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The Obama Watch
America’s Accelerating Downward Spiral
The stagflation of the 1970s was chicken feed compared to what Obama has concocted.
(Page 2 of 2)
But the problem is much bigger than the 1970s style inflation trap that President Obama and his supporting cast of left-wing flower children have worked us into. For America is financially much weaker today, with government spending, deficits and debt dwarfing anything America suffered in the 1970s. And the world is far less stable than then, financially, economically and politically. Moreover, America suffers far more virulent enemies today, at home and abroad, far more focused and determined to bring America down. As a result, America is extremely vulnerable today to three looming disaster scenarios.
First, our soaring national debt is not free. We have to pay interest on all those trillions in debt, every year. The Fed’s extremely loose, bordello-style monetary policy has kept interest rates at record low levels throughout the Obama Administration, with short-term rates near zero.
But that can’t and won’t continue. Accelerating inflation will itself push up interest rates, as investors demand a market real return in excess of inflation. When the Fed finally moves to counter inflation with a tight monetary policy, that will further sharply increase interest rates. The pressure of trillions in federal borrowing further contributes to rising rates, as does continuing economic recovery at home and abroad, though that may be less of a factor in America going forward.
With America’s national debt already over $10 trillion this year, and projected by CBO to grow to over $20 trillion by 2021, America is extremely vulnerable to soaring interest rates on that debt, which will produce soaring federal spending for debt interest, resulting in further soaring deficits and debt. Already, assuming only a modest rise in rates over the next 10 years, CBO projects that annual net federal interest spending on the national debt will soar from $214 billion this year to nearly a trillion by 2021. More rapidly rising rates could quite possibly result in federal spending, deficits and debt exploding out of control, beyond our capability to finance. The resulting financial chaos would further cripple our economy, making all the numbers much worse, indeed, completely intractable.
Secondly, with our deficit already at an all time world record by far of $1.645 trillion, what happens if we fall into another recession? How high will the deficit go then? Well over $2 trillion for sure. Will America even be able to borrow that much to keep the federal government functioning? That will be all the more dubious if the Fed has to stop printing money to buy so much of that debt. But if the Fed does not stop, how high will inflation go?
With soaring oil prices, regenerating inflation threatening to force the Fed into tight monetary policies, and all the Obama tax rate increases now scheduled for 2013, due to the expiration of the Bush tax cuts and Obamacare, another recession is frankly already on the horizon. That would likely leave America bankrupt just like Greece. The EU provided a trillion dollar bailout to back up Greece. But who would bailout America? Who even could?
Finally, these financial vulnerabilities leave America militarily vulnerable as well. America defeated Nazi Germany and Imperial Japan in World War II by running up the national debt to 109% of GDP. But CBO projects that on our current course the national debt will already be soaring close to 90% of GDP by 2021, exceeding the World War II historical record soon thereafter. With America already so deeply in debt, if we have to fight an extended, serious military conflict in the near future, beyond the limited actions we are already fighting, who will lend us the money to do it? China? Japan? The extra financial burden of military spending will cause federal deficits to soar further. If we have to borrow that much domestically, what will happen to our economy? Does this obvious financial weakness effectively invite war, if not directly against America, against our allies, from Israel to South Korea to Taiwan, even Japan?
Yet, at this moment, serious war drums are beating, even while our media and political establishments so thoroughly ignore them. President Obama got elected in part laughing over how he would solve the Iranian nuclear problem with his brilliant insight of just talking to Iran. Now in the third year of his Administration, none of that has amounted to anything. Obama said himself during the 2008 campaign that nuclear arms in the hands of such madmen would be “unacceptable,” but that just turned out to be more boob bait for bubbas, as so much else of Obama’s 2008 rhetoric.
Indeed, Mideast developments only further encourage the Iranian march to war. Regime change in Egypt has already allowed Iranian warships through the Suez Canal for the first time. Iranian infiltrators foment revolution among the Shiite majority in Bahrain, where the U.S. Navy maintains its top regional base. With the world distracted by Libya, Iran accelerates arming Hamas in Gaza and Hezbollah in Lebanon, both committed to mass murder of our Jewish allies in Israel.
What this all adds up to is that America faces an existential crisis today as grave as World War II, the Civil War, and, indeed, the original American Revolution itself. The year 2012 may well be the last chance to save our nation from ruin.
About the Author
Peter Ferrara is Director of Entitlement and Budget Policy at the Heartland Institute, General Counsel of the American Civil Rights Union, Senior Fellow at the National Center for Policy Analysis, and Senior Policy Advisor on Entitlements and Budget Policy at the National Tax Limitation Foundation. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under President George H.W. Bush.
Letter to the Editor View all comments (106) | Leave a comment
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Brian Mc| 3.23.11 @ 6:23AM
Since we are unable to elect responsible representation at the federal level, might be it's time to repeal the sixteenth amendment and cut off the flow. It's an ugly baby anyway...out with the bath water!
Alan Brooks| 3.23.11 @ 7:20AM
"America's Ticking Bankruptcy Bomb: How the Looming Debt Crisis Threatens the American Dream, and How to Turn the Tide Before It Is Too Late"
Buy Ferrara's Book Before it Becomes Outdated Then It's Marked Down 40% At Borders And Barnes & Noble, So Ferrara Writes Another Book
Shamus| 3.23.11 @ 9:19AM
The Federal Reserve acts primarily to provide profits to banks. Debasing the currency is its method of operation. Since the creation of the Fed in 1913, banks garnered trillions in profits while the dollar has lost more than 90% of its value.
Dixie Pixie| 3.23.11 @ 9:46AM
Greetings Shamus
The traditional method of comparing the value of a currency is by noting the price of an identical good or service and computing the change in price.
For example, a local food vendor opened his business in 1940 by selling hamburgers at 5 cents each.
Today he sales the same hamburger for $2.50 each.
A simple computation tell us the 2010 dollar is .02% in value of the 1940 dollar.
That means the dollar has dropped 98.98% since the last Great Depression.
Your 90% figure was far to generous to the Democrats.
RPM| 3.23.11 @ 10:03AM
five cents to $2.50 is 2 percent or a 98 percent reduction. Your arithmetic is a bit fractured, but otherwise your point is correct.
I would bet that 1940 hamburger tasted better, as well
loulou| 3.23.11 @ 10:50AM
"Pink sludge" did not exist in the 1940s!
