A slap of truth

From www.biggovernment.com:

You’re a Bigot, Now Vote for Me! The Progressive’s Plan for November.

by Derek Hunter

Are you opposed to Obamacare or illegal immgration? You’re a racist. Are you opposed to gay marriage? You’re a homophobe. Did you oppose Elana Kagan’s appointment to the Supreme Court? You’re a sexist. After less than two years of complete Democrat control of government, there aren’t many Americas progressives haven’t accused of some sort of bigotry for simply having an opinion different from theirs. The politics of “hope” and “change” have devolved into exactly what those espousing them claimed they would end. Is this really Democrat’s plan to win votes in November?

Barack Obama campaigned under the banner of unity and ending the “politics of division.” But that banner was swiftly furled and the true banner of progressive politics began flying over our country. Progressivism leaves no room for debate or disagreement. To paraphrase former President Bush, to progressives you’re either with them or you’re with the enemy.

During the Obamacare debate, opponents were compared to opponents of civil rights legislation. The ethically challenged Congressman from New York, Charlie Rangel, said “The group that were in Washington fighting against the health bill and fighting against the President, [they] looked just like and sounded just like those groups that attacked the civil rights movement in the South.” Left-wing blogs ran with this mantra and agenda-driven media outlets like MSNBC dutifully followed. They still advance the lie that African-American Members of Congress were pelted with racial slurs as they walked to cast their vote, something even the New York Times has acknowledged there is zero evidence of.

The ends justify the means, no matter how sickening and divisive the means.

When a judge in California overturned Proposition 8, a ballot measure that defined marriage as being between one man and one woman which was passed by voters, these self-appointed champions of democracy cheered its undermining. Whatever your opinion on the issue, it was a rather ironic turn for people who use the word “democracy” as though they respect it.

When Elena Kagan was nominated to the Supreme Court without much of a record, opposition to this life-time appointment was called sexist all across the left-wing echo chamber. Blogs were replete with this unfounded charge, with headlines like “Not-So-Subtle Sexism at the Kagan Hearings” from the blog at Ms. Magazine.

The bigotry arrow has become the default weapon in the progressive’s quiver, only it’s lost its sting.

When Arizona passed a state law allowing police to enforce federal law on immigration, progressives cried racism. It couldn’t be that a majority of Arizonans, and Americans, simply support forcing immigrants to enter the country legally – opponents needed to be painted as bigots.

When 9/11 families expressed discomfort with building a Mosque two blocks from where Muslin extremists senselessly murdered their loved ones they were ignored by Progressives. Why? Because attacking them is a losing proposition. So they attacked those who sided with them, many of whom are Republicans, as bigots. They’ve basically ignored Democrats, including Howard Dean and Senate Majority Leader Harry Reid, who’ve said the same things. Opponents are not trying to “block” the Mosque, Progressives claim, yet no law to stop it has been proposed. They’ve made appeals to sensitivity, nothing more.

Progressives, who act as sensitivity police for others, attack Republicans for standing with people who have every reason to be sensitive.

The difference between right and left on these issues is the right attempts to change hearts and minds; the left simply accused opponents of bigotry. This makes sense when you realize how unpopular their initiatives have been; if you can’t get people to vote for you, try to discourage them from voting at all. It’s a strategy – if you can’t win someone’s vote, convince them the alternative is a bigot, because who wants to vote for a racist, homophobe or sexist? They’re hoping people will stay home on November 2^nd.

Progressives show little concern for the will of the people. They have an agenda, and nothing is going to stand in the way of achieving it. They will lie, they will demonize, they will do anything to achieve it.

In their zeal to advance that agenda they’ve gone farther than they ever have before and thus exposed their true nature. Progressives have accused about 90 percent of the country of bigotry, in one form or another. On every one of the issues listed above polls show the American people are unambiguously not buying the spin and siding with their opponents. That’s a fact progressives will learn the hard way when it comes time for these “bigots” to vote

American rights versus Obama's purloined freebies

Here is a basic difference that runs really deep and explains a lot. It's the difference between how Obama and the far left New Age Marxists view rights and how we Americans view rights. Americans know that a person is born with the right to own him or herself and whatever he or she can produce.

Further, we understand that the only reason there is government is that individuals get together and decide that there are certain things they can't do by themselves (national defense, infrastructure, etc.) so they will have to organize and pool resources to do those few things that would otherwise not get done. But still, of course, individuals are the primary unit, though they choose to gather in groups for different purposes. Overall, we have the right to be left alone except for those few things that we delegated to government. So we have rights like the right to speak freely, move freely, defend ourselves, freedom of the press, freedom to congregate, etc. We have a Constitution to guarantee that we retain the right to act freely except for those few things we delegated to government. Everything else we keep for ourselves, as it should be. They were ours to start with.

Obama disdains these rights and calls them "negative liberties." That is, they say what government can't do, which then ensures our freedom from control and interference. What he has proposed for the past ten years or so are "positive rights." These are things that the government gives you, like the right to a job, the right to high speed internet (That's not a joke -- they think it's a basic human right!), the right to medical care, the right to a college education. Naturally, this includes seizing resources from no good people in order to dole out goodies to more "deserving" people. (Fortunately, often one only needs to have the correct skin color in order to "deserve" someone else's property.)

Notice, these are all things that the government needs to control and dole out. It is diametrically opposed to the American system of "natural rights" that are based on logic and nature. These are based on Friedrich Hegel's concept of Der Stadt. The State, or central government is everything. Without them you would have nothing. The individual has no reason to exist but to serve the government and be thankful for the crumbs they get back for giving the state all their rights, money, and freedoms.

A practical real-world look at what Hegel's ideas look like in practice would be to study the Soviet Union or Nazi Germany. The government is everything; the individual is nothing but a worm churning out as much as they can for the state.

Again, in the American system the individual is everything. We own ourselves and what we produce. We allow government to exist to fill in the cracks between the things we can do ourselves. Hegel's idea is that when you are born you belong to the state. Therefore, anything you produce belongs to the state. Anything they give back to you is a gift. This is the idea behind government being able to seize as much of what you have as they want and to "spread it around," as Obama likes to say. It's not his to spread. It's stolen from the rightful owner who produced it. If he wants to spread something around he could feel free to start being generous himself, and at the very least help his aunt in Boston and brother in Kenya who live in abject poverty. In actual fact he gives the tiniest percentage of his income to charity of any president -- he's a selfish miser. BUT, he will make damn sure that you are forced to help people that he wants to cozy up to.

This divide between American ideas and Hegel's idea that was part of the excuse for Marxism is huge and is being crammed down our throats daily. He wants us to believe we are born owing the government something, and are lucky that we have the government there to dole out absurd rights like high speed internet while denying us our most basic rights that he disdains as "negative liberties." No thanks, buddy, you can keep your command and controlled handouts and I'll keep my constitutionally guaranteed rights that I was born with.

Tony Robbins (mister positive) warns of "major, major" collapse

Tony Robbins, famous for decades for being unrelentingly positive, issues a warning of "painful" economic collapse towards the end of the year. Very interesting how he frames it.

Practical steps to take to protect yourself

Very good little article from this website.

