An Ol' Broad's Ramblings
Apparently, many on the left don’t seem to understand the consequences of forcing people to do something they don’t want to do. The problems with Obamacare go much deeper than just a useless, and dangerous, website. The product Obama is selling is dangerous to the American people, to the economy, to the whole country!
I’m one of the few who can actually keep my plan, at a cost, of course. Mine was grandfathered in. Oh, I could go with the FORCED planned, but I don’t need either maternity care, or mental health coverage. I wanted catastrophic, and that’s what I have. Of course, the cost has gone up by a HUGE chunk ever since that damn law was signed. The reason? Well, the insurance company was preparing for a onslaught of Obama voters, and the forced mandates of the law.
Excuse me, but why are men, and older women, way past their child bearing years being FORCED to buy maternity coverage? Where is the logic? Why? Because Obama said so, that’s why! Honestly, I don’t believe for one minute his has any idea what is actually in his ‘signature legislation’. Oh yeah…he’s gonna be remember for this one for a VERY long time, and it’s NOT going to be the legacy he was hoping for, let me tell ya!
Everyone who has gotten a notice the pretender said they’d never get and are ‘shopping around’ are finding they can’t afford these forced mandated policies. More than doubled premiums from the plan they liked to a plan they don’t like? Increased deductibles? People forced off the employers plans due to the increased cost? And the list goes on. Yep….real smart move there SFB!
The fact is….Obama lied, and people WILL die! They’ll die because they won’t be able to get the care they need. They’ll die because it’ll be a choice between feeding their families, putting over roof over their heads, or paying for overpriced useless insurance.
The fact is…. OBAMA FLAT OUT LIED to the American people! His lapdogs can spin it anyway they want, but facts are facts.
Who Is Affected by Obamacare? EVERYONE
Chris Jacobs – The Foundry
In response to the wave of insurance cancellations hitting millions of Americans, and the admission by some on the left that President Obama’s “if you like your plan” promise was false, Obamacare’s defenders are now taking a different tack.
While the law’s supporters finally admit that some people will be worse off under the law, they now claim that those “losers” will be few and far between.
The facts speak otherwise, because few Americans will be unaffected by Obamacare’s new health care regime:
Money Doesn’t Grow on Trees
by The Bunker
Your Mother taught you an important lesson on economics when she told you, “Money doesn’t grow on trees.”
Money is not wealth. It is a representation of the wealth creation process, a symbol. It is a tool of barter. If you need more insight see my post titled, “It’s All About Money.”
What I am about to lay out for you may seem unreal, a fantasy or another far out conspiracy theory. It’s not. I’ll try and make this as entertaining as possible. Please remember; it’s not nice to kill the messenger.
How does money come into being? In this country it starts at the Federal Reserve Bank. There is nothing “Federal” about the Federal Reserve. It is a private bank with “Special” powers granted to it by the Congress in 1913. It is a hybrid banking cartel. Like every other cartel its main purpose is to protect the interests of its member banks.
Since 2008 the Federal Reserve has been doing what it calls quantitative easing; money printing.
The U S Treasury needs money, lots and lots of money. The wealth generating process in this country cannot provide enough real money to satisfy the politicians spending spree. So, the Treasury borrows money by selling securities; bonds, bills and notes sometimes called Treasuries.
On August 14, 2013 the Federal Reserve held just over $2 Trillion dollars of Treasury securities. Before the massive money printing began in 2008 the Fed held about $476 Billion in U S debt. The Chinese own about $1.2 Trillion of our debt and all foreign owners is approximately $5.6 Trillion.
How does the Fed get the money to buy our debt? It makes it up, digitizes it on a computer screen.
If I hear one more time from that jackass in chief, or his clown side kick, how much better the economy is doing, we might have to get a new TV. Yeah, for them, the economy is terrific….they having a high ol’ time, spending OUR money. But out here in the real world, people are hurting!
Sure, they show the ‘official’ unemployment rate at 7.7%. But that doesn’t tell the REAL story. Take a gander at this map. Find your county, see how many people are on food stamps. There isn’t a county in this country that doesn’t have folks on food stamps. And many areas of the country have a LOT of people who are in need. No doubt, there is a great deal of fraud, but still, those who have given up looking for work, and have fallen off the ‘unemployment’ roster, ARE in need. In need of a job that just isn’t there for them. The real unemployment rate is 11.6%, and I suspect even that is still too low.
