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The third president (1743 – 1826) of the United States, a man who towered above all

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“I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”
–Thomas Jefferson

“A private central bank issuing the public currency is a greater menace to the liberty of the people than a standing army.”
–Thomas Jefferson

“I do not take a single newspaper, nor read one a month, and I feel myself infinitely the happier for it.”
–Thomas Jefferson

“The man who reads nothing at all is better educated than the man who reads nothing but newspapers.”
–Thomas Jefferson

“Paper is poverty, it is only the ghost of money, and not money itself.”
–Thomas Jefferson

“The spirit of resistance to government is so valuable on certain occasions, that I wish it always to be kept alive.”
–Thomas Jefferson

“The will of the people is the only legitimate foundation of any government, and to protect its free expression should be our first object.”
–Thomas Jefferson

“It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world.”
–Thomas Jefferson

“A democracy is nothing more than mob rule, where fifty-one percent of the people may take away the rights of the other forty-nine.”
–Thomas Jefferson

“I have the consolation of having added nothing to my private fortune during my public service, and of retiring with hands clean as they are empty.”
–Thomas Jefferson, letter to Count Diodati, 1807

“No government ought to be without censors and where the press is free, no government ever will.”
–Thomas Jefferson, letter to George Washington, September 9, 1792

“An honest man can feel no pleasure in the exercise of power over his fellow citizens.”
–Thomas Jefferson, letter to John Melish, January 13, 1813

“Some men look at constitutions with sanctimonious reverence, and deem them like the ark of the covenant, too sacred to be touched.”
–Thomas Jefferson, Resolutions, 1803

“Experience has shown that even under the best forms of government those entrusted with power have, in time, and by slow operations, perverted it into tyranny.”
– Thomas Jefferson

” I would rather be exposed to the inconveniences attending too much liberty than to those attending too small a degree of it.”
–Thomas Jefferson, to Archibald Stuart, 1791

“No nation is permitted to live in ignorance with impunity.”
–Thomas Jefferson

Malo periculosam libertatem quam quietam servitutem. (“I prefer the tumult of liberty to the quiet of servitude”)
–Thomas Jefferson to James Madison, 30 January 1787.

All the world’s a stage

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by Peter Tchir
of TF Market Advisors
Posted December 5, 2011

I CAN’T HELP BUT FEEL THAT WE ARE WATCHING A PERFORMANCE THIS WEEK. It feels like the actions, the meetings, and the statements are all very scripted. It seems reasonably clear which ending they are going for, but many of their actions also fit the “alternative” ending so it remains imperative to be cautious.

Roles for “bit” players have been cut

Last week, for the first time, the EU seemed to be able to muzzle the minor players and even limit the lines of the big players. The Finance minister summit was a failure. Nothing useful came out of it. EFSF was a total flop. The bank backstop plans are at a national level and revolve around the idea of getting banks to borrow even more in the short term and not extend their maturities.

In spite of the obvious failure, there were relatively few comments. Rather than getting headlines of disputes, or even headlines of bigger and better ways to leverage, they seemed to let it die a relatively calm death and move on. This was a chance for every finance minister to get their quotations in the news, but they seemed reasonably constrained. There were far fewer comments about the ECB or even from ECB members. To me, it seems that the big players (Merkozy and Draghi) have taken control of the play and are trying to get it to the ending they want.

The “Script”

Germany took great pains last week to distance themselves from ECB decisions. The speeches made it clear that the ECB should be “independent”.  This has been taken as a sign that Germany is relenting on letting the ECB print. By affirming the ECB’s independence, Germany can, in theory, explain that it wasn’t responsible for the printing. There is also a chance that this is a way to take the blame off of Germany if the ECB decides not to print.  That seems less likely, but not everyone, especially at the ECB, believes printing is a solution, so this could be a way for them to take the focus off of Germany’s “nein”.

According to the script, Merkel and Sarkozy will become the Merkozy again tonight so that they can ride into this week’s summit with a “renewed joint focus”, blah, blah, blah. There is no way that they don’t act as though they have some agreement (even if they don’t). We won’t know what is discussed, we won’t know how much time is spent working out plans for a summit failure, all we will get is another handholding moment meant to encourage the market. I suspect that more time “off screen” will be spent discussing preparations for a failed summit, but all we will see is smiling confident faces.