10 Practical Steps That You Can Take To Insulate Yourself (At Least Somewhat) From The Coming Economic Collapse

Most Americans are still operating under the delusion that this "recession" will end and that the "good times" will return soon, but a growing minority of Americans are starting to realize that things are fundamentally changing and that they better start preparing for what is ahead. These "preppers" come from all over the political spectrum and from every age group. More than at any other time in modern history, the American people lack faith in the U.S. economic system. In dozens of previous columns, I have detailed the horrific economic problems that we are now facing in excruciating detail. Many readers have started to complain that all I do is "scare" people and that I don't provide any practical solutions. Well, not everyone can move to Montana and start a llama farm, but hopefully this article will give people some practical steps that they can take to insulate themselves (at least to an extent) from the coming economic collapse.

But before I get into what people need to do, let's take a minute to understand just how bad things are getting out there. The economic numbers in the headlines go up and down and it can all be very confusing to most Americans.

However, there are two long-term trends that are very clear and that anyone can understand....

#1) The United States is getting poorer and is bleeding jobs every single month.

#2) The United States is getting into more debt every single month.

When you mention the trade deficit, most Americans roll their eyes and stop listening. But that is a huge mistake, because the trade deficit is absolutely central to our problems.

Every single month, Americans buy far, far more from the rest of the world than they buy from us. Every single month tens of billions of dollars more goes out of the country than comes into it.

That means that every single month the United States is getting poorer.

The excess goods and services that we buy from the rest of the world get "consumed" and the rest of the world ends up with more money than when they started.

Each year, hundreds of billions of dollars leave the United States and don't return. The transfer of wealth that this represents is astounding.

But not only are we bleeding wealth, we are also bleeding jobs every single month.

The millions of jobs that the U.S. economy is losing to China, India and dozens of third world nations are not going to come back. Middle class Americans have been placed in direct competition for jobs with workers on the other side of the world who are more than happy to work for little more than slave labor wages. Until this changes the U.S. economy is going to continue to hemorrhage jobs.

The U.S. government has helped to mask much of this economic bleeding by unprecedented amounts of government spending and debt, but now the U.S. national debt exceeds 13 trillion dollars and is getting worse every single month. Not only that, but state and local governments all over America are getting into ridiculous amounts of debt.

So, what we have got is a country that gets poorer every single month and loses jobs to other countries every single month and that has accumulated the biggest mountain of debt in the history of the world which also gets worse every single month.

Needless to say, this cannot last indefinitely. Eventually the whole thing is just going to collapse like a house of cards.

So what can we each individually do to somewhat insulate ourselves from the economic problems that are coming?....

1 - Get Out Of Debt: The old saying, "the borrower is the servant of the lender", is so incredibly true. The key to insulating yourself from an economic meltdown is to become as independent as possible, and as long as you are in debt, you simply are not independent. You don't want a horde of creditors chasing after you when things really start to get bad out there.

2 - Find New Sources Of Income: In 2010, there simply is not such a thing as job security. If you are dependent on a job ("just over broke") for 100% of your income, you are in a very bad position. There are thousands of different ways to make extra money. What you don't want to do is to have all of your eggs in one basket. One day when the economy melts down and you are out of a job are you going to be destitute or are you going to be okay?

3 - Reduce Your Expenses: Many Americans have left the rat race and have found ways to live on half or even on a quarter of what they were making previously. It is possible - if you are willing to reduce your expenses. In the future times are going to be tougher, so learn to start living with less today.

4 - Learn To Grow Your Own Food: Today the vast majority of Americans are completely dependent on being able to run down to the supermarket or to the local Wal-Mart to buy food. But what happens when the U.S. dollar declines dramatically in value and it costs ten bucks to buy a loaf of bread? If you learn to grow your own food (even if is just a small garden) you will be insulating yourself against rising food prices.

5 - Make Sure You Have A Reliable Water Supply: Water shortagesare popping up all over the globe. Water is quickly becoming one of the "hottest" commodities out there. Even in the United States, water shortages have been making headline news recently. As we move into the future, it will be imperative for you and your family to have a reliable source of water. Some Americans have learned to collect rainwater and many others are using advanced technology such as atmospheric water generators to provide water for their families. But whatever you do, make sure that you are not caught without a decent source of water in the years ahead.

6 - Buy Land: This is a tough one, because prices are still quite high. However, as we have written previously, home prices are going to be declining over the coming months, and eventually there are going to be some really great deals out there. The truth is that you don't want to wait too long either, because once Helicopter Ben Bernanke's inflationary policies totally tank the value of the U.S. dollar, the price of everything (including land) is going to go sky high. If you are able to buy land when prices are low, that is going to insulate you a great deal from the rising housing costs that will occur when the U.S dollar does totally go into the tank.

7 - Get Off The Grid: An increasing number of Americans are going "off the grid". Essentially what that means is that they are attempting to operate independently of the utility companies. In particular, going "off the grid" will enable you to insulate yourself from the rapidly rising energy prices that we are going to see in the future. If you are able to produce energy for your own home, you won't be freaking out like your neighbors are when electricity prices triple someday.

8 - Store Non-Perishable Supplies: Non-perishable supplies are one investment that is sure to go up in value. Not that you would resell them. You store up non-perishable supplies because you are going to need them someday. So why not stock up on the things that you are going to need now before they double or triple in price in the future? Your money is not ever going to stretch any farther than it does right now.

9 - Develop Stronger Relationships: Americans have become very insular creatures. We act like we don't need anyone or anything. But the truth is that as the economy melts down we are going to need each other. It is those that are developing strong relationships with family and friends right now that will be able to depend on them when times get hard.

10 - Get Educated And Stay Flexible: When times are stable, it is not that important to be informed because things pretty much stay the same. However, when things are rapidly changing it is imperative to get educated and to stay informed so that you will know what to do. The times ahead are going to require us all to be very flexible, and it is those who are willing to adapt that will do the best when things get tough.

Apparently they get it in the UK

From the UK Daily Telegraph, today:

The stunning decline of Barack Obama: 10 key reasons why the Obama presidency is in meltdown

By Nile Gardiner World Last updated: August 12th, 2010

1319 Comments Comment on this article

President Obama: In decline? (Photo: AFP)

The last few weeks have been a nightmare for President Obama, in a summer of discontent in the United States which has deeply unsettled the ruling liberal elites, so much so that even the Left has begun to turn against the White House. While the anti-establishment Tea Party movement has gained significant ground and is now a rising and powerful political force to be reckoned with, many of the president’s own supporters as well as independents are rapidly losing faith in Barack Obama, with open warfare breaking out between the White House and the left-wing of the Democratic Party. While conservatism in America grows stronger by the day, the forces of liberalism are growing increasingly weaker and divided.

Against this backdrop, the president’s approval ratings have been sliding dramatically all summer, with the latest Rasmussen Daily Presidential Tracking Poll of US voters dropping to minus 22 points, the lowest point so far for Barack Obama since taking office. While just 24 per cent of American voters strongly approve of the president’s job performance, almost twice that number, 46 per cent, strongly disapprove. According to Rasmussen, 65 per cent of voters believe the United States is going down the wrong track, including 70 per cent of independents.

The RealClearPolitics average of polls now has President Obama at over 50 per cent disapproval, a remarkably high figure for a president just 18 months into his first term. Strikingly, the latest USA Today/Gallup surveyhas the President on just 41 per cent approval, with 53 per cent disapproving.

