Letter to the Editor: Don't Look Down

America falls off the Financial Cliff

Tuesday, October 14, 2008

It's a long drop from the top, with many boulders and jagged points to hit on the way to the bottom. Unfortunately, for those scared of heights and without golden parachutes, America is loosing its balance on the edge of the cliff. Over the course of the last two plus years the enormous financial credit bubble has burst, and with notable drama in recent months like never seen in our lifetimes. America is now in the midst of the worst economic disaster since the Great Depression, in fact, we stand a good chance of entering a Greater Depression on the near horizon. This cliff is steep.

Now in America's dire moment of financial despair comes the gang of thieves responsible for the crisis to assure the public they have the solution to the problem. Ben Bernake (Alan Greenspan) and Henry Paulson are largely to blame for the over expansion of the credit market, some say they are criminally responsible, now they offer the remedy of even more credit expansion through fiat currency. Clearly they have taken the strategy of fight fire with fire to heart. America's financial system has been engineered to cycle through boom and bust periods by the central banks since the Federal Reserve's inception in 1913 (which was against the Constitution in the first place). The most prolific bust was obviously the Great Depression, but there has been a steady boom and bust cycle since then. The busts behoove the interests of the wealthiest of the bankers of the financial elite, those who own the Federal Reserve branches. They use crashes in the market to consolidate their wealth, buying up assets for pennies on the dollar in fire auction deals.

Today the market is clogged with trillions of dollars in non-liquid (worthless) assets, many occurring from unpaid mortgages in the cripple housing market. Hundreds of billions of dollars of mortgage-backed securities are resting like poison in the vaults of America's biggest financial institutions. Now the Administration wants unlimited, non-reviewable dictatorial powers to purchase bad assets in the name of the American taxpayer (Section 8 of the Paulson Plan). There is a financial crisis, according to the N.Y. Post's sources the stock market was a mere 500 trades away from a crash of nearly 25% September 18th, before Paulson announced his now infamous plan to calm fears of crisis on Wall Street. However, the proposed "mother of all bailouts" is not only against the Constitution, fiscal suicide, and blatantly socialistic, it also will only serve to compound the economic woes of America and mostly likely prolong the financial crisis into a long term depression. There is no magic bullet to fix this problem, a government bailout of Wall Street cannot make consumers pay off their debts. The credit market and thus the economy will crash, if it hasn't already by the time you read this... the question is how hard will we fall and how long will it take to get back up?

That question very well may hinge on actions that are taken outside of the United States by foreign nations, as the ultimate fate of America rests upon whether or not we can keep our status as the world's reserve currency. Our claim to this throne is in serious jeopardy of being usurped at the given moment, and the onslaught will only commence full force as the dollar becomes destroyed under the weight of the Fed's endless monetary expansion. The Federal Reserve has already been interjecting unprecedented amounts of money into the financial system. On Monday morning the Fed interjected a historic $680 Billion into the banking system to prevent a total fall out. The more money the Fed creates out of nothing, the less the dollar is worth, which hurts working people trying to save for the future and creates hyper-inflation on essential goods. This makes it unattractive and dangerous for foreign nations to buy up our debt, which is the sole reason America is able to live beyond our means in a credit based economy in the first place. Recently both Russia and China (the second largest holder of US debt) publicly called for a new global monetary system not based on the US dollar. Russia and China have also been discussing setting up their own regional reserve currency. Last week the Chancellor of Germany made a public announcement that the US would most likely loose its spot as at the top of the world's financial mountain. If America looses its place as the world's reserve currency, even in isolated markets, the economic effects felt by average Americans at home would be dramatic beyond description. The situation would make the Grapes of Wrath look like a picnic in the park.

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On Monday, The House amazingly rejected the bailout plan under tremendous pressure from taxpayers, causing Wall Street to panic and setting a new point loss record in the Dow of 777. Without a doubt the situation on Wall Street and the economy in general is in real threat of completely unraveling. However, the market must work itself without the government nationalizing financial institutions that engaged in fraudulent practices. This will be extremely painful for Americans across the board, but the entire fractual reserve banking system must be changed, not given a life-line from taxpayers' pockets.

Even without the current bailout package being added on, or the near trillion dollars in Defense spending the House just quietly passed last week, the US Treasury is already by definition fiscally insolvent. The national debt has reached $10 Trillion, but perhaps even more troubling for America's economic future is the staggering $100 Trillion in unfunded liabilities that is estimated the government owes, which according to GAO has doubled in just two years. This means that the government has already promised around $100 Trillion in entitlement programs that it does not have the funds to cover. The only way the US government and the entire economy continue to operate beyond their means is deficit spending and counting on foreign countries to hold our bad debt. This entire fraudulent financial system is on the brink of collapse, and unfortunately there are millions of hardworking Americans who will suffer the consequences.

Besides making sure this bailout bill is dead, the American people must act immediately to end the Federal Reserve. To eliminate their illegal power to issue currency and return monetary powers to the Congress and thereby the people as prescribed by the US Constitution. America must end its fiat currency and return to the gold standard in order to destroy the central banks criminal monopoly. There is no reason American workers should pay an income tax for interest to the wealthy central bankers. We must also start to live within our true means as consumers, then end the massive spending on maintaining our militaristic empire abroad and reduce the domestic welfare state in order to balance the budget and pay down the deficit. Otherwise we will permanently curse the destiny of future generations.