by John Browne, Senior Market Strategist at Euro Pacific Capital
President Obama has continued and increased the reckless spending of the previous Administration. Now, as the federal debt reaches its statutory limit, he is spreading fear and panic in the hopes of having it raised.
Many of the key people responsible for America’s historic mess, including the President, Treasury Secretary Geithner, former NEC Director Summers, and Fed Chairman Bernanke, have pronounced publicly that a failure to lift the debt ceiling will cause a catastrophic Treasury debt default.
This is simply not true. The US Treasury has tax revenues that cover the service of its current (staggering) debt of some $14.3 trillion.
Yet, that doesn’t mean the US government won’t be forced to default in other ways. Failure to pay the
nominal interest and principal on bonds is only the narrowest definition of “default.” When a broader definition is used – which includes the use of inflation to erode the real value of US debt – the US government has in fact been in a state of continuous default for almost a century.
A 2011 dollar is worth just four cents in terms of a 1914 dollar. As that new money circulates, your dollar will lose some 53% of its purchasing power, productivity increases notwithstanding. That’s just in the last three years!
As if we needed further proof that it didn’t really matter if you voted for McCain or Obama in 2008. McCain appeared this morning on “This Week” and vocalized his displeasure at the growing “isolationism” (his word, not mine) being expressed by the 2012 GOP candidates. Of course it was McCain, who during a debate in 2007, accused Ron Paul’s “isolotianism” of being the kind of policy that brought about WWII and the rise of Hitler. Here’s a video of that exchange:
This morning McCain sounded a similar tune when talking about Obama’s recent support of actions in Libya.
“There’s always been an isolation strain in the Republican party, that Pat Buchanan (a former Republican presidential contender) wing of our party. But now it seems to have moved more center stage, so to speak,” he said.
There is no question that President Barack Obama, a Democrat, made the right choice in lending US military support to the NATO mission in Libya, McCain told ABC television’s “This Week” program.
“If we had not intervened, Kadhafi was at the gates of Benghazi. He said he was going to go house to house to kill everybody. That’s a city of 700,000 people. What would be saying now if we had allowed for that to happen?
“That’s not the Republican party of the 20th century and now the 21st century,” McCain said.
McCain is a neo-con Republican dinosaur with a jingoist broken record roar of, “America F&%K YEAH!” It is as tired as it is desperate. He also, along with much of the media, needs to learn the proper definition of isolationism. For more see this excellent video on isolationism from Jack Hunter.
It is a testament to Ron Paul that his message of non-interventionism is now being echoed, in various forms, by his 2012 GOP opponents. However, let’s not kid ourselves, not a single candidate in the field other than Ron Paul can be trusted to put action behind the words.
In 2008 I wrote that I didn’t think America was ready for Ron Paul. Here in 2011-2012, America just might be ready. Even if Dino-McCain isn’t.
Quote of the Day: “It was bad enough when the TSA agents would go through your underwear in your luggage. Now they’re going through your underwear while you’re wearing it.” –Jay Leno
The Texas House unanimously passed a bill holding Transportation Security Agency (TSA) agents accountable for touching people’s private parts without probable cause. In response, the Department of Justice threatened to ground flights in Texas. DoJ’s threat caused the bill to die in the Texas Senate.
That’s why I sent the following letter to my Representative and Senators. We encourage you to send a letter as well, and you may borrow from or copy this . . . Read More »
by Michael Pento, Senior Economist at Euro Pacific Capital (www.europac.net)
For the better part of a century the foundations for a semi-comfortable retirement for many Americans have rested on the financial pillars of rising real estate and equity prices, positive real interest rates on savings, the continued solvency of public and private pension plans, and the reliability of national entitlement programs (Social Security, Medicaid). But in the last few years, the economic sands have fundamentally shifted and these pillars are no longer sturdy, some have cracked completely. For many Americans, the traditional idea of a comfortable retirement, filled with golf carts, cruises, and fishing trips, is going the way of the dodo bird.
