escapes. Now we have climbed a steep mountain and are cornered in a canyon with our pursuers above and a river below. We don’t have many choices. We could give up, we can fight and die, or jump and hope to live another day. Our pursuers are not going to surrender. They are going to keep pursuing us until we’re caught or dead.

The United States once had a Western frontier spirit. No challenge was too daunting. We were the pursuers, Great Britain was the pursued. We were a young nation with a rural population anxious to move to the big city and make their fortune. With fertility rates exceeding 6 births per woman for the 1^st half of the 1800’s, a population explosion took place in the U.S. Fertility rates declined steadily, but still stayed above 4 for most of the 1800’s. The youthful nation created the Industrial Revolution, built thousands of miles of railroad tracks, created a financial banking system, became a manufacturing powerhouse, and adapted to an urban society. It wasn’t smooth progress, but it was relentless progress.

Year	Fertility Rate
1800	7.04
1810	6.92
1820	6.73
1830	6.55
1840	6.14
1850	5.42
1860	5.21
1870	4.55
1880	4.24
1890	3.87
1900	3.56

Source: US Census

A creative entrepreneurial spirit was unleashed with all its fury during the 1800’s in America. No problem was too big to solve. Mountains, rivers, oceans, wilderness, and darkness were just obstacles to a better tomorrow. Capitalism and the possibility of wealth and success drove many to create and innovate. The invention of the Cotton Gin revolutionized farming. The invention of the Steamboat revolutionized river travel. The creation of the steam locomotive and railways revolutionized land travel. The sewing machine revolutionized the textile industry. The telegraph and telephone revolutionized communication. The light bulb, electric motors, and diesel engine changed the world.

Person	Invention	Date
James Watt	First reliable Steam Engine	1775
Eli Whitney	Cotton Gin, Interchangeable parts for muskets	1793, 1798
Robert Fulton	Regular Steamboat service on the Hudson River	1807
Samuel F. B. Morse	Telegraph	1836
Elias Howe	Sewing Machine	1844
Isaac Singer	Improves and markets Howe’s Sewing Machine	1851
Cyrus Field	Transatlantic Cable	1866
Alexander Graham Bell	Telephone	1876
Thomas Edison	Phonograph, Incandescant Light Bulb	1877, 1879
Nikola Tesla	Induction Electric Motor	1888
Rudolf Diesel	Diesel Engine	1892
Orville and Wilbur Wright	First Airplane	1903
Henry Ford	Model T Ford, Assembly Line	1908, 1913

The period from 1865 to 1901 is referred to as The Gilded Age, coined by Mark Twain in 1873. This period witnessed the establishment of a modern industrial economy. A national transportation and communication network was created, the corporation became the foremost form of business organization, and a managerial revolution transformed business operations. By the beginning of the twentieth century, per capita income and industrial production in the United States exceeded that of any other country except Britain. Long hours and hazardous working conditions led many workers to attempt to form labor unions despite strong opposition from industrialists and the courts. The businessmen created industrial towns and cities in the Northeastern U.S. with new factories, and contributed to the creation of an ethnically diverse industrial working class which produced the wealth owned by rising super-rich industrialists and financiers such as Cornelius Vanderbilt, John D. Rockefeller, Andrew Carnegie, and J.P. Morgan. Their critics called them robber barons, referring to their use of overpowering and sometimes unethical financial manipulations.

A confluence of demographic factors, the industrial revolution, and urbanization led the United States to become the greatest financial and manufacturing powerhouse in world history, eventually overtaking Great Britain in the early years of the 20^th Century. We have retained this position into the 21^st Century. Based on the current confluence of demographic trends, bad decisions by U.S. policymakers, the urbanization of the developing world, and the overreach that global empires always succumb to, the United States will not be the dominant world power at the end of the 21^st Century. The likely successor will be China.

