The coming fury of an angry America
by GunRights4USJanuary 17, 2010
06 January, 2010
Countercurrents.org
A tiny part of a tiny part of the population of the earth will set the terms for the future of all humans. A tiny part that is broken, spent out, and increasingly disillusioned. That sliver of humanity is the broken, spent out, and increasingly disillusioned American middle class, burdened with the task of spending all America out of catastrophe. When they break under the weight of desperate impossibility, how will the heartlands good citizens react, and what will they do?
According to the World Bank, there are 6,692,030,277 human beings on the earth. 308,108,741 of them live in the United States, about 4.6% of the total. Of these fortunate Americans, about 231,000,000 are of voting age. In general elections in history's greatest democracy, about half those eligible to vote actually do...115 million people. History's greatest democracy has only two options every election, a choice between two almost similar positions, and the winning option typically enjoys the support of only half of those who choose, approximately 60 million individuals.
For a scant 90 years, America has been the wealthiest, most powerful group of humans in all 20,000 years of recorded civilization. Decisions made by Americans can and do affect the lives of every other human on the planet, often for both present and future, good and bad. By brute force of American economics alone, a single, small 0.9% of the 6.6 billion people who call earth home set the agenda for each and every one of all the rest of us. Not even by force of arms has there ever been a time in glorious history when so few people dominated so many in so complete a way.
Centuries from now, historians will want to know whom these few people were, if only to understand how they lived and thought, and better know the cause of global events that shaped the world they live in. As we in our time grapple to understand who the powers were that made a Roman, a Roman, future thinkers will want to dissect the condition of the less than one per cent of all humanity who call themselves American, and who alone make America, America... and the earth, American as well.
It cost 1 billion dollars and four years to have .9% of the earth elect the President of the United States in 2008. It took a similar amount of time and money to be the guy that lost. Hundreds of millions more are expended to elect the 435 people who make up the United States Congress. No statistical analysis is required to understand that these are among the wealthiest and most privileged humans in all of history. A tiny fraction of a tiny fraction of a tiny fraction of the population of the planet. This, we are led to believe is democracy, and so this small sliver is at least nominally responsible to those few who elected them, and nobody else.
Like all great empires, America has a well-defined class structure. As a fedora on a table, at one brim is the thin cruel line of poverty and disenfranchisement, at the other brim another thin line of luxury and excess, and a middle where the head goes which has historically been the big, fat, American middle class. The middle class sets the agenda by dearth of weight, the luxury class promoting the agenda where and when it suits them. The lower class don't matter at all.
The great American middle class, then, at least nominally controls the fate of the planet. They do so by electing wealthy folks who pander to their interests, those wealthy folks whose interpretations of the middle class becomes policy. Future folks will want to understand how representative those interpretations were, and will want to see if changes in the middle class over time were responsible for changes in American policy towards the world.
If anything defines the great American middle class, it is the concept of the American Dream. The basic building block of the American Dream is the family - mom, dad, 2.4 kids and a dog. The "dream" part is the very American right to economic freedom, freedom to accumulate stuff. A box on a postage stamp in a sea of urban sprawl called home, a couple of cars, a good education for the kids, and unrestricted ability to consume as much surplus crap as possible. Americans define success completely in economic terms and then attach the flag, religion, and everything else to it. Without this absolute right to consume hordes of junk, there is no American Dream, and no middle class. There is left only a lower class, (whatever that is), and a powerful capitalist class existing as it always has throughout time, changing flags and philosophy depending on how the winds blow. Caesar, Czar, King, or CEO of Goldman Sachs.
The rise of the middle class at the end of the 19th century tracks the rise of wealth and power for most western, industrialized nations. Production, trade, and consumption of machine made goods became a near universal indicator of the rise of modern civilization. However, 40 years of crushing war amongst European powers stalled the growth for most, but emerging America remained unscathed, benefiting from the misdemeanours of a now dead age. History will fix the date of the birth of absolute America to the year 1914, the dawn of the American age to 1945, and no doubt, the golden era to the short period that began to erode in 1971. Of the time since, we the generation here and now and in the teeth of it, can only speculate.