Alan Brooks| 3.23.11 @ 11:52PM
You are glorifying the '40s. I would say the '80s was a better decade- you remember the deflation, don't you?
Oldefarte| 3.23.11 @ 11:37AM
Got your T-shirt on Alan??????
Tim the Enchanter| 3.23.11 @ 12:09PM
"Try the new Alan Brooks v2.0! Now with 40% more stupid!"
Grzmlyk| 3.23.11 @ 6:09PM
I'm not even tempted to read Alan Brooks's crap, regardless of the topic.
I already know what a platitude is.
Perhaps Alan should look up "jejune" in the dictionary. The photo of him there is rather flattering.
Negro X| 3.23.11 @ 8:07PM
another typical answer from moron boy brooks, just bury your head in obama's ass and all will be taken care of.
Alan Brooks| 3.23.11 @ 11:54PM
So go ahead, elect another RINO next year, if it is so important to you.
Bill Hussein O'Stalin| 3.23.11 @ 6:27AM
Don't sugar coat it.
Walking Horse| 3.23.11 @ 9:46AM
Actually, he is. It is worse than anyone wishes to acknowledge. The malignancy cannot be fixed by tinkering with the monetary system, nor can a handful of laws rectify the situation. The essence of the problem goes far deeper.
If you want to make a better America, it is necessary to be about the business of making better Americans - something that hasn't been a matter of public concern for generations.
This government is a reflection of what we have become. Take a close look. If you like what you see, carry on. If not, take a close look at yourself and decide if you want to be part of the solution.
The only folks on the scene who appear to have any clue are the good folks who involve themselves in the Tea Party Movement. Yet some of them have not come to terms with the need to eliminate the term "entitlement" from acceptable public discourse.
In the meantime, prepare to take care of yourself and your neighbors.
Mike D.| 3.23.11 @ 10:52AM
The truth. The people running this country reflect the population, which is a disaster area.
LiveFreeOrDie| 3.23.11 @ 4:00PM
/rant
100% disagree. Every single Senator in this country is a millionaire. EVERY SINGLE ONE! That does not reflect the population at all. The problem is corruption, cronyism, elitism, dishonesty and greed in both parties.
We need to stop electing people who think they are today's version of royalty at the PRIMARY level, but we don't. We talk about their "views" and how they would vote on a particular subject. (Even though there's about a 50% chance they will vote the other way.) It's meaningless to listen to answers from professional liars but we keep asking and pretending what they say means anything.
/-rant
Mike D.| 3.23.11 @ 4:39PM
And they only exist in a population thats ignorant of that truth. I don't disagree with what you are saying. How do you think this present regime got there? Less than half the population votes and a sizable protion of those are idiots. If the population of this country cares more about dacing with the stars than taking part in government and educate themselves on how its supposed to work then whats going to change? Ultimately its the people who have to effect change and right now I don't see it happening.
BackToBasics| 3.23.11 @ 11:27PM
True, the voters keep voting them in.
But how does one start off at the level of say a primary without sufficient backing? At the lower levels there is also much corruption that favors the rascals over the patriots for the most part. So often, no matter who is on the ticket on the Repub side, forget about the Dems, the candidate is probably not the best that wanted to get a chance at being elected.
The Tea Party can help here some, but some of the TP's in the new Congress are already showing signs of compromise or they are not up to speed yet on how to go about getting their voices and bills heard and voted on.
darcy| 3.23.11 @ 4:56PM
MikeD's point reflects reality in that our representatives reflect the same pentient for corruptibility that resides in the population at large. The entitlement society is just that: at all soci0-economic levels we have a disproportionate number of Americans on the take, gaming the system -- and most of it entirely legal.
One small example: I received today in the mail an offer to purchase a new cooling and heating system, and along with the dealer's rebate came a $500 federal tax credit. To whit: the feds are using my tax dollars and yours to tempt homeowners to purchase something they may or may not need; and I suppose the federal brainiacs pushing this program have determined that it is for the good of our planet that we install the latest HVAC and that at any rate we might save on our utility bills. Thusly, in a very nuanced and subtle manner, the federal government -- if you adopt their offer (and others like it) -- is training you to steal from your neighbor, using the tax code.
Otherwise, LFOD, I agree with you.
Donna| 3.23.11 @ 6:46AM
It’s good that this article is drumming in the dramatic economic challenges ahead. Instinctively Americans know this is coming. This is a little off topic, but it's on my mind and I cannot seem to find answers. What is concerning is what is going on with AIG and wanting to re-purchase the toxic debt and the government unwilling sel. Then there is a later article in WJS about the government looking for buyers of this debt. If it’s so toxic, why is AIG or others interested in these securities? If they are salable why did we have the bailouts? Why is the Administration unwilling to release the information about the bailouts? It’s interesting that a number of government corporations who were bailed out are offering IPO’s. What’s with that? Shouldn’t the taxpayers be issued stock if these companies are that worthy of IPO? Companies with this much debt doesn’t seem to be an attractive buy. Or is the debt even on the books. I thought they had to pay it back. Sounds like another government Ponzi scheme.
Jersey Mark| 3.23.11 @ 1:30PM
The whole financial crises relates to the "mark to the market" rule as it impacted a forced sale of mortgage-backed securities. With the value of the securities placed in question due to mortgage foreclosures, panic set in, depressed the price dramatically which forced the revaluation of all similar securities which then pushed financial firms into technical insolvency requiring the bale outs, ALL THE TIME IT BEING QUITE OBVIOUS THAT THE PRICING OF THE SECURITIES WAS FAR LOWER THAN ITS TRUE VALUE DUE TO PANIC SO THAT WITH THE TIME TO ACTUALLY REVIEW THE TRUE STATE OF THINGS, THOSE SAME SECURITIES NOW BECOME A VALUABLE INVESTMENT.
Eric Cartman| 3.23.11 @ 6:59AM
Welcome to the United States of Detroit. Brought to you by Liberal scumbags who have taken and taken from this nation and give nothing back except apoplectic scorn and shouts for more. The DemocRats and their union bosses are the traitorous flotsam lapping at the remains of a once great nation. If you don't believe me, look at the crooked scum protesting in Wisconsin. They want more, and even that's not enough. They want yours.
