America in a State of Irreversible Collapse

to stem this but obviously the house of cards is coming down no matter what we do or the govt. or FED does, and you talk of it being a society killer, and somewhere else you said we would return to a hunter/gatherer society.
1. Do you mean this literally? about the hunter/gatherer?

2. What should we do to prepare?

3. How much time do you think we have?

Thanks again for your thoughtful reports.

Thanks, Lib, Susan

I agree Jzneff...we have slightly differing points of view, but without such contrast neither of us would dig any deeper. Opposition is the great strength builder, without it we are all weaker.

only with the letter "F."

duh...did i spell diddo right?

http://www.chuckbaldwinli...

Patrick Henry
March 23, 1775
"Bad men cannot make good citizens. A vitiated state of morals, a corrupted public conscience are incompatible with freedom."

"It is when people forget God that tyrants forge their chains."

...Lisa, if 2 of the 3 are successes...then the third ( the destruction of the Constitution ) is soon to follow.

I would like see you weave in our lame media, as I feel they are very responsibile for the peoples apathy. Again great piece, keep up the great work.

Notice the line since 1913:

http://upload.wikimedia.o...

___________

Lisa C.

www.dvds4delegates.com=Ron Paul, the 44th U.S. President

Join us at: www.campaignforliberty.com

Brought to you by: www.women4ronpaul.com

The fact of the matter is, if one looks at a chart of the (real) CPI over the last 95 years, or the price of gold, since the creation of the Fed, the dollar can clearly be seen to have ALREADY collapsed, having lost over 96% of its 1913 value; the fact that it has happened in 95 years instead of, say, one or two years is a quibble. All those who deny that the dollar can or will collapse have missed the point: it is collapsing, and has been.

How would people feel if the government arbitrarily took 4 or 5 or 10% of the bank accounts, mutual funds and real estate every year? Yet that is exactly what inflation does --- it is a confiscation of wealth from the average citizen, for the benefit of the power elites.

Once again, though, Jzneff runs to the defense of the status-quo, established powers. One must wonder why.

Your reply was almost as funny as your article that gold was fiat money too!!!

You are right, history is not only ripe with examples of predictions of doom, but also of actual occurrences. the history of fiat paper currencies from 11th century Szechwan, China, to date, and their consistent collapses, time-after-time, due to what appears to be the inevitable, irresistible urge of issuing authorities to print too much of a good thing. The United States is no exception, already having obligated itself to liabilities well beyond its ability to pay them off; as David Walker the former Comptroller General, he has said for the last several years that the U.S. is technically bankrupt, that technicality will eventually become effective.

Now, concerning the 70s what was the major difference between then and now? Well, we had just been led to a total fiat monetary system by Nixon, the national debt load was less than a half a trillion dollars, inflation was just taking off due to the total disconnect between the dollar and gold. Of course, by the late 70s, inflation began in earnest.

The pattern continued in the 80s with inflation reeking havoc, interest rates were drastically increased, then by 85 the S&L debacle was revealed and yes, the thrifts failed. Y2K is not even part of the equation. The dot.com boom and bust, that was just another example of herd mentality, as is this last real estate boom and bust.

Let me ask you, what happens when a fiat currency reaches a point where it no longer carries a positive purchase value? So, I would assume you don’t believe in hyper-inflation? Because you don’t seem to believe that the dollar can experience hyper-inflation, which effectively means a negative value or purchasing power of the currency. Strange, there are several examples of hyper-inflation in history, even recent history. Hyper-inflation does not occur as a result of a total economic meltdown and there are plenty of examples to disprove your position, even recent examples.

Of course, not counting the effects of WWI on Austria, Germany, Hungary, Poland and Russia, all which suffered hyper-inflation, we see that since the 1950s there have been examples of hyper-inflation throughout Latin America and the Caribbean. More developed countries, many considered wealthy and industrial countries have also suffered from hyper-inflation and the only thing that calmed the dangers in those countries was the bail-out assistance from either the IMF, World Bank or other countries. Argentina, Brazil, Peru all had extremely high inflation, above 40% for years.

