ORIGINAL ARTICLE“There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system involved.” – Ludwig von Mises
The final collapse of our credit expansion boom approaches. We have a choice over the next week. We could voluntarily abandon further credit expansion by voting for a Balanced Budget Amendment to the Constitution or we can raise the debt ceiling, pretend to cut spending far in the future, and allow our currency system to experience a catastrophic final collapse.
We’ll take what’s behind door #2 Johnny. The vested interests in Washington DC and Wall Street only care about power and wealth. They will never abandon credit expansion. It’s their drug. They must have it. They are addicted to it. They will keep injecting it into our system until they overdose America.
The mainstream media acts as if not raising the debt ceiling by next Tuesday will result in America defaulting. This is a crock. America chose to proceed on a path to default decades ago. We are just finally reaching our destination. Below are the choices we made as a people and a country to default on our obligations and eventually destroy our country:
- The enactment of the 16th Amendment to the Constitution in 1913 allowing the government to impose a tax on your income, thereby opening Pandora’s Box to a 60,000 page tax code and allowing politicians to sell their votes to the highest bidder.
- The signing into law of the Federal Reserve Act by Woodrow Wilson in 1913, transferring control of our currency system to Wall Street banks. The man made inflation created by the Federal Reserve has reduced the purchasing power of the USD by 97% since 1913 and has allowed politicians to promise $100 trillion of benefits to Americans, that can never be delivered.
- The Social Security Act signed into law by Franklin Delano Roosevelt in 1935, supposedly to help widows and orphans, morphed into a giant ponzi scheme used by politicians to make Americans think it was a retirement plan and the money was in a lockbox. The scam continues, but ponzi schemes always collapse.
- Fannie Mae was created in 1938 as a government agency and Freddie Mac was created in 1970 as a quasi-government agency. By promoting home ownership and subsidizing loans to people who should have never gotten loans these agencies caused hundreds of billions in mal-investment. As tools of politicians, they were used to push social agendas. The result will be in excess of $300 billion in losses to the American taxpayer.
- The Korean War set a precedent where the President did not need to seek Congress to declare war as required under the Constitution. This has allowed the President the freedom to fight undeclared wars around the world for decades, while spending trillions, with no approval from Congress.
- LBJ’s Great Society programs such as Medicare and Medicaid were sold to Americans as cost saving programs that would improve healthcare for all Americans. We now spend 17% of our GDP on healthcare and these two programs have an unfunded liability of almost $100 trillion.
- Nixon closing the gold window in 1971 removed all restraint on the Federal Reserve, banks and politicians. With a fiat currency backed by nothing but promises, it was only a matter of time before the greed and corruption of bankers and politicians overcame any self imposed fiscal responsibility. The result has been the National Debt going from $400 billion in 1971 to $14.4 trillion today, a 3,600% increase in 40 years. Meanwhile, GDP only increased 1,350% over this same time frame.
- The embrace of consumer debt by the Baby Boom generation beginning in 1980 created an atmosphere of living for today and not worrying about the future. This attitude has left 50% of all the households in the country with a net worth of $70,000 or below.
- The repeal of the Glass Steagall Act in 1999 unleashed the hounds of hell upon America, as the soulless blood sucking vampires on Wall Street proceeded to rape and pillage the American economy with their financial derivatives of mass destruction and marketing of debt to the clueless masses. The housing bust and impoverishment of the middle class can be laid at the feet of these evil greedy bastards.
- Bush’s unpaid for wars of choice, his reckless tax cuts, and his foolish expansion of a bankrupt Medicare program in the midst of two wars turbo charged the country on its path to default.
- By bailing out Wall Street on the backs of the middle class in 2008/2009, the politicians in this country showed their hand. They will protect their fellow power brokers and contributors and throw the American people under the bus. Wall Street controls Congress.
- The Keynesian schemes rolled out by Obama and his minions have just added trillions of debt while depressing the economic system and doing nothing to help the average person. The Fed created inflation has inflamed revolution through out the world and further impoverished the middle class who need to eat and fill up their cars.
- In the midst of a Depression Obama chose to create a brand new healthcare bureaucracy, add 30 million people into the government controlled system, and commit the US taxpayer to trillions of future healthcare costs.
As you can see, next Tuesday means nothing. The debt ceiling means nothing. We chose to default as a nation many years ago. The destination was certain, only the timing was in question. Time to step on the gas.
“Credit expansion is not a nostrum to make people happy. The boom it engenders must inevitably lead to a debacle and unhappiness.” – Ludwig von Mises
Ludwig Von Mises was a mouthpieces
for the Austrian power elite of the
day. Credit expansion is not the
“basic” cause of a financial catastrophe,credit expansion comes
about in order to avoid severe recession, the system must grow or
die. When markets are saturated with goods an artificial system must be implemented to create new wants and needs.