With the outrageous costs of Obamacare (which members of Congress now believe they shouldn’t have to endure), the thousands upon thousand of new regulations, businesses closing their doors for good, the cost of food rising at an alarming rate, how can they stand there, with a straight face, and tell us the economy is improving. No, it is not, and I, for one, would appreciate if the blatant lies would cease. I suspect Congress’ approval ratings are so low because the Senate is led by one of the most corrupt Majority leaders in my lifetime. The House has worked hard for solutions that are never brought to the Senate floor because of him, and he takes his marching orders from the POTUS. How that man (Obama) has any approval is totally beyond me. I don’t care if he’s ‘likeable’. He’s incompetent! The buck stops with him. So, if you aren’t able to find work, look at the White House, and stop blaming those who DO understand the dilemma.
Most of those in Washington haven’t been in a grocery store in years. They have no idea how difficult it is to make ends meet. They have a guaranteed salary, twice, and in many cases, three times the amount of the average hard working citizen. PLUS they get to travel around the world, all at our expense. I won’t even go into the Obama’s expense account.
It’s time to stop all the ‘distractions’, and get down to the serious issues facing this country today.
Remember the Economy? It’s Still Bad
Derrick Morgan – The Foundry
According to a poll earlier this year, voters have a higher opinion of cockroaches than Congressmen. President Obama’s personal popularity remains solid, but his job approval rating is going down. Why are our elected officials unpopular?
It might just be because they are not listening. In poll after poll, the American people continue to tell Washington that their top priority is the economy. A recent Fox News poll asked participants what is the most important issue facing the nation. The results: the economy got 42 percent, deficit 17 percent, guns 5 percent, and immigration 4 percent.
President Obama inherited a weak economy, to be sure, but his policies, including Obamacare with its costly expected mandates on businesses and the Dodd-Frank financial services regulations have made the situation worse. Even when we see some economic growth, the jobs growth has been feeble. People have been leaving the workforce. Heritage’s James Sherk noted recently, “Labor force participation dropped to 63.3 percent, the lowest rate since 1979..” America needs to get its people back to productive work, not recruit Americans to start taking food stamps.
Farewell To The Dollar (Part VIII)
by The Bunker
The End is Near
The elite status of the U S dollar is coming to an end. Everyday headlines point to that fact. Once again the world’s economies see how irresponsible American politicians handle their economic duties. Here are some quick facts:
- Saudi Aramco the world’s largest oil producer is building the largest oil refinery in the world in the Chinese province of Yunnan.
- The BRICS nations (Brazil, Russia, India, China and South Africa) recently agreed to setup their own central banking system outside of the International Monetary Fund. This would allow them to trade in their own currencies. They collectively control 20% of the world’s GDP.
- Russia and China have been purchasing large amounts of gold. In 2012 China purchased 454.1 metric tons and Russia purchased 570 metric tons. The Former Russian finance minister Alexei Kudrin said that a full-blown economic and financial crisis in the euro zone is inevitable.
- Venezuela, Germany, Ecuador, Azerbaijan, Switzerland, Belgium, Ireland, Netherlands and Romania are asking that their gold be repatriated back to their country’s vaults.
- Currency wars have started. From Yahoo Finance, January 2013:
“Brazil’s government has been very active in its efforts to stem the Real’s appreciation, though capital controls and interventions.
Russia’s central bank deputy chief said yesterday “we are on the verge of very serious and confrontational actions in the sphere…called currency wars”.
EuroGroup chief Juncker recently said that “Europe is no longer willing to be the last economic player holding the toxic parcel of an over-valued exchange rate”.
Bank of England Governor Mervyn King said in December “concern is that in 2013 we’ll see the growth of actively managed exchange rates as an alternative to the use of domestic monetary policy”.
Japan’s new prime minster Shinzo Abe has called for “unlimited easing” by the BOJ.
Bank of Korea Governor stated a couple days back that the nation will take an “active” response on the Won if needed.
Swiss central bank has expanded its portfolio of foreign assets four times in the last three years in its efforts to keep the lid on Swiss Franc appreciation.
China has always been suspected of manipulating its currency, but the country actually allowed its currency to appreciate against the dollar last year. However the new regime in China may not be supportive of Yuan appreciation.
So, which currency will win the race to the bottom?”