Related link: The Obama presidency increasingly resembles a modern-day Ancien Régime

There are an array of reasons behind the stunning decline and political fall of President Obama, chief among them fears over the current state of the US economy, with widespread concern over high levels of unemployment, the unstable housing market, and above all the towering budget deficit. Americans are increasingly rejecting President Obama’s big government solutions to America’s economic woes, which many fear will lead to the United States sharing the same fate as Greece.

Growing disillusionment with the Obama administration’s handling of the economy as well as health care and immigration has gone hand in hand with mounting unhappiness with the President’s aloof and imperial style of leadership, and a growing perception that he is out of touch with ordinary Americans, especially at a time of significant economic pain. Barack Obama’s striking absence of natural leadership ability (and blatant lack of experience) has played a big part in undermining his credibility with the US public, with his lacklustre handling of the Gulf oil spill coming under particularly intense fire.

On the national security and foreign policy front, President Obama has not fared any better. His leadership on the war in Afghanistan has been confused and at times lacking in conviction, and seemingly dictated by domestic political priorities rather than military and strategic goals. His overall foreign policy has been an appalling mess, with his flawed strategy of engagement of hostile regimes spectacularly backfiring. And as for the War on Terror, his administration has not even acknowledged it is fighting one.

Can it get any worse for President Obama? Undoubtedly yes. Here are 10 key reasons why the Obama presidency is in serious trouble, and why its prospects are unlikely to improve between now and the November mid-terms.

1. The Obama presidency is out of touch with the American people

In a previous post I noted how the Obama presidency increasingly resembles a modern-day Ancien Régime, extravagant, decaying and out of touch with ordinary Americans. The First Lady’s ill-conceived trip to Spain at a time of widespread economic hardship was symbolic of a White House that barely gives a second thought to public opinion on many issues, and frequently projects a distinctly elitist image. The “let them eat cake” approach didn’t play well over two centuries ago, and it won’t succeed today.

2. Most Americans don’t have confidence in the president’s leadership

This deficit of trust in Obama’s leadership is central to his decline. According to a recent Washington Post/ABC News poll, “nearly six in ten voters say they lack faith in the president to make the right decisions for the country”, and two thirds “say they are disillusioned with or angry about the way the federal government is working.” The poll showed that a staggering 58 per cent of Americans say they do not have confidence in the president’s decision-making, with just 42 per cent saying they do.

3. Obama fails to inspire

In contrast to the soaring rhetoric of his 2004 Convention speech in Boston which succeeded in impressing millions of television viewers at the time, America is no longer inspired by Barack Obama’s flat, monotonous and often dull presidential speeches and statements delivered via teleprompter. From his extraordinarily uninspiringAfghanistan speech at West Point to his flat State of the Union address, President Obama has failed to touch the heart of America. Even Jimmy Carter was more moving.

4. The United States is drowning in debt

The Congressional Budget Office Long-Term Budget Outlook offers a frightening picture of the scale of America’s national debt. Under its alternative fiscal scenario, the CBO projects that US debt could rise to 87 percent of GDP by 2020, 109 percent by 2025, and 185 percent in 2035. While much of Europe, led by Britain and Germany, are aggressively cutting their deficits, the Obama administration is actively growing America’s debt, and has no plan in place to avert a looming Greek-style financial crisis.

5. Obama’s Big Government message is falling flat

The relentless emphasis on bailouts and stimulus spending has done little to spur economic growth or create jobs, but has greatly advanced the power of the federal government in America. This is not an approach that is proving popular with the American public, and even most European governments have long ditched this tax and spend approach to saving their own economies.

6. Obama’s support for socialised health care is a huge political mistake

In an extraordinary act of political Harakiri, President Obama leant his full support to the hugely controversial, unpopular and divisive health care reform bill, with a monstrous price tag of $940 billion, whose repeal is now supported by 55 per cent of likely US voters. As I wrote at the time of its passing, the legislation is “a great leap forward by the United States towards a European-style vision of universal health care, which will only lead to soaring costs, higher taxes, and a surge in red tape for small businesses. This reckless legislation dramatically expands the power of the state over the lives of individuals, and could not be further from the vision of America’s founding fathers.”

7. Obama’s handling of the Gulf oil spill has been weak-kneed and indecisive

While much of the spilled oil in the Gulf has now been thankfully cleared up, the political damage for the White House will be long-lasting. Instead of showing real leadership on the matter by acing decisively and drawing upon offers of international support, the Obama administration settled on a more convenient strategy of relentlessly bashing an Anglo-American company while largely sitting on its hands. Significantly, a poll of Louisiana voters gave George W. Bush higher marks for his handling of the aftermath of Hurricane Katrina, with 62 percent disapproving of Obama’s performance on the Gulf oil spill.

8. US foreign policy is an embarrassing mess under the Obama administration

It is hard to think of a single foreign policy success for the Obama administration, but there have been plenty of missteps which have weakened American global power as well as the standing of the United States. The surrender to Moscow on Third Site missile defence, the failure to aggressively stand up to Iran’s nuclear programme, the decision to side with ousted Marxists in Honduras, the slap in the face for Great Britain over the Falklands, have all contributed to the image of a US administration completely out of its depth in international affairs. The Obama administration’s high risk strategy of appeasing America’s enemies while kicking traditional US allies has only succeeded in weakening the United States while strengthening her adversaries.

9. President Obama is muddled and confused on national security

From the wars in Afghanistan and Iraq to the War on Terror, President Obama’s leadership has often been muddled and confused. On Afghanistan he rightly sent tens of thousands of additional troops to the battlefield. At the same time however he bizarrely announced a timetable for the withdrawal of US forces beginning in July 2011, handing the initiative to the Taliban. On Iraq he has announced an end to combat operations and the withdrawal of all but 50,000 troops despite a recent upsurge in terrorist violence and political instability, and without the Iraqi military and police ready to take over. In addition he has ditched the concept of a War on Terror, replacing it with an Overseas Contingency Operation, hardly the right message to send in the midst of a long-war against Al-Qaeda.

10. Obama doesn’t believe in American greatness

Barack Obama has made it clear that he doesn’t believe in American exceptionalism, and has made apologising for his country into an art form. In a speech to the United Nations last September he stated that “no one nation can or should try to dominate another nation. No world order that elevates one nation or group of people over another will succeed. No balance of power among nations will hold.” It is difficult to see how a US president who holds these views and does not even accept America’s greatness in history can actually lead the world’s only superpower with force and conviction.

There is a distinctly Titanic-like feel to the Obama presidency and it’s not hard to see why. The most left-wing president in modern American history has tried to force a highly interventionist, government-driven agenda that runs counter to the principles of free enterprise, individual freedom, and limited government that have made the United States the greatest power in the world, and the freest nation on earth.

This, combined with weak leadership both at home and abroad against the backdrop of tremendous economic uncertainty in an increasingly dangerous world, has contributed to a spectacular political collapse for a president once thought to be invincible. America at its core remains a deeply conservative nation, which cherishes its traditions and founding principles. President Obama is increasingly out of step with the American people, by advancing policies that undermine the United States as a global power, while undercutting America’s deep-seated love for freedom.

