Signs of Economic Weakness: Freedom’s Future Challenge

Serious evidence seems to point at some serious weaknesses in the underlying health of the United States economy.   

I believe we will have a slight recovery perhaps late 2009 or early 2010.  However, baby boomers are begining to retire which will strain the economy substantially of this once great nation.   This will create room in employement but only slowly (65 year old engineer can’t be replaced by a 25 year old straight out of college) but in the interm earnings may come back to Wall Street as companies rightsize (downsize or whatever).   However,  I doubt hiring will come back nearly as quickly as I’d hope and often not at all as companies focus on increasing efficiency first.

So, unemployeement will remain high for some time.  Even if you trend out the slowness of the decline in job cuts it will take literally months for this number to flat line and probably years for it to stabalize.  Meanwhile, the government is propping up an already over leveraged society.  This is why we’re  experiencing deflation now capitalism is trying to deflate the over leveraged nature of the economy.    The government is trying to halt deflation.  They are saying capitalism is dead before they even let capitalism do what it is meant to do and deflate when a bubble has gotten to big.  This is a very dangerous policy as capitalism opperates based on human and social nature.  The government has said that what man/nature naturally does is dead and they are stepping in as the State to do what nature shouldn’t be allowed to do (deflate an over inflated bubble).   So instead of letting natural capitalism work and an overleveraged society (business, government, and persons) deflate the government is trying to get an already over spent society to spend. 

Unfortunately we may start spending again.   As we get use to the following three key things:

• The bad news
• Realize unemployment has slowed
• Realize those of us that haven’t lost our jobs are probably ok 

Then we will start to leverage up again.  When this happens WATCH OUT because the foundation has been laid for big time inflation.  Now, the inflation can’t come until the deflation stops and the deflation can’t stop until jobs stabalize  late 2009/2010 (my prediction).  When this happens we will still be at high unemployement with stagnated ecomony.  Inflation is going to hurt bad if it comes in late 2010 and then by 2011 we’ll be hit with another serious depression VERY serious in my estimation.  This is my prediction and there are others out their that I’ve read have made the same prediction so I feel I’m in good company. 

With a government that is already MASSIVELY over leveraged and and is printing money like crazy we might have some serious troubles.  This will be more likely the real financial armageddon.   Further it will be spured as baby boomers continue to massivley pull their money out of the stock market and place it in treasuries and other more secure places.   What is worse is that this does not bode well for liberty and freedom.  Pain and fear will continue to spur the oppressive regimes alreay strongly supporting our government. 

But there are even more concerns.

In recent months, senior Chinese officials have expressed concern that the U.S. financial crisis and efforts by policymakers to lower lending rates by flooding the system with cash would impair the value of its massive U.S. bond holdings.  ~MarketWatch

As people move to treasuries a strong bubble is taking place here.  Something that concerns China as our largest debt holder.  It is something that should concern us here too and baby boomers that move their monies here as well.   Without our ability to take out treasuries the government will be forced into a true monetary crisis due to the serious nature of our now HUGE need for debt to fund this government and the current State power grab.  This is part of the move why so many liberals strongly support the oppression and slavery of the successful working business class with taxes.  If they can enslave us like the Jew or Black man in the past these liberals like Obama will have somebody they can tax to force the stablization of the government.  This is when I fear that revolution will become dangerous.  An indicator of what is taking place is well documented in most financial media today.

Having cut their key rates to close to zero, the Bank of England, U.S. Federal Reserve and Bank of Japan are now buying bonds, essentially printing money to reflate their economies in a policy known as quantitative easing.

“It is clear now that the ECB has set its sights on boosting inflation,” said Brian Kelly, chief executive officer of Kanundrum Research, a commodities and macroeconomic research firm.

“The worry in the market is that central bank tools are notoriously blunt instruments,” he added. “The central banks are trying to write a book with a can of spray paint. Investors are flocking to the soundness of gold in anticipation of a messy manuscript.”