Exactly, which currency will survive? When the U S dollar loses its status as the reserve currency the loss of purchasing power will be immediate. The end of the Petrodollar will send trillions of unneeded dollars flooding back to America. Hyperinflation will be the result.
By 2016 China will surpass the U S as the largest economy in the world. By all indications the global economies are getting ready for the transition. Are you?
Farewell To The Dollar (Part VII)
by The Bunker
Protecting the Petrodollar
Empires survive two ways; by the threat of force or the use of force. The American military can project force anywhere on the planet.
First Iraq War
Iraq invaded Kuwait in August of 1990. The invasion came after a breakdown in talks about the price of oil. Iraq claimed that Kuwait had been selling oil at a reduced price that resulted in lost revenues for Iraq. Old territorial disputes also entered the equation. Both countries sit on the border of Saudi Arabia. The whole area sits on an ocean of oil. Anything that would keep this oil and the petrodollar from flowing had to be stopped. Also, the U S had to keep its end of the bargain with Saudi Arabia. Having two neighbors sparing on its northern border made the Sheiks nervous. The first gulf war began and ended quickly.
By February of 1991 with the retreat from Kuwait of Iraqi forces Saddam Hussein ordered the torching of 700 Iraqi oil wells. This was a final act of revenge. The first Gulf War was about oil and the free flow of Petrodollars.
The Second Gulf War
In a Time Magazine article dated November 18, 2000 came this announcement:
“Europe’s dream of promoting the euro as a competitor to the U.S. dollar may get a boost from SADDAM HUSSEIN. Iraq says that from now on, it wants payments for its oil in euros, despite the fact that the battered European currency unit, which used to be worth quite a bit more than $1, has dropped to about 82[cents]. Iraq says it will no longer accept dollars for oil because it does not want to deal “in the currency of the enemy.”
The switch to euros would cost the U.N. a small fortune in accounting-paperwork changes. It would also reduce the interest earnings and reparations payments that Iraq is making for damage it caused during the Gulf War, a shortfall the Iraqis would have to make up.
The move hurts Iraq, the U.N. and the countries receiving reparations. So why is Saddam doing it? Diplomatic sources say switching to the euro will favor European suppliers over U.S. ones in competing for Iraqi contracts, and the p.r. boost that Baghdad would probably get in Europe would be another plus.”
By 2003 George Bush had convinced the world that Iraq was a hotbed of terrorist activity. Saddam Hussein according to Secretary of State Colin Powell also had an arsenal of weapons of mass destruction.
What Iraq really had was the second largest oil reserves on the planet, second only to Saudi Arabia. The potential for millions of barrels a day being sold in Euro’s and not dollars was the real threat to America’s survival.
The world and especially the Saudi Sheiks would not mourn the loss of Saddam Hussein. The second gulf war began and American forces still protect the oil fields.
Muammar Gaddafi of Libya had a plan. With gold reserves of approximately 143 tons, plenty of water and 2% of the worlds oil supply he wanted a new African currency. Gaddafi had held several negotiations with other African nations to form a currency union based on the Libyan Dinar. Gaddafi was also advocating dumping the dollar for future trade. Libya was also a completely independent nation operating outside the rules of the International Monetary Fund and the Bank for International Settlements.
By 2011 Muammar Gaddafi was brutally murdered after a short war. As Hillary Clinton laughingly proclaimed about the death of Gaddafi, “We came, we saw, he died.”
One of the anomalies that occurred during the fighting in Libya was the fact that the rebels took the extraordinary step to set up a central banking system. An article in the Asian Times pointed this out:
“I have never before heard of a central bank being created in just a matter of weeks out of a popular uprising. This suggests we have a bit more than a rag tag bunch of rebels running around and that there are some pretty sophisticated influences.”
The Petrodollar survived another small scale attack. There are other larger players on the world stage.
The world has put monetary sanctions on Iran. The hope was that these binds would suffocate the Iranian economy and force them to the bargaining table. Iran had other ideas. In an article from Reuters dated February, 28 2012 came this statement from the central bank governor of Iran:
“In its trade transactions with other countries, Iran does not limit itself to the U.S. dollar, and the country can pay using its own currency,” central bank governor Mahmoud Bahmaniwas quoted as saying. “If a country should so choose, it can pay in gold and we would accept that without any reservation.”