Demographics

The population of the United States literally exploded during the mid 1800’s. From 17 million inhabitants (2.5 million which were slaves) in 1840, the United States experienced a fivefold increase to 76 million citizens by 1900. This enormous increase occurred despite the loss of 600,000 men in the prime of life during the Civil War. Great Britain’s population doubled over this same time frame. With fertility rates between 4 and 7 children (versus 2 today) during the 1800’s, much of the growth was home grown. More than 80% of the population lived on farms in the early 1800’s as it was essential to have many children to work the farm. The fertility rates steadily declined as the country shifted from a rural society to an urban society.

During the Gilded Age approximately 10 million immigrants came to the United States, many in search of religious freedom and greater prosperity. This mammoth immigration from Europe and Asia sparked tension and anger among many in the U.S. The new immigrants came to urban America, where disease, overcrowding and crime festered. As a result, relations became openly hostile, with many Americans becoming anti-immigrant, fearing the customs, religion, and poverty of the new immigrants, considering them less desirable than old immigrants. In reality, these new immigrants were essential to the growth of the country. Between 1870 and 1880, 140,000 Chinese immigrants arrived in the U.S. with many working on the Transcontinental Railway project. Labor unions such as the American Federation of Labor strongly opposed the presence of Chinese labor, by reason of both economic competition and race. Congress banned further Chinese immigration through the Chinese Exclusion Act in 1882, which prohibited Chinese laborers from entering the United States. This racism is why every major city in the U.S. has a Chinatown.

U.S. POPULATION

The other huge demographic benefit that the U.S. had over Great Britain and Germany was its youth. In 1860, the median age of the U.S. population was 19.4 years old. The median age in England was 27 years old. With 50% of the U.S. population under the age of 20 from 1860 through 1880, there was an unlimited supply of labor to supercharge the engine of growth. The youthfulness of America led to a tremendous sense of vitality and optimism about the future. The percentage decrease in the 20 to 39 age group between 1860 and 1880 is a reflection of the youth wiped out by the Civil War. Despite this setback, the young Americans changed the world. The benefit of a youthful society is that failure and obstacles are brushed off. The reckless adventure of youth leads to discoveries, inventions and new ideas. The older a society gets the more cautious and set in their ways. The following chart paints a disturbing picture for America. In 1860 over 50% of the population was under 20 years old. By 2040 less than 26% of the population will be under 20 years old. With 20% of the population expected to be over 64 years old, the passion, reckless adventurism, and vitality will be in limited supply. Just the cost to support 80 million old folks will be crushing. Developing countries with young populations will be gaining on us.

Age	1860	%	1880	%	1900	%	2000	%	2040F	%
under 20	13.7	50.6%	25.5	49.4%	33.8	44.4%	80.4	28.6%	101.6	25.9%
20 to 39	8.5	31.4%	15.6	30.2%	24.6	32.3%	81.6	29.0%	120.3	30.7%
40 to 64	4.1	15.1%	8.8	17.1%	14.6	19.2%	84.4	30.0%	90.2	23.0%
over 64	0.8	3.0%	1.7	3.3%	3.2	4.2%	35	12.4%	79.8	20.4%

Totals	27.1	100.0%	51.6	100.0%	76.2	100.0%	281.4	100.0%	391.9	100.0%

Source: US Census

Urbanization & Industrialization

The 2^nd Industrial Revolution from 1850 until 1900 changed the face of America. In 1850, more than 80% of Americans lived on farms. By 1920, only 50% lived on farms. Today, only 20% of Americans live in rural areas. This shift resulted from technological progress. A six-fold increase in real wages made children more expensive in terms of forgone opportunities to work and increases in agricultural productivity reduced rural demand for labor, a substantial portion of which traditionally had been performed by children in farm families. The US rural population plummeted, as farmers were displaced by mechanization and forced to migrate to urban factory jobs. America’s westward expansion allowed over 400 million acres of new land to be put under cultivation between 1870 and 1910 while the number of Americans involved in farming dropped by one third.