In the summer of 1914, America was an outlier in a world of teetering monarchies, festering colonial empires, and rancid landed aristocracies. While the rest of the world fed its gold and its young to the insatiable maw of industrial war, Americans were building a dream from limitless resources and the economic opportunities of a conflict that left America unspoiled and prosperous. By the close of hostilities in 1945, with the capital of the planet spent and exhausted, America burst from the ruins to begin the greatest run of prosperity and innovation of all time. The American middle class exploded, living the dream so thoughtfully given to them over a generation of global war.
Powerhouse America imposed its vision of a liberal, free market democracy on the "free world" through the Bretton Woods agreement of 1944. The United States became the world's greatest manufacturer of goods, trader of goods, and consumer of goods. Rebuilding the planet became a God given mission, the profits manna from heaven. The American dollar became the world's dollar. Freedom and cash registers rang.
But with the US greenback backed by gold, American economic expansion was limited to the bullion it horded. Wars in Korea and Viet Nam, and the massive expansion of "entitlements" with Social Security and Medicare among others, began to strain the American Dream. By the early 1970's the US had ceased to be an exporter of stuff, and the middle class began to buy increasingly cheaper stuff from abroad - at the expense of their own manufacturing and jobs. Given that the dream of freewheeling consumption was the bedrock of the burgeoning, voting middle class, politics insisted on a populist solution to the increasingly broke US economy. In 1971, Richard Nixon elected to abandon Bretton Woods, leave the gold standard, and America was free to print its way out of deficit and keep the dream alive.
At the same time as the US set the world awash in USD's, untold wealth and prosperity inflated its way through the massive baby boomer cohort. Women were entering the workforce in exponential numbers, soaking up inflated dollars with double incomes - and less expensive kids. American politics became a contest of pandering to the hedonistic desires of the American household, boom times embraced and fuelled by lax regulation and credit, busts fought off with the simple printing of even more money. Good times.
The American household saved 11% of its income in 1970, and had only 1.4% of its cash going to newfangled credit cards and auto loans. Everything else exchanged for clothes, appliances, food, houses, and shiny happy stuff, increasingly from overseas. Unknown to all, it was to be the high water mark for the middle class of America.
In 1971, American imports exceeded exports for the first time in modern history, by 2.6 billion dollars. At a time when a billion was a lot, America began paying to simply exist. Gross Public Debt had grown from 43 billion in 1940, to 381 billion by 1970. Within a single generation - the age of narcissism, the computer age, the age of globalization - the baby boomers of the American middle class had tilted the entire planets resources towards an unsustainable consumer culture. No longer living the dream, those alive just moments before Lehman Brothers listed over, rolled under, and disappeared below the waves of history, were fighting simply to keep the stuff they had.
The future had evaporated right before their shuttered eyes, and for over forty years.
The current version of the American middle class bears no resemblance at all to that of the end of the golden era in 1970. Forty years ago, Americans saved 11% of their earnings - which had evaporated by 2005, reaching the oxymoron of negative savings. Credit card debt shot from 1.4% to 15%. In the space of a generation, a single income family flush with cash, savings, and dreams had become a double income nightmare staggered with debt.
In 2008, there were more household bankruptcies than divorces.
The cost of crap fell and Wal Mart rose. Debt enslaved suburbanites now spend 32% less on clothing than they did a generation ago. 18% less on food, 52% less on appliances, and 24% less on cars. The middle class is consuming as voraciously as it ever has, however they have replaced sturdy $400.00 American Lawn Boy lawn mowers with $99.00 tin cans from China, and buy them now on credit. Some call that progress, others, value. In reality, it's inflation. The simple fact of the matter is Americans no longer have the disposable income to consume their way out of trouble, and that trouble lies in why it is the American middle class is broke, struggling, and increasingly angry.