Top expert gets it right

'Black Swan' Author Taleb: US Bonds Will Collapse, Avoid Stocks

Thursday, 12 Aug 2010 03:01 PM

Article Font Size

By: Dan Weil

Investment author Nassim Nicholas Taleb isn’t buying the government-bond rally that has sent the 10-year Treasury yield down to a 16-month low of 2.68 percent.

Investors have turned to Treasuries as a haven amid a global economic recovery that is fading. Given the explosion in government debt, that isn't a smart move, Taleb says.

The Congressional Budget Office forecast that the debt burden will total 62 percent of GDP by Sept. 30.

Taleb warned of unexpected events upsetting financial markets in his popular book “The Black Swan: The Impact of the Highly Improbable,” which predicted the financial crisis of 2008.

Now the New York University professor is “betting on the collapse of government bonds," he said at a conference in Johannesburg, Bloomberg reports.

He also urged investors to avoid stocks. “I’m very pessimistic. By staying in cash or hedging against inflation, you won’t regret it in two years.”

Individual investors are both following Taleb’s advice and rejecting it.

Experts estimate that Americans have parked up to $9 trillion in bank accounts, certificates of deposit, Treasury bills and money-market funds, CNBC reports. So in that sense, investors are toeing Taleb’s line.

But they’re also choosing Treasuries — among other bonds — over stocks.

In the most recent week, bond mutual funds enjoyed a $13.25 billion inflow, while stock funds suffered a $3.85 billion outflow.

Hedge funds aren’t shying away from Treasuries either. They now account for about 20 percent of trading in the $10 trillion market, up from 3 percent last year, according to a new study from Greenwich Associates, MarketWatch reports.

© Moneynews. All rights reserved

THANK YOU! Someone remembers history!

From Big Government:

Blame Barney Frank for the Recession, Not George Bush

by Jeff Dunetz

The progressive Democrats in power must believe that the citizens of this country are absolute morons, either that or they haven’t read a newspaper in two years and don’t realize that George Bush is no longer president. The Democratic party plans on retaining their change message for their 2010. Their new tag line is “vote for us, or its back to the bad old economic policies of George Bush. That’s right Barack Obama and his progressive majority are going to campaign as if they were all still in kindergarten “Its not my fault….blame Bush.”

Not only is that approach childish, but it belies the truth. Allow me to suggest that the policies of Barney Frank had more to do with the bursting of the housing bubble, the resulting bank crisis and the “great recession,” than the policies of George Bush. Led by Frank the Democratic party brought down the banking industry by forcing banks to give loans to people who couldn’t afford them, then he blunted the Republican attempts to regulate the industry

Frank aggressively fought reform efforts by the Bush administration. He told The New York Times on Sept. 11, 2003, Fannie Mae and Freddie Mac’s problems were “exaggerated.” Exaggerated? Thanks to Fannie and Freddie the housing market collapsed and we fell into this “great recession.”

“These two entities – Fannie Mae and Freddie Mac – are not facing any kind of financial crisis,” Frank Opined to the Times. “The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”

The 10/8/03 Washington Post reported that Frank opposed giving the Bush administration the approval rights over banking business activities that “could pose risk to the taxpayers.” He worried the Treasury Department “would sacrifice activities that are good for consumers in the name of lowering the companies’ market risks.”

In the video below Frank sits in a 9/10/03 House Financial Services Committee hearing and says Fannie and Freddie are sound, and there is no housing disaster coming.

Rep. Barney Frank (D., Mass.): I worry, frankly, that there’s a tension here. The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see. I think we see entities that are fundamentally sound financially and withstand some of the disaster scenarios.

Two years later the United States was much closer to the bursting on the housing bubble. The Republicans in Congress introduced a bill to regulated Fannie Mae and Freddie Mac. Led by Barney Frank and Chris Dodd the bill was killed.

On June 27, 2005 Barney Frank stood up on the floor of the House of Representatives and told America that there is undue concern about the housing market and even though prices were growing very quickly the housing market is not like the Dot.Com industry, the housing bubble will not burst.

If the Guinness Book of World records had a hypocrisy category, the winner would be Barney Frank, Chairman of the House Banking Committee. Let me revise that, Frank wouldn’t be the winner, judging by his actions the Guinness people would have to retire the category.

When the housing bubble finally burst Mr. Frank called for prosecution of the people who caused the banking crisis, he should have looked in the mirror.

Barney Frank got away with his housing bubble hypocrisy and is still getting away with it. Fannie and Freddie are still asking the public for money, the economy is still in the toilet and the Democratic Party is still blaming President Bush.

While there were plenty of problems with George Bush’s policies, this recession has more to do with the policies of the progressive Democrats, than those of the former president. In fact, if the POTUS and his progressive lemmings were to be truthful, they should be blaming Barney Frank because when you examine what happened Frank is the one blocked the regulation of Fannie and Freddie and it was Frank who kept saying over and over there is no housing crisis

You two smart ones! You're outta here!

From Andrew Breitbart's Big Government, today:

Obamanomics: Retirement of the World’s Greatest Cheer

by Chriss W. Street

The White House’s ever-optimistic economic cheerleading squad is in shambles. Over the last six weeks, Peter Orszag, Director of the Office of Management & Budget and Christine Romer, Chairman of the Council of Economic Advisor, have now euphemistically “resigned to spend more time with their families”. Both Orszag and Romer were highly credentialed and respected academicians who provided a veneer of elitist credibility to offset the enormous skepticism regarding the lugubrious Larry Summers and the dubious Timothy Geithner. Orszag and Romer had been reduced early on to a level of authority similar to Saturday Night Lives’ iconic Spartan Cheerleaders, Will Ferrell and Cheri Oteri. They trotted out each week dressed for the part to enthusiastically give the “World’s Greatest Cheer”, but they were never actually allowed on the team.

The Obama Administration has fancied itself as the new Camelot of American Politics. Their campaign march to power was capped by a highly choreographed speech near Berlin’s Brandenburg Gate where Presidents Ronald Reagan and John Kennedy rallied the Free World to oppose tyranny with “tear down these walls” and “ich bein Berliner”.

Obama was successful demonstrating the he could match America’s two most photogenic Presidents for good looks and beautiful wives. (Michelle Obama is beautiful??? Why didn't somebody tell me. I thought she was a ridiculous, America-hating harpy.) But his appeasement message of “the walls between the countries with the most and those with the least cannot stand” seemed the antithesis to Reagan’s: “Democracy is worth dying for, because it’s the most deeply honorable form of government ever devised by mAan.”and Kennedy’s: “Let every nation know, whether it wishes us well or ill, that we shall pay any price, bear any burden, meet any hardship, support any friend, oppose any foe, in order to assure the survival and the success of liberty.”

Presidents Reagan and Kennedy championed supply-side tax cuts and reductions in regulations to support spur the economic triumph for America’s brand of free market democracy, whereas President Obama seems much comfortable with bureaucratic orthodoxy. Both Reagan and Kennedy respected the profit motive and extolled the creative virtues of the capitalism. Reagan stated: “The most terrifying words in the English language are: “I’m from the government and I’m here to help.”