At this point, I will give the politicians some credit. For the first time in months they seem to be writing the script. They aren’t just taking whatever script Wall Street hands them, and trying to act that out. The Wall Street scripts haven’t worked and have been unbelievable. The  politicians are finally taking control and trying to develop their own plan, and selling Wall Street on how viable it is. Since they are politicians, they are actually trained at figuring out what can get done and selling it to the people.  It probably won’t work, but at least they are doing what they are good at, and it would be hard to do worse than listening to another round of self-serving Wall Street advice.  On a refreshing note, at least we have agreement on something, Wall Street and politicians now both think the other group doesn’t understand anything and has no sense of timing.

The “puppets” are pushing through austerity in Italy and Greece. They can be held up as shining examples to other countries of what needs to be done. They aren’t the heroes of the story, but are there so that the Merkozy can point them out and show that i) it can be done, and ii) when it is done, the EU and IMF will come through with additional funds.  The “it” they got done won’t be well defined (but this is a movie, not the real world anyways) but the reward those good countries receive will be highlighted.

So the meeting will have Merkozy telling the smaller and problematic countries what a great future lies ahead for the eurozone. They will talk about the sacrifices they are making to ensure the viability of the future. There will be no criticism of the plan as only “friends and family” reports will get the inside scoop, and the “trailer” will be played over and over as part of the advertising campaign. We, the audience, will suspect that all the best parts of the play are in the “trailer” but we won’t be able to dig deep enough to argue against it.

The puppets will tell the other countries how happy they are that they have finally adopted austerity with growth to move forward and that they are excited about this opportunity to be part of the renewed commitment to the eurozone. Anyone who tries to figure out how austerity and growth work together, or where the money is coming, or any other details, will be escorted from room, and will be Clockwork Oranged into reading “fringe blogging websites” until they accept that details are bad, and only vague notions and slogans can “solve” anything.

At the end of the day, any holdouts will get invited to special meetings with the Merkozy. This is where they will be asked what they want to get in order to support the agreement, and reminded, that it is only an agreement in principle so they might as well say yes now, and they can always reject it later. These dark little meetings where the bribes are given and the futility of the agreement are discussed will only be available on the director’s cut, but will make people cringe when they realize what went on.

So in the end, according to script, everyone will get a chance for a joint communiqué and photo up where they talk about their commitment to implement these progressive changes. Every person who truly thinks about it for more than a minute, will know that it is a sham. They will see what has gone on, but it won’t matter. The “critics” will fall all over themselves to proclaim the success of the summit and that we are witnessing the birth of a new and better Euro. For a few days at least, the airwaves will be filled with the excitement that the “great leadership” exhibited by the Merkozy, and the diligence of the puppets, has led to such a monumental agreement. The future will be so bright, some might even “wear shades” when they discuss what has been accomplished.  Tears wouldn’t even shock me.

Then before anyone can complain that the positive reviews were bought, or that the script is flimsy, we will see the next wave of activity. This will be like a giant publicity machine, trying to turn a horrible movie into an Oscar winner through the sheer strength of publicity and graft.

The ECB will cut rates by 50 bps. The ECB will announce further participation in the secondary markets and hint at the ability and willingness to print money. The IMF will announce some new programs. The EFSF will start participating in the primary market. Even the Fed might hint at future QE (if not actually doing anything).

Then the leaders can sit back and hope their magic works.  Hope that their story has been bought and that the markets can take off and that they won’t actually have to implement much.  Yes, I think this is the key here.  They know that the treaty agreement changes are unlikely to be implemented.  They know the ECB has limits, that the IMF is going to struggle to do what people seem to believe they can do, they just hope that this is enough to give the markets so much confidence that they don’t have to do anything.  A market that can swing 6% on a 50 bp rate cut, might be manipulated into going so high that confidence is regained, long enough to buy time.

The “alternative ending”

So far, the directors have rejected the alternative ending. They don’t think that America in particular is ready for a non Hollywood ending, but they are filming some scenes just in case.  Fortunately many of the scenes are exactly the same as in the preferred ending. In the alternative ending, Merkozy and the puppets can’t convince everyone to go along with the communiqué. They can’t convince them that it is really meaningless so there is no point to disagree. Somehow the summit ends without the decision to move forward.