At the same time that consumables were falling in price, the fixed portions of the American Dream began an exponential increase. Two incomes meant two cars - or three, or four - and despite the fact that cars were cheaper, the cost of cars to the two-income family rose by 52%. Houses got bigger, and mortgages increased 76% - with 10 million of them in various states of distress and foreclosure. Health insurance rose 76%, taxes 25%. Childcare was an expense nobody had a generation ago, but one that became essential with two adults working. The cost of education had increased - as did the length of time necessary to obtain that education. A ticket to the middle class that cost 12 years of school - grade one through high school - now includes daycare, preschool, grade school, high school, and then college. Americans must now pay for the additional time.
In 2005, that .09% of the earth that set the agenda for the planet was spending over 66% of its income on the fixed costs of the American dream alone, where it once spent less than a third. Or, to frame it in a way that defines the great problem, the American system that depends on rabid consumerism has left its heartland with exponentially decreasing amounts of disposable income, falling from 66% to 33% in a single lifetime. When George W Bush implored the middle class to spend its way out of the 9/11 chaos, in stunned and terrified whispers the American middle class muttered, "With what?"
"The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country"- Edward Bernays, 1928
"Our enormously productive economy...demands that we make consumption our way of life, that we convert the buying and use of goods into rituals, that we seek our spiritual satisfaction, our ego satisfaction, in consumption.... We need things consumed, burned up, replaced and discarded at an ever-accelerating rate"- Victor Lebeau, 1947
"Too much consumption and too little investment, too many imports and too few exports. We have not been on a sustainable economic track and that has to be changed. But those changes don't come overnight, they don't come in a quarter, they don't come in a year. You can begin them but that is a process that takes time. If we don't make that adjustment and if we again pump up consumption, we will just walk into another crisis."- Paul Volker, 2009
“If you look around, you see how many people is out of work, number one, and you see how many people is in foreclosure or lost their homes or in default because they've lost their jobs, that tells you right there what the economy is doing.” - Middle Class American, 2009
A tiny part of a tiny part of the population of the earth had constructed a global economic architecture that sustained it in wealth and excess, security and predictability. In a scant forty years that wealth, excess, security, and predictability have proved to be entirely unsustainable. The approaching political climate of the American middle class will reflect the shock and desperation that may now be starting to manifest itself. How Americans react to their fast changing circumstance and what they will do about it will deeply affect the 95% of the earth's humans who are really only along for the ride.
In 2008, America gambled on hope, as hope is all it had. A new administration faced the growing catastrophe in the only way it could understand, frantically pumping in dollars to resuscitate a prostrate consumerism. An insane amount of debt piled up, the annual deficit soaring through $1,000,000,000.00. One trillion dollars. Absolutely none of it was used to purchase plasma TV's, hot tubs, or bling. The richest of Americans - as they always have - prospered along Wall Street and summered in the Hamptons while the drought stricken middle class waited for a rain that will never fall.
The American middle class will not spend its way out of disaster, if only because it can't. There are no savings. The house is worthless. The credit cards are gone. Jobs are disappearing. Today is bad and tomorrow looks worse. People are nervous, frightened, worried. They are behind in the mortgage, and struggle to make health insurance payments. All the while, they watch the stock market explode, the bonuses arrogantly roll on, and their government lie to their faces that the "recovery" is underway. China is booming, so is India and Brazil. Beneath the hope, patriotism, and the flag, the American middle class can feel it all slipping away.
In a nation consumed by politics, where pandering and lobbying are two sides of the same platitude, what will the increasingly angry gentle folks of Ohio, Iowa, and Florida demand of their philandering representatives in Washington? What form of instant remedy will some baseless political hack come to offer them as the snake oil for what ails them? How will those decisions come to dominate the lives of those in Canada, Ecuador, and Ghana?
In the distant future, historians will consider the rise, fall, and collapse of the great American Dream and conclude that was the cause of all that followed. None will be surprised at the all too human response of anger, frustration, and action in the teeth of injustice and inequality. After all, history is full of angry people who just weren't going to take it anymore. They will wonder only how it was we could not see it coming - how we could be so stupid to have blown it.
The coming fury of angry America is as palpable as it is silent. What will that tiny part of a tiny part of the earth's population do when the utter hopelessness of the situation washes over them and the tides of history curl around and bear them, inexorably, into the past?