Kennedy stated “Conformity is the jailer of freedom and the enemy of growth”. Obama on the other hand dismissing a career in business as; “Focusing your life solely on making a buck shows a certain poverty of ambition. It asks too little of yourself. Because it’s only when you hitch your wagon to something larger than yourself that you realize your true potential.” For the last two years Summers and Geithner have smugly claimed (1) America has better demographics, (2) China will be happy to continue to fund our government spending and (3) the dominance of the US economy will return as it always has. The Great Recession has been worse than the Administration’s cheerful predictions. Reassurances that unemployment would fall to 7.5% by this November’s election are being replaced with; deficit spending of only $3.5 trillion over two years was not sufficient stimulus and the 9.5% current unemployment may “temporarily” move higher.

The Administration’s signature accomplishment of “Healthcare Reform”, passed in over a weekend as cost containment, is taking some tough hits now that independent analysts have read the 2324 pages of small print. Towers Watson, an employment benefits consultant, now projects it will cost corporations $14 billion a year more to comply. The fear of this new spiraling entitlement has small business frightened. The Heritage Foundation calculates the annual budget deficit when Obamacare is fully implemented in nine years, will be more than double the White House estimate of $ 917 billion.

Christine Romer may still eventually win the Nobel prize for her pioneering economics studies. She convincingly demonstrated the failure of US fiscal stimulation to be effective during the Great Depression, because taxes were raised almost as quickly as government spending increased during the New Deal. Her recent work, with husband David Romer, focussed on the impact of tax policy on government and general economic growth. The historical record of US tax changes from 1945-2007, reveals that a one percent increase in taxes by “one percent of GDP lowers real GDP by roughly three percent.” (Higher taxes suffocate the economy. No kidding. Everyone knows this but Obama, our idiot overlord.)

Peter Orszag’s economic research determined “higher health care costs coincide with downward pressure on consumer incomes.” As real disposable income growth has been 1% or less for the last eight quarters – the longest period of such slow growth since World War II, Orszag could quickly calculate that pay checks from private payrolls shrank to their smallest share of personal income ever in first quarter. who believe they have zero or negative equity in their homes has risen to over 50%.

The Spartan cheerleaders may be hanging up their pompoms after two years of rooting for policies their own research told them would not work. The fear that higher government spending will lead to higher tax rates has paralyzed business, which is the cause of anemic income growth and high unemployment in the US. President Obama said; “we are the change we were looking for”. He is right! He should change course and adopt the proven supply side policies championed by Presidents Reagan and Kennedy of cutting taxes and supporting business is the change that lead to economic victory. Now that would be the change worthy of; The World’s Greatest Cheer

Avatar Movie: Luciferian Masterpiece

Our Hero

Who is the hero of the movie Avatar? He is a former marine who was sent to a war he didn’t want to fight and ended up in a wheelchair. So he’s the victim of someone more powerful than himself who was unjust and threw him down to stay in that wheelchair, crippled. In the course of the movie he takes on the body of an avatar to work among another race to ultimately save them.

What is an avatar? Avatar is actually a concept from Luciferian theology (the religion of Satan worship, which in its worship-of-Lucifer-the Lightbearer-form is far more common than you think). To Luciferians one of Satan’s many identities, Djwal Khul, hung out in Tibet and used Jesus as an avatar to save the world. In other words, he sat over there in Tibet and could see through Jesus’ eyes, be his brain, speak with his mouth, and move his limbs – just like in the movie. So the hero of the movie was a very direct representation of the “real” avatar of Luciferian theology. He slipped into the role of Djwal Khul using the body of Jesus to work among another intelligent race in order to save them.

Of course, Satan’s version, told in the Koran and occult sources, is that Satan was just minding his business and God was unjust and threw him down and crippled him by limiting what he could do and where he could go.

We are the World

Now, what about this world that the blue people of the movie live in? Remember? Everything is alive, interconnected, and even the plants all over that world can communicate with animals and humanoids on the other side of the world. They are also all connected to the worldwide spirit mother, the tree of light that unites and enlightens them all. She is very powerful and has mystical powers, even over death.

Sounds very different from our world, right? Actually, it is believed by Luciferians to be the way things actually work here. It’s called the Gaia Hypothesis and you will often hear the teachings spouted by Al Gore and his pals. We all belong to the earth; she is our mother; we’re all connected to all living things; God is in all of us and everything. This is a very ancient and successful cult that is well established to be a cult of Satan. He is the mother of our world, the spirit mother and power and force of the world that pulses through all things. You can increase your power and joy in this life by connecting to his power that surges through all things and become one with all things and so on. One of his main symbols, probably the main one, is blue light like the tree in the movie emitted. He claims to be the enlightener to bring light to mankind and the universe. (That's weird. Look at the picture above. Everything in the movie is always bathed in blue light.)

Feng Shui, crystals, transcendental meditation, pyramid power, and so on are common ways you’ll see people use to channel and get in touch with the “life force” flowing through everything.

The Red Dragon

What was the most powerful and awesome creature in the movie? Remember? It was the power that the man using the avatar harnessed to ultimately bring all the blue people together with him to save their world. Yes! It was a red dragon. I don’t think I have to explain how a red dragon is one of the most often used symbols of Satan. All the other dragons in the movie were different colors like grey or blue or greenish. The one supreme, powerful, huge, dominating one was red. And the guy harnessed the power of the red dragon to impress everyone and rally them to defeat the enemy and save the world. The other dragons were harnessed by the other blue people to give them the power to fly all over, lift heavy objects, and go to high places. (Sound like spiritualism where you use the power of lesser demons to have out-of-body experiences, fly around the universe on the Astral Plane, and use mind powers to see the future and lift objects with your mind?)

I’ve Seen the Enemy and He is Us

Who was the enemy? They were humans, yes. They were also a powerful capitalist corporation and their private army of US military thugs. Oddly enough, Luciferians for a hundred years, and especially since the books of occultist Alice Bailey were published by Lucifer Publishing before World War II, have been calling for the overthrow of capitalism and nationalism. They claim that nationalism makes armies necessary, and they want to get rid of armies. Capitalism is bad because it makes us think of ourselves, and really individuality needs to disappear so we can all happily unite in our union with Satan and all the people and creatures and plants of the world (as in Gaia Hypothesis). Humans are the only ones, they say, who dare to resist uniting with each other and Satan. So, we need to overcome humans, capitalists, and national militaries like in the movie.

There’s another layer to the humans arriving and trying to take over. They come in from somewhere else, though they don’t belong there, and try to seize control of the planet. In the course of doing that, they are totally destroying the place. Guess what Luciferians call God? The External Controller. This is precisely what they say God is doing on this planet. They say He doesn’t belong here, but comes in unwanted and tries to seize control. And that is the only reason this world is so chaotic and bad, because someone who doesn’t belong there is struggling for control, when all Lucifer wants to do is live in peace and bring harmony and joy to his beautiful planet, like the mother tree.

Summary

So, in one three hour movie we have the hero, the good guy, playing the role of Satan’s identity Djwal Khul. The tree of light, the mother tree, is the most powerful good on the planet, and a clear-cut symbol of Satan. The most awesome power for uniting and destroying the enemy to save the world is a red dragon, one of the ultimate symbols of Satan. And the evil humans who don’t want to be in harmony with the planet, along with the military and capitalists, and the external controller GOD HIMSELF get conquered and evicted from the planet by the end of the three hours.