New farming techniques and agricultural mechanization facilitated both processes. The reaper allowed farmers to quadruple their harvesting efficiency by replacing hand labor with a mechanical device. Manufacturing became the dominant industry after the Civil War. The world was taken by storm as the United States exited the Civil War with a 5% share of worldwide manufacturing output and expanded it to almost 20% by 1900. The market share was stolen from the United Kingdom and France.

The period between 1850 and 1900 was marked by the increasing concentration of people, political power, and economic activity in urban areas. In 1860, there were nine cities with populations over 100,000 and by 1910 there were fifty. These new large cities were laid inland along new railroad routes such as Denver, Chicago, and Cleveland. Industrialization and urbanization reinforced each other and urban areas became increasingly congested. As a result of unsanitary living conditions, diseases like cholera, dysentery, and typhoid fever struck urban areas with increasing frequency. Cities responded by paving streets, digging sewers, sanitizing water, constructing housing, and creating public transportation systems.

The completion of the Transcontinental Railroad in 1869 had the effect of stimulating a period of consolidation and technological standardization. It was during this time that railroad magnates such as Jay Gould and Cornelius Vanderbilt amassed vast power and fortunes from consolidation of smaller rail lines into national corporations. Between 1850 and 1890, over 120,000 miles of railroad were laid. This was a huge undertaking that required vision, brute strength, and the promise of potential riches if accomplished. Capitalism is not pretty, but has proven to generate wealth and progress better than any other system.

Table 1: RAILROAD MILEAGE INCREASE BY GROUPS OF STATES
	1850	1860	1870	1880	1890
New England	2,507	3,660	4,494	5,982	6,831
Middle States	3,202	6,705	10,964	15,872	21,536
Southern States	2,036	8,838	11,192	14,778	29,209
Western States and Territories	1,276	11,400	24,587	52,589	62,394
Pacific States and Territories		23	1,677	4,080	9,804
TOTAL USA	9,021	30,626	52,914	93,301	129,774
SOURCE: Chauncey M. Depew (ed.), One Hundred Years of American Commerce 1795–1895 p 111

Thomas Edison and Alexander Graham Bell transformed the country with the invention of the light bulb and the telephone between 1876 and 1880. Between 1882 and 1920 the number of generating plants in the US increased from one in downtown Manhattan to nearly 4,000. While the earliest generating plants were constructed in the immediate vicinity of consumers, plants generating electricity for long-distance transmissions were in place by 1900. Between 1877 and 1893 (the term of Bell’s patent coverage) the number of phones leased by Bell’s company increased from 3,000 to 260,000, although these were largely limited to businesses and government offices that could afford the relatively high rates. After the Bell patents expired, thousands of independent operators became incorporated and their competition for services to middle and low-class households as well as rural farmers drove prices down significantly. By 1920, there were 13 million phones in the United States providing service to 39 percent of all farm households and 34 percent of non-farm households.

The discovery of oil in western Pennsylvania in 1859 changed the course of America for the next century. Between 1880 and 1920, the amount of oil refined annually jumped from 26 million barrels to 442 million. The discovery of large oil fields in Texas, Oklahoma, Louisiana, and California in the early 20th century contributed greatly to these states’ rapid industrialization. America became addicted and dependent on oil for heating, lighting, lubricating, and running cars, trucks, and machinery. This dependence on oil could ultimately contribute to the downfall of the U.S. economy.

Economic Growth

The 1800’s had the usual ups and downs economically. But, there were a few themes that dominated. GDP grew consistently, with a big spike in the 2^nd half of the century. The 1800’s were also characterized by deflation. The U.S. was able to generate tremendous growth using virtually no government debt, except during the Civil War. The National Debt stood at $2.3 billion in 1872 and dropped to $1.7 billion by 1888. Lastly, the U.S. currency was rock steady because it was backed by gold. The National Currency Act of 1863 established the dollar as the national currency. The National Banking Acts of 1864 and 1865 created the infrastructure of our national banking system. In 1865 there were 1,643 banks in the U.S. By 1896 there were 11,500 banks operating in the U.S. Financial panics occurred when expansion and over-investment got out of hand in 1873 and 1893. They were violent and short.