Gold is seen as the ultimate protection against inflation and a better store of wealth than paper money. ~MarketWatch

The rapid expansion of gold prices over the years and recently is an indicator of this.  The fact that gold prices have remained high in a deflationary cycle is a further indicator of the EXTREME level of expectation for inflation and economic difficulty.  Even when the mainstream media continues to be largely bullish dont be fooled.  Fact is bad news sells when it’s not about you but when it’s about the stockmarket that effects EVERYBODY it doesn’t sell.  It’s sort of a strange corallary.  Everybody likes to watch a car crash unless it is a car crashing into you or your car.

What is of big concern to me is the position our federal government is putting us in as they begin to strengthen and shore up the oppression of the successful business class of our society while they make fascist moves to control segments of our society.  Jean-Baptiste say coined the phrase “supply creates demand”.

Unfortunately this phrase is very misinterpreted. Say is not telling us that when you supply something that demand will arise and consume it. In the case of exploding toilet paper, what demand will exist? There will be none. What Say is telling us is that if you supply something, you now become a demander of all other products in an economy. Say is telling us that our consumption comes from our production; our ability to demand comes from our ability to supply. This phrase outlines the very fundamental nature of trade.

via “Long-Term Bear Markets, Say’s Law, and the Bailout Frenzy” by Travis Steward, FSU Editorial 05/01/2009.

Supply occurs when members of society produce something of value.   Because to produce something of VALUE (that being the key word) they demand other goods.  As the government takes over banks, autos, health care, energy and now disgustingly credit cards and says what society will create they risk forcing us to create something of lesser value or no value (when it’s government beaurcratic paperwork or tax paperwork).  For example, I surely wouldn’t buy a Fiat.  Or they will force loans to be made that don’t have value because of the customers inability to pay.  They’ll push green energy policies that create further bubbles like in Spain.  It is a dangerous path to walk down.  Not only is it dangerous they’re doing it in a dangerous method with absolutely grotesque spending. 

Meanwhile the government is stress test testing our banks which I wrote about previously.   We’ve already suffered a collapse nearly as bad as the Great Depression and the government is testing our banks to see how much worse they can handle.  Nearly half the banks faild this test and most raise further capital which is another way of saying sell their debt and convert it to equity.   Who is holding these big banks debt? The government.  Now the government get’s more stock in the bank as their debt is converted into equity (covert nationalization).    What ELSE does that mean?  Half the banks will fail if things get worse!  But think about what I documented about the stress tests.   They used a 25 to 1 stress liquidity ratio.  During the Great Depression the ratio was more like 12 to 1 and I think things could get worse this time around maybe even 8 or 6 to 1.    Therefore, they made the test twice as easy as the most severe situation in our history which we’ve almost already nearly repeated and are now struggling to recover from.  If inflation comes, if the job market hasn’t recovered, if treasury bubble burst (no more debt), who will bail out the still overleveraged banks, business and individuals of course nobody.  Then who will pay taxes, who will bailout a government with a popped treasury market?  However, not only will nobody be able to be bailed out when the treasury bubble bursts the government will need to be bailed out.   This will be done through further oppression then the current oppressive policies Obama is now taking.

With regard to the way the tax burden is distributed across income cohorts, it is increasingly concentrated on upper-income taxpayers. Federal statistics show that the top-earning 25 percent of income taxpayers paid 73 percent of all federal income taxes in 1980. By 1988, that percentage had increased to nearly 78 percent. By 2000, after the Clinton tax hike, it hit 84 percent. And by 2006, the last year for which the data has been compiled, the top 25 percent of income taxpayers shouldered just over 86 percent of the federal income tax burden.

And Obama doesn’t plan to ease that burden—or so one might infer from the next $1.4 trillion over 10 years tax increase that was included as part of the budget he sent to Capitol Hill. To put it another way, the Obama budget included $3.61 in tax increases for every dollar of so-called tax cuts.  ~ US News