Mimi| 3.23.11 @ 7:48AM
Eric....You always nail it..Short and Sweet but oh so true!!
Eric Cartman| 3.23.11 @ 11:58AM
Thanks Mimi. Same to you below. Lets hope the new Republicans are going to do something about it. Have a great day :-)
play nice| 3.23.11 @ 1:54PM
Su casa es mi casa...
martin j smith| 3.23.11 @ 7:26AM
Unlike the 1970s we have a President in training who --even worse than Carter is personally and in coordination with various other social entities ( BIG LABOR-MEDIA- etc ) being actively supported in creating and implementing the wrong policies. And, it has recently ( very recent ) documented that the LABOR and ACADEMIC LEFT is actively trying to sabotage our nation and our economic system ( various web sites and Glen Beck have shown video or audio of some guy connected with the SEIU actually stating point blank that the goal is to overturn our banking system ). Now what are we going to do about that ?
wodiej| 3.23.11 @ 7:29AM
This is the result of trying to redistribute wealth instead of encouraging people to earn it on their own.
Ken (Old Texican)| 3.23.11 @ 7:32AM
Peter,
Thanks again.
I certainly hope our new Speaker, Rep Ryan, and Jim DeMint are readng these articles.
What can our House Republicans do to slow the bleeding for the next two years?
IzeHavitt| 3.24.11 @ 10:32PM
I can suggest that We, The People, can do at least two things: 1) Tithe. God said in Malachi, ch. 3, that He "will rebuke the devourer for our sake." Think about that, O
America. We need God to do that for us while we throw the bums out.2) The second thing we can do is to understand that barter, or exchanging, is just as legitimate a form of finance as either debt or equity. Some one third to one half of international commerce is already done this way. If the dollar collapses, we should know how to trade amongst ourselves. And we should encourage our elected reps to adopt this type of thinking when dealing with budgetary matters as well. There are many other forms of currency than simply the dollar, or Euro, or whatever. Fiat Lux.
Timothy L. Pennell| 3.23.11 @ 7:37AM
It's like he's doing it ON PURPOSE.
Ya think?
Gmason| 3.23.11 @ 10:47AM
I came across these these two quotes from Lenin the other day:
"The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation. "
"The best way to destroy the capitalist system is to debauch the currency. "
Just sayin...
Fairbanks99| 3.23.11 @ 8:57PM
Yes.
saleboter| 3.23.11 @ 7:56AM
Party/golf boy doesn't care as long as he gets re-elected. If he does the party is over for the US
martin j smith| 3.23.11 @ 7:56AM
The issue of our economic down spiral should focus on two main things ( other than what Obama does ) One: What OUR reps are doing and two: the effort of the states to deal with Government Labor ( i.e. SEIU ) They have to hear from us and they need to act.
Chalkdust| 3.23.11 @ 7:57AM
My dog says he doesn't detect a real sense of urgency in our newly elected congress. He gets the sense they're waiting to see how bad things can get before 2012. Maybe by acting to quickly they reason, they're afraid they'll save Obamolick's a$$ much like they saved Bill Clinton's in 1994-96.
Old Soldier| 3.23.11 @ 10:21AM
That would not surprise me. It certainly looks like Republicans are trying to fail as loudly as possible.
Louis Jenkins| 3.23.11 @ 11:09AM
Oddly enough my dog thinks the same thing. When I ask him about the deficit he looks grave, scratches his ear, which is feat considering he is a Boston Terrier, and then looks at me with a serious concern. Our morning walks are much the same, although he does have other items that need attention, and when I ask him about Obama's Libya policy, he gets real serious and barks. If only I was the man my dog thinks I am. But it doesn't take much to exceed Obama, and the dog is usually right.
Mimi| 3.23.11 @ 8:13AM
Well Peter Ferrara you outdid even yourself with this article of TRUTH. Thanks again for sharing and teaching us!
We have ...(a not REAGAN) 3 legged stool of Lack of leadership, economic disaster on the horizon and National Security at risk.
We did what we could in Nov.2010 to elect a "NEW" House of Representatives....Unless this country gets some help from the DEMS and news media we can not act soon enough , to avoid a disaster looming.
There are some signs that some are waking up to this tragic, spiral down. The present ADMINISTRATION is not just a marked failure, in every way but a catastrophic, destructive tragedy !!!
Tim the Enchanter| 3.23.11 @ 12:13PM
Spam bastard
Dee See| 3.23.11 @ 8:38AM
----HUAC meets NUREMBERG
-------now more than ever
REALLY
Who Knows?| 3.23.11 @ 8:49AM
Actually, it’s not Jimmuh Carter’s 70’s that we could most usefully look at, but 1971, when tricky Dick Nixon closed the gold window. And, THAT action itself was probably inevitable, due to LBJ’s guns and butter faux pas, trying to have a big government domestically while also paying for the big war in Vietnam.
I have one other picky point---the author seems to think the Fed is controlled by Obama, and that it will print money long enough to avoid any economic trouble in the USA before our model of Hussein gets reelected.
Isn’t the Fed supposed to be independent? Doesn’t it have the dual Humphrey-Hawkins mandate to keep inflation under control AND promote growth---admittedly, a stark dilemma?
While I’m a gold bug, somehow I just can’t get into the sky is falling dither posture about the future of the American economy, and even foreign affairs. Yes, we certainly face challenges, but, hey---THAT’S HUMAN LIFE!
I try to always keep in mind that a crisis is most vitally an opportunity. And, THAT’S what should never be wasted. Also, as Churchill once put it---America always does the right thing, after exhausting the other options (or something to that effect.).
2011 = 1971?
It could be! Just as back in the early 70’s, right now in the early 10’s we are climaxing in monetary AND physical revolutions, across the world, due to many years of feckless choices by putative leaders.
So, like a pressure cooker that’s been heated beyond its tolerances, a plurality of people have been “boiled” into a mad state, and they AREN’T TAKING IT ANY MORE!
In 1971, going off the gold standard (de facto) was a BIG DEAL. It introduced massive uncertainty into the world of finance and economics, and guess what?
Humans adjusted. Yes, we got stagflation, and less employment and GDP output than optimally possible, but the developed world ADJUSTED. America didn’t cease to exist and nobody starved, and the whole liberal-caused slump even brought us Ronald Reagan.
Remember---America IS the big dog!