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Memento Mori: Remember that you are a mortal man

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from Jesse’s Café Américain
Posted 24 July 2011

IT IS SAID THAT DURING THE ROMAN TRIUMPH, in which a great hero was recognized by a procession through the city, generally for a military victory, a slave was positioned behind them, whispering in their ear:

“Memento mori,”  roughly speaking  ‘Remember that thou art a man.

As you may recall, Rome had become a Republic, after the overthrow of its monarchy, and enjoyed a period of Hellenistic influence, both in science and philosophy. In its decline into the reign of the imperial, god-like emperors and their increasingly idiot and sociopathic successors and sons, the elite became utterly distinct from the people by self-decree. ‘They would become as gods’ is a hallmark of an empire on the road to decline and decay, repeatedly endlessly through history.  It is the logical end of the will to power, in which none will be served but oneself, with power as an obsessive distortion of self-preservation and ego.

Death is the great leveler, and the balancer of the scales of fortune. Perhaps a member of the middle class can whisper this to the financiers and the politicians, those newly made masters of the universe, as they bask in their moments of power and triumph, and forget their commonality with the people.

Better to have someone whisper in your ear, than succumb to the excess of self-delusion and have the crowd cut it off with your head. But madness has no discourse with logic.

Roman Art: Memento mori, a philosophical theme during the Hellenistic period, an allegory of death that has rebalanced and weighs the same as all people regardless of their wealth and social status, with symbols of Life and Death.

Illustration above: Mosaic from Pompeii. 2nd style. 47×41 cm Museo Archeologico Nazionale, Naples



A Phony EU Crisis

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from The Daily Bell
Posted July 22, 2011

Europe’s leaders have grasped the nettle. Faced with a spiraling bond crisis in Italy and Spain and the greatest threat to the EU project for 50 years, they have ripped up their bail-out strategy and taken a large stride towards a “liability union.” – UK Telegraph

Dominant Social Theme:
Oh, it is the end of the world. The EU is dead. Oh, it is not the end. Long live the EU and the great men and women who saved it … History is being made … etc. … etc. …

Free-Market Analysis:
We have watched the unraveling of Europe for over a year now and can say with some shock and dismay, as the final act grows near, that what we have been treated to is probably nothing more than an elaborately scripted farce. Or call it a dominant social theme (the EU is in trouble and needs rescue by the great statesmen of Brussels).

Now a deal has been struck to “save” Greece (though it is the banks that are being saved yet again, not Greece). The Germans won’t like it as Merkel seems now to have committed them to guarantee, at least informally, hundreds of billions of euros in PIGS assets. But apparently whether the “little people” like something or not doesn’t matter now in this “new” world.

The only danger is over-reach. The crisis, long expected, may still spin out of control or prove insoluble. But there is no doubt the Eurocrats expected this crisis and planned for it. The idea was to use its chaos to create a closer European federation and that is just what they’re trying to do. Out of chaos, order …

The elites that stand behind the EU are trying to build a one-world order, and they will stop at nothing to get it. The same thing is going on in the US with the debt crisis. An orchestrated agenda. The Americans will eventually get European-style austerity. They simply don’t understand the ramifications yet.

These economic crises cannot be pure happenstance. We’ve suggested they can spin out of control, and perhaps they will; but they are all manmade events, the direct outcome of economic constructs and policies of enormous wealth and control. Somebody set up the 100 central banks around the world that report directly to the Bank for International Settlements in Switzerland. These are quasi-private entities, many of them. Are we supposed to believe that no one takes a profit on them? That there is no way they compensate their creators?

The money and power is unimaginable. The BIS controls the central banks that in turn control the big banks around the world. The stock exchanges with their endless mergers are controlled as well; and the bond markets, it seems. If the elites control the banking industry – and they do – then they must also control currency markets – at least to some extent. And we are supposed to believe that Greece, little Greece, caused such havoc with this financial system that Merkel and Sarkozy had to meet to save it in the nick of time?

Increasingly, we don’t believe it. The entire amount of the Greek default is in the low hundreds of billions. That’s pocket change for these trillionaire, globalist banking families and their corporate, religious and military enablers. It’s walking-around money. They can spend more than that in a day, an hour even.

The whole thing is a set up. It must be. A shadow play. A crisis created to build further global governance. The only question is whether they can control the resultant fallout in the long term, for the damage far exceeds Greece now.

The Internet has certainly made that more questionable, for it has informed Europeans of what’s really going on and helped organize them. Still, the EU grinds on. Dominant social themes of the elite are rarely if ever cancelled. They tend to continue until they meet immovable resistance, either from the marketplace or people.