The GDP per person grew moderately in the 1800’s as the population of the country exploded. As the Industrial Revolution progressed, GDP per Capita accelerated. The late 1800’s were a time of good deflation from excess supply, driven by new technology. The new inventions (light bulb, telephone), railroads and machines powered by oil created tremendous productivity and excess capacity. The economy grew an extraordinary 4% per year in real terms between 1870 and 1896, as wholesale prices fell 50%. Tremendous growth and progress were achieved while deflation reigned. The U.S. also learned that there can be economic benefits to war. The Spanish-American War began in 1898. The U.S. gained control of the former colonies of Spain in the Caribbean and Pacific. The war increased the business and earnings of American railroads, increased the output of American factories, and stimulated industry and commerce.

Data compiled by the Federal Reserve Bank of Minneapolis paints a fascinating picture about inflation. During the entire 100 years from 1800 to 1900, there was inflation in only 22 of those years. There was deflation during 39 of those years, and zero inflation in the other 39 years. Most of the inflation occurred during the War of 1812 and the Civil War. An item that cost you $100 in 1800 would have cost you $50 in 1900. It does appear that tremendous economic growth can be achieved without inflation. This has not been what has been preached since 1913. In the 98 years of the Federal Reserve’s existence, the United States has had 86 years of inflation and 12 years of deflation. The massive inflation has generated false growth in GDP, especially since Nixon closed the gold window in 1971.

The U.S. achieved phenomenal growth with no inflation and utilization of very little public debt. Except for the spike during the Civil War, political leaders kept a lid on government spending. All revenues were generated from excise taxes and tariffs. There was no personal or corporate income tax during the 1800’s except for a brief period during the Civil War. The U.S. entered the 19^th Century with public debt at 10% of GDP and departed the 19^th Century with public debt at 10% of GDP. Today, it stands at 80% of GDP and accelerating upwards. These low debt levels gave the U.S. a tremendous competitive advantage over the UK. With a vast global empire, the UK had public debt exceeding 250% of GDP in the early 1800’s and had to utilize considerable resources to paying that debt down throughout the 19^th Century.

The U.S. dollar was stable during the entirety of the 1800’s, except during the brief inflationary period during the War of 1812 and the more dramatic inflationary period during the Civil War. The stability of the dollar was constant versus gold from 1870 until FDR seized all the gold in the country in the early 1930’s, when it collapsed by approximately 50%. Since Nixon closed the gold window in 1971, the dollar has collapsed another 47% versus gold. Stating that we have a strong dollar policy has been a bold faced lie.

China Rising

The United States began its long trek to becoming a worldwide economic powerhouse during the 19^th Century, leading to domination of the 20^th Century. The dominant power at the start of the 19^th Century was the United Kingdom. Today, they have the 6^th highest GDP, just ahead of Italy. In 1970, U.S. GDP was $1 trillion and has risen to $14 trillion today. China’s GDP in 1970 was $92 billion. Today, it is $4.2 trillion a 4,450% increase in 28 years. China has been growing their GDP at an 8% to 10% pace for over a decade. They now have the 3^rd largest economy in the world, and will pass Japan as the 2^nd largest economy on the planet within the next 5 years. Sometime between 2030 and 2050, China will overtake the United States as the largest economy in the world.

The tremendous growth is being driven by the migration of millions of people from farms to the cities. By 2007, 594 million Chinese lived in urban areas. The United Nations has forecast that China’s population will have about an equal number of people staying in the rural and urban areas by 2015. In the long term, nearly 70% of the population will live in urban areas by 2035. According to Professor Lu Dadao, president of the Geographical Society of China (GSC), China’s urbanization took 22 years to increase to 39.1% from 17.9%. It took Britain 120 years, the U.S., 80 years, and Japan more than 30 years to accomplish this.

