by Josh Hiken
When the Goths sacked Rome in the early 5th century,thereby putting the final nail in the coffin of Roman supremacy, they employed the tactic of starving the Roman public by surrounding the impenetrable city walls and cutting off supply lines. Eventually the Goths gained entrance and made quick work of their withering opposition.
However, glory and power were not the main motivations for the attack. The Goths were actually looking for food, but by the time they took control ofRome, there was no food left and they had to hastily move on even hungrier from battle exhaustion.
Today, in what will someday surely be thought of as The Ancient Holy American Empire, the U.S. government and many illustrious leading economists are collectively chanting for more stimulus (QE2 or Quantitative Easing 2) in order to combat the impending deflationary spiral that our country and many others are perceived to be currently facing. In fact, many of these folks actually believe that the last round of stimulus cured our economy and that a “double dip” recession is unlikely.
Warren Buffett recently decried that he is very confi-dent in America. However, his investment positions don’t seem to paint such an optimistic picture. Ben Bernanke has gone from saying that the economy is very sound to now proclaiming it to be “unusually uncertain.”
Given Bernanke’s perfect record of predicting the exact polar opposite of future conditions, one would conclude that the economicoutlook is perfectly certain. It is perfectly certain that our economy is driving off of a cliff and taking the U.S. dollar right with it.
Stimulus helps. It helps whoever gets it for a short amount of time by punishingeveryone else, the economy at large and everyone’s longer term future. The dumb right wants to stimulate big business and the dumb left wants to stimulate the poor masses.
Stimulus punishes both. By propping up the zombie banks, all we did was help the vampire bankers give themselves giant bonuses and allow them to kick the now much bigger, stimulus fueled can down the overly paved road. By giving home buyers a tax credit and car owners a “cash for clunkers” program, all we did was artifi cially infl ate prices and transfer money from renters to sellers.
Stimulus doesn’t fi x any of the fundamental problems in our economy and in fact exacerbates them. Unfortunately, stimulus and money printing are politically expedient. Who doesn’t wantto run on the platform of “Hey, I’m gonna give everyonemoney so that you can all spend the country into prosperity.”
But the current Keynesian philosophy of print and spend creates a dangerous casualty: the U.S. dollar will not survive the sloth that is ourgovernment and its masters. Indeed, the private central banking cartel known as the “Federal Reserve” is printing the U.S. dollar and its purchasing power right out of existence and, no matter what side you are on in the raging defl ation vs. infl ation debate, money printing will eventually destroy the currency.
You cannot simply extend credit and then print extra money if someone defaults and expect that not to cause infl ation. Why not just guarantee every loan in the whole world?
Also, if any body fi nally starts to doubt the pathetic creditworthiness of the U.S.,then Treasury yields would have to come up and we can barely afford the interest on our $13,000,000,000,000.00 debt as it is.
If… When China gets cold feet about loaning us trillions of dollars at three percent so that Joe Six Pack can own a flatscreen and little Timmy can eat Cheese Balls by the bushel, things will start to get very tumultuous for our little friend the U.S. dollar. Get ready for Jenny the soccer mom to pay ten thousand bucks for a bag of groceries in the relatively near future.
If China won’t lend us cash for Big Macs and SUV’s, then the FED will have to because no politician will accept the necessary deflationary environment we all face without taking blind and swift action. The only action it can take is to print and print some more which will be the fi nal nail in our coffin.
Printing money to fuel consumption is like starving your enemy so that you can steal their food. So people, get at least some of your dollars into tangible assets like agriculture and commodities such as gold. Or else, watch whatever wealth you have dwindle away.
Josh Hiken, a former stockbroker, is a writer, commentator and musician who lives in Southern California. He can be reached at jhiken@hotmail.com.
Progressive Avenues can be found at www.progressiveavenues.org. The website is regularly updated.