Constitutions mean nothing. Promises are made to be broken. Treaties are talk for children, merely incremental markers trailing in the wake of global governance. By their actions ye shall know them. As with sharks, their momentum must be never stilled. Here’s more from the Telegraph article:

The three rescued countries of Greece, Ireland and Portugal have in turn been offered a lifeline out of crippling debt-deflation. The tetchy negotiations dragged on for hours, with an irascible Finland at one point demanding that Greece offer the Parthenon, the Acropolis and its islands as collateral for the second €110bn (£97bn) rescue package. France and its allies abandoned their long struggle to prevent a Greek default, opening the way for the first sovereign insolvency in Western Europe since the Second World War. Objections from the European Central Bank were swept aside. Germany has obtained its fig leaf concession: burden-sharing for bankers.

As a quid pro quo, Germany has dropped its vehement opposition to debt sharing and crossed the line in the sand towards fiscal federalism. It has agreed to turn the eurozone’s €440bn bail-out fund (EFSF) into what amounts to a European Monetary Fund, and arguably into an EU Treasury in embryo … Global markets surged as the details of the EU statement leaked. Credit default swaps measuring bond risk on Ireland and Portugal saw the biggest one-day fall on record. Commission chief Jose Manuel Barroso said politicians and markets had finally “come together” for the first time since the crisis began.

Chancellor Angela Merkel said the goal was to “go to the root of the problems”, but she may not find it easy to secure political assent for such sweeping concessions from her own parliament. The accord is a spectacular volte-face. Her mantra until now has always been that “collectivisation of risks” would be a grave error … EU officials hope that a debt rollover plan for Greece can be limited to a short technical default. The ECB has backed down on its threat to reject Greek bonds as collateral. The formula will not be extended to Portugal and Ireland. It is understood that rating agencies will hold fire for the sake of global stability.

How neat is this? Like watching a play where all the problems are resolved in the third act. We even learn that the markets rallied in relief (at least to begin with) after the deal was announced! Yes, the EU has moved one step further (a big one) toward federal consolidation. The question is only whether the Germans, in aggregate, will resist, and what will be the results if they do. The Zero Hedge website claims today that this new deal places Germany in the position of underwriting the whole of the failing PIGS universe. The Germans may wake up in open revolt.

It doesn’t seem bothersome, anymore, than Greek unrest. The shadow play continues. The ECB was immoveable in its rigor up until the last minute. But somehow the ECB backed down. The rating agencies that were so horrible have suddenly retreated. Everyone has “compromised.” Problems have magically evaporated. Frau Merkel had threatened not to attend the meeting, but somehow in a single evening she was able to come to yet another “historic” breakthrough with Nicolas Sarkozy.

Perhaps the Eurocrats are merely desperate. Or perhaps they are following a script. We’ve seen it before. US Congressional Democrats sacrificed their careers to pass the leveling health care Act. Now Merkel is sacrificing her career to prop up the EU. Maybe she has been promised something.

Will the Germans riot in the streets? There is already a German Tea Party movement. How about Greece and Spain? Summer is not over yet. And yet … perhaps not. Perhaps, somehow, the elites can impose a federation on nation-states that have been independent for 2,000 years or longer. We don’t see how, (the EU with its debts seems unworkable) but one thing we’re convinced of now is that the elites are arrogant enough to try. The whole mechanism reeks of arrogance.

There is no end to their mischief and scheming. We’ve been privileged to watch how history operates for the past several years and we’ve paid close attention. We’ve come to the conclusion, as Henry Ford once said, that history is bunk. It’s directed. This EU “grand compromise” has been in the works for months, for years – perhaps for decades.

What a farce! It began with the mysterious leaked argument between Sarkozy and Merkel – like the first shot of a war. The EU then was said to be on the edge of a breakup. Sarkozy had threatened to withdraw France. The union teetered – and the crisis was on! And on … and on … and on …

Endless meetings, constant market movements, the mainstream media bewailing every moment. The EU is on the brink. The euro is on the brink. The Greeks are rioting (that was real); the Spanish are protesting (that was real, too). But it was just an act. It’s all too neat, too well orchestrated.

And now we are starting to see the liniments of what is REALLY planned. “The communiqué called for a “Marshall Plan” to bring the Greek economy back to life. “To be credible, the EFSF needs to be proportional to the scale of contagion: we think €2 trillion is needed,” one top Eurocrat is quoted as saying.