To understand how important Iranian oil is to the nations of Central Asia and the Far East this story was published by RT News in February of 2012:
“But that was not the end of their attempts, and Iran sought other ways to get around the petrodollar noose. There are rumors that India, which imports 12% of their oil from Iran, has agreed to purchase oil for gold. Energy trade with China, importing 15% of its oil and natural gas from Iran may be settled in gold, yuan, and rial. South Korea plans to buy 10% of their oil from Iran in 2012, and unless Seoul sides with American and European sanctions, it is likely to use gold or their sovereign currency to pay for it. Also, Iran is already dumping the dollar in its trade with Russia in favor of rials and rubles.”
The future will tell how far the U S will go to protect the Petrodollar.
Farewell To The Dollar (Part VI)
by The Bunker
The Petrodollar Empire
The modern world needs oil. With the advent of the Petrodollar the world also needs U S dollars to buy oil. This has created the largest empire in world history. Like any empire it must be protected.
When the dollar was pegged to gold it was fairly simple to protect its value. The gold was stored in a huge vault. Congress would balance its budget and America had sound money. You can see how this arrangement put a crimp in the politician’s style.
With the dollar pegged to oil things got a whole lot more complicated. Oh, it was perfect for a political class that loves to spend money. There is seemingly no end for U S dollars and the politicians have the printing press.
How important is the Petrodollar to the U S economy? One of the tricks economists use to make their illusions seem real is something called money velocity. It is the measurement of how many times a currency trades hands. By using a formula this can be turned into a measurement of how healthy an economy is.
Money velocity can be used to pump up the Gross Domestic Product (GDP) of an economy. John Mauldin in an essay titled, “The Velocity of Money” explains it this way:
To give you a very rough understanding, let’s assume a very small economy of just you and me, which has a money supply of $100. I have the $100 and spend it to buy $100 of flowers from you. You in turn spend $100 to buy books from me. We have created $200 of our “gross domestic product” from a money supply of just $100. If we do that transaction every month, we will have $2400 of annual “GDP” from our $100 monetary base.
You can see that by taking Mauldin’s simple example and applying it to the worldwide oil market how beneficial it is for the U S economy. In fact without the Petrodollar America’s debt based economy would collapse.
Farewell To The Dollar (Part V)
by The Bunker
Gerald Ford and Jimmy Carter
Richard Nixon had manipulated the economy to get re-elected. Gerald Ford and his successor Jimmy Carter paid the price.
Even with the new Petrodollar picking up steam around the world the lingering affects of too many dollars back home had to be cleaned out. The wage and price controls had held manufacturers and business’s back. The Federal Reserve had to increase the interest rates to pull dollars out of the economy. Business’s wanted to make up for lost revenue under price and wage controls. The result was Stagflation. The economy slowed and prices rose. Something else was a big contributor, OPEC slowed oil production and the price of oil rose. Gasoline supplies decreased and the cost per gallon hit the economy like a bomb.
Suddenly the savior of the dollar, King Feisal was the guy everyone loved to hate. The American public didn’t really know about the ins and outs of the Petrodollar. They only knew that gas was expensive and they sometimes had to wait in line to get it.
The common thinking about the OPEC oil embargo in 1973 is that it was a reaction by Arab states to the Yom Kippur war. The media played heavily on that theme. The price per barrel quadrupled to about $12 dollars and the stock market continued to decline. From 1972 to 1974 the U S Gross Domestic product skidded from over 7% to -2%. Inflation rose from around 3% to over 12%. It was a mess.
In the 70’s there were a group of business’s known as the, “Seven Sisters” and they controlled over 86% of the worlds oil production. The group consisted of, Anglo Persian Oil (Now BP), Gulf Oil, Standard Oil of California, Texaco (now Chevron), Royal Dutch Shell, Standard Oil of New Jersey (Esso) and Standard Oil of New York (now Exxon/Mobil). Exploring for oil is not cheap. These big boys took a giant hit when the dollar started losing value. The Alaska Pipeline was getting into full swing in 1974 and inflation and rising wages was taking its toll on potential profits.
In January of 2001 an insider to the world’s oil trade made a startling statement. Sheik Ahmed Zaki Yamani was the Saudi oil minister in the 1970’s. He was Henry Kissinger’s bargaining partner and if anyone wanted oil from Saudi Arabia they had to go to Yamani.