Argentina from 89-90 and even more recently has suffered from hyper-inflation but it wasn’t caused from the destruction of their industrial base, but from their monetary policy which inflated their currency. the government of Zimbabwe declared inflation had reached a record level of 1042.9 percent in April. And let’s not forget how the Argentinians suffered for decades under a combination of military dictatorship and hyperinflation. While at the beginning of 1935 you could get 251.1 billion dollars for a billion moneda nacional, at the beginning of 2005 you would have been able to get only three US cents if the same currency had still been in circulation. Inflation was particularly bad in 1989, at 4,900 percent.

Introducing the peso in 1991 did not resolve the crisis; only when the unnatural dollar parity was abandoned in 2002 did the situation start to slowly improve. Bosnia-Herzegovina also suffered under hyperinflation during and after the bloody conflicts in Yugoslavia, and Serbia-Montenegro was even harder hit. Between 1989 and 1994, they had to introduce various currency reforms. In 1993 alone, inflation came to more than a billion percent. In December the cost of living was already 2,839 times higher than the month before, and more than six billion times higher than at the start of the year.

More examples of runaway inflation in recent times include Bolivia (1985), Nicaragua (1988), Poland (1989), Brazil (1989 – 90), Peru (1990), Zaire (1990 –94), Russia (1990), Georgia (1992–94) and Angola (1994– 97) Recently, the New York times stated that Russia was on the verge of hyper-inflation. Now of course Zimbabwe is filled with extremely poor billionaires, but let’s not consider Zimbabwe because that is simply a case of total political idiocy more than anything else.

If you actually believe that we are living in a free-market economy then look again, it has been managed for decades. If you were living under a free market you would not have a central bank dictating interest rates, or manipulating them to achieve certain economic goals which are basically political in nature.

The free market would have absolutely no effect on the purchasing power of the dollar under a fiat monetary system since inflation is the natural result of such a system. Under a gold specie system, you would be correct, but we are not under a gold specie system. Now, of course you won’t believe Ben Bernake when he states that: “U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.” Well, there is a cost associated with such a policy and its called inflation.

The fact is that the value of the dollar does not equal the number of goods you can purchase divided by the number of dollars in existence. Inflation generally is defined in terms of a rise in general prices due to an increase in the amount of money in circulation. The inflation/deflation issues as defined are applied to goods and services based upon the amount of dollars pressed into circulation, not the amount of products and services that are divided by the number of dollars in circulation. To adhere to such a “monetary theology” would require you to totally disregard of inflation as a factor. According to your “theory” inflation doesn’t exist at all or at least does not have a negative effect on the purchasing power of the dollar.

GAAP-based financial statements of the U.S. government, show the actual federal deficit at $4.0-plus trillion for 2007, alone, with total federal obligations standing at $62.6 trillion, although one of the Fed governors spoke out of turn and was chastised for it when he said that actual obligations of the federal government are more like $100 Trillion. But I am sure that should not concern you.

At these debt levels, even the markets will soon begin to recoil from the government. It is evident that the major players, those who buy our Treasuries and even several foreign central banks are already taking a few steps back from the dollar. For the last 5 years or so, these “investors” have pretty much funded the U.S. in its excesses around the world and at home, that will quickly come to an end when they seek the continued deterioration of the U.S. economy. The problem, as you and I will see, is that just about every other country will eventually see the same problems as the U.S. because they use the very same techniques in issuing their currency and expanding their economies.

So, we will see rapid inflation, that could easily deplete the 70% of the capital liquidity base in several economic sectors and we could see something like that happen within the span of a month, that’s how fast and unexpected it can happen. It is estimated that we have, since the creation of the Fed, witness the debasement of our currency by 95% or perhaps more now.

The value of the dollar is based upon purchasing power, now view today’s purchasing power of the dollar compared to 1970, then compare it to 1913, what do you see? You see a dollar that has lost a great deal of its purchasing power due to inflation. Now, since you don’t think the dollar can be debased to a negative value how do you explain the fact that the dollar has already been debased to the degree it has over the years? That would be the logical conclusion since you don’t believe that it can be debased to a negative value.

"All fiat money systems have collapsed" is just a clever play on words….a clever play on words, I don’t think history agrees with you on that. It is not a matter of logic, but a matter of history. Every single fiat system has collapsed, not one has remained over a certain period of time. Those that are in existence now are simply following the same pattern of destruction that all others have followed. There is no way that a fiat system can last indefinitely because the underlying debt consumes the economy as it. Warren Buffet does know something about making money and using money, but even he has said that the most dangerous time bomb we face is the derivatives market and that it would only take a few domino falling to cause a complete collapse of the system.