The “transfer” that the Germans were assured would never happen is now starting to take place. Others will pay, too. But in Germany there is the constitutional question, as well. We are told German judges are to evaluate the legality. Yet what judge on earth would pull down the union at this point? If the German people want to stop what’s going on, they will have to do so themselves, non-violently if possible in the streets. Of course that hasn’t yet helped the Greeks.

Step by step, promotions are implemented and international structures are built. The politicians and generals in the modern era are literally actors on the stage. Some stand athwart history and others position themselves “progressively.” Miraculously, accommodations are reached in the nick of the time. Alternatively, war is declared. The narrative is provided. History is “written.”

Even in war, the elites apparently control both sides of the conflict. The goals are achieved via the Hegelian Dialectic that allows the powers-that-be to push the larger social conversation in whatever direction they choose. Of course, that’s always towards a greater global union these days.

Thank goodness the extraordinary Brussels bureaucrats have once more performed a miracle, salvaging the EU yet again, at least for now. Was there ever any doubt?

Ron Paul appeals to America: “Default now, or suffer a more expensive crisis later”

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by Ron Paul, op-ed first posted in Bloomberg
Posted July 22, 2011

Default now, or suffer a more expensive crisis later

DEBATE OVER THE DEBT CEILING HAS REACHED A FEVER PITCH in recent weeks, with each side trying to outdo the other in a game of political chicken. If you believe some of the things that are being written, the world will come to an end if the U.S. defaults on even the tiniest portion of its debt.

In strict terms, the default being discussed will occur if the U.S. fails to meet its debt obligations, through failure to pay either interest or principal due a bondholder. Proponents of raising the debt ceiling claim that a default on Aug. 2 is unprecedented and will result in calamity (never mind that this is simply an arbitrary date, easily changed, marking a congressional recess). My expectations of such a scenario are more sanguine.

The U.S. government defaulted at least three times on its obligations during the 20th century:

• In 1934, the government banned ownership of gold and eliminated the right to exchange gold certificates for gold coins. It then immediately revalued gold from $20.67 per troy ounce to $35, thus devaluing the dollar holdings of all Americans by 40 percent.

• From 1934 to 1968, the federal government continued to issue and redeem silver certificates, notes that circulated as legal tender that could be redeemed for silver coins or silver bars. In 1968, Congress unilaterally reneged on this obligation, too.

• From 1934 to 1971, foreign governments were permitted by the U.S. government to exchange their dollars for gold through the gold window. In 1971, President Richard Nixon severed this final link between the dollar and gold by closing the gold window, thus in effect defaulting once again on a debt obligation of the U.S. government.

Unlimited spending

No longer constrained by any sort of commodity backing, the federal government was now free to engage in almost unlimited fiscal profligacy, the only check on its spending being the market’s appetite for Treasury debt. Despite the defaults in 1934, 1968 and 1971, world markets have been only too willing to purchase Treasury debt and thereby fund the government’s deficit spending. If these major defaults didn’t result in decreased investor appetite for U.S. obligations, I see no reason why defaulting on a small amount of debt this August would cause any major changes.

The national debt now stands at just over $14 trillion, while net total liabilities are estimated at over $200 trillion. The government is insolvent, as there is no way that this massive sum of liabilities can ever be paid off. Successive Congresses and administrations have shown absolutely no restraint when it comes to the budget process, and the idea that either of the two parties is serious about getting our fiscal house in order is laughable.

Boom and bust

The Austrian School’s theory of the business cycle describes how loose central bank monetary policy causes booms and busts: It drives down interest rates below the market rate, lowering the cost of borrowing; encourages malinvestment; and causes economic miscalculation as resources are diverted from the highest value use as reflected in true consumer preferences. Loose monetary policy caused the dot-com bubble and the housing bubble, and now is causing the government debt bubble.

For far too long, the Federal Reserve’s monetary policy and quantitative easing have kept interest rates artificially low, enabling the government to drastically increase its spending by funding its profligacy through new debt whose service costs were lower than they otherwise would have been.

Neither Republicans nor Democrats sought to end this gravy train, with one party prioritizing war spending and the other prioritizing welfare spending, and with both supporting both types of spending. But now, with the end of the second round of quantitative easing, the federal funds rate at the zero bound, and the debt limit maxed out, Congress finds itself in a real quandary.