Not only is it a NEGATIVE warning that no one could bail us out, as the author scares us with, but nobody ---no country---is large enough or powerful enough to STOP us from somehow dealing with the upcoming “crises”. That’s POSITIVE!
Think of countries like Canada and Venezuela and Libya and even China as little or large TAILS. It may be funny in a fantasy-land Hollywood way to worry about the tail wagging the dog, but in the real world, the big dog America still has more than enough power and prestige to handle the furious tails out there.
Even with the pretender president Obama calling the shots.
I can’t resist recalling one more historical fact.
The terrible losses of human life and human built structures and businesses in Japan are presently in the news, big time. This is both “bad” and “good”. No doubt that the destruction of humans and human order is a loss. IF we imagine this being true for ALL of humanity, then human beings might be close to extinct, and the race would be set back, and perhaps take a thousand years to recover.
However---one of the “good” results from WWII for Europe and even Japan was that after so much of their physical infrastructure was demolished, WHEN they rebuilt, they were able to start from scratch, and thereby use the most modern means. Yes, the war bombing razed lots of older and more inefficient factories.
Of course it did take a long time, but without the legacy factories holding them back, auto companies, for example, were able to retool and not be burdened by held over CRAP.
Think of the American unions and what they did to GM, and Ford, and Chrysler!
Basta!
Phil Sukalewski| 3.23.11 @ 10:06AM
Nicely written.
As a struggling business owner, what keeps me going is knowing that we know the solution to the problem; i.e. Cut spending and cut taxes (preferably with the Fair Tax replacing the income tax).
Unlike my parents in the 1970's, the Laffer curve was mostly theory until Reagan implemented it and it work the miracle of creating 22 million jobs and tripled government tax receipts.
loulou| 3.23.11 @ 10:52AM
BTW, Nixon was not a conservative.
Jehu| 3.23.11 @ 10:53AM
Japan and Germany most definitely did not benefit economically from WWII. Neither did the US, contra the typical Keynesian line.
Some people are in a state of denial about the situation we are in. I can't say I totally blame them. But the fact is, the numbers are irrefutable. It's already over.
Who Knows?| 3.23.11 @ 11:04AM
What, exactly, is "already over"?
Jehu| 3.23.11 @ 11:18AM
America's prosperity and power. No salvation is going to magically fall from the sky. We'll "adjust" to a country that is poorer and less secure. The main question is whether the political system itself will survive. I think it will for the most part given the depth of its roots, compared to say Weimar Germany, but it may not.
Who Knows?| 3.23.11 @ 12:32PM
If America’s power and prestige are “already over”, why is America STILL the top dog, militarily, economically and----despite the absence of leadership by Obama---politically?
I can understand if one thinks that because of the huge debt being grown every day that EVENTUALLY America will not be THE top dog.
Maybe, in a hundred years, IF China has become politically free, with such a large number of energetic people, it COULD overtake America, as we did Great Britain after WWII.
But---“already”?
Come on!
Jehu| 3.23.11 @ 12:44PM
Look at it this way- if you drive off a cliff, you're still alive until the car hits the ground. We've driven off the cliff but are still intact because the consequences are still a little ways off. Several years instead of several seconds, but inevitable all the same.
Also I don't much care about being the "top dog." I'd just like a decent and prosperous society for my daughter to grow up in. The fact that the rest of the world is screwed up too doesn't make me feel much better.
Who Knows?| 3.23.11 @ 5:45PM
Ah, ye of so little faith.
Tim the Enchanter| 3.23.11 @ 12:16PM
Spam
Tim the Enchanter| 3.23.11 @ 12:16PM
More Spam
Petronius| 3.23.11 @ 9:15AM
$14,000,000,000,000 in government debt and $90,000,000,000,000-$120,000,000,000,000, in unfunded federal entitlement liabilities for your thoughts.
Call me when the black market opens.
Panda Letters| 3.23.11 @ 10:14AM
3-23-11 7:59 am
Mode: e-mail
By: Panda
Panda Letter is a correspondence on our failed Republic
Objectives: 1) increase the volume of U.S. middle-class from bottom up. 2) never, never allow domestic inflation above 3%. 3) no persons should pay more than 50% of their aggregate income in taxation; with exception to the death tax. 4) lower and flatter the IRS corporate "broken" federal take code.
Observation: complexity favors the few over the many
Central problem: falsifying debt (Gov. & Fed) to force feed profit.
Solutions: addressing U.S. twin fiscal & trade deficits -- both leading to "unsustainable."
Panda
Greed is the hardest thing to manage
CharlesWhite| 3.23.11 @ 10:18AM
The US will simply stop being the façade of a free nation and ether break up into several small countries or a dictatorship will take over. The progressives/Liberals, Moderate and Democrat’s have manage to subvert the once great foundations (Morals and Ethics) of this country to the point that a darkness worse then the Fall of Rome (i.e. Dark Ages) will be brought on to this world, if your Christian then it is “Revelations”, Muslim “End Days” everyone else it will be something like “The Road” or “Book of Elli” type world (if only global warming would happen we could live out “Water World”…)
mf| 3.23.11 @ 10:32AM
what amazes me both in this article and in the string of comments is apparent cluelessness of this discussion, or more precisely unwillingness to admit what has happenned. You can not beat up on labor for thirty years without collapsing consumer demand. You can not replace well paid labor with labor that works for food in overseas labor gulags without collapsing consumer demand. This demand was artificially propped up by financialization and mass issuance of fraudulent credit, akin to mass currency counterfeiting, which led to the financial crisis and sudden, rather than gradual collapse of consumer markets in so called developed markets. Government revenue shrinks because labor income shrinks, while at the same time taxes on capital are being cut and defense spending skyrockets. You cant have your cake and eat it too. If capital wants to work foreign labor for food, then capital needs to be taxed to sustain consumer markets. This has nothing to do with social justice, everything to do with keeping the mechanism of market economy going. If we are all supposed to live off the free labor of the chinese, you have to spread the wealth as domestic labor participation drops. Not leftist idea, but bloody common sense.
So now, to "protect the capital some more", federal reserve is printing phantom money and giving it to the banks. None of this injection goes into real economy, instead it seeks rent by going into commodities, land, and purchase of government bonds. Labor gets than taxed by commodity inflation once, and the second time by growing public debt. Consumer demand drops some more.