What will they do?
Aetius Romulous Historian, Economist, Accountant, Writer, and blood sucking CEO. Born at the wrong end of the Baby Boom Generation - too late to enjoy the ride, too early to have missed it, and stuck in the middle with the mess. Aetius writes and blogs from his frozen perch atop the earth in Canada, spending the useful capital of a life not finished making sandwiches and fomenting revolution. It's a living.
http://screambucket.com/
aetiusromulous@rogers.com
A thought provoking perspective
by GunRights4USJanuary 11, 2010
Imagine the following. Assume that the world has collapsed into chaos, and among the many survivors are two individuals in particular: Survivor A and Survivor B. Survivor A has ten pairs of shoes stored for the collapse, while Survivor B has a thousand pairs of shoes socked away. Survivor A takes loving care of each pair, while Survivor B runs his shoes hard, wearing them out and then grabbing another off the shelf.
Question: After fifty years, how many shoes does each survivor have to pass on to his
grandchildren?
Think hard. Hint: this is a trick question.
Go here for the answer.
Ever hear of the Greenspan-Guidotti rule?
by GunRights4USDecember 27, 2009
By Porter Stansberry
Dec 2 2009 9:10AM
It's one of those numbers that's so unbelievable you have to actually think about it for a while...
Within the next 12 months, the U.S. Treasury will have to refinance $2 trillion in short-term debt. And that's not counting any additional deficit spending, which is estimated to be around $1.5 trillion.
Put the two numbers together. Then ask yourself, how in the world can the Treasury borrow $3.5 trillion in only one year? That's an amount equal to nearly 30% of our entire GDP. And we're the world's biggest economy. Where will the money come from?
How did we end up with so much short-term debt? Like most entities that have far too much debt – whether subprime borrowers, GM, Fannie, or GE – the U.S. Treasury has tried to minimize its interest burden by borrowing for short durations and then "rolling over" the loans when they come due. As they say on Wall Street, "a rolling debt collects no moss."
What they mean is, as long as you can extend the debt, you have no problem. Unfortunately, that leads folks to take on ever greater amounts of debt... at ever shorter durations... at ever lower interest rates. Sooner or later, the creditors wake up and ask themselves: What are the chances I will ever actually be repaid? And that's when the trouble starts. Interest rates go up dramatically. Funding costs soar. The party is over. Bankruptcy is next.
When governments go bankrupt, it's called a "default." Currency speculators figured out how to accurately predict when a country would default. Two well-known economists – Alan Greenspan and Pablo Guidotti – published the secret formula in a 1999 academic paper. The formula is called the Greenspan-Guidotti rule.
The rule states: To avoid a default, countries should maintain hard currency reserves equal to at least 100% of their short-term foreign debt maturities. The world's largest money-management firm, PIMCO, explains the rule this way: "The minimum benchmark of reserves equal to at least 100% of short-term external debt is known as the Greenspan-Guidotti rule. Greenspan-Guidotti is perhaps the single concept of reserve adequacy that has the most adherents and empirical support."
The principle behind the rule is simple. If you can't pay off all of your foreign debts in the next 12 months, you're a terrible credit risk. Speculators are going to target your bonds and your currency, making it impossible to refinance your debts. A default is assured.
So how does America rank on the Greenspan-Guidotti scale? It's a guaranteed default.
The U.S. holds gold, oil, and foreign currency in reserve. It has 8,133.5 metric tonnes of gold (it is the world's largest holder). At current dollar values, it's worth around $300 billion. The U.S. strategic petroleum reserve shows a current total position of 725 million barrels. At current dollar prices, that's roughly $58 billion worth of oil. And according to the IMF, the U.S. has $136 billion in foreign currency reserves. So altogether... that's around $500 billion of reserves. Our short-term foreign debts are far bigger.
According to the U.S. Treasury, $2 trillion worth of debt will mature in the next 12 months. So looking only at short-term debt, we know the Treasury will have to finance at least $2 trillion worth of maturing debt in the next 12 months. That might not cause a crisis if we were still funding our national debt internally. But since 1985, we've been a net debtor to the world. Today, foreigners own 44% of all our debts, which means we owe foreign creditors at least $880 billion in the next 12 months – an amount far larger than our reserves.
