By Michael Snyder | Economic Collapse

Is there any doubt that we are living in a bubble economy?  At this moment in the United States we are simultaneously experiencing a stock market bubble, a government debt bubble, a corporate bond bubble, a bubble in San Francisco real estate, a farmland bubble, a derivatives bubble and a student loan debt bubble.  And of course similar things could be said about most of the rest of the planet as well.  In fact, the total amount of government debt around the world has risen by about 40 percent just since the last recession.  But it is never sustainable when asset prices and debt levels increase much faster than the overall level of economic growth.  History has shown us that all financial bubbles eventually burst.  And when these current financial bubbles in America burst, the pain is going to be absolutely enormous.

You know that things are getting perilous when even the New York Times starts pointing out financial bubbles everywhere.  The following is a short excerpt from a recent NotQuant article

The New York Times points out that just about everything on Earth is expensive by historical standards.   And then asks the seemingly obvious question:  Does that make it a bubble?

Welcome to the Everything Boom — and, quite possibly, the Everything Bubble. Around the world, nearly every asset class is expensive by historical standards. Stocks and bonds; emerging markets and advanced economies; urban office towers and Iowa farmland; you name it, and it is trading at prices that are high by historical standards relative to fundamentals. The inverse of that is relatively low returns for investors.

Quite possibly?”  We’re not sure what definition of the word “bubble” they’re using.   But in our book when the price of literally everything blasts upwards, obliterating the previous ceilings of historical benchmarks, it’s a pretty good indication that you’re in a bubble.

Of course when most people think of financial bubbles the very first thing they think of is the stock market.  And without a doubt we are in a stock market bubble right now.  The Dow has risen more than 10,000 points since the depths of the last recession.  And it is nearly 3,000 points higher than it was at the peak of the last stock market bubble in 2007 when our economy was far stronger than it is now…

Dow Jones Industrial Average 2014

But of course these stock prices do not reflect economic reality in any way whatsoever.  Our economy has not even come close to recovering to the level it was at prior to the last financial crisis, and yet thanks to massive Federal Reserve money printing stock prices have soared to unprecedented heights.

At some point a massive correction is coming.  No stock market bubble lasts forever.  For a whole bunch of technical reasons why serious market turmoil is on the horizon, please see a recent Forbes article entitled “These 23 Charts Prove That Stocks Are Heading For A Devastating Crash“.

The bubbles in the financial markets have become so glaring that even the central bankers are starting to warn us about them.  For example, just consider what the Bank for International Settlements is saying

The Bank for International Settlements has warned that “euphoric” financial markets have become detached from the reality of a lingering post-crisis malaise, as it called for governments to ditch policies that risk stoking unsustainable asset booms.

While the global economy is struggling to escape the shadow of the crisis of 2007-09, capital markets are “extraordinarily buoyant”, the Basel-based bank said, in part because of the ultra-low monetary policy being pursued around the world. Leading central banks should not fall into the trap of raising rates “too slowly and too late”, the BIS said, calling for policy makers to halt the steady rise in debt burdens around the world and embark on reforms to boost productivity.

In its annual report, the BIS also warned of the risks brewing in emerging markets, setting out early warning indicators of possible banking crises in a number of jurisdictions, including most notably China.

“Particularly for countries in the late stages of financial booms, the trade-off is now between the risk of bringing forward the downward leg of the cycle and that of suffering a bigger bust later on,” it said.

Sadly, just like in 2007, most people are choosing not to listen to these warnings.

Another very troubling bubble that is brewing is the massive bubble of consumer credit in the United States.  According to the Wall Street Journal, consumer credit in the United States increased at a 7.4 percent annual rate in May…

The Federal Reserve reported Tuesday that consumer credit—consumer loans excluding real estate debt—in May increased at an annual rate of 7.4% to a record $3.195 trillion. Most of that gain came from a 9.3% increase in nonrevolving credit, the bulk of which is accounted for by auto and student loans. Revolving credit, which is primarily credit-card debt, expanded at a more muted 2.5% rate after jumping 12.3% in May.

That might be okay if our paychecks were increasing at a 7.4% annual rate, but that is not the case at all.  In fact, median household income in America has gone down for five years in a row.  As the quality of our jobs goes down the drain, our paychecks are shrinking even as our bills go up.  This is putting an incredible amount of stress on tens of millions of American families.

And when you look at the overall debt bubble in this country, things become even more frightening.

In a previous article, I shared a chart which shows the incredible growth of total debt in the United States.  Over the past 40 years, it has gone from about 2.2 trillion dollars to nearly 60 trillion dollars

Total Debt


Is this sustainable?

Of course not.

None of these financial bubbles are.

It is not a question of “if” they will burst.  It is only a question of “when”.

And some believe that we are rapidly approaching that point.  In fact, Marc Faber believes that we are seeing signs that it may be starting to happen already…

It’s the question investors everywhere are wrestling with: Are asset prices in a bubble, or do they simply reflect the fact that the global economy is growing once again?

For Marc Faber, editor of the Gloom, Boom & Doom Report, the answer is clear. In fact, he says the bubble may already be bursting.

“I think it’s a colossal bubble in all asset prices, and eventually it will burst, and maybe it has begun to burst already,” Faber said Tuesday on CNBC’s ‘Futures Now‘ as the S&P 500 lost ground for the second-straight session.




by Nick Beams

The rise of Wall Street’s Dow Jones Industrial Average to an all-time high above 17,000 last week is another sign of the explosive contradictions building up within the American and global financial system.

Since hitting its low point of 6,547 on March 9, 2009 following the financial crash of September 2008, the Dow has climbed by more than 10,000 points, and is now over 250 percent what it was barely five years ago.

At the same time, following the official recession of December 2007 to June 2009, US gross domestic product has experienced its worst “recovery” of any comparable period since World War II, with output falling by almost 3 percent in the first quarter of this year. Investment in the real economy remains stagnant as corporations pile up cash rather than expand productive activity, and use the money to fund share buy-back operations, mergers and acquisitions and other, essentially parasitic, financial operations.

Internationally, the situation is no better or, in some cases, worse. Large segments of the economies of the advanced countries are either experiencing stagnation or outright recession. Output in the euro zone has yet to return to the levels of 2007.

According to calculations by the Bank for International Settlements (BIS), a consortium of the world’s central banks, the output of the major economies is around 8 percent below where it would have been had pre-2008 trends continued.

In the so-called “emerging markets,” once hailed as the saviours of the world economy, there is increasing nervousness over the state of financial markets amid fears that a major withdrawal of “hot money,” highly sensitive to any interest rate increases in the advanced economies, could precipitate another global financial crash.

Even though it is still experiencing growth rates of around 7.5 percent, China is widely regarded as being highly vulnerable to the bursting of the financial bubble created by the massive expansion of credit following 2008. It is estimated that in the past six years, credit has increased by an amount equivalent to the finances of the entire US banking system.

And yet, amid this worsening situation, US and global stock markets, fuelled by the injection of ultra-cheap money from the major central banks, keep powering upwards.

This process cannot continue indefinitely. The endless accumulation of wealth, as money seemingly miraculously transforms itself into even greater amounts of money, is inherently unsustainable. The entire financial system resembles a kind of inverted pyramid in which massive financial wealth rests upon a narrowing real economic base, making the whole system extremely vulnerable to even a small disturbance.

As this possibility increases, the policies of the central banks serve not to prevent a financial disaster, but rather to fuel the very conditions that are leading inexorably to one.

The events of the past week have been highly revealing. They demonstrate the extent to which the whole world economy, and the jobs, social conditions and livelihoods of billions of working people, are subject to the dictates of a tiny financial elite.

The week began with a warning from the BIS that present monetary policies were creating the conditions for a repeat of September 2008, possibly on a bigger scale. But this was immediately countered with the assertion that any attempt to halt speculation by ending the supply of ultra-cheap cash would bring about an economic collapse. So present policies have to be continued, notwithstanding the fact that they are leading to a disaster.

Last Wednesday, in her most significant public comments since taking up the post in February, US Federal Reserve Chair Janet Yellen insisted that the present policy of providing an endless supply of cash to financial markets would continue into the indefinite future.

She ruled out any action on monetary policy to prevent the emergence of dangerous asset bubbles and the kinds of parasitic and outright criminal policies that led to the crash of 2008, on the grounds that it would do too much damage to the economy, leading to the growth of unemployment. “Macroprudential regulation” should be used to control the financial system, she asserted.

However, any such regulations ultimately rest on enforcement procedures, above all against the biggest financial and investment firms, which, as the US Senate’s Permanent Subcommittee on Investigations report of 2011 made clear, engaged in criminal activity. However, the bringing of criminal charges was ruled out by Attorney General Eric Holder in March 2013, when he told a congressional panel that if prosecutions were launched against the largest institutions, they would “have a negative impact on the national economy, perhaps even the world economy.”

In other words, both US monetary and legal authorities are completely beholden to the banks and financial corporations.

When asked about the ability of the banks to create a “parallel universe” shadow banking system outside the purview of would-be regulators, Yellen admitted she did not have a “great answer” to that problem. But this admission of bankruptcy did not stop others from endorsing her remarks.

European Central Bank (ECB) President Mario Draghi, who recently reduced interest rates set by the ECB to zero and below, backed the stand of his American counterpart. He insisted that “macroprudential” measures, not monetary policy, had to be “the first line of defence against financial stability risk.”

Others quickly chimed in. Bank of England Deputy Governor John Cunliffe said tightening monetary policies to curb asset values risked hurting the economy and should be seen as “the last line of defence.”

Sweden’s central bank, the Risbank, after a battle within the governing board, decided that actions speak louder than words and cut interest rates by 50 basis points, declaring it was for “other policy areas” to manage rising household debt and housing markets.

Bank of America strategists were clearly delighted that the wealth bonanza would continue, saying the message from the Fed, the ECB and the Risbank was that that monetary policy would stay “loose,” with “macroprudential” policies taking care of any financial stability risks.

While the promotion of financial parasitism has been enshrined as official policy, further adding to the wealth of the already super-wealthy, the offensive against the working class deepens.

Outlining the need for austerity measures, Australian treasurer Joe Hockey declared that while the world was “awash with money,” governments had no money. These phenomena are two sides of the same coin. The driving down of living standards and the imposition of mass poverty is based on the recognition that, in the final analysis, the only way of putting value into financial assets is to extract it from the working class.

The claim that “macroprudential” regulation can avert a catastrophe is a cruel hoax. Apart from the fact that financial markets develop ways of side-stepping such regulations as soon as they are developed, there is the issue of the regulators themselves.

In the US, at the very heart of the global financial system, they are drawn directly from the ranks of the banks and finance houses or from the legal firms that have acted for them in proceedings aimed at thwarting attempted controls. Such individuals view their term of “public service” merely as a means of enhancing their “market value” when they return to make millions in the world of corporate finance.