A few weeks ago, the Royal Bank of Scotland sent a warning out to all its clients, me being one of them, that they were expecting a global depression within the next few months. BIS, has also sent out a similar “warning”. BIS, by the way, is the Bank of International Settlements, the central bank of central banks, but what do they know, they are only banks and don’t know a damn thing about money or the economy. BIS also warned that they feared the Federal Reserve was hiding the real facts about the American economy and the American banking system behind the guise of fighting recessionary pressures; they also expressed fears that the FED was taking a similar path that was taken in the 1920s that led to the Great Depression, but what do they know, they are only bankers.

Another interesting thing happen in the beginning of this year, but it was publicized and I don’t recall hearing a thing about it in the media, but for the first time in the history of the fractional reserve banking system the non-borrowed reserves in the U.S. banks not only hit zero, but are now at a negative 100%. Now, considering that the entire fractional reserve system depends upon the banks having such reserves, that can pose a problem, but more of a problem is the fact that the FED has had to allow many more banks then they have told us to dip into FED funds as a last resort. I am sure that is of no consequence to you however. Although there has been a slight, very slight break in the rate of inflation in the last month, the problem is that the untold billions of FED dollars recently pumped into the system have not worked their way through the economy. This “recession”, so hard to admit to by the government or the FED, has been an inflationary recession and while you don’t want to believe it, the convergence of several factors could easy push this recession into a hyper-inflationary depression, with the collapse of the currency. Of course you don’t believe that, so not to worry or concern yourself with such facts.

Now, it is not uncommon to see severe contractions, as we are currently beginning to see, where the economy can hit bottom and then bounce briefly until it falls again, finding a new bottom. Now the current economic downturn really does reflect a severe structural shift in our economy that has never been experienced before, anywhere; this will eventually see an increased constraint on consumer activity, even during the last decade we began to witness this constraint in numerous sectors of the economy. The fact is that this current downturn, just looking at the numbers has already reached the half-way point to qualifying, by government standards, as a depression. It is important to remember that depressions don’t really begin overnight, they take time to work through the system. As I said on another post, the Crash of 1929 didn’t even make the front page news around the country, it was a couple of years before the economic woes of the 20s to work through the economy and by 1933 we were in a full blown depression.

Recently, the strong efforts of the FED and our government to prevent the systemic collapse of the entire banking system has pumped so much fiat money into the system that is probably close to a 20% increase at this point and will rise dramatically as the system is battered more. Of course, according the FED, it has not formally been creating new money, but by adding to reserves it is basically re-liquefying defunct banks and securities dealers. In essence, they are lending what could be considered liquid “assets” for illiquid “assets”, even in the most bizarre world that is not a good idea. The result will be that these institutions will be able to once again resume their normal business, lending money and thereby creating a very large new money supply. Just wait until all this money starts to show up in “normal” accounting figures, then we will see the effect of the FED policies, not only on the money supply but the economy as well.

Every country around the world has been running for cover from the U.S. Dollar, but of course, what should they know. In the near future, you will see dollar selling reach an extreme as foreign investments fleeing the dollar for safety, that will pose a very difficult problem, not only for the FED, but the government and the rest of us too. Since our government, and indeed our economy are so dependent upon foreign investments for liquidity, it will not take much to strangle the entire domestic system once they begin in earnest to run away from the dollar. At that point the FED will have absolutely no other choice but to increase the monetizing of federal debt. Given the fact that the government is already technically bankrupt, that will probably push it over the edge into effective bankruptcy. Since the government cannot cover its present or future obligations, the rapid monetizing of the debt will push the system into hyper-inflation. You see it is not the money system that is in a collapse per say, but the money itself.

Now, another interesting fact is that the government has stopped publishing personal disposable income reports, they simply disappeared from the quarterly reports, but it can be assumed that the People’s real disposable income has reached an all time low, perhaps as low as 2.2%. That is a potentially devastating occurrence in economic terms. The last few decades that number has been around the 3.3% or higher, for it to drop that low is a major indication that we have a problem and its not going away. I estimate that by the mid-term of the 2010 election season we will see an effective and successful third party take control of Congress, and by 2012 it would not surprise me if we see a third party President setting in the White House.