This is the downward spiral, and it is similar to the collapse of the Soviet Union (lived through it in Poland). This is the end of the road for a bankrupt economic idea of "free trade" and "globalization", with everyone in power refusing to admit to this bankroptcy to protect their own interests.
1. Kaufman-Brown amendement NOW. Decapitate big banks.
2. If we are going to print money, printing must be public, in limited and publicly known quantity, and be injected directly into the economy: public infrastructure.
Geez, wake up, and stop "its all the liberals" nonsense.
loulou| 3.23.11 @ 10:53AM
Correction: Decapitate unions. NOW.
Paul Thiel| 3.23.11 @ 2:33PM
Ok, how about it's 92% the liberal's fault.
LiveFreeOrDie| 3.23.11 @ 4:14PM
He's got a good point about consumer demand and he's at least partially correct about "propped up markets."
I also do not entirely blame the left, either party have played their parts in this economic idiocy. It's just that the "solutions" from the left are without failure. They never fail to amplify every problem tenfold.
axbucxdu| 3.23.11 @ 8:40PM
Automated production will always exhaust demand: i.e., the difference between the time it takes to deplete an asset and the time it takes to make it continues to grow without bound due mainly to computerization, not cheap foreign labor.
This disparity is only made worse by the fools running the government's monopoly in counterfeiting: The Fed.
martin j smith| 3.23.11 @ 10:40AM
I agree that the concept of"global economy" or globalization is a very bad idea. The EU was a bad idea. the UN is a very bad idea. But I think for now we do have to look at those in BOTH POLITICAL PARTIES who perpetuate these bad ideas and get rid of as many as possible one at a time thru the electoral system, etc.
somnolence| 3.23.11 @ 10:49AM
Herman Cain is literally the only one suggesting eradicating the Federal Reserve and reviving the gold standard. Let's see how far the tough love goes and how long his message resonates.
loulou| 3.23.11 @ 10:55AM
Our only hope is a non-politician, non-statist like Cain or even Trump.
The GOP House has shown that it is clueless and impotent. Statist elites.
Louis Jenkins| 3.23.11 @ 11:24AM
QE #1, #2, etc.? The Federal Reserve is painting itself into a corner, and there will be no way out. This country is circling the drain, and it won't be pretty. The middle class is disappearing. We're slowly migrating towards the uber-rich, or the entitlement society. A stitch in time saves nine. There is still time to get ready. While we can't hang out in the woods and eat snakes and bugs, let us do our best to be prepared. Work at putting in a garden, learn to can, become a little more self sufficient, and learn to shoot if you haven't. Doing little things will, perhaps, get you by. Money will be worthless, so that only leaves hard metals, and things to trade.
Ralph | 3.23.11 @ 11:25AM
The so-called Republican party is jsut as corrupt as the Socialists. These bastards have sold every one of us down the river. There will be a economic collapse, that was the whole plan of Barry X (and his puppeteers). Next in his Great Adventure he gets to rule via Martial Law, death squads, torture, etc. Too bad there is no place to escape to. Too bad nobody will stand up to this Tyrant.
Oldefarte| 3.23.11 @ 11:45AM
In october of 2008, I predicted [in very general terms] that this very thing would be the eventual outcome of electing this man to become our president. His now universally known historical background could/should have caused most every normal, rational individual to conclude same. Now it is on the verge of coming to fruition. I'm slightly amazed that he has ever politically manipulated the supposedly independent Federal Reserve into facilitating his destructive policies from a monetary standpoint. Once again, folks, the intent here is the eventual destruction of this country from multiple fronts, and as Peter rightfully proclaims in his last sentence, if we taxpayer-voters do not go to the polls in November of 2012 and finish the job we started in november of 2010, THIS COUNTRY WILL BECOME TOAST!!!!!!!!!!!!!!!!!!!!!!
Jeff Perren | 3.23.11 @ 12:03PM
Mr. Ferrara continues to demonstrate why he is one of THE best economic commentators around.
Thank you for another clear, fact-filled article.
John| 3.23.11 @ 12:47PM
So let me understand this. If the deficit reduces then America will start a whole bunch of new wars. On second thought I hope the defecit grows to infinity. yes the Burger costs 2.50 today but people now earn 40 thousand plus on average. Burgers have never been cheaper.
J.C.Eaton| 3.23.11 @ 12:54PM
I will not stipulate that this wrtched president, this burlesque of a president is a "well spoken" president. His oratory is mundane, banal, vapid, insipid bullshit. He sing-songs his way through seemingly days of meaningless prevarication and the libs all fawn at his shrine. That's bad enough, but when 'righty' commentators alledge that this turkey is well-spoken it becomes too much. Thanks
and adios.
Gold BC| 3.23.11 @ 12:59PM
The Federal Reserve is the culprit here. Dominated by non-Americans and living off tax free interest payments for decades courtesy of ignorant taxpayers and conniving government officials.
Wayne | 3.23.11 @ 1:46PM
I blame NIXON. We use to be on a gold standard. When Carter was president gold was about 35 dollars an ounce. Today gold is closing in on 1500 dollars and ounce. That is about 40 times greater in about 40 years.
Gold hasn't increased in value, the dollar has decreased that much. Stock markets don't go up, the dollar they are valued in goes down.
Nixon drove us down the path to hyper-inflation. It would have happened sooner except for the benefits on technology that has greatly increase our productivity. Now we need to cut off the spigot and return to the gold standard, and update our methods to increase productivity which is what actually brings wealth.
Jerzy Sobon| 3.23.11 @ 1:51PM
"The man can be well-spoken, as President Obama undoubtedly is, and still not have the slightest idea what he is talking about."
I disagree. I think this is exactly what he wants to happen to this country. I propose the theory that Obama knows exactly what he is doing and will continue to do everything he can so long as it hurts this country. What would Obama be doing differently if his goal was to financially harm America?
DON| 3.23.11 @ 2:19PM
The Fed "wants" Inflation....
They get to pay off debt (the debt outstanding now is very low in interest rate...) with cheaper dollars.
In adddition, there are many homes in calif that were purchased for, say, $500k.
They are underwater and now worth, let's say, $250k.
The way to make those things worth $500k is to INFLATE them back up. That wipes out the underwater issue, and gets the banks off the hook.
All of that is very,very bad policy, but that is what I think they are up to...