In an interview from the London Observer, Sheik Yamani makes this statement:
“His voice quickens further when he reminisces about the era of great oil diplomacy in the Seventies and his contemporary, former US Secretary of State Henry Kissinger.
At this point he makes an extraordinary claim:
‘I am 100 per cent sure that the Americans were behind the increase in the price of oil. The oil companies were in real trouble at that time, they had borrowed a lot of money and they needed a high oil price to save them.’ He says he was convinced of this by the attitude of the Shah of Iran, who in one crucial day in 1974 moved from the Saudi view, that a hike would be dangerous to Opec because it would alienate the US, to advocating higher prices. ‘King Faisal sent me to the Shah of Iran, who said: “Why are you against the increase in the price of oil? That is what they want? Ask Henry Kissinger – he is the one who wants a higher price”.’
Yamani contends that proof of his long-held belief has recently emerged in the minutes of a secret meeting on a Swedish island, where UK and US officials determined to orchestrate a 400 per cent increase in the oil price.”
Jimmy Carter and OPEC are still seen as the villains of the disastrous economy of the 1970’s. The problems began long before Carter took office. The uncontrolled spending of LBJ forced Nixon to end the Bretton Woods agreement. The resulting catastrophe was immediate. Realigning the dollar to oil solved the problem. Forcing an increase in oil prices pulled dollars towards global trade and into the world’s central banks. Higher interest rates decreased the money supply back home. It was a tough couple of years for the American public.
Farewell To the Dollar (Part IV)
by The Bunker
In 1969 Richard Nixon took the oath of office. The economic mess that was laid in his lap was monumental.
Foreign bond holders had been watching the U S spend dollars without any thought to the Bretton Woods agreement. France, Germany, Switzerland had begun to demand re-payment in gold. This was a two fold problem; gold was leaving the reserve pile and paper money was returning to America’s shores. It was only a matter of time before the Bretton Woods agreement would end.
In 1970 the whole thing began to unravel quickly. The Vietnam War was still costing too much. LBJ’s legacy programs had been under priced and the true costs were beginning to be slipped into the budget. By the end of 1970 the gold coverage for the dollar had dropped to 22%.
By 1971 the amount of paper dollars that had returned to America’s shores increased by 10%. Repayment in gold to foreign investor’s had decreased the supply by $22 billion. It was clear to the world that the dollar was no longer, “good as gold.” Germany was the first to pull the plug and allow the Deutsche Mark to float on the currency markets. This meant it would no longer peg it’s currency to the dollar. The dollar immediately fell by 7% against the German Mark. This made an already out of balance trade deficit worse. France and Switzerland soon followed Germany’s example. The value of the dollar was sliding on the world markets. By late summer of 1971 the U S gold reserves could not cover the dollar holdings of foreign bond holders. If any more countries demanded payment in gold, the reserves would be wiped out. This would have put the U S economy in default.
The results of all this was immediate and not unexpected, except to a congress that refused to do anything to stop it. Inflation followed by high unemployment and an ever widening trade deficit hit by early fall of 1971. The congress immediately blamed America’s problems on, “foreign price gougers.” Nixon had two choices; hope things got better or end the dollar to gold exchange.
In August of 1971 inflation was running close to 6% and unemployment was just over that same number. There was a very real possibility of a run on the dollar. President Nixon signed executive order 11615. This order installed wage and price controls on Americans and a 10% import tax on all goods. Nixon also ended the convertibility of the dollar to gold. The president in a Sunday night televised speech claimed he had to, “defend the dollar against speculators.” By Monday morning all the world’s currencies became fiat and began to trade without controls on the world market. The dollar fell against other currencies. Foreign holders of dollars lost wealth. They were trapped because they could no longer trade the fading dollar for gold. Nixon and his advisers had won and there was an election coming up.
Import taxes are the first salvo in trade wars. The world was in shock, something had to be done. By December of 1971 negotiations between the top 10 nations of the world (G10) ended in an agreement. The Smithsonian Agreement ended the import tax. Nixon proclaimed that this solved the world’s monetary problems. History will show it had only a temporary affect.