As for those who rise up through the ranks, they view their term of office as a mere stepping stone to enter the “parallel universe.” And on the off-chance that someone might emerge who actually believes in regulation, they can easily be dispensed with by means of a sex exposé or some other form of scandal.

The situation is the same elsewhere, as exemplified by the fact that the head of the ECB, Mario Draghi, is a former international vice-president of Goldman Sachs.  Twist and turn the present economic and financial system in whatever way one chooses, there is no way to prevent a catastrophe.


Prominent international voices are starting to question why the U.S. dollar should be so overwhelmingly dominant.

The Almighty Dollar Is In Peril As The Global ‘De-Dollarization’ Trend Accelerates

Image Credits: Public domain


by Michael Snyder | Economic Collapse

As the Obama administration continues to alienate almost everyone else around the entire planet, an increasing number of prominent international voices are starting to question why the U.S. dollar should be so overwhelmingly dominant in global trade.  In previous articles, I have discussed Russia’s “de-dollarization strategy” and the fact that Gazprom is now asking their large customers to start paying in currencies other than the dollar.  But this is not just a story about Russia any longer.  As you will read about below, China and South Korea have just signed a major agreement to facilitate trade with one another using their own national currencies, and even prominent French officials are now talking about the need to use the dollar less and the euro more.  John Williams of shadowstats.com recently said that things have never “been more negative” for the U.S. dollar, and he was right on the mark.  The power of the almighty dollar has allowed all of us living in the United States to enjoy an extremely high standard of living for decades, but as that power now fades it is going to have profound implications for the U.S. economy.  In future years the value of the dollar will go down substantially, all of the imported goods filling our stores will become much more expensive, and it is going to cost the federal government a lot more to borrow money.  Unfortunately, with the stock market hitting all-time record highs and with the mainstream media endlessly touting an “economic recovery”, most Americans are not paying any attention to these things.

French oil giant Total is one of the largest energy companies in the entire world.  On Saturday, Total’s CEO made an absolutely stunning statement.  According to Reuters, he told reporters that there “is no reason to pay for oil in dollars”…

“Doing without the (U.S.) dollar, that wouldn’t be realistic, but it would be good if the euro was used more,” he told reporters.

There is no reason to pay for oil in dollars,” he said. He said the fact that oil prices are quoted in dollars per barrel did not mean that payments actually had to be made in that currency.

If Gazprom’s CEO had made such a statement, it would not have really surprised anyone.  But this came from a high profile French CEO.  A decade ago, it would have been unthinkable for him to say such a thing.  Wars have been started over less.  Virtually all oil and natural gas around the planet has been bought and sold for U.S. dollars since the 1970s, and this is an arrangement that the U.S. government has traditionally guarded very zealously.  But now that Russia has broken the petrodollar monopoly, the fear of questioning the almighty dollar appears to be dissipating.

And at this point even French government officials are not afraid to publicly discuss moving away from the U.S. dollar.  Just check out what French finance minister Michel Sapin said to the press this weekend

French finance minister Michel Sapin says “now is the right time to bolster the use of the euro” adding, more ominously for the dollar, “we sell ourselves aircraft in dollars. Is that really necessary? I don’t think so.” Careful to avoid upsetting his ‘allies’ across the pond, Sapin followed up with the slam-dunk diplomacy, “This is not a fight against dollar imperialism,” except, of course – that’s exactly what it is… just as it was over 40 years ago when the French challenged Nixon.

So why are the French suddenly so upset?

Could it be the fact that we just slapped the largest bank in France witha nearly 9 billion dollar fine?

The remarks come a week after Paris-based bank BNP Paribas (BNP) SA was slapped with a $8.97 billion fine by U.S. authorities for transactions carried out in dollars in countries facing American sanctions. The fine spurred debate in France about the right of the U.S. in extending its regulatory reach beyond its borders.

This is yet another example of how the Obama administration is alienating friends all over the globe.

In fact, there doesn’t seem to be anyone that the Obama administration is afraid of crossing.  Just a couple of days ago, the German press exploded in outrage when Germany arrested a U.S. spy.  Why we feel the need to spy on our friends is something that I will never figure out.

And of course our relations with Russia are probably the worst that they have been since the end of the Cold War at this point.  And as the Russians now rapidly move away from the U.S. dollar, they seem intent on bringing the rest of “the BRICS” with them.  The following is a short excerpt from a recent Voice of Russia article entitled “BRICS morphing into anti-dollar alliance“…

However, in her discussion with Vladimir Putin, the head of the Russian central bank unveiled an elegant technical solution for this problem and left a clear hint regarding the members of the anti-dollar alliance that is being created by the efforts of Moscow and Beijing:

“We’ve done a lot of work on the ruble-yuan swap deal in order to facilitate trade financing. I have a meeting next week in Beijing,” she said casually and then dropped the bomb: We are discussing with China and our BRICS parters the establishment of a system of multilateral swaps that will allow to transfer resources to one or another country, if needed. A part of the currency reserves can be directed to [the new system].” (source of the quote: Prime news agency)

It seems that the Kremlin chose the all-in-one approach for establishing its anti-dollar alliance. Currency swaps between the BRICS central banks will facilitate trade financing while completely bypassing the dollar. At the same time, the new system will also act as a de facto replacement of the IMF, because it will allow the members of the alliance to direct resources to finance the weaker countries. As an important bonus, derived from this “quasi-IMF” system, the BRICS will use a part (most likely the “dollar part”) of their currency reserves to support it, thus drastically reducing the amount of dollar-based instruments bought by some of the biggest foreign creditors of the US.

Of course the key economic player in the BRICS alliance is China.

So will China actually go along with a “de-dollarization” strategy?

Well, the truth is that China has been making moves to become more independent of the dollar for a long time, and it has just been announced that China and South Korea have signed an agreement which will mean more direct trade between the two nations using their own national currencies

China’s central bank has authorized the Bank of Communications, the country’s fifth largest lender, to undertake yuan clearing business in the South Korean capital, the People’s Bank of China (PBoC) said in a statement.

The announcement came as Chinese President Xi Jinping wrapped up a state visit to South Korea on Friday. China is seeking to make the yuan – also known as the renminbi – used more internationally in keeping with the country’s status as the world’s second biggest economy behind the United States.

Unfortunately, most Americans don’t care about any of this at all.

They don’t understand that more U.S. dollars are actually used outside the United States than are used inside the United States.  Because most of the rest of the world uses U.S. dollars to trade with one another, this has created a tremendous amount of artificial demand for our currency.  In other words, the value of the U.S. dollar is much higher than it otherwise would be, and this has enabled us to import trillions of dollars of products at ridiculously low prices.  The standard of living that we enjoy today is highly dependent on this arrangement continuing.

And our ability to fund the federal government and our state and local governments is heavily dependent on the rest of the planet loaning our dollars back to us for next to nothing.  If we actually had to pay realistic market rates to borrow money, the finances of the federal government would have already collapsed long ago.

So it is absolutely imperative for our own economic well-being that this “de-dollarization” trend not accelerate any further.  The rest of the world could actually severely hurt us by deciding to stop using the almighty dollar, and the more that the Obama administration antagonizes both our friends and our foes around the globe the more likely that is to happen.

We live in very perilous times, and the almighty dollar is more vulnerable now than it has been in decades.

If it starts collapsing, it will take down the entire U.S. financial system with it.

Let us hope that we still have a bit more time before that happens, because once the U.S. dollar collapses it will be exceedingly painful for all of us.


by Brandon Smith | alt-market.com

In the mid-sixties at the height of the “social revolution” the line between democratic benevolence and outright communism became rather blurry. The Democratic Party, which controlled the presidency and both houses of Congress, was used as the springboard by social engineers to introduce a new era of welfare initiatives enacted in the name of “defending the poor”, also known as the “Great Society Programs”. These initiatives, however, were driven by far more subversive and extreme motivations, and have been expanded on by every presidency since, Republican and Democrat alike.

At Columbia University, sociologist professors Richard Cloward and Francis Fox Piven introduced a political strategy in 1966 in an article entitled ‘The Weight Of The Poor: A Strategy To End Poverty’. This article outlined a plan that they believed would eventually lead to the total transmutation of America into a full-fledged centralized welfare state (in other words, a collectivist enclave). The spearpoint of the Clowan-Piven strategy involved nothing less than economic sabotage against the U.S.

Theoretically, according to the doctrine, a condition of overwhelming tension and strain could be engineered through the overloading of American welfare rolls, thereby smothering the entitlement program structure at the state and local level. The implosion of welfare benefits would facilitate a massive spike in poverty and desperation, creating a financial crisis that would lead to an even greater cycle of demand for a fully socialized system. This desperation would then “force” the federal government to concentrate all welfare programs under one roof, nationalize and enforce a socialist ideology, and ultimately, compact an immense level of power into the hands of a select few.

Cloward and Piven claimed that this could be accomplished at a grassroots level through community activism, and, that it would facilitate a more compassionate federal authority, however, there are numerous problems with these assertions.

The Cloward-Piven Strategy has nothing to do with grassroots activism, and accomplishes nothing tangible for the downtrodden poverty class. In fact, I would dare to say that Cloward and Piven as well as most social engineers are well aware that the concept ultimately only serves to give even more dominance to the establishment and pilfer even more freedom from the masses.

Cloward-Piven is not limited to the destabilization of state and local welfare programs. It can easily be used against federal level entitlements, and in reality, is much more effective against an entity with the proven tendency towards exponential debt spending. Though the federal government may be able to borrow fiat dollars through the Federal Reserve to prolong welfare rolls while the states cannot, a more volatile threat arises when debt monetization begins to wear down the purchasing power of the currency. Weakened purchasing power results in reduced consumer activity, less industrial growth, less GDP, and obviously, more poverty. The dollar has lost approximately 98% of its purchasing power since 1972, and after 50 years of the so-called “War on Poverty”, nearly one third of the American population now repeatedly slips under the official poverty line.

In the past decade alone, the number of people dependent on food stamps and EBT for their survival in the U.S. has doubled from 25 million people to nearly 50 million people. Those who receive some kind of payment from the government, including those on social security, disability, and veterans benefits, are approximately 100 million. Americans on social security do not consider themselves welfare recipients because they paid into the system, however, the point remains that if the federal money tap shuts down due to overwhelming participation, the checks will stop whether you paid into the system or not.

In the end, it is the Federal Government itself that is most vulnerable to the Cloward-Piven Strategy, and I believe the goal is to set fire to ALL social structures in the U.S., then assimilate them into a new globalist system.

The tactic of overwhelming the welfare structure REQUIRES the complicity of the government itself. A grassroots activist movement cannot and will never compel federal and state governments to expand welfare initiatives if they do not wish to. If welfare programs are not expanded beyond their capacity to be maintained, they cannot be overwhelmed. Therefore, government must cooperate with the Cloward-Piven Strategy by generating more and more welfare programs to be exploited. That is to say, the elitists who control our government, regardless of their claimed political party, must WANT to arrange circumstances to allow for Cloward-Piven to be successful.