Paul Thiel| 3.23.11 @ 2:38PM
Give that man a prize!
This is a deliberate attempt to rescue those areas of the country (primarily blue) that have been living beyond their means for decades.
Unfortunately, once the process of devaluation and high interest rates starts, it can no longer be controlled.
Nunya| 3.23.11 @ 5:52PM
The inevitable outcome of a policy of this type is Weimar Republic-type inflation, where a wheelbarrow full of paper won't buy a loaf of bread. If that happens, expect riots in the streets, and bloodshed.
I hope it doesn't come to that, but I keep all my guns loaded just in case....
axbucxdu| 3.23.11 @ 8:57PM
It can and it will. And it can last as long as electrical power can be supplied to the computers that recognize the plastic cards most of us carry in our wallets. No wheelbarrows are required.
We are about to learn firsthand what effect integrated electronic transactions have on an economy when the money supply goes exponential.
valwayne| 3.23.11 @ 2:19PM
Obama has wreaked tremendous damage on our economy over the past two years, and now his equally dangerous and incompetent foreign policy is hitting us. Chaos in the Middle East, gas and energy prices shooting through the roof, and if that weren't enough Obama has no with almost no apparent thought launched the nation into war against a country that was no threat. It seems its now our duty to go to war to protect people from bad regimes. Look out Iran, N Korea, Sudan, Bahrain etc Obama may be sending the cruise missiles now! Can we at least hope we can make it to 2012 without a collapse and pray their is a Reagan out there to save us from Jimmy Obama?
RN in Houston| 3.23.11 @ 3:09PM
We are now seeing what happens when the left gets a lock on government and enacts it programs. This is much like what happened in the Soviet Union when it collapsed in 1990 or so. After WWII, the SU was able to hang on for about 45 years because it was bleeding its satellites dry of their economic blood. Since 1933, the U.S. has been able to hold on while government bleeds the private sector dry. We are now near the point of collapse (like Europe) because we have been bled dry thanks to the big lie of socialism.
Pelligrino| 3.23.11 @ 3:25PM
Let's put this in real terms. Think if this were your kid. Yesterday I spoke with a very bright, energetic budding lawyer with another year to go of law school. Will he pass the bar exam in 16 months? Yes, if his work and efforts continue.
He's racking up debt via $45,000 in annual tuition, $15,500 in living expenses per year. He still has $14,000 in yet unpaid loans for undergraduate studies. So....this puts his total debt at right at $200,000.00 next May, May 2012.
And this is a young man with nothing more than a legal degree and some work experience at the age of 25. There are medical school colleagues of his that will have $325,000.00 in debt next May.
So what are their chances in this economy? Who is going to hire them? Better put: Who might hire them that would be offering an attractive salary for them?
How's hiring where you live? How about all those college grads and MBA types living in their parents' attic working $8.75/ hour jobs because that's all they find?
Yes, let's drop the snarky remarks about going to law school (I would have advised him to devote his talents elsewhere).
We may run the risk of a very angry, violent, and somewhat smart group of 20-35 year olds. Wouldn't you be irate? We offer them no real future. We have ensured that their future is signifcantly worse than what 50 - 75 year olds have enjoyed, have we not?
Is this part of the aimed for class warfare? Just call it generational warfare?
missbosslady| 3.23.11 @ 10:56PM
Pelligrino,
I think it is one of the prongs, in a multi-pronged attack.
I am most leery of those that seem intent in trying to convince us that we are outnumbered. I just can't get behind the notion.
I see a desperate left, in the throws of a tantrum, that knows that this may be their last gasp for some time. It is imperative that they have us believe that they are many and we are few.
Of course, they will always be able to find the freaks, those that can be convinced that they are absolute victims, thus giving them justification to throw a hissy fit. I just don't think they have the numbers.
They will do as the always do and reach out to the disaffected, the weak, the takers, etc., but they still won't have the numbers.
Wisconsin was a good example, if that was an all out assualt by the left's standards, and I beleive it was, then there isn't too much to worry about.
Sun Tzu would have been proud. Wisconisn drew the enemy to what they thought was the central battle, during the hub-bub several other states passed or initiated legislation curtailing public unions.
Let us not forget the great strides that were made in the states last November. How many state houses rest in the hands of Republicans?
I see a battle of the states emerging. Who will draw the biggest migration? Illinois is in the process of going all in; burdensome taxes and lefty wish list items are flying through the system. Several states have been quick to target those looking for refuge from Gov. Quinn and the democrat cabal.
I just read an article about the diminishing population of children in San Francisco. Imagine! People with children actually don't want to raise them in the no holds barred den of degeneration that is the home of nasty Nancy. Shocker!
The numbers don't lie, and they don't have them.
Paul McGrath| 3.23.11 @ 4:28PM
Buy gold. Not gold stocks, or gold coins. But plain gold, in 1/8 of an ounce gold pieces, if you can. Put them in your safe deposit box or bury them in your yard. You're going to need them when the dollar becomes worthless. And it might.
Andy Texan | 3.23.11 @ 6:06PM
Most of our governments since TR Roosevelt have been bad to varying degrees (with maybe exceptions in Harding, Coolidge and Reagan). What we have now is the worst of the worst. Very sad. Better be planning for the deluge. There is no time for challengers to O to wait for more seasoning (Rubio, Jindal, Walker, Rand Paul, Ron Johnson, etc). Every pol thinking of being president better get in for 2012.
obadiah| 3.23.11 @ 6:08PM
Except for the fellow who named Nixon, the comments are just about unanimous: Obama, the democrats, the socialists and the unions are entirely to blame. We need to get back to the "fundamentals" administered by Newt, Karl Rove, Haley Barbour and the energy industry. Ken Lay, where are you now that we need you?
shipley130| 3.23.11 @ 7:57PM
Well, look at the facts that can't be twisted too much. 20 million more on the welfare rolls since 2007, millions more will go on medicaid because of Obamacare, 104 dollar oil, 14 trillion dollar debt. Actual unemployment rate, 10%.
missbosslady| 3.23.11 @ 9:51PM
The problem, folks, is that we are not part of clique. The political class, the media and academia compose the current clique and if you're not in it, your out of it. Yet, there is nothing unique happening, just an historical repeat. The central players are drawn from the usual quarters, the message is stale and long since disproven. However, no people in that history had as good a chance at beating back this repulsive ideology concocted and perpetrated by the proverbial clique, of this I am certain.