There is one more loose end you may have noticed that I haven’t mentioned yet. The central character, the avatar, whom I said is ultimately the role of Jesus in Luciferian doctrine doesn’t seem to make sense. The ex-Marine is in the role of Djwal Khul, and his avatar, the blue guy, is Jesus, and saves the world. How did Jesus help Djwal Khul (Satan) save the world? Here is the heart of modern Luciferian doctrine. Satan claims that he is the ultimate god. He used Jesus as an avatar to point the way to the Father, himself. Jesus messed up and started saying He was the Way, Truth and Life, and no one comes to the Father but by Him. That was excessive pride talking. He was supposed to say that He showed the way to the Father, and that’s it. Jesus was supposed to show what it looked like for the average man to become a Christ, a god, and point the way to the ultimate Christ, Lucifer. Then we would understand that every human can become a christ, a god, by merging with Lucifer. Once we have all merged with Lucifer, the External Controller is conquered and evicted, and the world is saved, bringing about a thousand years of peace and prosperity since God is no longer messing things up. So, the movie shows what was supposed to happen if Jesus hadn’t gotten proud and confused everyone with all that talk about how He was the Way.

I’m sure there’s a lot more symbolism in there. A lot. I saw the movie a year ago and am going on memory. I don’t intend to watch essentially “Lucifer, a love story” again just to get a better handle on all of the symbolism. You get the point. The whole movie is an explanation of Luciferian beliefs, with the “happy” ending that Satan is hoping for but will never see besides in the movie theater. Maybe he will build his own private movie theater and leave us alone? No, I didn’t think so.

"We're at the turning point" top expert says

Rather than having me talk about this same stuff again, sounding the alarm, I am going to let one of the most famous and respected, normally not at all alarmist economists do it for me (look for things in red):

Economy Heading for a Systemic Collapse into Hyperinflationary Great Depression

Economics / Great Depression IIAug 05, 2010 - 02:29 PM

By: The_Energy_Report

When Fed Chairman Ben Bernanke admits to seeing an "unusually uncertain" economy ahead, it's pretty terrifying to imagine what he's really thinking. What John Williams envisions—and he's by no means looking to the far horizon—is a systemic collapse, a hyperinflationary great depression and the cessation of normal commerce. Despite that bleak outlook, however, when the economist and editor of ShadowStats.com sat down for this exclusive Energy Reportinterview, he also had some good news.

The Energy Report: A few months back, John, you said, "if you strangle liquidity you always contract an economy and deliberately or not, liquidity is being strangled, resulting in sharp declines in consumer credit, commercial and industrial loans." Does this mean it would spur more economic growth if banks actually started lending?

John Williams: It sure wouldn't hurt. We're still seeing contractions in liquidity, and that's adjusted for inflation. In real terms, M3 money supply is down almost 8% year-over-year. It's the sharpest fall in the post -World War II era. It's not so much the depth of the decline in the liquidity or the duration, but the fact that the liquidity turns negative year-over-year that signals the economy turning down.

We had the signal in December of 2009 indicating intensification of the downturn, in this case, within six to nine months. We're in that timeframe now and see softening numbers. People are talking about a weaker economy. Even Mr. Bernanke has described the economy as "unusually uncertain" in terms of its outlook. Wording like that from the Fed is a pretty good indication that something's afoot.

TER: Why is M3 still contracting?

JW: Just as you noted, the banks are not lending. The money the Fed put into the system in terms of buying mortgage-backed securities from the banks and trying to help bank liquidity ended up back with the Fed as excess reserves. We have well over $1 trillion there; had the banks loaned that money in the normal stream of commerce, it would have added more than $10 trillion to the broad money supply, which otherwise is up around $14 trillion. That certainly would have had some inflationary impact if not in terms of actual business activity. You can't always get the economy to grow by pushing money into it. Sometimes it's like pushing on a string.

TER: And you say that a contracting money supply is a sure sign of trouble?

JW: When it contracts year-over-year adjusted for inflation, that's a signal for a downturn or an intensified downturn. It happens every time. Squeeze liquidity and business activity contracts.

On occasion, we've had recessions without a preceding downturn in the money supply. And sometimes, the money supply has turned positive but the economy has not followed—again, pushing on the string. Expanding money supply has led to upturns as well, so the Feds had to give it a try to stimulate the economy. But the one sure signal is the downturn. You don't get it often but it's very powerful when you do.

We're beginning to see the data break. Some unusual factors have been at work. I expect an accelerating pace of downturn in the next couple of months. The numbers will turn sharply worse. Consensus estimates are already moving in that direction and most everything will follow. Industrial production is still up but retail sales have been falling. Payroll numbers have been flat when you take out the effects of the census hiring. Those employment numbers will turn down in the next month or two, providing an important indicator of renewed economic contraction.

So we'll see how it develops, but we're at that turning point. It is happening as we speak. At the end of July, we got an estimate of the second quarter GDP, where the pace of annualized growth slowed to 2.4%. The early GDP estimates are very heavily guessed at, so most of the time you don't know if you're getting a positive or a negative number. You get a margin of error of plus or minus 3% around the early reporting. That happens also to be about average growth.

Nevertheless, on a quarter-to quarter-basis, I think we'll see GDP down again in the third quarter. With the bulk of the reported GDP in the first half due to inventory building, the stage for renewed contraction has been set. By then we'll find the consensus pretty much in the camp that we're in a double-dip recession. The popular press will describe it as a double dip, but we never had a recovery. Actually, this is just a very protracted, very deep downturn that has had a pattern of falling off a cliff, bottoming out, having a little bit of bump due to stimulus and then turning down again. Sort of shaped like the path of a novice skier going down a jump for the first time. Speeding sharply down the hill, he goes up in the air and starts spinning wildly as he tries to figure out which end is up with his skis. Then he takes a pretty bad tumble. We're beginning to spin in the air.

TER: But we've been in recession for three years now?

JW: The second leg that I'm talking about is the one now underway as we get to the middle of 2010. December 2007 is when this recession officially started, although I contend that it started earlier in 2007. At any rate, the economy plunged through 2008 and well into 2009. The numbers were pretty much bottom-bouncing during the second half of 2009. The auto deals and the homebuyer deals added a little spike to the growth pattern, but that growth was stolen from the future. It didn't create new demand.

Let me just clarify a bit. Recession, at least traditionally, was defined as two consecutive quarters of contracting real GDP growth adjusted for inflation. The National Bureau of Economic Research, the defining authority as to whether we're in a recession, will deny it, but at one time they used that general guideline as well. They've always used other numbers, too, such as employment and industrial production, trying to time the beginning or the end of a recession to a particular month. Significantly they did not call an end to this recession. They said it was too early to call, but I think they had a pretty good sense of what was going to happen. So what we're seeing now just looks like an ongoing deep recession. The next down leg is going to be particularly painful and I'm afraid particularly protracted.

TER: Can the governments pull any more stimulus levers yet this year?

JW: Oh, I think they'll try, but nothing much they can do will have anything other than short-term impact. If they write everyone a check, people go out and buy things. That would give the economy a quick boost but do nothing to change the underlying fundamentals or to correct the structural problems in this recession. Those are tied to the lack of robust growth in consumer income.