A Balanced Budget Amendment to the Constitution would require
a Constitutional Convention of the States. It would require
3/4 of the States to approve. This farce of a debate will be
a footnote to history before that happens.
Boehner is doing this so he can say he sent two bills over to the Senate and they didn’t pass either. Politics as
usual.
“the system must grow or
die.”
For our current system, this is true. It is true because it is a debt based monetary system. I requires ~3% annual growth just to appear stable.
In real terms that means, at a minimum, our whole system of debt, energy use, etc. must double every 23 yrs.
Austrian school or not, the math is the math, and Von Mises et. al. understood the math.
“Von” Mises clearly states that a boom brought about by credit expansion will sooner or later collapse…I most heartily agree. what he does not elaborate on, is why the credit got expanded, clearly he is ignorant of the dialectic. Intercourse precedes pregnancy, and no,this is not a system on debt, debt is a result not a cause.
Credit is simply bringing consumption forward in time. At the cost of paying interest on the debt and eventually having to pay it back. Human nature involves several fatal flaws:
We don’t viscerally understand compound growth rates
We discount the future in favor of the present
We are overly optimistic about future success
Given those characteristics, smart predators can take advantage of consumers and lure them into ruinous debts. The predators, in this case, are the government (which never explains the cost of wars) and financial corporations (or the financing arms of manufacturing companies such as automobiles).
The only defense is strong cultural taboos against debt. For example, I still remember 1955 when it became ‘OK’ to borrow money to buy a car. Nobody I knew in college was taking out a student loan. We worked like hell to pay for college–and the states were more interested in keeping tuition low and they are now. But the failure rate in the freshman class stood at 80 percent. Easy to get in, hard to stay in.
Christopher Alexander, in The Timeless Way of Building, lays out the perfect way to build a house. It is built by hand, mostly by the occupants, over a period of years. A little added each year as the family’s requirements change and the money to add to the house is earned.
It is not impossible to imagine life without credit cards, without auto debt, and without home mortgages. We will find out about that kind of life again very soon, unless I miss my guess.
Don Stewart
Got nothing to do with LvM or any economist or theory. Whatever the currency system, the country fails if it corrupt or mismanage it. History is full of states who failed due to mismanagement of politics, society, military, and of course finance. The U.S.A. currently is well on its way in messing up these four pillars of nationhood. There is no sign of correction. Therefore, the country will fail under current set of leadership and direction.
Egypt was on the verge of total failure until citizens rose up to replace those responsible. Libya and Syria are in the process of deciding who is in charge after their 4 pillars crumbled. Greece corrupted their 4-pillars so bad that big EU put in under adult supervision, otherwise national failure will happen. The USSR experienced the exact 4-pillar failure and they started all over with a different system. No country is immune to failure.
Having just been enchanted by Carolyn Baker’s opening chapter in Sacred Demise, I looked with eagerness to this website and the ideas and dialogue that I might find here, in the spirit of “walking the spiritual path of industrial civilization’s collapse”. And I am heartened that there are indeed thoughtful responses to Quinn’s overly simplistic view of the evils of government; analysis pushed to either the extreme left or the extreme right really don’t help to clarify the predicaments in which we now find ourselves.
While I don’t disagree with the apparent facts of our choices as Quinn presents them, in the case of Social Security or Medicare, it is way too conspiratorial to view their genesis as only a sham to steal money from duped citizens. In fact, though it be a truism, our government is sometimes still an expression of the will of the American people — and I believe that in some of the choices to which Quinn points as evidence of malice & greed aforethought, we should rather be holding to their idealistic origin and overall intention of caring for society.
We must all seek to do much better in our analysis than to conflate all things ‘big government’ as a menace to a more perfect American union because as one studies other nations and human history, it is obvious that the continuum of human society is much richer and full of possibilities than Quinn’s diatribe would have us believe. In fact, in almost any other so-called developed nation where one cares to look there is ample proof that healthcare can be delivered more effectively with regard to both cost and health outcomes by a much broader public/private collaboration, i.e., a “healthcare bureaucracy” — what’s required is that we each live seriously our individual responsibility to take care of each other.
And returning to Carolyn Baker and spiritual paths, encouraging such myopic thinking as ‘all big government is bad’ seems hardly in the spirit of what ecopsychology would have us learn from a more intimate experience of Earth and Nature. Unfortunately, many of us seem to have bought into the false notion that each of us is an island and in control of our destinies without regard to anyone else. I can only say, what nonsense!
I do not agree 100% with everything I post on this site, but in the case of Quinn’s article, I thought that there was enough truth in it to merit posting. Take what you like and leave the rest!!