Over 5 decades of bad policy that finally caught up with us.

Those five decades involved ever expanding debt to create an illusion of growth in GDP. It first became a problem in 1968 when we first borrowed a dollar for a dollar growth and got worse each decade.

The only thing the President is doing, I believe he is very aware of this, is trying to delay this as long as possible. People should be using that time, whether they agree with his policies or not as a chance to get prepared for that coming collapse. When power outages, and food shortages and $200 oil hits us, very few people will be prepared for it. We know it is coming whether in months or a few years because nation after nation is leaving the dollar in non-dollar trade deals or buying assets with dollars or doing like China and buying oil to stockpile for later use in the massive storage facilities they are building. (currently using tankers to store oil in too).

You have the G-20 calling for the end of the dollar because of how our government is run. But, even nations in South America are entering non-dollar trade deals between them. Every one of these things is adding risk to the dollar.

I look for another dollar rally (and the market go down if it does) but, from the analysts I have been following that have been right so far, they don’t expect it to hold. It might be weeks, months or even a year depending on the global recovery and whether it is real or not, but, then it falls. Why would the world continue to use a currency of a nation that can never tax or grow out of the mess it is in?

What will happen will be blamed on the President but, should be blamed on the international central banking cartel that created this mess.

Since its creation, the FED, has caused a dozen recessions, our second depression, 3 banking crisis and devaluation of the dollar by 95% and yet, they say all they need is secrecy and more power.

So, while the President is trying to deal with this, he doesn’t have a prayer of doing more than buying us some time. As the Sec. of the Treasury said in the Town Hall meeting, this will be with us for a long time. Unfortunately, because of our dependence on foreign loans and deficit spending, we don’t have a long time.

Keep in mind that when you use deficit spending to create jobs, you also create a situation where ending the spending ends the jobs and sends us back into a recession. Here is a good article on why that happens.

http://www.wealthmoney.org/budget.html

So, each time both parties used spending to help end a recession, they made it worse and now we are to the point where we can never pull the spending and have enough growth to even pay for interest on debt once it goes up. The CBO has already warned the Government we face a quadrupling of that interest to over $820 billion or more than we took in from Corporate and individual tax receipts for the last year. And remember those tax receipts are still falling and even if they raise taxes they will mostly end up being passed on to consumers in one way or another and that consumer is already tapped out. 35% of prices from U.S. goods is from taxes and the cost of doing taxes (more from the cost (sometimes 400% more) than the tax paid).

Again, everything bad for five decades has caught up. Bad, monetary, economic, trade, tax and foreign policy has now created the perfect storm. The GAO told Congress as far back as 2007 that we face the loss of our standard of living and that was before this crisis even hit. That warning was due to decades of bad policies that kept adding more and more risk to our survival as an economic power.

JanPaul

Related Posts:

• For deflationists, Financial Sense interviewed one of the best in that camp this weekend.
• As long as there is a belief that we are stabilizing and ‘turning the corner’ the market will march higher.
• How about no recovery for a decade?
• China’s nowadays is similar to the 1920’s and 1930’s.
• US deficit 2009 is $1.4 trillion out of $14 trillion economy, that means deficits of 10% of gdp.

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