U.S May Sacrifice It’s Leading Power For Recovery

The stock market, could (but who really knows) be looking at a global recovery without us. Thus, at some point the DOW goes to 50,000 (due to devalued dollars and earnings converted to dollars) but, you won’t be able to buy anymore with DOW 50,000 dollars than you can with DOW 9,000 dollars.

If the “trillion dollar deficits for years” happen that Obama is saying we may face, then at some point, we face being cut off from loans and having to “print” the money we need for those deficits. Add all the state bailouts that may have to happen with borrowed money and you add even more risk we get cut off.

This is a global shift in power from the largest debtor nation to other nations. While it may not be fully revealed until a global recovery is under way, the U.S. is facing something it has never faced before. Not even the previous depressions can be used as a gauge when there is a global shift in power like is happening.

We also have, the potential of a global currency emerging, or, a currency tied to gold and silver emerging. Trying to say “this will happen,” when there are so many variables is risky. But, denying all the various theories is also risky and foolish. With this much “change” taking place, many contingency plans are needed and constant reevaluation of the data (weekly if not daily) is required. Without that ongoing evaluation, you won’t know when to put one of those contingency plans into action.

Because this is a global crisis and a global recession there are global forces at play as well as what our government and the private company “Federal Reserve” is doing. Also, since we are the largest debtor nation and so dependent on foreign energy, we are subject to what they do in an even more critical manner. They can literally destroy the dollar in one day by just having one nation say they will stop lending to us and start selling what they have to “cut their losses.”

Yes, they will lose, in the case of China, a Trillion or so, depending on what they get for what they sell of their $2 trillion in holdings, but, that would be cheaper than keeping on lending to us and building up even more of a loss potential when we collapse on our own.

Remember, that what Von Mises said about an eventual collapse if we continue to delay the depression and correction of debt expansion, has not changed nor been proven to be false. In fact, each day is proving him right more and more as we expand debt at faster and faster rates.

Now you have Obama saying he may not end the Bush tax cuts, add more tax cuts, spend even more, bail out even more, borrow even more, print even more. However, don’t blame him for doing what is the only option other than allowing us to default on debt, end most government services and face riots in virtually all major cities that have large populations dependent on welfare, medicaid, unemployment insurance, and city services.

The advisers for Obama will give him the same advice they would give McCain had he been elected. There are only two choice, end the expansion and have a long depression or delay it until it collapses under its own weight.

- Jan

Related Posts:

• The Greatest Depression
• It’s difficult to have optimism when the U.S. is piling on insurmountable debt.
• “We’ve Never Seen this Before – Such a Huge Rally, and the Little Guy Is Out”
• Joseph Stiglitz says that Wall Street is hyping up the economy to sell more stock.
• Kevin Depew’s statistics for 2009

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