Quote of the Day: “History clearly shows the government that stimulates the best, taxes, spends, and intrudes the least. In particular, the lesson from 1945-47 is that a sharp reduction in government spending frees up assets for productive use and leads to renewed growth.” – Economists Jason E. Taylor and Richard K. Vedder
Both Democrats and Republicans need to learn from history, particularly the Democratic Truman Administration. That’s why I sent this letter to Congress, from which you may borrow or copy . . . Read More »
My readers are familiar with my forecast that the US dollar is in terminal decline. America is tragically bankrupt, unable to pay its lenders without printing the dollars to do so, and enmeshed in an economic depression. The clock is ticking until the dollar faces a crisis of confidence like every other bubble before it. The key difference between this collapse and, say, the bursting of the housing bubble is that the US dollar is the backbone of the global economy. Its conflagration will leave a vacuum that needs to be filled.
Mainstream commentators often discuss three main contenders for the role: the euro, the yen, or China’s RMB (known colloquially as the “yuan”). These other currencies, however, each suffer from a critical flaw that makes them unready to carry the reserve currency role in time for the dollar’s collapse. When it comes to fiat alternatives, it appears the world would be going out of the frying pan and into the fire.
by Michael Pento, Senior Economist at Euro Pacific Capital (www.europac.net)
The artificially engineered U.S. recovery is already starting to falter as a continuous procession of disappointing data continues to confirm the sad truth. Recent numbers on GDP, durable goods, housing, regional manufacturing, initial unemployment claims and leading economic indicators all indicate a sharp slowdown in GDP growth. Just today the ADP Employment report showed that the private sector added a paltry 38,000 jobs in May, down from 177,000 jobs in April, significantly below expectations, and the weakest number since September 2010. Just yesterday Case Shiller announced that the U.S. housing market had officially achieved a “double dip,” in that national home prices have given up the entire 5% bounce that they had achieved after the May 2009 lows. These signs of continuing malaise comes at a time when the government is contemplating ways to dramatically cut spending. But given the economic weakness, is America really ready to accept the short term consequences that a government spending cut would cause?
Rand Paul, not even 1 year in the U.S. Senate, is already creating a legacy for himself. And if you believe in the Constitution and the human liberty it protects then it looks good, very good. Paul has been steadfast and fearless when it comes to remaining true to his campaign promises. This is an anomaly in the float-with-the-current like a rotten log cesspool that is Washington DC circa 2011.
Paul has pushed for balancing the budget aggressively, stood up for consumer choice, and all the while doing everything in his power to cut government spending. Now, he’s revealing his diamond-tough huevos by going up against the whimsical idiot-savants of hypocrisy in his own party and the truth-bending emotionally-charged demagogues on the other side. His only allegiances are his promises and the U.S. Constitution. If enough of his peers in DC started doing the same our Founding Fathers might stop rolling over and over in their graves to salute the flag once again.
Listen here to Rand Paul discussing recent renewal vote on The PATRIOT Act with everyone’s favorite Neo-Conservative whipping boy, Sean Hannity (from Hannity’s radio show). Near the end Rand Paul reveals who he may vote for in the upcoming POTUS 2012 election and touches on his own potential aspirations for that same office.
Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.
Earlier this year, we thought we’d be willing to trade an increase in the debt ceiling for something of lasting value — like a balanced budget amendment. We now think that’s a strategic mistake.
The real strategic opportunity lies in the debt ceiling itself. As long as we maintain THAT, then nothing else needs to be done to balance the budget.
Many people hate corporations. Progressives and populists blame them for a host of sins, and several libertarians assert they couldn’t exist in their present form without the State. We at DownsizeDC.org oppose the crony capitalism of the Corporatist State, and we cringe whenever people assume our pro-free market philosophy is a “defense” of corporations.
That is why our new campaign is a “heresy.” What we propose may shock you, but we have good reasons.
Our position is that even if you hate corporations . . .
Abolishing corporate income taxes is in your self-interest.
These taxes are unproductive as revenue-generators, but what they really do is make politicians more powerful, at your expense.
Liberty Maven
by John Browne, Senior Market Strategist at Euro Pacific Capital
by Peter Schiff
Loading ...