Another key component of Cloward-Piven is the existence of an immense number of poverty stricken people. Without a significant portion of the population under the poverty level, there is no mass of people to use as a weapon. Again, grassroots activists would be hard pressed to actually create the kind of poverty levels they would need for exploitation. But wait! Government, along with the aid or direction of central bankers, is able to create any level of poverty it wishes at any time by simply pretending to bungle everything it does. Once again, Cloward-Piven (much like Saul Alinsky’s repertoire of propaganda scams) is far more useful to the power elite than it is to the common citizen. As former White House Chief of Staff, Rahm Emanuel, famously said:

You never want a serious crisis to go to waste. And what I mean by that is it’s an opportunity to do things you think you could not do before…”

In light of the Cloward-Piven Strategy, which is at its very core a method to artificially induce crisis, the otherwise insane policy actions of the Obama Administration and preceding puppet presidents now become perfectly logical. Obama, after all, has been a long time proponent of the methods of Saul Alinsky, the left wing gatekeeper equivalent to Neo-Con godfather Leo Strauss. Cloward and Piven were also both avid followers of Alinsky, who promoted lies, misdirection, subversion, and abandonment of conscience in order to win social power at any cost (special note – Alinsky also dedicated his book ‘Rules For Radicals’ to Lucifer…yeah, to the friggin’ devil).

Under Obama’s watch alone, our real national debt including unfunded liabilities and entitlements has risen to nearly $200 trillion. Our “official” national debt has gone from $10 trillion to $17 trillion in the short time Obama has been in office. Real unemployment including U-6 measurements stands at around 20% of all Americans. Personal wealth and savings have plummeted. Wages remain in stasis while prices on necessary goods continue to rise.

In my articles ‘The Socialization Of America Is Economically Impossible’ and ‘Obamacare: Is It A Divide-And-Conquer Distraction?’, I examined much evidence suggesting that Obamacare was actually designed to fail, and that the bumbling of the Obama White House when dealing with the program was purely deliberate. When coupled with Obama’s handling of the current illegal immigration conflict, I would say that the Cloward-Piven Strategy is in full force.

Why fight tooth and nail against all common sense and history, why lie openly to millions of registered voters to get the program in place, only to allow it to derail because of a poorly designed website!? Because, Obama and his handlers know full well that it will end up costing the country billions that we cannot afford, and aid in a resulting crash.

Why the sudden surge of illegal immigrants into the U.S.? Why not! The White House has made it clear that it has every intention of keeping them within America by allowing the border patrol to ship the detained across the country where they are then released. Obama’s threat to use executive action to force through his own version of the immigration bill is the icing on the cake. Amnesty is essentially guaranteed, I believe, in the near term, which is why tens of thousands of Central American parents are willing to send their children on a journey where they could very well be kidnapped by sex traffickers or killed. If the White House really wanted to stop this humanitarian crisis, the President would state publicly and clearly that America is not a drive through welfare center, that there will be no free goodies at the second window, and that there will be no chance of amnesty, instead of diverting more agents to the border to ensure more illegals are shipped into the interior.

The president does not wish to stop the flood of immigrants exactly because Cloward-Piven requires their presence. Not only would this officially add millions of people to welfare rolls, but I would venture to suggest that Obama will likely include automatic sign-up to universal healthcare as part of his amnesty measures.

If there wasn’t enough strain on the social welfare structure before, there certainly will be now.

I would remind readers, though, that in the final analysis this is NOT about Obama. I have seen other commentators including Glenn Beck discuss Cloward-Piven in the past, but always through the blinders of the false left/right paradigm. Obama could not have attained the levels of destabilization he has without standing on the shoulders of those political errand boys who came before him. Ronald Reagan, for instance, was also responsible for signing the Immigration Reform And Control Act of 1986 into law, which was supposed to trade the amnesty of 3 million illegals for greater border security.  This new “more comprehensive” security was never implemented by Reagan.  Both Republican and Democratic regimes have made our current calamity possible, and the leaderships behind both parties are nothing more than paid mascots for international financiers and globalists who have a very different vision of what America should be.

If we allow ourselves to fall into the trap of making the developing crisis about a singularly unimportant man such as Obama, then the elites get exactly what they want – an angry and desperate citizenry out for the blood of a middleman and out for the blood of each other, while they sit back, relax, and wait to swoop in as our financial saviors with strings attached.

For those naïve enough to assume that Cloward-Piven is just a well intentioned activist method, it is important to understand that even if that were so, the effect of the Cloward-Piven Strategy will never achieve the goal its creators claimed to support. In my view, it is probable that they never really intended for it to produce wealth equality or an increased quality of life.

The tactic can only decrease wealth security by making all citizens equally destitute. As we have seen in numerous socialist and communist experiments over the past century, economic harmonization never creates wealth or prosperity, it only siphons wealth from one area and redistributes it to others, evaporating much of it as it is squeezed through the grinding gears of the establishment machine. Socialism, in its very essence, elevates government to the role of all-pervasive parent, and casts the citizenry down into the role of dependent sniveling infant. Even in its most righteous form, Cloward-Piven seeks to make infants of us all, whether we like it or not.



By Zachary Goldfarb | The Washington Post

President Obama unveiled an ambitious $3.9 trillion budget blueprint Tuesday that seeks billions of dollars in fresh spending to boost economic growth but also pledges to tame the national debt by raising taxes on the wealthy, slashing payments to health providers and overhauling the nation’s immigration laws.

The request sent to Congress for the 2015 fiscal year offers a smorgasbord of liberal policy ideas at a time when riling up the Democratic base and drawing a vivid contrast with Republicans are critical to Obama’s hopes of preserving his party’s imperiled majority in the Senate.

His blueprint includes some targeted spending cuts, but relies primarily on more than $1 trillion in new taxes to slow borrowing over the next decade – with much of the burden falling on major businesses and the wealthy. While some of the proceeds would go toward deficit reduction, Obama also calls for more than $55 billion in new spending on defense, roads and bridges, universal preschool education and expanded tax credits for the poor.

To achieve Obama’s agenda, however, Congress would have to approve his ideas — an unlikely prospect in an election year. While the budget opens the door to a few potential areas of bipartisan agreement – including an overhaul of business taxes that would generate cash for infrastructure – it retreats from other compromises.

For example, Obama does not propose using a less-generous measure of inflation to calculate Social Security benefits, a move that would significantly slow spending growth in the program. Obama included the proposal, known as the chained consumer price index, in last year’s budget in a failed bid to strike a grand bargain on the debt with Republicans.

“Our budget is about choices, it’s about our values,” Obama said during an appearance at Powell Elementary School in the District.  “As a country we’ve got to make a decision if we’re going to protect tax breaks for the wealthiest Americans or if we’re going to make smart investments necessary to create jobs and grow our economy, and expand opportunity for every American.”

Republicans quickly rejected the president’s choices, however, complaining that his request would bust the caps on agency budgets that he and congressional Democrats had agreed to set in a compromise enacted barely three months ago.

House Speaker John A. Boehner (R-Ohio) derided the request as “a clear sign this president has given up on any efforts to address our serious fiscal challenges that are undermining the future of our kids and grandkids.”

“After years of fiscal and economic mismanagement, the president has offered perhaps his most irresponsible budget yet,”  Boehner said in a statement. “Despite signing last year’s bipartisan budget deal – and touting it as an accomplishment – the president now proposes violating that agreement with a spending surge. What’s more, he proposes raising even more taxes – not to reduce the deficit but to spend more taxpayer money.”

Added House Budget Committee Chairman Paul Ryan (R-Wis.):  “This budget isn’t a serious document; it’s a campaign brochure.”

In his message to Congress, Obama argues that his policies have the deficit well in hand — and would improve the nation’s fiscal outlook in the years to come. His request proposes to reduce borrowing by an additional $1.4 trillion by 2024, building on $4 trillion in deficit-reduction enacted by Congress since the budget wars began three years ago.

As a result, the White House projects a deficit of $564 billion in 2015, or 3.1 percent of the economy, down from $649 billion this year and 3.1 percent of GDP. By 2024, Obama projects a deficit of just $434 billion, or 1.6 percent of the overall economy, the smallest deficit since 2007, before the Great Recession dealt a terrible blow to government finances.

A shrinking deficit would reduce borrowing, thereby allowing the overall debt to grow more slowly. The White House estimates that the debt would shrink to 69 percent of the economy by 2024, compared to 74.4 percent today.

Those projections are far rosier than those made recently by the non-partisan Congressional Budget Office. Under current law, the CBO forecasts that the deficit will rise to 4 percent of GDP in 2024 and that the debt will grow to 79 percent of GDP.

The Obama budget would build on a spending deal reached late last year between Rep. Paul Ryan (R-Wis.) and Sen. Patty Murray (D-Wash.), the chairs of their respective chamber’s budget committees. Under the deal, which largely replaces the deep domestic and defense cuts known as sequestration for two years, agency spending levels are set through September 2015.

In his budget, Obama argues that the deal provides insufficient spending; he proposes $56 billion in additional funding to agencies, offset by $28 billion in alternative spending cuts and tax hikes.

The new spending, known as an Opportunity, Growth and Security Initiative, will pump money into preschool programs, the National Institutes of Health, manufacturing institutes, climate research, job training and a new parental leave proposal, among other benefits for the middle class. Obama would also expand a tax credit for poor, working-class Americans valued at $60 billion over 10 years.

To pay for those initiatives, the president takes aim at a variety of tax breaks that benefit the wealthy – limiting the value of retirement savings accounts, a loophole known as “carried interest” that allows many private equity and hedge fund managers to reduce their tax burden, among others.

Reprising one tax proposal from last year that also hits middle class and lower income Americans, Obama proposes a new tax on tobacco to pay for the early-childhood initiative.

After 2015, Obama proposes to replace the remainder of sequestration with a combination of tax hikes as well as cuts in other mandatory spending programs, such as Medicare. Obama would seek, for example, to raise premiums for wealthy seniors and force drug companies to offer larger discounts on prescription drugs.

Like the CBO, the Obama administration does not paint an overly optimistic picture of economic growth over the next decade, with an average inflation-adjusted growth rate of just 2.6 percent per year over the next 10 years.

Rather, the president sees a rosier budget picture due  primarily to his proposal to increase tax revenue. In 2024, Obama projects collecting about $500 billion more in taxes than would be the case under current law.





$495.6 billion in discretionary funds (0.1% less than last year)

The Pentagon’s budget for 2015 represents a major turning point for the military, which is moving from more than a decade of massive growth to a significantly smaller force that will be more dependent on technology. The Obama administration plans to spend $495.6 billion on defense in 2015 or about $113 billion less than had been expected in last year’s budget. The biggest savings will come from cuts to personnel, particularly in the Army, which will be gradually pared back to its smallest size in 74 years. The Pentagon also plans to rein in healthcare costs and cut some of its older weapons systems.