In fact, I am sure that the same sentiment is shared by many Americans. I have a certitude that I cannot shake. I hold fast to the idea that a people like ours could not be shackled.
"Every clique is a refuge for incompetence. It fosters corruption and disloyalty, it begets cowardice, and consequently is a burden upon and a drawback to the progress of the country. Its instincts and actions are those of the pack."
Madame Chiang Kai-Shek
missbosslady| 3.23.11 @ 9:53PM
Oh my, veered a little off course above. Long day. Apologies.
Speedypete| 3.23.11 @ 10:19PM
I changed my search engine home page today after a poll was posted in their news section said that if the election were held tomorrow President Carter, I mean Obama, would win against the current field of potentials. Who did the poll and what drugs are they on? I need some or better yet a real fiscal conservative, a real statesman and leader of the free world.
Joe Y| 3.24.11 @ 10:05AM
It was a rigged Pew Poll:
1) Of registered voters, not likely voters
2) Registration breakdown: 25% Republican; 32% Democrat; 37% Independent
Kent Lyon| 3.23.11 @ 10:37PM
I have said repeatedly that if America elects Obama for a second term, America has a death wish. Unfortunately, Mr. Ferrara makes the case that even without a second term, Obama may destroy the country. While almost everyone will consider that failure, Obama and his SEIU and far left supporters apparently will consider that success. As stated by the former SEIU operative, that's their whole point.
Kent Lyon| 3.23.11 @ 10:38PM
I should add that I have also said that Obama's vision for America is Grove Parc Plaza. If Mr. Ferrara is right (and I for one believe he is), that is exactly what America will be post Obama.
Dee See| 3.24.11 @ 12:05AM
EVEN AS our 4th Globalist front POST American
administration swings into gear.
EVEN AS Janet Napolitano secretly signs some 80 MILLION Mexicans into 'Trusted Traveller'
(i.e. Green Card) status.
"-----We must integrate North America by stealth"
It's called TREASON.
It commands the gravest possible sentences from any functioning nation's judicial system.
HUAC meets NUREMBERG ---can you have any
doubts?
Dracovert| 3.24.11 @ 6:58AM
It is a given that Obama is like Jimmy Carter on steroids. But a better comparison may be with the Gore-Bush election of 2000. Gore had a popular, if tarnished, president in his corner and a strong economy, historically a sure-fire winning combination. But in a hotly contested election, Bush took office. Gore did not even win his home state of Tennessee. So, what happened?
The Dot.com Bubble is what happened. The Dot.com Bubble cracked one solid year before Clinton left office, and the NASDQ was down $2.5 trillion during Clinton's last year in office. Unemployment rates and inflation were not yet factors, but the American people still had vivid memories of Carter's incompetent bungling of the economy and were wary of a new recession, which in fact came right on schedule. It was a blessing that President Bush was able to minimize the recession, stabilizing unemployment rates at 6.1% before the economy resumed strong growth. But a new generation had no memory of Carter and had not suffered through the Carter years, allowing the Democrats to recreate the Carter Catastrophe in the Housing Bubble.
It is my thesis that both Parties screw up in the millions of dollars, but the economy can absorb these minor manifestations of stupidity and greed. The economy has had to absorb LBJ's War on Poverty that added $6 trillion to the national debt, Clinton's Dot.com Bubble that added $3 trillion to the national debt, and Carter's, Clinton's, and Obama's participation in the Housing Bubble that has added $5 trillion to the national debt and counting. The economy can no longer cope.
"If something cannot go on forever, it will stop." Stein's Law.
Stan Redmond| 3.24.11 @ 11:47AM
Just go gault and live off the system. If anyone asks. Tell them you are an illegal alien and you find that question racist.
There are days I do wonder why I work so hard and long when I can just quit and live off my savings, until that's confiscated. I am at a point (I'm not even 40) where I can afford, and would like, to hire 3 or 4 employees but I won't. The prospect of expanding my employee base and business is so unbelievably inconvenient and expensive it's not worth it. Taxes, lawsuits, insurance, taxes, the new healthcare mandates, regulations, taxes, why bother?
Francis W. Porretto | 3.24.11 @ 1:12PM
The Ferrara article is well written and valuable. The questions it poses are two:
1. What is required to get the country out of the way of this onrushing Juggernaut?
2. If that isn’t done, what can private citizens do to protect themselves and their loved ones?
Unfortunately, what’s required to evade the inflation Juggernaut is for the Fed to cease to create new money. But that would require that Congress stop borrowing. Neither the Democrats nor the Republicans are seriously contemplating that dramatic a change, nor can any imaginable pressure from the citizenry compel them to do so. Therefore, Question 2 becomes the only one of interest.
The answer there is what it’s always been: distrust the dollar. Indeed, abandon it, to the extent possible. Save only real wealth: commodities people want for their intrinsic properties.
Such a strategy involves both stockpiling consumables and purchasing “hard” stores of value, such as gold, silver, and copper, with whatever you have after your monthly bills have been met.
John Pugsley recommended this as long ago as 1980. A few of us listened, and we’re more-or-less ready for what’s coming. The rest of the country doesn’t have much time left. Verbum sat sapienti.
Zero Establishment| 3.24.11 @ 1:21PM
Mr. Ferrara, well said on the financial side of things, but add this to the exponential moral decay that's been going on for decades in the U.S and worldwide... well we've almost have the perfect storm coming our way...
shipley130| 3.24.11 @ 6:09PM
Obama will just lie about the economy as he is with the Libyan War. It's time congress clamps down on the out of control Kenyan.
Timely Renewed | 3.24.11 @ 7:49PM
The underlying problem is the vast expansion of federal power based upon the Supreme Court's vast expansion of the interstate commerce clause far beyond its original meaning. The only sure way to stop the innumerable ways in which the federal government has expanded beyond the original scope of the Constitution is to reverse those Supreme Court cases (which date back to 1937) and restore the interstate commerce clause to its original meaning. Given how entrenched these Supreme Court precedents are, this will require a constitutional amendment restating the original, very limited scope of the interstate commerce clause. See http://www.timelyrenewed.com
Honza| 3.24.11 @ 8:30PM
You had me until "And the world is far less stable than then, financially, economically and politically. Moreover, America suffers far more virulent enemies today, at home and abroad, far more focused and determined to bring America down."