Back home Nixon had to win an election. He had earlier fired the Federal Reserve chairman and installed a close friend, Arthur Burns. To avoid a recession Nixon forced the chairman to do the opposite of what needed to be done. The Federal Reserve chairman lowered interest rates and increased the money supply. Nixon had promised that the wage and price controls would only last 90 days. He extended them 1,000 days to hold down inflation and stabilize unemployment. The combination of low interest rates, cheap money and relatively good employment made the economy seem stable as voters headed off to the polls. Nixon won a second term. As anyone who lived through the 1970’s knows, the illusion would soon wear off.
Outside the country the dollar was still losing value. Something had to be done to prop up the dollar and get it flowing throughout the world. President Nixon went to China in 1972 to begin trade talks. Henry Kissinger had an old friend in Saudi Arabia.
China had the potential of 89 million new customers and Saudi Arabia was the world’s largest oil producer.
In 1973 King Faisal of Saudi Arabia signed an agreement with the U S. He would only sell his oil in U S dollars. He also agreed that any excess profits from the sale of oil would be invested in U S Treasury Bonds. What did the King get in return? The one thing America had plenty of, military power. Nixon agreed to protect the Saudi oil fields from any aggressors. By 1975 all the OPEC nations had signed on. The dollar was safe. It was the beginning of the Petrodollar.
Once again the world needed the U S dollar. Any country buying oil, like a soon to be growing China, had to exchange their currency into dollars. This kept the American currency flowing like oil around the globe. It also meant that the congress was unrestricted and could spend as much money as it wanted. With the demand for oil always increasing, more dollars were needed to buy oil. There was no need to worry about the gold reserve. The Saudi’s also kept sending America money every time they bought U S bonds. It was a perfect plan. Richard Nixon wasn’t so lucky and had to resign in disgrace.
Farewell To The Dollar (Part III)
by The Bunker
After the war the soldiers came home and went right to work. Not just in the factories but in the bedroom. The “Baby Boom” was in full swing. This from Wikipedia:
In 1946, live births in the U.S. surged from 222,721 in January to 339,499 in October. By the end of the 1940s, about 32 million babies had been born, compared with 24 million in the 1930s. In 1954, annual births first topped four million and did not drop below that figure until 1965, when four out of ten Americans were under the age of twenty.
It didn’t matter. The American economy was unstoppable. With the dollar as the reserve currency and the nation’s huge industrial capacity, global demand for the country’s products exploded. The world economies soon learned that it was easier to trade around the world in dollars than in their own currencies. If they wanted our products, and they did, they could sell what they produced to us. This allowed them to be paid in dollars which they could use to buy other goods. They also bought U. S. Treasury Bonds. Currencies are traded on the open market like any commodity such as wheat, corn, soybeans. If there is demand for a commodity the holder of that commodity is in the driver’s seat. It was still a juggling act because the U. S. couldn’t flood the world with dollars. Remember the rule; dollars or debt could not exceed the gold reserve. If the politicians wanted to spend more money they had only two choices, raise taxes or sell bonds (increase debt). Increasing debt was tricky because of the Bretton Woods agreement. Taxes are never popular. This kept everyone in line, for awhile.
It was a groovy time man. Oh, there were problems, big problems but overall the economy plunged ahead. The death of President Kennedy was more than just the end of conservative governing. It was the beginning of the end for the U. S. dollar.
President Lyndon Baines Johnson (LBJ) wanted it all. He was a Texan with Texas size appetite for spending. The “Great Society” was born. He also wanted a war, the Vietnam War, and he got it, right in his Texas size nose.
The Vietnam War should be measured in American lives lost, that cost was over 58,000 young men and women. The dollar cost during the term of LBJ is a conservative $345 billion dollars. The U. S. treasury began calling in favors from old WWII allies to buy our bonds, we needed money.
Lyndon Johnson also desperately wanted a legacy. The Great Society was his baby and he fed it good. Is there a total accounting for the direct cost of this massive expansion of government? Not really, it was such an orgy of programs and spending it would take an audit of the budgets for those years to breakdown the total cost. The legacy costs of Medicare and Medicaid are the real busters. It would be safe to say that LBJ forced billions of dollars in government borrowing and printing. His seven year run as President broke the bank and tipped the scales of dollars to gold. He decided not to run for a second time. It’s a good thing, he would not have liked what was about to happen.
The parallels to what happened in the late 1960’s and early 70’s and what is happening today need to be pointed out. The U S government under LBJ overspent, borrowed and printed too much money. The foreign holders of the debt and dollars got nervous and demanded repayment. According to Richard Nixon the dollar was under attack. But was it? Or was it just the world’s economies reacting to what America had done to itself?