Health & Human Services

$73.7 billion in discretionary funds (7.6% less than last year)

The Obama administration on Tuesday proposed an $80.1 billion budget for the Health and Human Services department, representing a $3.9 billion increase over 2012 levels. The budget includes new funding for AIDS prevention, family planning programs, food safety, Head Start and mental health services for young adults and families.

But it does not include a major increase in funding for the National Institutes of Health, despite warnings from the agency’s director that it needs a significant infusion to remain on the cutting edge of research. And some of the increases are offset by cuts to block grant programs. In particular, the department saves $80 million by eliminating the Preventive Health and Health Services Block Grant program, which provides money to states to deal with leading causes of death and disability in those areas.The administration is seeking $4.7 billion for the Food and Drug Administration, which includes new spending to implement laws passed last year to improve food safety and the safety of custom-mixed drugs made by large specialty pharmacies.

The budget also continues to fund the president’s signature health-care law, which saw many of its key provisions implemented this year. It includes money to continue operating the state and federal health insurance marketplaces, as well as to provide subsidies to help low- and middle-income people pay for health insurance. Most Americans must carry health insurance starting this year, or they face a fine.


$68.6 billion in discretionary funds (1.9% more than last year)

The White House budget proposal shows that the president wants to increase discretionary spending for the Department of Education by $1.3 billion to $68.6 billion. That’s in addition to $14.4 billion the federal government gives to states to help educate poor children and another $11.5 billion it provides for disabled students who require special education.

Obama is again seeking funding for his “Preschool for All” plan to expand early childhood education to most low and middle-income four-year-olds across the country – a 10-year, $76 billion program that would be funded with an increase in the federal tobacco tax.

Veterans Affairs

$65.3 billion in discretionary funds (3.0% more than last year)

The 2015 White House budget would provide $65.3 billion in discretionary funding for the Department of Veterans Affairs. The enacted 2014 federal budget gave $63.4 billion to the agency, which provides benefits to veterans and their families. The VA has accumulated a massive backlog of claims waiting to be processed, which they trimmed from 600,000 to 400,000 from March to November 2013. Obama announced that “slashing that backlog” was a White House priority in his 2014 State of the Union address, and his proposed 2015 budget includes a $138.7 million investment in the Veterans Claims Intake Program in an effort to reform and speed up the process.

The White House’s budget also proposes a $1.6 billion investment in helping homeless and at-risk veterans, including $500 million for homelessness prevention and rapid re-housing, $321 million for a supportive housing program for veterans and $75 million for 10,000 new housing vouchers through the Department of Housing and Urban Development.

2015 Opportunity, Growth, and Security Initiative

$55.4 billion in discretionary funds

The budget plan includes funds for investments in early-childhood education, more teachers in elementary school, clean-energy research, advanced manufacturing, federal employee training, government customer service.

State and Other International Programs

$42.6 billion in discretionary funds (0.2% less than last year)

The Obama administration is seeking $46.2 billion for the State Department and the U.S. Agency for International Development, just $1.6 billion less than it requested for fiscal 2014. The figure includes $5.9 billion for “overseas contingency operations,” which serves as the base budget for operations in Afghanistan. Under the budget proposal, $1.5 billion would be dedicated to address the humanitarian crisis in war-torn Syria and to “support transitions and reforms” in the Middle East and North Africa, regions still being reshaped more than three years after the start of the Arab Spring. The fiscal blueprint would invest $4.6 billion to secure diplomatic facilities overseas and would support additional security construction – efforts that were largely driven by the fallout from the 2012 attacks on the U.S. compounds in the Libyan city of Benghazi.

Homeland Security

$38.2 billion in discretionary funds (2.8% less than last year)

The department would receive $38.2 billion in non-disaster funding under President Obama’s budget proposal, which would reduce spending for the organization by nearly 3 percent compared to the 2014 enacted level but roughly the same as it was in 2013.

Obama’s fiscal plan calls for 4,000 additional Customs and Border Protection officers, as well as $549 million to protect federal computer networks from cybersecurity threats, $1 billion in assistance to state and local governments for firefighters and emergency-management personnel and $10 million to help immigrants on the path to citizenship.

Housing and Urban Development

$32.6 billion in discretionary funds (3.3% less than last year)

The president’s proposed budget includes $46.7 billion for the Department of Housing and Urban Development, about $1.2 billion more than what Congress approved for fiscal 2014.

The administration proposed about $20 billion for the Housing Choice Voucher program. Those funds would restore cuts imposed on assisted housing units by the 2013 sequestration, and support all existing vouchers. Another $9.7 billion would go toward the Project-Based Rental Assistance Program, slightly less than the previously enacted level.

The president also requested $6.5 billion for preserving affordable public housing and $2.4 billion for Homeless Assistance Grants, slightly more than the levels approved in fiscal 2014 in both cases.


$27.9 billion in discretionary funds (2.6% more than last year)

President Obama’s proposed budget asks for $27.9 billion in discretionary spending, a 2.6 percent increase, for the Energy Department, featuring boosts in spending on basic research and costs associated with maintaining the nation’s nuclear weapons stockpile.

The administration is asking for $627 million in additional funds, a third more than the current fiscal year, for managing the nuclear stockpile. Overall the proposed budget includes $11.7 billion for nuclear security, a 4 percent increase over the 2014 enacted level.


$27.4 billion in discretionary funds (0.7% more than last year)

The Justice Department’s proposed $27.4 billion budget reflects Attorney General Eric H. Holder’s priority of criminal justice and prison reform. Holder’s budget–$122 million above the 2014 enacted lev­el–includes $173 million in targeted investments for criminal justice reform efforts.

The DOJ budget requests funding for Holder’s “Smart on Crime” initiative to reduce the number of low-level drug offenders in prison and reduce recidivism rates by expanding drug treatment programs. It requests $15 million for U.S. Attorneys, including prevention and reentry work and promoting alternatives to incarceration such as the establishment of drug courts and veteran courts. Another $15 million would go towards expanding the federal Residential Drug Abuse program and $14 million would assist inmates with reentering society and reducing the population of individuals who return to prison after being released. An additional $14 million would expand the Residential Substance Abuse Treatment program at the state and local levels. The DOJ budget also requests $115 million for the Second Chance Act Grant program to reduce recidivism and help ex-offenders return to productive lives.


$22.2 billion in discretionary funds (7.9% less than last year)

The department would lose roughly $938 million this year under the president’s proposal, receiving $23.7 billion in discretionary funding. The administration is pressing for reduced crop insurance subsidies for farmers and insurance companies “to more reasonable levels,” changes that would save the government $14 billion over 10 years, the budget says.

Other Agencies

$19.2 billion in discretionary funds (2.7% more than last year)

National Aeronautics & Space Administration

$17.5 billion in discretionary funds (0.6% less than last year)

The administration is asking $17.5 billion for NASA, another tight budget for an agency that peaked at $18.7 billion in 2010. The 2015 request is down $185 million from the enacted 2013 budget. NASA can also tap $900 million in the administration’s Opportunity initiative if Congress provides the funding. NASA officials view this as a “continuity-driven” budget that will make almost all major programs go forward as planned.


$14 billion in discretionary funds (2.2% more than last year)

The hub of the president’s budget proposal for transportation is a $302-billion, four-year surface transportation reauthorization. It emphasizes a fix-it-first approach that would give funding priority to salvaging existing roads, bridges and transit systems rather than expanding their network.

The administration wants to invest $1.25 billion a year in the popular TIGER grant program to states and cities. It would create a new $10-billion, four-year program to address freight transportation bottlenecks that experts say impede U.S. competition in the global economy. The White House plan would almost double funding — from $12.3 billion to $22.3 billion — for transit systems and intercity passenger rail.


$12.4 billion in discretionary funds (1.6% less than last year)

The White House’s proposed 2015 budget would provide $13.8 billion to the Treasury Department, representing a downgrade of about 1.6 percent compared to the spending level for this year. Most of the funding, $12 billion, would go toward the Internal Revenue Service, boosting the agency’s budget by 6.3 percent compared to 2014. The proposals include $165 million for an initiative that partly aims to help IRS call centers boost their response rates from 60 to 80 percent, as well as $480 million to support additional tax enforcement and compliance functions.

The budget blueprint also calls for $1.5 billion to help spur lending for small businesses, $225 million for a fund to encourage job growth and healthier communities in underserved areas and plans for assessing the production and use of coins, including the penny.


$11.8 billion in discretionary funds (1.7% less than last year)

The administration’s proposed budget for the Department of Labor includes one of President Obama’s top priorities this year, a boost in the minimum wage to $10.10 an hour from $7.25, where it has been since 2009. The president recently raised the minimum wage for federal contractors by executive order; House Republicans oppose a broader increase.

The White House is seeking $11.8 billion in discretionary funding for the agency. The money would support new efforts to reach unemployed workers and recently separated veterans with in-person “reemployment” services; assist states in launching new paid leave programs for employees who need to take time off from work to care for a child or family member; and boost efforts to enforce laws that workers from being denied wages and overtime pay.


$11.5 billion in discretionary funds (unchanged from last year)

The Interior Department would get a 4 percent budget increase to $11.7 billion in fiscal 2015, its first full year under Secretary Sally Jewell, under the Obama administration’s budget proposal.

Some of that increase provides more money for ecological sustainability of waterways such as the Chesapeake Bay and the Everglades National Park, while there is no major increase for forest fire protection

Social Security Administration

$9.1 billion in discretionary funds (2.2% more than last year)

The White House budget increases spending to improve customer service through modernized online and in-person operations.


$8.8 billion in discretionary funds (6.0% more than last year)

The White House is requesting a discretionary budget of $8.8 billion for the Department of Commerce, the federal agency charged with promoting economic growth, conducting the Census and issuing patents, among other responsibilities. The 2014 budget gave the department $8.3 billion for discretionary spending. The Obama administration’s budget would give $210 million to the Economic Development Administration, and $25 million to the Regional Innovation Strategies Program, both initiatives geared toward helping regional and small businesses – a group the president often gets slammed for ignoring.

Environmental Protection Agency

$7.9 billion in discretionary funds (3.7% less than last year)

President Obama on Thursday proposed a $7.9 billion fiscal 2015 budget for the Environmental Protection Agency, a spending plan that focuses on reducing carbon output from vehicles and power plants and preparing the country “for the unavoidable impacts of climate change.”

The proposal is a $300 million reduction from the EPA’s 2014 budget of $8.2 billion, though the plan would increase the agency’s funding in coming years. One major cut is $581 million from a fund that helps states build wastewater and drinking water projects.

National Science Foundation

$7.3 billion in discretionary funds (1.4% more than last year)

The plan includes a small increase in funding aimed at research to improve economic growth through advanced manufacturing and clean energy.

Corps of Engineers

$4.5 billion in discretionary funds (18.2% less than last year)

The budget blueprint would cut spending for the Army Corps of Engineers and focus on projects with an environmental return. It also proposes increased fees for use of inland waterways, and streamlined procedures so that state and local governments can do more waterway maintenance.