This rapid urbanization will create huge infrastructure growth as more roads, sewers, houses, manufacturing plants, power plants, public transportation, and office buildings will need to be built. This trend is identical to the U.S. trend in the 1800’s. The urbanization has caused pollution, illness and congestion problems. These issues also occurred in the U.S. during the 1800’s. The efforts to solve these problems will create even more growth. The manufacturing of goods for America will slowly be replaced by production for its own internal demand. Eventually, China will not be as dependent on the U.S. for its economic existence.

The population of China is currently 1.3 billion, more than 4 times the size of the U.S. population. China’s population is not expected to grow much, if at all, between now and 2050. This is a dramatic difference from the U.S. in the 1800’s, as immigration and high birthrates drove the population upward. The birthrate in China of 1.7 is not high enough to even maintain its current population level over the long-term.

Most of the arguments that I hear regarding why China will not pass the U.S. economically relate to their aging population. After examining the current age distribution and the projected distribution between now and 2050, there is very little difference between the U.S. and China on a percentage basis. It is clear that young populations lead to more vitality, growth, and invention. As the chart below details, 20.1% of the Chinese population is under the age of 15. In the U.S., 21.4% of the population is under the age of 15. Now here is where the rubber meets the road. Because China’s total population is 1.3 billion, 20.1% under 15 years old equals 267 million people. Their youth almost equals the United States’ entire population. The U.S. only has 60 million people under the age of 15.

Age structure:
0-14 years:	20.1% (male 142,085,665/female 125,300,391) (2008 est.)
15-64 years:	71.9% (male 491,513,378/female 465,020,030) (2008 est.)
65-over:	8% (male 50,652,480/female 55,472,661) (2008 est.)

By 2050 the U.S. demographic picture will only be slightly better than China’s on a percentage basis. In addition to the fact that China starts with a population 4 times the size of the U.S., they will benefit greatly from the shift from a rural society to an urban society. The U.S. already has 80% of its population living in non-rural areas. By 2050, China will likely reach a similar percentage. This means that approximately 600 million people will move from rural areas to urban areas in the next 40 years. This figure is mind boggling. In addition, the people moving are likely to be young. The old people will stay on their farms and subsist as they always have. The youthful urban population will drive progress and advancement.

The piece of the pie that is missed by many is the rapid education of China’s youth. In 1978 there were virtually no Chinese students enrolled in Post-graduate programs or studying abroad. Today, there are close to 1 million Chinese students in Post-graduate programs and in excess of 100,000 students studying abroad. One third of all the graduate students in U.S. Science and Engineering programs are not U.S. citizens. With 267 million children under the age of 15 combined with rapid urbanization and desire for advanced education, China is an economic juggernaut. There will be no denying them the economic crown by the middle of this century. It is inevitable.

The ascendancy of China does not necessarily mean that the United States will descend. The United Kingdom entered the 1800’s with a tremendous amount of public debt. Through economic growth, fewer military conflicts, and control of spending, they were able to reduce their debt from 250% of GDP to 50% of GDP by 1900. The current U.S. economic position appears to be more dire than that of the UK in 1800. With total debt exceeding 350% of GDP, a global empire with troops stationed in 120 countries, two ongoing wars, a National Debt that will reach $14 trillion in the next two years, $56 trillion of unfunded future liabilities, and a rapidly aging populace, the ability for rapid economic growth is nil. We’ve lived above our means for decades and now we’re broke.

Sheriff Ray Bledsoe: [to Butch and Sundance] You should have let yourself get killed a long time ago when you had the chance. See, you may be the biggest thing that ever hit this area, but you’re still two-bit outlaws. I never met a soul more affable than you, Butch, or faster than the Kid, but you’re still nothing but two-bit outlaws on the dodge. It’s over, don’t you get that? Your times is over and you’re gonna die bloody, and all you can do is choose where.

Americans have a lot of fight left in them. If we go straight and kick our spending and debt habit we can push off the day of reckoning. If we continue on the reckless current fiscal path, the Chinese, among others, will catch and pass us before the middle of the century. Our standard of living will enter permanent decline and we will become the Great Britain of the 21^st Century. The choice is ours.