Keep in mind, this only covers our existing debts. The Office of Management and Budget is predicting a $1.5 trillion budget deficit over the next year. That puts our total funding requirements on the order of $3.5 trillion over the next 12 months.
So... where will the money come from? Total domestic savings in the U.S. are only around $600 billion annually. Even if we all put every penny of our savings into U.S. Treasury debt, we're still going to come up nearly $3 trillion short. That's an annual funding requirement equal to roughly 40% of GDP.
Where is the money going to come from? From our foreign creditors? Not according to Greenspan-Guidotti. And not according to the Indian or Russian central banks, which have stopped buying Treasury bills and begun to buy enormous amounts of gold. The Indians bought 200 metric tonnes this month. Sources in Russia say the central bank there will double its gold reserves.
So where will the money come from? The printing press. The Federal Reserve has already monetized nearly $2 trillion worth of Treasury debt and mortgage debt. This weakens the value of the dollar and devalues our existing Treasury bonds. Sooner or later, our creditors will face a stark choice: Hold our bonds and continue to see the value diminish slowly, or try to escape to gold and see the value of their U.S. bonds plummet.
One thing they're not going to do is buy more of our debt. Which central banks will abandon the dollar next? Brazil, Korea, and Chile. These are the three largest central banks that own the least amount of gold. None owns even 1% of its total reserves in gold.
I examined these issues in much greater detail in the most recent issue of my newsletter, Porter Stansberry's Investment Advisory. Coincidentally, the New York Times repeated my warnings – nearly word for word – a few weeks ago. They didn't mention Greenspan-Guidotti, however... It's a real secret of international speculators.
My readers know that Greenspan-Guidotti means the U.S. is likely to have a severe currency crisis within the next two years. How high will gold go during this crisis? Nobody can say for sure. We've never been in the situation we are now. The numbers have never been so large and dangerous. But I wouldn't be surprised at all to see gold at $10,000 an ounce by 2012. Make sure you own some.
Good investing,
Worthy New Year’s resolutions
by GunRights4USDecember 22, 2009
1. Attend an Appleseed Shoot
2. Know your state representatives
3. Write letters to the editor
4. Join a gun rights group
5. Send a politician the Gun Rights questionaire
6. Build a guns and liberty book and video collection
7. Take a new person shooting
8. Shoot a machine gun
9. Read Second Amendment books
10. Support all efforts to defend the Second Amendment
A frightening future – revisited
by GunRights4USDecember 18, 2009
TO REITERATE... I SINCERELY BELIEVE THIS DESCRIBES THE FUTURE OF AMERICA!
Read: The Day the Dollar Died
Recent additions to the GunRights4US Library of Liberty
by GunRights4USDecember 3, 2009
One heck of a good rant…
by GunRights4USDecember 2, 2009
The coming of Caesar
by GunRights4USNovember 30, 2009
We have a problem. This could be “the big one”—bigger than coping with the Ahmadinejads, Kims, and Chavezes of the world and bigger than our current economic woes. Our republic, our society, may be heading for a crackup. We are bankrupt, both financially and politically.
The source of the problem is democracy. Decades of so-called “progressive” thought have led us to abandon the limited-government, constitutional republic established by our founding fathers. In the name of putting more power into the hands of "the people," the government has arrogated sweeping powers.
There is a famous passage (possibly cobbled together from several separate statements and authors) that explains democracy’s fatal flaw, the inherently self-destructive element that caused our founding fathers to distrust democracy (Google “James Madison on democracy” for more):
“A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship.”
Crude, majoritarian democracy (as in, “there are more of us than there are of you, so we’re going to redistribute your wealth”) inevitably undermines the harmony of society. A free market, as competitive as it is, is based on peaceful, voluntary cooperation. When commerce is free and unfettered by government interference, both sides to a transaction normally gain, thereby promoting social harmony.