Corporation for National & Community Service

$1.1 billion in discretionary funds (unchanged from last year)

The proposal maintains funding for 114,000 AmeriCorps volunteers across the country and other projects.

Small Business Administration

$0.7 billion in discretionary funds (22.2% less than last year)

General Services Administration

$0.2 billion in discretionary funds (88.9% less than last year)

SOURCE: Office of Management and Budget. GRAPHIC: The Washington Post. Published March 4, 2014.



By Patrick Martin
March 5, 2014

The budget proposal released Tuesday by the White House is more political posturing by Obama and the Democrats, as they seek to fool the American people with empty pledges of concern for the poor, the unemployed, and all the other victims of the crisis of American capitalism.

The goal is to disguise the real policy of both big business parties, the Democrats as much as the Republicans, which is to make the working class pay for the economic slump triggered by the 2008 Wall Street crash, which continues to this day.

For electoral purposes, the Democrats will claim that they support measures to create jobs and alleviate social inequality, and point to Republican opposition to such elementary measures as increasing the minimum wage and renewing federal extended benefits for the long-term unemployed.

But it is noticeable that Obama made no reference to extended unemployment benefits or social inequality in his weekly Internet/radio address Saturday, or in remarks Tuesday prefacing the release of the budget.

Congressional leaders of both parties have downplayed any effort to restore extended unemployment benefits, either to the 2 million workers who have lost them since January 1, or to the 3 million more set to lose them during the remainder of 2014.

The document release Tuesday is not really a budget at all, in the sense of a blueprint for how the Obama administration proposes to spend money during the coming fiscal year, FY 2015, which begins October 1, 2014. The overall level of discretionary spending—money appropriated year-to-year, as opposed to continuing obligations like Social Security and interest on the federal debt—was set in December’s bipartisan agreement, which covers both the current fiscal year and next.

The Obama administration does not challenge that agreement, which it embraced at the time. Instead, the White House proposes to add $56 billion in spending to be paid for by an equivalent increase in taxes on the wealthy, principally by repealing the tax exemption of “carried interest,” which forms the bulk of the income of hedge funds and private equity firms.

This proposal is a sham, since the Democrats refused to cut that boondoggle for the super-rich when they were in control of both houses of Congress in 2009-2010. Wall Street worked through political stooges in the Democratic leadership like Senator Charles Schumer of New York to block several proposals to end the tax exemption.

Once the Republicans gained control of the House of Representatives, ensuring that no tax increase on Wall Street could possibly be enacted, the Democrats immediately embraced new taxes on “carried interest” with much populist tub-thumping about ending privileges for “fat cat” bankers and billionaires—privileges they had themselves assiduously protected.

Obama now reprises this dishonest and unconvincing performance as the tribune of the “middle class” against Wall Street, calling for “closing tax loopholes that right now only benefit the well-off and the well-connected.” (At the same time, he is raking in campaign contributions from the big financial interests for Democratic candidates in the 2014 congressional elections).

There is political significance in the budget proposal, not in the empty demagogy about higher taxes on the rich, but in the proposed distribution of the $56 billion in increased spending, which Obama would split 50/50 between domestic social programs and the Pentagon.

In effect, Obama proposes to restore the entirety of the cuts in military spending compelled under the “sequester” budget-cutting process that the White House and Congress adopted in 2011, which took effect early last year.

It is not clear where the $28 billion for the military would go, whether to replace the sequester cuts dollar-for-dollar, or to provide a $28 billion contingency fund for new military operations not yet paid for in the current budget, such as stepped-up intervention in Syria, or military action against Iran, or US intervention in the ongoing crisis in Ukraine.

Suffice it to say that the Democrats have now embraced the principle that even after the end of the war in Iraq, and with combat operations in Afghanistan supposedly winding down, there should be no reduction in the worldwide military activities of American imperialism.

As for the proposed $28 billion in spending on domestic social needs, this would come largely in the form of tax credits, including making 5.8 million low-income childless workers eligible for the Earned Income Tax Credit and raising the EITC for another 7.7 million workers, as well as subsidies to offset the cost of child care and college education. Given the vast numbers of people involved, the actual per capita benefit would be small—about $500 for each person receiving additional EITC credits.

The White House dropped one proposed attack on retirement benefits, the use of so-called chained CPI to calculate annual cost-of-living increases for Social Security. Obama embraced this measure, which artificially lowers future increases in benefits by distorting what the elderly spend their money on (grossly underestimating their expenses on health care, for instance), as part of a proposed budget deal with congressional Republicans.

White House deputy press secretary Josh Earnest made it clear that the pullback on chained CPI was only temporary, pending the next round of budget talks, likely after the November congressional elections. “This offer from the president remains on the table,” he said, but it was not incorporated in the budget because the Republicans had not agreed to make concessions in return.

As a result of the focus on tax credits, the domestic “spending” increase would not involve a dollar more in actual spending by the federal government. There would be no restoration of the sequester cuts for the federal departments that provide domestic social services. These departments will experience either outright reductions in spending, or spending increases below the rate of inflation, meaning a cut in the level of services to be provided.

According to one summary of the budget, the departments of Education and Transportation will be held at the rate of inflation, receiving increases in discretionary spending of 1.9 percent and 2.2 percent respectively.

The Department of Labor will be cut by 1.7 percent, the Department of Interior, which includes Indian Affairs programs, will have spending levels frozen, the Department of Housing and Urban Development will see spending cut 3.3 percent, and the Environmental Protection Agency will be cut 3.7 percent.

These cuts are dwarfed by those in Health and Human Services, down 7.6 percent from last year, and the Department of Agriculture (which includes the food stamp program), down 7.9 percent.

The cuts in HHS are particularly revealing, since they demonstrate the Obama administration’s real attitude to health care spending, as the rollout of Obamacare continues. According to a New York Times summary, the budget “proposes substantial savings in Medicare, including cuts in payments for nursing homes and home health agencies.”

It also includes a reactionary provision to remove undocumented immigrants from the Medicare rolls and “explicitly require citizenship or lawful presence in the United States as a condition of getting Medicare.” Private Medicare Advantage plans would be required to take measures to have such immigrants “involuntarily disenrolled.”



By Susan Jones
February 11, 2014

(CNSNews.com) – On the same day House Speaker John Boehner said he would bring a “clean” debt ceiling bill to the House floor — and join Democrats in voting for a 13-month extension of the debt limit — the head of the Congressional Budget Office declared that the “large and growing federal debt” could eventually increase the risk of a  “fiscal crisis.”



“The large budget deficits recorded in recent years have substantially increased federal debt, and the amount of debt relative to the size of the economy is now very
high by historical standards,” Elmendorf told the Senate Budget Committee.

“CBO estimates that federal debt held by the public will equal 74 percent of GDP at the end of this year and 79 percent in 2024 (the end of the current 10-year projection period). Such large and growing federal debt could have serious negative consequences, including restraining economic growth in the long term, giving policymakers less flexibility to respond to unexpected challenges, and eventually increasing the risk of a fiscal crisis (in which investors would demand high interest rates to buy the government’s debt).

Elmendorf also estimated that the economy will grow at a “solid pace” in 2014 and for the next few years. But he said the unemployment rate will probably remain above 6 percent until late 2016.

“Moreover, the rate of participation in the labor force — which has been pushed down by the unusually large number of people who have decided not to look for work because of a lack of job opportunities — is projected to move only slowly back toward what it would be without the cyclical weakness in the economy.”

(In testimony before a House panel last week, Elmendorf said Obamacare subsidies that help low-income people buy expensive health insurance are a “disincentive for people to work.” He said the Affordable Care Act “will reduce the total number of hours worked in the economy by between one-and-a-half and two percent from 2017 to 2024.” That represents a decline in the number of full-time-equivalent workers of about 2.0 million in 2017, rising to about 2.5 million in 2024.)

Beyond 2017, Elmendorf said CBO expects economic growth to “diminish to a pace that is well below the average seen over the past several decades.” He said the anticipated slowdown reflects long-term trends, such as slower growth in the labor force due to the aging of the population.






Source: www.usdebtclock.org

















Published on Feb 11, 2013


The American people are now facing a very serious situation. On January 17, 2013, the Government Accountability Office, the nonpartisan investigative arm of Congress released its annual audit of the U.S. government. The report covered fiscal years 2011 and `12. The conclusion of the report was this, “Absent policy changes, the federal government continues to face an unsustainable fiscal path.”

If the U.S. government does not stop the wild spending and develop serious, meaningful budget reform, and if the Federal Reserve does not stop printing money to monetize the government’s debt, the U.S. economy and the U.S. dollar will collapse. That means that all of your savings, all of your investments, your home and everything else will be destroyed before your eyes.

The mainstream media is not going to tell you what is going on.  The federal government will never be able to pay back the debt that it owes.  Members of Congress and the White House are aware of this.  Other foreign countries that the United States owes money to such as Russia and China are also aware of this.  So it’s now up to the Federal Reserve to keep the system going by printing money and extending the time of default out far enough so that some future world war can happen to justify the need to take total control over the United States through martial law.  Millions of Americans will not survive this.  After the take over of America, a world government will be created with a single world army, and a new world currency. It will still be controlled by the same powerful group of elite people, but this way they escape the blame for everything and keep their power over the masses, which is exactly the type of control that they want.



Published on Nov 27, 2013



It starts with the poor and homeless, next the government will take the guns and then they will come for you.  Executive Orders have been signed for the U.S. government to take over and initiate martial law in the United States whenever the President of United States gives the command.

November 6, 2013





Published on Jul 12, 2013



Published on Feb 14, 2014



Anthony Gucciardi
August 26, 2013

High level government documents reveal that the Pentagon is preparing in full force for ‘large scale economic meltdown’ and massive revolt via the US public — exactly what we are criticized for doing.


You see the Pentagon and agencies like the Department of Defense (DoD) are in full scale emergency readiness in their own words for ‘cataclysmic’ events that are believed to ultimately ignite riots in the face of chaos and economic collapse, and it’s all out in the open. And it’s one of the reasons that we’re seeing such a massive amount of spying on activists of all kinds, alternative news writers and personalities, and basically anyone preparing for themselves.

The US government is dedicated to logging such information into a major database in order to ‘prepare’ for the coming collapse that they are predicting in their own documents for all to see. Collapse predictions that have turned into ‘war games’ by the Pentagon, which in 2010 were orchestrated to prepare for what the Pentagon dubbed ‘large scale economic breakdown’ and the disappearance of essential services like food.

In this same ‘war games’ exercise dedicated to domestic response, exercises were ran in order to prepare for ‘domestic order amid civil unrest’.


A thread that is seen throughout these tests is the concept that civil unrest will unfold and prompt military action against the public. One of the largest examples of this is the US Army’s Strategic Studies Institute paper that talks about about the ‘threat of domestic crises’ that are expected to lead to massive unrest throughout the nation. Spurring more paranoia into the notion that every citizen is a terrorist, the report starts talking about everything from economic collapse to a loss of functional political order brought upon by a ‘hostile group within the United States’ that could access weapons.