Now in 2013 world currency wars are beginning. Once again the U S has flooded the world with dollars and debt. As you read through the next chapters of this saga compare what happened then to the headlines of today.
In July of 1944 delegates from the 44 allied nations met at the Mount Washington Hotel in Bretton Woods New Hampshire. They wanted to solve a very serious global problem. This problem had led to two world wars in the span of one century. The dilemma was two fold; international currency wars and trade wars. Both of these were contributing factors that pushed the world’s nations into hot wars. The 77 delegates to this conference were going to solve this once and for all. They actually came up with a good plan.
It was decided that the world needed a stable currency that all the nations would be tied to. It was clear to all who attended that the United States Dollar would make an excellent choice. America was the only industrial super power whose homeland remained unscathed during the war. Its money was backed by gold and the nations Treasury Bonds could be redeemed in gold. The United States Dollar became the world’s reserve currency. This was a huge win for America. Before the war Britain had held this honor. The switch from the British Empire to America forced a British official to proclaim:
“[This agreement was] The greatest blow to Britain next to the war”, largely because it underlined the way in which financial power had moved from the UK to the US.”
To level out the playing field in economic trade it was agreed that all the world’s currencies would be pegged to the dollar. The nations pledged to a parity arrangement that kept their currencies within 1% of the reserve currency (The dollar) on international currency markets. In return the United States agreed to peg the dollar to gold at the rate of $35 per ounce. The U. S. also promised to exchange the dollar for gold at the defined rate with any nation holding dollars or U. S. debt (Bonds). American delegates also agreed to not exceed the money supply and devalue the dollar. The U. S. at the end of WWII had $26 billion in gold reserves. This amounted to approximately 62% of the world supply. If the
U. S. Treasury went on a printing spree and created more dollars or debt the balance would be upset. Remember, the dollar was pegged at 1/35 to an ounce of gold, too many dollars or too much debt and the system wouldn’t work. The American delegates promised this would never happen. This made the American dollar, “good as gold.”
Farewell to the Dollar (Part I)
by The Bunker
In January of 1963 President Kennedy released the Economic Report of the President to Congress. Here is an excerpt:
THE EXPANSION OF 1 9 6 1 AND 19 6 2
COMPARISON OF 1 9 6 2 WITH 1961
Significant gains were registered in all major categories of economic activity between 1961 and 1962. For the year 1962 as a whole, gross national product (GNP) rose 7 percent over its 1961 level—from $519 billion to $554 billion. Industrial production showed an 8 percent rise. Demands for automobiles and housing were particularly strong: sales of domestic automobiles increased by more than 20 percent—from 5.6 million units in 1961 to 6.8 million units in 1962—making 1962 the second biggest automobile year in history; private nonfarm housing starts rose by 11 percent, with an exceptionally strong advance in apartment construction….
The unemployment rate, which averaged 6.7 percent in 1961, fell to an average of 5.6 percent in 1962—the result of an increase of 1.2 million in employment accompanied by an increase of 400,000 in the civilian labor force.
To get a full grasp of the decline of our empire we have to retrace the steps that started the journey. The path was laid out in 1944. It should have been an easy hike but global politics, ignorant politicians and uncontrolled greed muddied the course. It is evident, almost 70 years later; America is mired in a slop of its own making.
It would be impossible to tell this complex story in the space of an article. I will provide an overview. Geo-politics, international monetary policy, world trade and currency speculation is not completely understood by anybody. If it was, the world wouldn’t find itself in the mess it is in.
This story is about the one thing that rules the world; Money. Specifically the, “Almighty Dollar” and the lengths America has gone through to keep it that way.
The presstitute media attributed the drop in the headline unemployment rate (U3) to 7.7 percent from 7.9 percent to the happy jobs report. But Rex Nutting at Market Watch says that the unemployment rate fell because 130,000 unemployed people who have been unable to find a job and became discouraged were dropped out of the U3 measure of unemployment. The official U6 measure, which counts some discouraged workers, shows an unemployment rate of 14.3 percent. Statistician John Williams’ measure, which counts all discouraged workers (people who have ceased looking for a job), is 23 percent.
In other words, the real rate of unemployment is 2 to 3 times the reported rate.
Read the entire column here.