Hard decisions

It isn’t too late to return to fiscal sanity. We could start by canceling out the debt held by the Federal Reserve, which would clear $1.6 trillion under the debt ceiling. Or we could cut trillions of dollars in spending by bringing our troops home from overseas, making gradual reforms to Social Security and Medicare, and bringing the federal government back within the limits envisioned by the Constitution. Yet no one is willing to step up to the plate and make the hard decisions that are necessary. Everyone wants to kick the can down the road and believe that deficit spending can continue unabated.

Unless major changes are made today, the U.S. will default on its debt sooner or later, and it is certainly preferable that it be sooner rather than later.

If the government defaults on its debt now, the consequences undoubtedly will be painful in the short term. The loss of its AAA rating will raise the cost of issuing new debt, but this is not altogether a bad thing. Higher borrowing costs will ensure that the government cannot continue the same old spending policies. Budgets will have to be brought into balance (as the cost of servicing debt will be so expensive as to preclude future debt financing of government operations), so hopefully, in the long term, the government will return to sound financial footing.

Raising the ceiling

The alternative to defaulting now is to keep increasing the debt ceiling, keep spending like a drunken sailor, and hope that the default comes after we die. A future default won’t take the form of a missed payment, but rather will come through hyperinflation. The already incestuous relationship between the Federal Reserve and the Treasury will grow even closer as the Fed begins to purchase debt directly from the Treasury and monetizes debt on a scale that makes QE2 look like a drop in the bucket. Imagine the societal breakdown of Weimar Germany, but in a country five times as large. That is what we face if we do not come to terms with our debt problem immediately.

Default will be painful, but it is all but inevitable for a country as heavily indebted as the U.S. Just as pumping money into the system to combat a recession only ensures an unsustainable economic boom and a future recession worse than the first, so too does continuously raising the debt ceiling only forestall the day of reckoning and ensure that, when it comes, it will be cataclysmic.

We have a choice: default now and take our medicine, or put it off as long as possible, when the effects will be much worse.

The Amazing Dissolving Nation

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by James Howard Kunstler
Posted July 18, 2011

GOING BROKE FAST IS A VERY COMPELLING PROBLEM. For ordinary people it tends to induce chicken-with-no-head syndrome – a mad burst of pointless locomotion ending in sudden collapse. If the US debt ceiling is raised – which I think is a 90 percent bet – there will be a sigh of relief that resounds from the lobster pounds of Penobscot Bay to the parking lots of Silicon Valley… and poor dissolving America will still be stuck in its essential predicament of being broke. So a lot of pointless locomotion will continue in the form of positioning among a troop of clown candidates for the dumbshow of the 2012 election. I wonder lately whether that election will actually happen.

Europe is arguably worse off money-wise, more broke, flimsier, crapped out, crippled, and paralyzed. Sad, because in outward appearance Europe  is – how shall I put this? – better turned out than America. Europe is a fit, silver-haired gentleman in a sleek Italian suit and a pair of Michael Toschi swing lace wingtips, holding a serious-looking Chiarugi leather briefcase. America is pear-shaped blob of semi-formed male flesh, in ankle-length cargo shorts, a black T-shirt featuring skull motifs, tattoos randomly assigned (as if by lottery) to visible flesh, a Sluggo buzz-cut, and a low-rider sports cap designed to make your head look flat. In other words, he lacks a certain savoir-faire compared to his European cousin.

But both are broke. Neither has any idea what he will do next – though, for the American, it will probably involve the ingestion of melted cheese or drugs (or both). When the European collapses, a certain air of delicacy will attend his demise; the expired American will go up in flames in a trailer and they’ll have to sort out his remains from the melted goop of his dwelling-place with a front-end loader.

This is the way the world ends for the OECD (Organisation for Economic Co-operation and Development), the nations that affected to be developed and civilized. This phase of globalism is certainly not the end of history, but it is looking like the end of accounting tricks, and possibly democracy, which has discredited itself with accounting tricks. At a certain point in time, the sickening recognition sets in that appearances are not the same as reality – and then, all of a sudden, you’re in a political maelstrom.

Citizens of the various lands will discover that the money being argued over, shifted around from column A to column B, assigned to this or that actuarial table or budget line or account or obligation or vault or  “structured vehicle”- that money is just… not… there. There’s no money. It was pretend money. From now on, none of you will get paid. Imagine a world where nobody gets paid.