In such scenarios, the report discusses how the DoD would then be ‘forced by circumstances’ to come in and stop ‘purposeful domestic resistance or insurgency”:

“DoD might be forced by circumstances to put its broad resources at the disposal of civil authorities to contain and reverse violent threats to domestic tranquility. Under the most extreme circumstances, this might include use of military force against hostile groups inside the United States. Further, DoD would be, by necessity, an essential enabling hub for the continuity of political authority in a multi-state or nationwide civil conflict or disturbance.”

To go along with this, and the idea of the military coming in to stop domestic resistance in the midst of an economic collapse, the Pentagon has gone and created a force consisting of 20,000 troops whose sole purpose is to be available for civil unrest and catastrophes – all based on the 2005 Homeland Security program to prepare for ‘multiple, simultaneous mass casualty incidents‘. Yet again we see this link.

But don’t worry, changes have been made just one month ago to allow for the Pentagon to directly have absolute authority over domestic emergencies and ‘civil disturbance’ at large. As reported in a Long Island news publication and properly summarized by The Guardian as further preparation for some form of domestic meltdown:

“Federal military commanders have the authority, in extraordinary emergency circumstances where prior authorization by the President is impossible and duly constituted local authorities are unable to control the situation, to engage temporarily in activities that are necessary to quell large-scale, unexpected civil disturbances.”

What does this mean exactly, to engage in the activity necessary to quell large-scale civil disturbances? Well, for one it is the blank check ability to go ahead and stop major protests amid domestic turmoil. The kind of protests we’re seeing around the world, from Egypt to Brazil. The kind of protests where citizens have had enough.

And going by the Pentagon documents mixed with the DoD papers, it appears the military believes America may take to the streets amid an economic collapse or ‘domestic disturbance’ of large caliber. And you can be sure that virtually all citizens that question the government are the targets of military intervention, as we see in the DoD’s own Army Modernisation Strategy, detailing ‘anti-government and radical ideologies that potentially threaten government stability‘ as a major threat.

Yes, you read that right. The DoD is classifying ‘anti-government and radical ideologies’ as something that threatens government stability. When a major ‘domestic disturbance’ comes along that all of these documents are discussing, such as perhaps in the form of mass protests, it’s the ‘anti-government extremists’ they will be coming after.





By Mac Slavo | SHTFplan.com

January 20th, 2014

It’s not too difficult to understand that we are well on our way to a paradigm shift in America; in fact we’re in the midst of it right now. The writing is on the wall and can no longer be ignored.

The US government has run up trillions of dollars in debt, and given the recent debates over the country’s debt ceiling, we can rest assured that neither Congress or the President will act to curtail spending and balance the budget. We will continue adding trillions of dollars to the national debt clock until such time that our creditors no longer lend us money.

From the monetary side, the Federal Reserve’s response to this unprecedented crisis has been to simply “print” more money as is necessary. On top of the trillions in dollars already printed thus far, the Fed continues quantitative easing to the tune of about $80 billion per month. It’s the only arrow left in the Fed’s quiver, because failing to inject these billions into stock markets and banks will lead to an almost instant collapse of the U.S. financial system. Unfortunately, the current strategy is chock full of its own pitfalls, the least of which being the real possibility of a hyperinflationary environment developing over coming months and years.

On Main Street, average Americans have seen their wealth decimated. They’ve lost millions of jobs and homes over the course of the last five years. And if recent reports are any indication, the destruction of the middle class will continue unabated for years to come. The resulting effect is a vicious negative feedback loop that continues to build upon itself. Americans no longer have money (or credit) to spend to prop up the economy, thus more jobs will be lost, leading to more people requiring government assistance for everything from food to shelter.

We are, on every level, facing a collapse of unprecedented scale.

As noted by International Man Jeff Thomas of Casey Research, it’s not that difficult of an exercise to predict what’s coming next:

The number of people whose eyes have been opened seems to be growing, and many of them are asking what the collapse will look like as it unfolds. What will the symptoms be?

Well, the primary events are fairly predictable: they would include major collapses in the bond and stock markets and possible sudden deflation (primarily of assets), followed by dramatic inflation, if not hyperinflation (primarily of commodities), followed by a crash of several major currencies, particularly the euro and the US dollar.

We know a collapse is coming… If you’re paying attention you probably have the distinct feeling that we are in the middle of it right now. And guess what? The government and military know it’s coming too, as evidenced by large-scale simulations of exactly such an event and its fallout.

But the collapse of our financial system, or hyperinflation of our currency, or a meltdown in US Treasuries is only the beginning. We know some or all of these events are all but a foregone conclusion.

What we don’t know is the timing of the trigger event that causes the global panic to ensue and what will happen after these primary events take hold.

According to Jeff Thomas, while we can’t know for sure, the following “secondary events” are the most likely outcomes when the system as we have come to know it destabilizes.

The secondary events will be less certain, but likely: increased unemployment, currency controls, protective tariffs, severe depression, etc.

But, along the way, there will be numerous surprises—actions taken by governments that may be as unprecedented as they would be unlawful. Why? Because, again, such actions are the norm when a government finds itself losing its grip over the people it perceives as its minions. Here are a few:

  • Travel Restrictions. This will begin with restrictions on foreign travel, including suspension/removal of passports. (This has begun in a small way in both the EU and US.) Later, travel restrictions will be extended within the boundaries of countries (highway checkpoints, etc.)
  • Confiscation of wealth. The EU has instituted the confiscation of bank accounts, which can be expected to become an international form of governmental theft. This does not automatically mean that other assets, such as precious metals and real estate will also be confiscated, but it does mean that the barrier for confiscation has been eliminated. There is therefore no reason to assume that any asset is safe from any government that approves theft through bail-ins.
  • Food Shortages. The food industry operates on very small profit margins and survives only as a result of quick payment of invoices. With dramatic inflation, marginal businesses (suppliers, wholesalers, and retailers) will fall by the wayside. The percentage of failing businesses will be dependent upon the duration and severity of the inflationary trend.
  • Squatters Rebellions. A dramatic increase in the number of home and business foreclosures will result in homelessness for anyone whose debt exceeds his ability to pay—even those who presently appear to be well-offAs numbers rise significantly, a new homeless class will be created amongst the former middle class. As they become more numerous, large scale ownership of property may give way to large scale “possession” of property.
  • Riots. These will likely happen spontaneously due to the above conditions, but if not, governments will create them to justify their desire for greater control of the masses.
  • Martial Law. The US has already prepared for this, with the passing of the 2012 National Defense Authorization Act (NDAA), which many interpret as declaring the US to be a “battlefield.” The NDAA allows the suspension of habeas corpus, indefinite detention, and the assumption that any resident may be considered an enemy combatant. Similar legislation may be expected in other countries that perceive martial law as a solution to civil unrest.

The above list is purposely brief—a sampling of eventualities that, should they occur, will almost definitely come unannounced. As the decline unfolds, they will surely happen with greater frequency.

Full article at Casey Research via The Daily Crux

We could go point by point on this list and provide a plethora of evidence to validate Jeff’s claims, but that would take pages upon pages of references.

The fact is that the US government, for the last decade, has been moving increasingly closer to what can only be described as a police state. With watch lists, militarized police departments, legislative actions, and executive orders the government has already set the stage for these secondary events.

When the system itself is no longer able to support the tens of millions of Americans receiving monthly government assistance, one hiccup could set the whole thing ablaze.

While it can’t be avoided on a national scale, there are advance preparations that individuals and their families can make to, at the very least, insulate themselves from the secondary event triggers. This includes storing essential physical goods and keeping them in your possession. Things like long-term food supplies, barterable goods, monetary goods, self defense armaments and having a well thought out preparedness plan will, if nothing else, provide you with the means necessary to stay out of the way it all hits the fan.



by Mac Slavo | SHTFplan.com
January 21st, 2014

When toxic chemicals spilled into the Elk River in Charleston, West Virginia a couple of weeks ago we got another glimpse into what the world might look like in the aftermath of a major, widespread disaster.

There were several lessons we can take from this regional emergency and all of them are pretty much exactly what you might expect would happen when the water supplies for 300,000 people become suddenly unavailable.

Lesson #1: There will be immediate panic


Studies have suggested that the average person has about three days worth of food in their pantry, after which they would be left with no choice but to scrounge for scraps once their food stores run out. We saw this scenario play out after Hurricane Sandy, when thousands of unprepared people lined up at National Guard operated FEMA tents and temporary camps. That’s what happens when there’s no food.

With water, however, it’s a whole different matter.

Food we can do without for weeks, but lack of water will kill us in a very short time. The events following the Charleston chemical spill highlight just how critical fresh water is to maintaining stability.

A reader at The Prepper Journal web site shared his first hand account of the events as they played out. In a situation where water supplies are poisoned, whether by accident or on purpose, the anatomy of a breakdown accelerates significantly from three days to mere minutes:

Just yesterday that ban was lifted, but what if this had happened in your town? Would you be able to live comfortably with no water from the tap for 5 days? The news reports that I read stated that there was plenty of water and the stores never ran out. That is in direct contradiction to what Steve tells me:

Immediately after the announcement, the stores in the area were rushed for any bottled water products. Within an hour the stores were emptied.  Do not let anyone tell you that everything was nice, peaceful and everyone conducted themselves gracefully.  There were fist fights and scuffles for the last of the water.

After the order was issued no one could give any answers as to when drinkable water would be available.  Those with water were either hording it or selling it at enormous prices.

48 hours after the ban,  water began to be distributed to the everyday person.  Hospitals and nursing homes received the first shipments.  By the way the hospitals (except one) were not taking any new patients).  If you got hurt or injured you were on your own or had to travel an hour away for treatment.

What if the spill was more serious or the supply of water non-existent? Would you have enough water on hand and the means to disinfect new sources to take care of your family? It is news like this that illustrates for anyone paying attention the importance of storing water.

Full report at The Prepper Journal

If you live an area affected by a water supply contamination and have no water reserves, this report suggests that you have less than an hour to stock up. And during that hour there will be panic with the potential for violence being highly probable.

Lesson #2: Security forces will be deployed to maintain order

This is a no-brainer, but nonetheless worthy of mention.

We saw it after Hurricanes Sandy and Katrina – thousands of troops and militarized police deployed to prevent looting and rioting. The fact is that when the water and food run out people will be left with no choice but to rob and pillage. It becomes a matter of survival. Crowds will unwaveringly stampede to get to the resources they need. They’ll stomp over you if you happen to fall on the ground in a rush, because when the herd starts running nothing will stop it.

Imagine how these people will act when they are desperate for food food and water:



There is a reason the government has been preparing military contingency plans and simulations for events that include economic collapse or a massive natural disaster. They know what will happen if millions of people are left without critical supplies.

