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American Armageddon: Why US Economy has Already Plunged Over the CliffTerrence Aym Salem-News.com
Time has run out. Making do with the status quo signals the certain death of the Republic.
(CHICAGO) - 2011 may be remembered by historians as the year that America died.
Many political, economic and market pundits have been warning of an approaching "tipping point" for several years. They warn that once America tips over that cliff there'll be no avoiding certain disaster.
Well, that proverbial tipping point has already occurred. The debt has reached such stratospheric heights that—under the current system—it will never be able to be repaid. And still Washington adds more debt.
Poking fingers at a living corpse
Now, the death of America didn't happen overnight. Its demise played out as a slow train wreck eight decades in the making.
Five killers are responsible for the murder of the United States of America. Any one of them alone probably could not have caused America's demise. All five forces in unison, however, are a perfect storm of economic and cultural death. Neither political party has the vision, the urgency or—frankly—the guts to avert the now almost certain doom.
Centuries past the vision of the men and women who ignited the torch of individual liberty and raised that torch for all the world to see, the politicians of today are little more than doting morticians poking their fingers at a living corpse.
Although the historic 2010 elections swept a tidal wave of new Representatives into the House, so far many of the members have been ineffectual and the committees have been chaired by many of the good-old-boys that have a penchant for doing business as usual.
The halls of the centralized government are overflowing with glad-handers, smirking know-it-alls, arrogant legislators, nodders and winkers, and shady politicians making shady deals with cronies in the corners of the Capitol's back rooms. The Congress has become an echo of the ineffectual, gutless Senate that presided over the death throes of the final days of the Roman Empire.
It's 2011. Time has run out. Making do with the status quo signals the certain death of the Republic.
Jeff T. Allen has identified three of the killers in his recent in-depth article published at the American Thinker website. Two more that he overlooked have been added.
Half-hearted attempts to get a handle on the nation's debt is woefully inadequate. Cutting $100 billion from a budget pegged at $3.7 trillion dollars still leaves an added deficit of an additional $1.6 trillion. This is because if the federal government spends $3.6 trillion while receiving only $2 trillion in tax revenues the gap is more than one and a half trillion dollars.
With the projected budget shortfall already equal to the entire Gross Domestic Product (GDP) every additional dollar spent is one that government will not be able to pay back, ever.
While Senator Rand Paul proposed a $500 billion cut (that would still leave a deficit of $1.1 trillion), he was largely criticized or at best ignored. Yet that cut represents only the first bold step desperately needed to take swift remedial action to save the economy, the dollar and the American peoples' lifestyles and property.
No serious attempt is being taken to stop the spending that has drained the lifeblood of America and sent it into a dizzying spiral towards becoming a Third World country with a worthless currency.
Many people are aware that the statistics released by the Bureau of Labor are a sham. Unemployment being touted as hovering just under 10 percent is a lie. The actual figure is closer to the low 20 percent range.
Add to that the dissection of the internal statistics released in January 2011 that revealed that less than half of those Americans that fall into the age group that can work hold full-time jobs and the real picture of the shocking emergency that's facing the nation emerges.
Just 48 percent of those that want (and need) a full-time job have one. The rest are either unemployed or underemployed with low-paying part-time jobs.
The workforce has shrunk as well. More than 500,000 jobs were permanently lost during 2010, evidence of a dying—or dead—economy.
The Federal Reserve's QE2
Federal Reserve Chairman Ben Bernanke's horribly misguided "quantitative easing" that results in printing hundreds of billions of dollars of Monopoly money, is inflationary and will lead to the U.S. currency becoming next to worthless. As the value of the dollar shrinks everything else will go up at the gas pump, grocery store…all retail stores. The cost of energy will skyrocket as will the cost of labor and services.
The effects of this policy can be easily traced to the run up of world commodity prices during the past six months. Staples needed for life are all skyrocketing: corn, wheat, sorghum, soybeans and other grains have increased from 30 to 50 percent.This has led to food riots.
Corn riots driven my U.S. economic policy have broken out across Mexico three times in the past five months. During December of 2010, riots broke out in the UK.
But nowhere have people felt the squeeze as those that live in Africa and the Middle East. Strong evidence exists that the unrest and uprisings across the Middle East—including Egypt—were ignited by food prices. The cost of wheat in Egypt had risen so high that millions are on the verge of literally starvation.
The Fed monetary policy of qualitative easing is driving the U.S. towards five to six percent interest rates not that far down the road with inflation at the door and hyperinflation just down the street.
All of this will exacerbate the federal government's ability to repay its debt as each time the interest rate ratchets upwards hundreds of billions more will be added to the existing debt.
Without a swift reversal of policy and huge, epic cuts in the deficit, 100 percent of Americans annual earnings will be needed to simply repay the country's debt.
The United States of America will be a banana republic.
Entitlement programs implosion
Some are now projecting the cost of Social Security and Medicare to reach upwards of $140 trillion by 2050. That number represents ten times the entire annual economic output every business and worker in the nation.
Although previous accounting projections had the Social Security trust fund falling into a negative cash flow by 2020, it arrived nine years early.
Social Security will sit at a negative $56 billion at the end of 2011.
Its' now official: Social Security is paying out more than it is taking in—and all actuarials admit that the situation will mushroom each year forward. There's no going back.
As the dollar spins out of control, the currency dumped on the world markets, the inflation rate soaring, employment languishing and property values continuing to shrink the 1930s Great Depression will begin to look like the land of milk and honey.
Long before 2050 America—for all intents and purposes—will have ceased to exist.
Mortgage policies and home ownership
The American housing market already in a slump worse than that experienced during the Great Depression years. Depending upon the region of the country, homeowners have seen market values tumble from 25 percent to more than 50 percent off the peak in 2006. The housing recession/depression is now into its fifth year with no end in sight.
Now buyers and builders are about to get another one-two punch that could set housing off into a final death spiral it may not be able to recover from for many decades.
The federal government is now moving ahead with a scheme to tighten the credit management of those seeking to purchase a house.
In essence, the scheme involves tighter regulation of the industry and raising the minimum downpayment for a piece of property to 25 percent of the assessed market value.
Additionally, the mortgage interest rate will be set depending upon the buyer's credit rating. The lowest rates will be given to those with credit rating scores above 740. Those that fall below that benchmark will pay higher rates. The lower the rating, the higher the rate.
For the conclusion of this article, visit: helium.com
Terrence Aym is a Salem-News.com Contributor based in Chicago, who is well known nationally for his stirring reports on the top ranked site, helium.com. Born in Minnesota, Terrence Aym grew up in the Chicagoland suburbs. Having traveled to 40 of the 50 states and lived in 7 of them, Aym is no stranger to travel. He's also spent time in Canada, Mexico, the Caribbean, Europe, Asia and Western Africa. An executive for many years with Wall Street broker-dealer firms, Aym has also had a life-long interest in science, technology, the arts, philosophy and history. If it's still possible to be a 'Renaissance man' in the 21st Century, Aym is working hard to be one.
Aym has several book projects in the works. Media sites that have recently featured Aym, and/or discussed his articles, include ABC News, TIME Magazine, Business Insider, Crunchgear.com, Discover, Dvice, Benzinga and more recently, his work has been showing up in South Africa and Russia.
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