Europe has run the money string to its bitter end and now it just remains to be seen how each country blows up and where the dust settles. Greece and Portugal may just shrug and retire on an economy based on goat-cheese and olives. Ireland will get drunk and pass out for at least a century. Spain sinks back into an age-old catatonic daze, having gone broke spectacularly once before. Italy strings up Mr. Berlusconi on a lamp-post and breaks up into 112 warring city-states. France elects DSK, whose first act is to declare war on the City of New York. Religious wars leave England in embers. And Germany becomes the world’s first “green” police state.

It’s conceivable to me that Barack Obama may be the last president – for a while. He was a decent fellow but, in the end, ineffectual, and of course he got no help from the legislative branch, including especially colleagues in his own party, a most remarkable class of maundering chickenshits and grifters. Our money problems will not go away and after a while this land will not be governable by familiar means.

In case you haven’t noticed, the rule of law is already AWOL in many sectors of our national life, most particularly money matters, but before long on every street-corner, every highway strip, plus every GMO cornfield, and brownfield. The two parties are unreformable and the Tea Party is the stooge of one of the two parties, and there is no other party of earnest, decisive, and sane individuals anywhere near the horizon. So some kind of convulsion is in the cards and it will be the unfortunate duty of some dutiful officer to step in and set an agenda based on something other than bluster, fakery, and pocket pool.

While there’s a good chance the US debt ceiling will be extended, it seems to me that meanwhile we have crossed an invisible line into a place where untoward things happen.

Debt Ceiling Drama

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by Dr. Ron Paul
Posted July 19, 2011

THE DEBT CEILING DEBATE IS PROVIDING PLENTY OF OPPORTUNITY for political theater in Washington. Proponents of raising the debt ceiling are throwing around the usual scare tactics and misinformation in order to intimidate opponents into accepting more debt and taxes. It is important to distinguish the truth from the propaganda.

First of all, politicians need to understand that without real change default is inevitable. In fact, default happens every day through monetary policy tricks. Every time the Federal Reserve engages in more quantitative easing and devalues the dollar, it is defaulting on the American people by eroding their purchasing power and inflating their savings away. The dollar has lost nearly 50% of its value against gold since 2008. The Fed claims inflation is 2% or less over the past few years; however economists who compile alternate data show a 9% inflation rate if calculated more traditionally. Alarmingly, the administration is talking about changing the methodology of the CPI calculation yet again to hide the damage of the government’s policies. Changing the CPI will also enable the government to avoid giving seniors a COLA (cost of living adjustment) on their social security checks, and raise taxes via the hidden means of “bracket creep.” This is a default. Just because it is a default on the people and not the banks and foreign holders of our debt does not mean it doesn’t count.

Politicians also need to acknowledge that our debt is unsustainable. For decades our government has been spending and promising far more than it collects in taxes. But the problem is not that the people are not taxed enough. The government has managed to run up $61.6 trillion in unfunded liabilities, which works out to $528,000 per household. A tax policy that would aim to extract even half that amount of money from American families would be unimaginably draconian, and not unlike attempting to squeeze blood from a turnip. This is, unequivocally, a spending problem brought about by a dramatically inflated view of the proper role of government in a free society.

Perhaps the most abhorrent bit of chicanery has been the threat that if a deal is not reached to increase the debt by August 2nd, social security checks may not go out. In reality, the Chief Actuary of Social Security confirmed last week that current Social Security tax receipts are more than enough to cover current outlays. The only reason those checks would not go out would be if the administration decided to spend those designated funds elsewhere. It is very telling that the administration would rather frighten seniors dependent on social security checks than alarm their big banking friends, who have already received $5.3 trillion in bailouts, stimulus and quantitative easing. This instance of trying to blackmail Congress into tax increases by threatening social security demonstrates how scary it is to be completely dependent on government promises and why many young people today would jump at the chance to opt out of Social Security altogether.

We are headed for rough economic times either way, but the longer we put it off, the greater the pain will be when the system implodes. We need to stop adding more programs and entitlements to the problem. We need to stop expensive bombing campaigns against people on the other side of the globe and bring our troops home. We need to stop allowing secretive banking cartels to endlessly enslave us through monetary policy trickery. And we need to drastically rethink government’s role in our lives so we can get it out of the way and get back to work.