In Charleston, after water supplies started being delivered to grocery store chains, local government and the companies themselves brought on hired guards to keep the peace.

The Elk River event was limited in scope, affecting about 300,000 people in an isolated area, thus it was not that difficult of a situation to contain as FEMA and government could throw all of their resources and assets at the problem.

But imagine a scenario that involves multiple large metropolitan areas simultaneously in different regions of the country.

There are simply not enough personnel (or supplies) to respond to such a situation and maintain order.

Lesson #3: Despite hundreds of billions spent, the government is ill-prepared

It took emergency responders five days to get water to the Super Dome in New Orleans following Hurricane Katrina.

Following Sandy, FEMA had enough food and water to provide the absolute basic necessities to about 50,000 people.

In Charleston it took at least two days to get water supplies moving.

If this were a massive catastrophe it could be weeks before help arrives.

The Federal Emergency Management Agency has itself warned that it is not equipped to handle large-scale emergencies. It’s for this reason that they strongly recommend a minimum two week supply of food and water.


Considering that the majority of Americans have maybe three days worth of supplies, how many millions of mouths would need to be fed three square meals a day if we experienced a multi-city event?

It was recently reported that FEMA has in its possession about 140 million “meals ready to eat.”

In 2011 a FEMA/DHS organized National Level exercise simulated an earthquake on the New Madrid Fault in the Mid West. The simulation revealed that 100,000 people would be killed almost immediately, and another 7 million would be displaced from their homes.

They would only have one place to go – government managed FEMA camps. Those seven million people eating just two MRE’s per day would  consume FEMA’s entire emergency food reserve within 10 days.

Then what?

You probably already know the answer.

Prepare now, because the last place you want to be in is in the midst of crisis-driven panic.





























By Greg Hunter’s USAWatchdog.com

Economic and political writer Brandon Smith thinks America is in deep financial trouble, and the Fed knows it.  Smith contends, “First of all, I’d like to point out that at the end of last year, I brought up the prospect to the alternative economics community that the ‘taper’ was real, that the Fed would start cutting QE stimulus.  I received a pretty negative response from that concept, which is understandable because a lot of people in alternative economics and the liberty movement are focused on the concept of hyperinflation through printing.  I am pointing out through my articles on ‘taper’ that there is more than one way to kill the dollar.  It’s not just about printing.  There is also the issue about debt default and how that can kill the dollar’s world reserve status and kill the dollar’s value in the process.  So, the ‘taper’ is a huge part of that process of debt default.”  

Smith goes on to say, “I find it interesting the Federal Reserve institutes the ‘taper’ just before we saw major downturns in global manufacturing.  The Baltic Dry Index is starting to crash again.  We’re starting to see trouble in emerging market currencies.  You could say that maybe that’s coincidence that the Federal Reserve started the ‘taper’ before those negative indicators started to become visible.  I don’t think that was a coincidence.  I think they knew that those negative indicators were coming, and the Fed is insulating itself using the ‘taper’ concept.  Basically, what that means is the Fed is pulling back its QE because the effects of QE are diminishing.   Stimulus has a shelf-life.  Printing has a shelf-life for its effectiveness in manipulating markets and propping up stocks.  I think we’ve hit the point where QE is no longer effective.  The shelf-life is over.  They are pulling the QE back now because they don’t want it to be known to the public that QE has become ineffective.  They don’t want QE to be blamed for a stock market implosion.  So, they are pulling it back because they know this downturn is coming.”  

What about talk that the Fed is ‘tapering’ QE to intentionally cut the legs out from under the market?  Smith explains, “Ultimately, the Fed is not pulling back from QE because the Fed wants to cut the legs out from under the market.  I think the market is losing its legs regardless.  They are pulling QE back because what happens if we have a stock market implosion while stimulus is running?  I am saying the Fed is removing QE as part of the equation because it knows an implosion is going to happen, and they don’t want to be blamed.”  Smith predicts that another $10 billion of QE, or money printing, will be cut at the next Fed meeting.  Smith says, “The Fed is looking to end this by the end of the year, but maybe even faster.”  

Smith predicts U.S. debt will “explode in 2014.”   Smith goes on to say, “I think the U.S. debt issue is going to be very big this year.  I think where all this is headed is debt default by the United States and intervention by the IMF.  I believe the IMF will intervene in U.S. Treasuries.”  Smith thinks America is headed for one big “final swindle.”  Smith says the government is “cornering the last vestiges of U.S. wealth in the Treasury market and then will cut the legs out from under the Treasury market and thereby destroying the few people left in the middle class and deal with an economic collapse situation. . . . I think we will not see a full-on collapse where we wake up and there is nothing.  We will have a slow to medium speed collapse where we will lose a considerable percentage of the value of the dollar.  We will see major price hikes in necessary goods such as food, energy and electricity.   I think the ultimate goal is to have the IMF move in and take over the management of the U.S. economy.  I think the IMF and the U.N. will work hand in hand to rebuild the U.S. economy once it collapses.”  Smith goes on to say, “I I have never seen so many possible global trigger events in the short time since I started to report on these global events.  If you would have told me back in 2008 that we may one day be on the verge of WWIII in the Ukraine or with China and Japan, I might not have believed you. . . .  I think there is a good possibility of a limited exchange, or limited use of nuclear weapons.”   

On gold and silver, Smith says, “People in the investment market are going to start looking for alternative hedges.”  Smith thinks, “Silver will go way up,” and “gold will be up 20% to 30% this year.”  (There is much more in the video interview.) 

Join Greg Hunter as he goes One-on-One with Brandon Smith of Alt-Market.com.  



After the Interview:

Smith told me his next article will come out later this week.  He’s going to give his many reasons why 2014 will get “uglier and uglier before the end of the year.”  Smith predicts 2014 will reveal “the perfect storm of interconnectivity, and it is not a coincidence.”   Catch Brandon Smith at Alt-Market.com.    


By Alice Ross in Frankfurt | The Financial Times

Deutsche Bank has for the first time laid out plans to slash its US balance sheet as it seeks to allay concerns over how it would deal with tough new rules imposed by the Federal Reserve on foreign banks.

The lender aims to reduce assets held in its US arm by up to a quarter largely through reassigning some operations to Europe or in Asia. This comes after the Fed confirmed last week that overseas lenders operating in the US would have to ringfence capital in the country to safeguard against future financial crises.

Stefan Krause, Deutsche’s chief financial officer, told the Financial Times that the lender was confident it would be able to meet the new capital and leverage requirements imposed on its US arm. He said the balance sheet adjustment should not be seen as a pullback from the bank’s US franchise, where the lender is focused on growing its asset and wealth management business as well as battling to regain ground lost to US rivals in its flagship fixed income arm.

“The US continues to be an important market for us. We are very comfortable we will be able to meet the leverage requirements in the US,” he said.

Deutsche Bank will aim to reduce its $400bn balance sheet in the US – not including the $200bn held in its US branch that does not fall under the new rules – to about $300bn in part by reassigning operations such as its Mexican arm and its Frankfurt and Tokyo-based repo businesses that are currently part of its US business elsewhere.

The bank will also reduce a sizeable chunk of its repo business in the US after discovering that some of its clients were not making use of its other offerings. The capital-intensive but low margin short-term lending is often offered by banks to hedge fund clients as a sweetener for other more lucrative business.

The foreign banking organisation rules announced by the Fed were widely seen as more lenient than some bankers had feared, with an extension of a year until 2016 to comply with capital requirements and an extension until 2018 to comply with leverage requirements.

Under the new rules, which European lenders have complained unfairly penalise their US operations, foreign banks in the US will have to have a minimum leverage ratio – a measure of total equity to total assets – of 4 per cent in their US holdings. Analysts at Morgan Stanley and Citi have estimated that Deutsche will need to allocate more than €7bn in capital to its US subsidiary to meet the new rules.

Analysts have predicted that some foreign banks in the US will issue debt abroad and transfer this to their US arms. But Deutsche Bank plans instead to convert some of the existing debt its US arm owes to its German arm into hybrid debt that would convert into equity capital under certain conditions.

Deutsche Bank is also hoping that the German regulator will soon give it the green light to raise up to €6bn in additional capital through hybrid debt to help it improve its leverage ratio in Europe.


by Mark Thornton | Mises Daily

President Barack Obama has recently released his budget in which he calls for an “end of austerity.” This is an amazing statement from a president whose government has spent the highest percentage of GDP in history and added more to the national debt than all past presidents combined. What must he mean by austerity?

There are demonstrations around the world over austerity on an almost daily basis. It is condemned as an evil poison for tough economic times while others tout it as the elixir for economic depressions.

The president’s rejection of austerity represents the Keynesian view which completely rejects austerity in favor of the “borrow and spend” — increase aggregate demand — approach to recession. What he really is rejecting is the infinitesimal cutbacks in the rate of spending increases and the political roadblocks to new spending programs.

While the 2009-2012 budgets have been relatively flat, they are still more than 15 percent higher than in 2008 and 75 percent higher than in the previous decade. This four year leap in spending was financed with a $5 trillion increase in the national debt. No austerity here!

The type of austerity that gets the most worldwide press attention on a daily basis is that promoted by economists at the International Monetary Fund. This “austerian” approach involves cutbacks in government services and tax increases on the beleaguered public in order to, at all costs, repay the government’s corrupt creditors. This pro-bankster approach is what generates a massive amount of media attention and sometimes violent demonstrations.

Austrian School economists reject both the Keynesian stimulus approach and the IMF-style high-tax, pro-bankster approach as counterproductive. Although “Austrians” are often lumped in with “Austerians,” Austrian School economists support real austerity. Real austerity involves cutting government budgets by reducing salaries, employee benefits, and retirement benefits. It also involves selling government assets and even repudiating government debt. Instead of increasing taxes, the Austrian approach advocates decreasing taxes.

Despite all the hoopla in countries like Greece, there is no real austerity except in the countries of Eastern Europe. For example, Latvia is Europe’s most austere country and also one of the fastest growing economies. Estonia implemented an austerity policy that depended largely on cuts in government salaries. In contrast there simply is no significant austerity in most of Western Europe or the U.S. As Professor Philipp Bagus explains, “the problem of Europe (and the United States) is not too much but too little austerity — or its complete absence.”

Real austerity for individuals means living a highly restricted lifestyle. The best example is the monk who lives on a subsistence-level diet, wears simple clothing, possesses a few basic pieces of furniture, and uses only necessary utensils. His days consist of long hours of work and prayer with no leisure activities and he may not even enjoy indoor heating or plumbing.

Austerity applied to whole countries, is not necessarily so harsh or ascetic. It simply means that the government has to live within its means.

If government were to adopt a thoroughgoing “Libertarian Monk” lifestyle, then the national government would be cut back to only national defense without standing armies and nuclear weapons. The national debt would be wholly repudiated. This would involve certain short-run hardships, although much greater long-run prosperity.