I think it would be in the people’s best interest to count ALL the people who are unemployed!
The last budget Obama submitted was soundly defeated by his own Senate, headed by feckless Harry Reid, the most useless majority leader EVAH! The Senate hasn’t passed a budget in 4 years, which is unconstitutional! What makes anyone think they will this time around?? The House has managed to pass budgets, but that jack wagon won’t even bring them to the floor for a vote.
Obama hasn’t been too handy either. His understanding of the economy is NIL! How he got elected, then re-elected is beyond comprehension. Perhaps if they hadn’t prevented the military from voting, we wouldn’t be in this mess right now. It’s going to take YEARS to fix it, that is, IF we can managed to get the commies out of power!
Gutting the military and leaving us defenseless against our enemies, and we have many, is NOT the answer! Taking care of the sick and elderly also isn’t the government’s job. Yes, we should care for those who are truly in need, but if you can’t be bothered to prepare for your own future, it’s not OUR responsibility, but I have no problem helping those who really need it. Reform welfare, and get people back to work! Most don’t want to be on the gubmint teat, so trash Obama’s crap, and get the feds out of the way. Trashing all the useless regulations, and allowing people to create businesses and provide jobs would be a REAL GOOD START! Federal paper work for businesses is ridiculous, time consuming, and prevents businesses from growing!
Our tax code is more than absurd! A flat tax would provide individuals and businesses the needed income, that THEY earned, more cash flow, more to spend as they see fit. Businesses would have the income to hire more people, individuals would put more into the economy by spending, which calls for more hiring at businesses. It’s not that complicated. This would actually increase federal revenue, which would pay for the Constitutionally mandated spending. Scrap the rest of the crap! Which means that ObamaCare is NOT going to be funded, and MUST be repealed! The government MUST get out of the health care system, and let insurance companies do the job they were created to do!
Almost anyone who is an adult, is responsible for the running of a household, could balance the budget in no time. Why can’t those supposedly intelligent people in D.C. do the same??
6 Things the Next U.S. Budget Should Do
t’s time for Congress to make a real budget—and not just any budget.
It’s been four years since the U.S. had a real budget. While the House of Representatives has passed budgets, the Senate has stopped each one. Instead, the Senate under Majority Leader Harry Reid (D-NV) has done short-term, stopgap measures to keep the government funded year after year.
But this year, Reid and others have said they are going to step up and do their job.
The President’s budget is already late—by two months—and will not appear until early April, according to the White House. To get things started, House Budget Committee Chairman Paul Ryan (R-WI) will unveil his fiscal year 2014 budget tomorrow.
Heritage’s Alison Acosta Fraser and Patrick Louis Knudsen, the Grover M. Hermann Senior Fellow in Federal Budgetary Affairs, have a blueprint for what that budget should look like if we are to have any hope of reclaiming economic growth and digging out of the hole we’re in. They make the case that the budget should do six things.
1. Balance. Achieve balance within 10 years, and stay in balance.
Why? Put simply, we can’t keep spending more money than we take in. Anyone who has paid a credit card bill knows that that bill just keeps getting larger and larger until you start living within your income. If we as a country don’t get our budget into balance within the next 10 years, government is going to swallow nearly all of the economy—leaving us all with a disaster, but especially today’s children.
It’s About Money
from The Bunker
I have been working on a story about how and why President Nixon was forced to de-couple the U S Dollar from gold. It is important right now because the circumstances that led up to his decision are happening again. The innovative solution to re-peg the dollar from a precious metal to a precious commodity was genius. This time, it’s going to take some drastic solutions to save the dollar.
I realized that this story requires a level of understanding of what money is, why gold is important and the hidden tax of inflation. I was never taught these concepts in school. I had to search out the truth on my own.
Our dollar is being devalued and inflation is beginning to creep into our economy. Every day ads are broadcast on talk radio warning of hyper-inflation and an approaching economic collapse. Their solution is to buy gold or silver.
Everyone needs money, that’s why they call it money! But do we really understand what it is?
To begin, let me make this one statement to dramatize how important the dollar is. The dollar in your wallet is one of the most important things in your life. To be more specific, it is the purchasing power of the dollar that keeps you and your family alive. Very few people reading this are self-sufficient. We aren’t all farmers. In a modern society we don’t hunt and gather food or build shelters in the woods. We have to buy everything to sustain life.