Democracy, by contrast, engenders social conflict. Money changes hands by force of the taxman and the threat of imprisonment, not voluntarily. Democracy pits citizens against each other in a sordid squabble whereby many strive to have the state confer benefits seized from their fellow citizens.
Today, Washington redistributes trillions of dollars annually, so the capital is swarmed by battalions of lobbyists, representing myriad special interests, each trying to secure more political rent from government than what government takes from them. As the late, great economist Hans Sennholz described it, the democratic "transfer society" resembles the absurd spectacle of a circle of people, each trying to pick his neighbor’s pocket. How can there be social harmony when everyone is trying to rip off someone else?
This process of using government to extract wealth from other citizens (dubbed “legal plunder” by the 19th-century French economist Frederic Bastiat in his brilliant essay, “The Law”) has reached the point where Uncle Sam is essentially bankrupt With government spending and deficits soaring under the present administration, the day of reckoning approaches. If foreigners should decide to cut their losses and balk at financing any more of our debt, either interest rates will soar, collapsing the economy, or the Fed will monetize all the debt, collapsing the dollar and the economy.
Can that day of cataclysm be postponed? Perhaps the wealth-redistribution system can be kept on life support a while longer, if government can confiscate a much larger share of the middle class’ wealth (yes, the middle class, because there aren’t enough rich people to finance all of Uncle Sam’s promises) or by dramatically slashing benefits.
When that momentous day arrives, there will be a lot of angry Americans.
One might say that the so-called “social contract” will be broken, but the problem is, there isn’t just one such “contract.” There are two, and they are fundamentally and irreconcilably opposed to each other.
One “contract” is the government’s long-standing promise to support those in need. Many Americans have been taught to believe that they are entitled to a share of other people’s property, even if they have contributed nothing of value to society themselves and have made poor choices. The other social “contract” is the traditional implicit promise of America: namely, that if you work hard, you are entitled to the fruits of your labor.
When a financial crackup occurs, those who have been taught to depend on government will demand continued government benefits. If government fails to provide them, those demands could turn violent. On the other hand, if government moves to confiscate a significant chunk of whatever wealth remains in the hands of an already-hurting middle class, then millions of peaceful, law-abiding, hard-working Americans may finally reach the breaking point and rebel, as our forebears did in the 1770s, against a government viewed as abusive and oppressive.
How bad could it get? If the social order breaks down, civil unrest could disrupt markets and shortages of essential goods could occur. The resulting chaos could trigger martial law. A strong leader—a Caesar—could institute some sort of command order. Millions would resent it, but it would be accepted, because the alternative—civil conflict, chronic disorder, and impending starvation—would be intolerable. In such a calamity, Caesar would be the lesser of two evils. The American Republic and Constitution would join earlier democracies in the ashbin of history.
God help us.
Dr. Mark W. Hendrickson is an adjunct faculty member, economist, and contributing scholar with The Center for Vision & Values at Grove City College.
Something useful
by GunRights4USNovember 26, 2009
Watch this one as well
A frightening future for our nation
by GunRights4USNovember 24, 2009
Of late he has begun to write a series of short stories that describe how a currency collapse will look from the perspective of the average American. I’ve read them and they are chilling to say the least. I’m going to provide the links to each of his missives so that you too can become enlightened as to what I sincerely believe is the future of this once great nation.
The Day the Dollar Died by John Galt (Part I)
American Hangover (The Day the Dollar Died, Part II)
“I Have Been to the Fields of Gettysburg” (The Day the Dollar Died Part III)
Arrogance of the Gods (The Day the Dollar Died Part IV)
“A New Day of Economic Justice for All” (The Day the Dollar Died Part V)
“Pass Me the Butter and Blueberry Syrup, Please” (The Day the Dollar Died Part VI)
Security for Liberty for All (The Day The Dollar Died Part VII)
“CQ, CQ, is Anybody out there?” (The Day the Dollar Died Part VIII)
There’s Two “T’s” in Ottumwa (The Day the Dollar Died IX)
As additional parts become available, I will post links to them here.
May God have mercy on the United States of America