In contrast, the typical austerity policy is not severe. Government employees would be given cuts in wages, benefits, and retirement benefits necessary to balance the budget. The biggest cuts would fall on politicians, appointees, and senior bureaucrats. Given that such cutbacks occur when most everyone is facing cutbacks and hardships and given that government employees are typically very well compensated, it is not unreasonable to expect them to bear most of the burden of an austerity policy.

One particularly promising area for cutbacks is government regulation. Regulation is a burden on taxpayers, discourages entrepreneurship, and makes us less safe. One recent empirical study found that regulation was extremely costly and that “eliminating the job of a single regulator grows the American economy by $6.2 million and nearly 100 private sector jobs annually.”

Real austerity actually works best with tax cuts. To help austerity create growth it needs to be understood that certain taxes are highly discouraging to production. Tax cuts on investment and capital in contrast stimulate economic activity and production.

IMF-inspired tax increases make no sense. In hard times, government policies should be guided by the idea of increasing production, not of making production more burdensome via higher taxes. In much the same way, our ascetic monk does not force his duties and burdens on ordinary citizens.

President Obama has also suggested higher taxes (again) this time such as the removal of “tax breaks” for the retired rich. This would be the first step toward robbing our IRAs. Some have even suggested that “austerity” should involve extending existing taxes onto charities and nonprofits. Others have suggested taking away the tax-exempted status of charities and non-profits, which is nothing but a backdoor tax increase. These are some of the dumbest suggestions, especially in economic crises and are not real austerity.

Austerity does not mean, for example, budget cuts that would eliminate garbage collection or shutting down the fire department while leaving the military, education, and the spy state untouched. This is just a form of extortion that does not solve the problem. It only reveals the true nature and intent of those who work in government.

The Keynesian stimulus approach does not work. The IMF-inspired austerian approach also does not work. Only real austerity works. This means cutting government employee incomes, benefits, and retirement benefits. This alone would encourage them to run a tighter ship in the future. Eliminating regulators and regulations, cutting taxes, and selling government assets would all aid in the recovery process.

President Obama and Congress should get busy doing what is best for the economy and the American public instead of enriching themselves and those who feed at the public trough.


by Thorsten Polleit | Mises Daily

Credit is a wonderful tool that can help advance the division of labor, thereby increasing productivity and prosperity. The granting of credit enables savers to spread their income over time, as they prefer. By taking out loans, investors can implement productive spending plans that they would be unable to afford using their own resources.

The economically beneficial effects of credit can only come about, however, if the underlying credit and monetary system is solidly based on free-market principles. And here is a major problem for today’s economies: the prevailing credit and monetary regime is irreconcilable with the free market system.

At present, all major currencies in the world — be it the US dollar, the euro, the Japanese yen, or the Chinese renminbi — represent government sponsored unbacked paper, or, “fiat” monies. These monies have three characteristic features. First, central banks have a monopoly on money production. Second, money is created by bank lending — or “out of thin air” — without loans being backed by real savings. And third, money that is dematerialized, can be expanded in any quantity politically desired.

A fiat money regime suffers from a number of far-reaching economic and ethical flaws. It is inflationary, it inevitably causes waves of speculation, provokes bad investments and “boom-and-bust” cycles, and generally encourages an excessive built up of debt. And fiat money unjustifiably favors the few at the expense of the many: the early receivers of the new money benefit at the expense of those receiving the new money at a later point in time (“Cantillon Effect”).

One issue deserves particular attention: the burden of debt that accumulates over time in a fiat money regime will become unsustainable. The primary reason for this is that the act of creating credit and money out of thin air, accompanied by artificially suppressed interest rates, encourages poor investments: malinvestments that do not have the earning power to service the resulting rise in debt in full.

Governments are especially guilty of accumulating an excessive debt burden, greatly helped by central banks providing an inexhaustible supply of credit at artificially low costs. Politicians finance election promises with credit, and voters acquiesce because they expect to benefit from government’s “horn of plenty.” The ruling class and the class of the ruled are quite hopeful that they can defer repayment to future generations to sort out.

However, there comes a point in time when private investors are no longer willing to refinance maturing debt, let alone finance a further rise in indebtedness of banks, corporations, and governments. In such a situation, the paper money boom is doomed to collapse: rising concern about credit defaults is a deadly enemy to the fiat money regime. And once the flow of credit dries up, the boom turns into bust. This is exactly what was about to happen in many fiat currency areas around the world in 2008.

A fiat money bust can easily develop into a full-scale depression, meaning failing banks, corporations filing for bankruptcy, and even some governments going belly up. The economy contracts sharply, causing mass unemployment. Such a development will predictably be interpreted as an ordeal — rather than an economic adjustment made inevitable by the ravages of the preceding fiat money boom.

Everyone — those of the ruling class and those of the class of the ruled — will predictably want to escape disaster. Threatened with extreme economic hardship and political desperation, their eyes will turn to the central bank which, alas, can print all the money that is politically desired to keep overstretched borrowers liquid, first and foremost banks and governments.

Running the electronic printing press will be perceived as the policy of the least evil — a reaction that could be observed many times throughout the troubled history of unbacked paper money. Since the end of 2008, many central banks have successfully kept their commercial banks afloat by providing them with new credit at virtually zero interest rates.

This policy is actually meant to make banks churn out even more credit and fiat money. More credit and money, provided at record low interest rates, is seen as a remedy of the problems caused by an expansion of credit and money, provided at low interest rates, in the first place. This is hardly a confidence-inspiring route to take.


It was Ludwig von Mises who understood that a fiat money boom will, and actually must, ultimately end in a collapse of the economic system. The only open question would be whether such an outcome will be preceded by a debasement of the currency or not:

The boom cannot continue indefinitely. There are two alternatives. Either the banks continue the credit expansion without restriction and thus cause constantly mounting price increases and an ever-growing orgy of speculation, which, as in all other cases of unlimited inflation, ends in a “crack-up boom” and in a collapse of the money and credit system. Or the banks stop before this point is reached, voluntarily renounce further credit expansion and thus bring about the crisis. The depression follows in both instances.[1]

A monetary policy dedicated to averting credit defaults by all means would speak for a fairly tough scenario going forward: depression preceded by inflation. This is a scenario quite similar to what happened, for instance, in the fiat money inflation in eighteenth-century France.

According to Andrew Dickson White, France issued paper money

seeking a remedy for a comparatively small evil in an evil infinitely more dangerous. To cure a disease temporary in its character, a corrosive poison was administered, which ate out the vitals of French prosperity.

It progressed according to a law in social physics which we may call the “law of accelerating issue and depreciation.” It was comparatively easy to refrain from the first issue; it was exceedingly difficult to refrain from the second; to refrain from the third and with those following was practically impossible.

It brought … commerce and manufactures, the mercantile interest, the agricultural interest, to ruin. It brought on these the same destruction which would come to a Hollander opening the dykes of the sea to irrigate his garden in a dry summer.

It ended in the complete financial, moral and political prostration of France — a prostration from which only a Napoleon could raise it. [2]


By Greg Hunter’s USAWatchdog.com 

It’s another week and another delay to part of Obama Care.  Businesses with 50 to 100 employees will have another year to phase in health care coverage.  Now, most of these companies already provide health care, but not the kind that Obama Care requires with free abortions and birth control and other “free” stuff.  This “free” stuff will have to be paid for in much higher premiums, deductibles and co-pays.  And just wait until you are taxed on the portion of your health care the employer pays for.  That will amount to another pay cut.  Let’s call this what it really is, and that is an attempt to soften the blow this terrible law is exacting on the middle class.  These people will vote out many Democrats up for re-elections, and the Democrats are very worried about losing the Senate.  I predict the Democrats will lose the Senate in 2014 and then Mr. Obama will be the lamest of lame ducks.  80% of people are paying so 20% can get “free” health care, and that includes illegal aliens.  Why should anyone be angry for paying much more and getting less?  Even some Democrats are producing ads attacking Obama Care.  The Democrats lied as a party to get this passed, and they will be punished as a party this November.   By the way, all these delays in Obama Care are totally unconstitutional.  

Some Republicans are angry that President Obama is not releasing the details of his Iran nuclear deal.  It is supposed to curtail Iran’s nuclear program, but if you listen to the Iranians, they don’t seem to be doing much negotiating or curtailing.  Republicans want to know the details of the Iranian nuke deal, and the White House is keeping it secret.  What is the deal?  According to the Iranians, they are not going to stop enriching uranium.  Two staunch U. S. allies, Israel and Saudi Arabia, are upset.  Benjamin Netanyahu, Prime Minister of Israel, comes to the White House early next month.  Meanwhile, a top Iranian general is warning of consequences if Iran is attacked.  Iran’s Chief of Staff of the armed forces said, “We are ready for the decisive battle with America and the Zionist regime.” What kind of negotiation is this?  This week, it was reported the U.S. is removing an aircraft carrier from the Persian Gulf.   What kind of negotiation is this? 

The Senate and the House have sent a debt ceiling bill to the President, and he will sign it into law.  The bill suspends the Treasury’s borrowing limit.  Let that sink in—suspends the borrowing limit, as in no limit!!   That means the government can continue to spend until after the election in November or it all blows up, whichever comes first. 

There is no wonder the government is printing money like crazy.  The economy is rolling over again.  Don’t believe these mainstream media stories where they tell us over and over there’s a so-called recovery—nonsense.  Look at this headline: “Outlook rosy this year after slow start.”  Did you see the latest retail sales numbers?  Spending shrank by nearly a half percent.  The MSM is quick to blame the weather, but don’t buy it, not with all the high profile announced lay-offs in retail you are hearing about.  One example: JCPenney is closing 33 stores.  That’s not growth, and don’t forget about the unemployment rate which is really around 23%, if done the way BLS did it in 1994 and earlier.  92 million are no longer counted in the workforce.  If there really was a “rosy” economy, would there be record numbers of people on food stamps?  Imagine that bread and soup line without food stamps!  That would be bad for the recovery story wouldn’t it?  You wonder why the DHS is buying another 75 million rounds of ammunition.  What’s going to happen when the free money or the buying power of the free money turns to dirt?  I am also hearing more and more stories about confiscation of retirement accounts and savings.  They are openly talking about it in Europe.  Another sign the economic outlook is not “rosy.”  

In legal action, Senator Rand Paul is suing President Obama over NSA spying.  It’s unconstitutional, and Paul is going to fight it out in court.  Paul says he’s not against the NSA or spying but he wants there to be judicial oversight, and right now, there isn’t much oversight. 

Finally, the government is being sued over the $13 billion JP Morgan deal that settled “wrongdoing” in the mortgage market.  The lawsuit alleges that the Justice Department “acted as investigator, prosecutor, judge, jury, sentencer and collector.”   The entire deal is secret, and there is no judicial oversight.  Also, not a single top banker was named or charged when, clearly, crimes were committed, according to the government.  I wish them luck lifting the curtain on a shady backroom government banker deal. 

Join Greg Hunter as he analyzes these stories and more in the Weekly News Wrap-Up.


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