TER: So consumer income is a key factor.

JW: Absolutely. If you put in housing that's related to the consumer, that's three-quarters of the GDP. The average household is not staying ahead of inflation, and unless income grows faster than inflation, the economy won't grow faster than inflation—and that means that GDP is not growing. Income sustains consumption. When income grows, consumption grows. The only way to have sustainable long-term economic growth is to have healthy growth in income. You can buy some short-term economic growth, though, without growth in income, through debt expansion, which is what Greenspan tried.

Most of the growth we'd seen in the last decade prior to this downturn was due to debt expansion. The debt structures have pretty much been put through the wringer and consumers are not expanding credit, generally because it's not available to them. Absent debt expansion and/or significant growth in income, no way can the consumer expand personal consumption. You have to address employment, quality of jobs.

TER: You're suggesting that problems with the quality of jobs, if not the quantity, goes back to Greenspan—before the recession kicked in.

JW: Yes. A lot of high-paying jobs have been lost to offshore competition, to U.S. companies moving facilities offshore and to outsourcing offshore. That's been the primary driver of declining household income.

TER: We no longer really have the option of expanding the debt and it's doubtful that even short-term stimulus will have much impact. Looking at this next leg down against that backdrop, what projections would you make about unemployment, housing prices, GDP as we look through the end of 2010 and into '11?

JW: Unemployment will be a lot worse than most people expect. Housing will continue to suffer in terms of weak demand. But in this crazy, almost perverse circumstance, the renewed weakness to a large extent will help push us into higher inflation. Real estate tends to do better with higher inflation, but it's not going to be a happy circumstance for anyone.

The government is effectively bankrupt. Using GAAP accounting principles, the annual deficit is running in the range of $4 trillion to $5 trillion. That's beyond containment. The government can't cover it with taxes. They'd still be in deficit if they took 100% of personal income and corporate profits. They'd also still be in deficit if they cut every penny of government spending except for Social Security and Medicare. Washington lacks the will to slash its social programs severely, to change its approach to ever bigger government. The only option left going forward is for the government eventually to print the money for the obligations it cannot otherwise cover, which sets up a hyperinflation.

All of what I just described was already in place when the systemic solvency crisis broke. Before this crisis the government was effectively bankrupt. In response to the crisis, the government may have gone beyond what it had to do, but you err on the side of conservatism when you're trying to prevent a systemic collapse. That was a real risk. It still is. Irrespective of the politics of big government spending, quantitative easing, renewed bailing out of banks, whatever is involved, I'd argue that the government still will do whatever it takes to prevent a systemic collapse. That last series of actions had the effect of rapidly exploding the deficit. In just a year, we went from something under $500 billion in official reporting, on a cash basis as opposed to GAAP basis, to something close to $1.5 trillion.

TER: How big will that deficit grow in this second painful and protracted period?

JW: I can't give you a hard number, but I can tell you this. The markets came into this year on consensus projections that we'd have positive economic growth. Forecasts for the federal deficit, treasury funding, banking system solvency, etc. all were based on assumptions of recovery, of positive growth. Those assumptions presumably still underlie what I consider to be an irrational stock market.

But those projections and assumptions were wrong. We're going to have negative growth. The downturn will intensify. We're not in recovery. We have states on the brink of bankruptcy. The federal government isn't going to let California or New York or Illinois collapse. Those are threats to the systemic survival. They're also going to spend a lot more to support people on unemployment. Again, putting aside election year politics and such, the banking industry will need further bailout as solvency issues come to a head again. The federal deficit is going to balloon. It's going to blow up much worse than any formulas would give you, and Treasury funding needs will explode.

TER: Clearly you see us spiraling out of control.

JW: We've been talking about an economic recession, but we are headed for something far worse. I define a depression as a 10% peak-to-trough contraction in the economy. In terms of the broad economy, we're not down 10% in GDP yet. So while we're not formally in depression, we're certainly seeing it in a number of indicators and I think we'll be in a depression, with GDP down 10%, in the near future.

A contraction greater than 25% peak-to-trough puts you in a great depression. That is what I envision, but we'll be taken there by hyperinflation and a resultant cessation of normal commerce.

TER: Hyperinflation means different things to different people. How do you define it?

JW: My definition has been and will remain very simple. When the largest-denomination note in circulation—the $100 bill in the case of the U.S. dollar—has the same value as toilet paper, you have a hyperinflation. You saw that in the Weimar Republic. People papered their walls with money.

TER: I think you've said that the only reason that Zimbabwe's economy survived is because they started using dollars as black market currency.

JW: But you don't have anything like that in the United States as a backup. We're going to have a much rougher time in the U.S., of all places, than they had in Zimbabwe. Zimbabwe was able to function because people could exchange the local currency into dollars, and then buy things with the dollars, so the economy continued to function. Without some kind of a backup system, as the currency becomes worthless you'll see disruptions to key supply chains. When people don't have food, you end up in very dangerous circumstances.

TER: Do you see any real potential for precious metals or another currency as a backup?

JW: Well, yes. I think they will become a backup fairly quickly, but we don't have any widely developed black market for another currency at this point because the dollar remains the world's reserve currency. All sorts of things may develop that we don't anticipate. What will be used to cover for the dollar? Gold and silver? The precious metals are limited in supply and not widely held by the population in general. Hard currency from Canada or Australia? That wouldn't be in wide circulation, at least not early on. I think a barter system is where it will go until the currency system is stabilized, but the currency system can't stabilize until the government's fiscal house is in order.

There's no sense in setting up a currency on a gold standard if you can't live within your means, because you'd just end up going through successive devaluations against gold. So whatever's done to set up a new currency system will have to be in general conjunction with the overhaul of the government's fiscal condition. But in the interim, something of a barter system would evolve. Even that, though, is something that may take six months to get stabilized.

TER: It's hard to imagine.

JW: In the Weimar Republic, you could go into a fine restaurant one evening and enjoy its most expensive bottle of wine with a nice dinner. You'd probably negotiate the price before you sat down, because the price would be higher by the time you finished dinner. By the next morning the empty wine bottle would be worth more as scrap glass than it had been worth as an expensive bottle of wine the night before. That's how rapidly things change in a hyperinflation.

But we have a circumstance that did not exist in the Weimar Republic. Our society is heavily dependent on electronic cash. Say you have a credit card with a $10,000 limit. In hyperinflation, that $10,000 might be enough to buy you a loaf of bread.

TER: There's not even enough physical cash running around anywhere in the United States that actually represents what goes back and forth electronically. If you can't use your debit card, how do you pay for your coffee at Starbucks? And how will companies and banks adjust?

JW: You're not going to have electronic payments that are in-barter equivalent that I can foresee. That would be a fairly sophisticated system and the needs are going to be immediate. When hyperinflation starts to break, it can unfold in a matter of weeks, months. You'll need to be able to handle things rapidly. Frankly I think the system will tend to break down. It's not a happy circumstance. How will a small company get its goods to people? There might be blackouts. Who's going to get the fuel to the power plants?

TER: And to the gas stations for the cars for people who still have jobs?

JW: Yup. It will get very difficult. Society won't run as we're used to it. People will find a way, but it's going to take a little while for that to stabilize.