The Soviet Union challenged us existentially on every continent and was a far graver foe. Al Qaeda dreams of taking over Algeria and Iran dreams of commanding The Persian Gulf when it can hardly control Iran.
China is a mercantilist power with a soon to be collapsing population which will have needs in old age.
Also, when entitlements become unaffordable, we can cut them. They are, after all, luxury goods.
Other than that, the analysis is sound.
MacWell™| 3.27.11 @ 8:09AM
We the people have been taken on a ride, this ride isn't the kind you might enjoy with your son or daughter at an amusement park, no, this ride has been going on since 1913... and it's seems like there is not way off.
The FED has been stealing our wealth, right from under our eyes, with the backing of the very government that is SUPPOSED to be "of the people, by the people, and for the people". don't believe me?
Allow me to post a snippet from the book, "the creature from Jekyll Island", a book that until yesterday, I've never heard of. The information in this book is all public record, not made up by the vast right wing boys. Believe me folks, this isn't a republican or democrat thing, because the people behind the FED don't give a crap about either party. Without further ado
Below is a summary of what was uncovered by Edward Griffin, his book explains in great detail how we the people have been systematically drained, by the FED, of every bit of our REAL wealth through inflation.
Here are his conclusions
1. The Federal Reserve is incapable of accomplishing its stated objectives.
2. It is a cartel operating against the public interest.
3. It's the supreme instrument of usury.
4. It generates our most unfair tax.
5. It encourages war.
6. It destabilizes the economy.
7. It is an instrument of totalitarianism.
Want more proof? Do a search for the book, and you can link to a free PDF version of Mr. Griffin's explanation and synopsis of the book.
MacWell™| 3.27.11 @ 8:22AM
Part 2;
If what Mr. Griffin states is true, then the election next year takes on a new issue. Not only should we rid ourselves of this, European style , "central bank", but, we need a Congress that will prosecute the families involved in the FED, but, also be willing to confiscate the wealth they've taken from us. Everyone who is involved in this hideous scheme should be stripped of their wealth and thrown in jail until they achieve room temperature.
The next election, imho, will be the most important in America's history. Will we continue to allow the robber barons of today to enslave us?
Or will we throw off the chains and rebuild America to it's once great place in the world?
It is OUR decision.
Lon Gray| 3.28.11 @ 9:53AM
To understand Obama, you need to understand where he came from:
To say Obama is the product of his parentage and previous environment is a gross understatement. There are a host of theories trying to explain Obama. By the Right he has many different designations – a Progressive, a conventional Liberal, a Socialist, a Muslim, not born an American, an alien. But, all of these javelins bounce off Obama with no effect or just glancing blows. He continues to act in apparently mysterious ways – not easily explained. If he were truly a Socialist he would have tried to command the means of production. But, Obama did not nationalize banks but rather infused capital to them. Another inconsistency: Recently banks wanted to pay back their government loan and get off the hook with the Obama administration. But, Obama did not want to take their money. Rather he insisted that the bank undergo some sort of stress test before allowing them off the hook? Why? There are claims that he is an environmentalist and simply acting out that role – banning vital oil drilling in America, limiting the production of coal, introducing and pouring billions into hair brain solutions like wind mills and sun energy which are far more expensive and will not supply anywhere near the energy required besides, requiring years to develop properly. In addition, Obama is blocking oil drilling all over America and its coastline while, at the same time, encouraging oil drilling in Mexico. To add salt to our wounds, The US Export Import bank has given a two billion dollar loan guarantee to Brazil to do their own off shore drilling. But, the oil is not to go to us but to the Chinese! Then, there is his inconsistent and apparently illogical approach to all our problems in the Middle East – one minute he is siding with the dictators of Egypt, Libya, Iran, Saudi Arabia and the next minute, making obligatory gestures of compassion to their long suffering populations. (Not to mention his dissing and enthusiastic participation in the dismantling of our only reliable ally in the Middle East, Israel jsk)
Other inane gestures: He somehow made the Muslims party to our space program praising them for their great contributions to its development – huh? He returned a bust of Winston Churchill given to us by the Brits that had been gratefully placed by us in the White House because of Churchill’s crucial contribution to the defeat of Adolph Hitler in WWII. Obama has not really been raised American. His early years were in Kenya and then Indonesia. He was first thrust into American culture by his mother when he was already 10-12 years old. He has no understanding or sympathy for American exceptionalism. In fact, he resents the concept. So, what is Obama’s dream? He tells us very explicitly that his dream is his father’s dream. Obama’s father, Obama Sr.. was basically an anti-Colonialist – the dominant idea in the third world of the 20th Century. The simple core of this idea was that the world is divided into two – the colonizers or oppressors and the colonized or victims. the rich got rich only by looting the colonized and even when they left, powerful economic forces remained in a position of exploitation. Banks, insurance and pharmaceutical companies, oil companies and anyone else that happens to make money are simply now the economic wing of colonialism still into exploitation. And, who to Barack Obama, Jr. is the lead elephant and current exploiter? Why we are, of course. How is Obama to deal with us, the problem? First, bring us under the rod of the Federal government. Obama’s father in 1965 wrote an article in an East African journal saying how this should be done. Bring down all the rich guys by the power of the state, confiscate their land, property, raise taxes as high as you want – 100% if necessary, and obtain their wealth through fiat and legislative piracy. The rationale is that the wealth is not rightfully theirs, in the first place, but had been ripped off from the poor .
Obama, like the naive would like to believe, is no buffoon, not inexperienced, not unworldly, not apolitical and not a mediocrity. He is a very clever but misdirected guy and out to do us all in.
If he is to be voted out of office in 2012, Republicans will have to take the full measure of the man. They need a strong guy, perhaps a father figure, a person that appeals to the American public. It will be a very difficult election made more so by mindless, irresponsible media genuflections and the Obama useful idiots that may never see the awful danger that this man represents.
wholesale beads | 3.29.11 @ 3:57AM
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Christian Louboutin | 6.23.11 @ 3:57AM
But these developments are just several further spins in an accelerating downward spiral for America that leaves our traditional prosperity, high standard of living, and national security extremely vulnerable to three looming disasters, at least two of which are likely to happen within the reasonably near future.
Creative Recreation | 8.10.11 @ 11:32PM
is good