In an electronic society it's going to take some creative thinking by businesses. I'm sure some people will figure out some ways to accommodate these changes, but it's going to be a painful, costly process that won't be conducive to normal revenue flows—at least not as measured in inflation-adjusted dollars.

TER: I'm almost afraid to ask, but how will the stock markets fare when the system breaks down?

JW: Stocks generally tend to reflect inflation, since revenues and profits are in inflated dollars. If you look at stock prices adjusted for inflation, you can have a bear market as well as a bull market. But these are not going to be good economic times. So I think we're going to have a real bad stock market adjusted for inflation. I'd stay out of stocks in the U.S. With the U.S. markets in serious trouble, the rest of the world probably will see lower stock prices as well, but they're not going to have the hyperinflation.

TER: What will plunge us into this abyss? And when?

JW: I think the odds are extremely high that we'll see it break within the next year. I would put it six months to a year, outside. We're getting extraordinary protestations from other central banks about the U.S. finances, its solvency, risk of the dollar. Before the current crisis you never would have heard any central banker making such comments. As this breaks, it's going to be obvious that the U.S. is moving to debase its dollar. It'll have no option to do otherwise. I would fully expect some foreign holders looking to dump the Treasuries. With the dollar plunging, the Treasury won't be able to get the funding that it needs from a practical standpoint in the open markets.

The Fed will come in to salvage that situation, becoming the lender of last resort to the Treasury—literally monetizing the Treasury debt. The Fed might have a couple different ways to address the dollar situation, from raising interest rates to direct intervention, slapping on currency controls. I can't tell you exactly how it's going to go. But you'll have an environment that's effectively creating a perfect storm for the U.S. dollar. I hate to use the term but it's a good one.

Heavy dollar selling will be exceptionally inflationary. Oil prices will spike in response to the weakness in the dollar. Oil is a primary commodity that drives consumer inflation; that's how you can have inflation in a recession. The traditional wisdom is that strong demand against limited supply causes inflation, but you can also have inflation due to commodity price distortions, which is what we had back in '73 and what we've seen over the last year or so.

Most of the recent volatility in the CPI has been due to swings in oil prices, which have been directly tied to swings in the value of the U.S. dollar. About $7 trillion in liquid dollar assets that overhang the market outside the U.S. could be dumped overnight. We're going to be seeing a lot of pressure to accept that back in our system, and it will be very inflationary. The Fed's options will be limited, but again I'd expect them to try and maintain systemic solvency.

So what we end up with is a circumstance where the dollar is under heavy selling pressure. People will feel the squeeze on their inflation-adjusted income with much higher prices for gasoline and fuel oil. The route to the monetary inflation will take hold from the Fed's direct monetization of Treasury debt. As we discussed earlier, the mortgage-backed securities taken off the bank balance sheets have generally gone to excess reserves and are sitting with the Fed. That hasn't been inflationary so far because it hasn't gone into the money supply.

TER: How do we get through this, John?

JW: If there's no solution for the system—and I don't see one; I think it just has to run its course—there still is good news. We as individuals have ways of protecting ourselves, our families, our friends, our businesses—whatever is important to us. To do that we have to preserve the value of our wealth and assets in order to ride out the storm. As terrible as it will be, it will end. A time will come when things become self-righting and the people who have been able to survive will be able to do some extraordinary things.

TER: And what do you advocate in terms of individuals preserving wealth and assets?

JW: Hold some gold, silver, precious metals. I'm talking physical possession. Preferably coins because coins, sovereign coins, are recognized as such. They don't have liquidity issues. Having some assets outside the U.S., and certainly some assets outside the U.S. dollar, is a good thing. I like the Australian dollar, the Canadian dollar, the Swiss franc in particular. They won't suffer the same hyperinflation in Australia, Canada and Switzerland as we do in the U.S., so those currencies will tend to act as ways of preserving wealth. Over time real estate is a traditional store of wealth, but it's not portable and sometimes it's not liquid.

If I'm right about what's going to unfold, a significant shift in government is possible; suppose the government moved so far to the left where maybe private ownership of property was not allowed. Having a lot of assets in real estate under those circumstances might not be so good. I think generally real estate is a good bet but you also have to consider the risks. Use common sense. Think through different things that could happen.

Most importantly, build up a store of supplies, more than you would normally consume over a couple of months, particularly food and water, canned goods. Having those goods can save your life in a number of ways. You'd have food to eat, and if you have extra you can use it to barter. I met a guy who'd been through hyperinflation and found for purposes of the barter system those airline-size bottles of high-quality scotch proved quite valuable. Buy things that you would otherwise consume and rotate your inventory. Don't go out buying all sorts of things you'll never use. Keep what makes sense to you and your circumstances. Make sure you have things that are stable. Not too perishable.

I had a professor at Dartmouth who'd lived for a while in a hyperinflationary environment that devolved into a barter system. He told a story about how his father had traded his shirt for a can of sardines. He decided to eat the sardines, which was a mistake because they had gone bad. But nonetheless that can of sardines had taken on monetary value. So when you look to trade things you want to be careful what you're doing.

TER: How long does a hyperinflation environment typically last?

JW: I guess it depends on how comfortable people can be in the environment. It went on for a couple of years in Zimbabwe, but they were able to function. Here, in a system that can't function well with it, it's not going to last too long. You won't have a usable currency. It's likely a barter system would evolve, and if it became stable and functioned well, it could last for a while. People don't want to starve. If that's a real risk, they will take action to protect themselves. We may have rioting in the streets. The government might declare martial law. If people can live comfortably with hyperinflation it would tend to linger. The more difficult things are, the faster people will move to remedy it.

TER: Well on that note is there anything that we can do as voting citizens to turn this around? Or minimize the impact?

JW: If things break slowly enough that people can see what's coming and respond, tremendous change may result from what comes out of elections. Incumbents are going to have a rough time. The circumstance is open for the development of a major third party that could knock out either the Republicans or the Democrats as a second party. Over time, pocketbook issues tend to dominate elections. If things are going well, if people are prosperous, they ignore the corruption in political circles as being just part of the system. But when they're hurting, they turn out the bastards and look to put in some change. We sure need change. I can tell you that. It's not just one party. Both major parties have an equal share of guilt in what's unfolding. . .whichever one is in power keeps making it worse.

TER: Not very happy thoughts, John, but we appreciate your insights and look forward to talking with you again as we move through these trying times.

Walter J. "John" Williams, is a Baby Boomer who has been a private consulting economist and a specialist in government economic reporting for more than 25 years, working with individuals and Fortune 500 companies alike. He received his AB in economics, ***** laude, from Dartmouth College in 1971, and earned his MBA from Dartmouth's Amos Tuck School of Business Administration in 1972, where he was named an Edward Tuck Scholar. John, whose early work prompted him to study economic reporting and interview key government officials involved in the process, also surveyed business economists for their thinking about the quality of government statistics. What he learned led to front page stories in the New York Times andInvestor's Business Daily, considerable coverage in the broadcast media and a joint meeting with representatives of all the government's statistical agencies. Despite a number of changes to the system since those days, he says that government reporting has deteriorated sharply in the last decade or so. On the bright side, it keeps John and his economic consultancy, Shadow Government Statistics, in the limelight. His analyses and commentaries have been featured widely in the popular domestic and international media.