Conservative Refocus

Barry Secrest

It has always been the case in history, when a particular event occurs that is significant, no one can actually know at the time the portent of the event in question.  For instance, who could have known that the tyrannical excesses of King George during the Americas' colonization would eventually lead to a Revolution that would define free societies for the next two and a half centuries?

Even better, who could have known that this same revolt against Great Britain would ultimately lead to the salvation of a latter day United Kingdom, if not the world, during both Germany and Japan's savage aggression nearly two centuries later?  But how was it that the American Revolution came about?  Was it just an issue of taxation. or were there far many other issues at work?

We often look at the Rebels in the Southern States, firing their canons at Fort Sumter in 1861, as having started the Civil War, but what actually occurred that led the Southerners to fire their guns at the Federal installation in the first place?  The answers to this question are always many and varied and simply cannot be pared down into one simplistic reason, such as slavery for instance.

World War I was started by the assassination of Archduke Ferdinand in 1914, but how could the assassination of one man cause an entire planet to become engulfed in war?  What events were at play that led up to the signatory event of a world conflagrating into conflict?  The same thing with World War II; we know that Germany invaded Poland in 1939, thus setting into motion the chain of events which culminated in a world at war, but what exactly caused Hitler and the Germans to invade Poland in the first place?  Hundreds if not thousands of books have been written in an attempt to answer this question; however, there is no single simplistic answer beyond declaring a singular group's incrementally contrived madness as the cause.  The answer to each of these questions can only be ascribed to a daisy chain of events that require a full accounting of history in order to even get close to the penultimate answer.

In fact, we can take each signature event, point to it and say, "behold, that's what caused it," and yet, in each case, there are always a series of issues and pressure points, often having built up over decades if not centuries, that come together into one terrible, uncontrolled climax that pushes what might have been a single correctable event into a cataclysm of world-shattering impact.

From Superpower to Super-debtor

It has been over 65 years since the entire planet has descended into conflict, which then begs the question, are we overdue for an extreme clash of nations, and what might that conflict look like?

Oh, we have had a number of lengthy and costly skirmishes since the great wars.  The Cold War between the US and the USSR, the Vietnam War and Korean wars, Iraq, and Afghanistan, among others, and each of these represented the battle of the political Left against the Right in large part, when viewed holistically.  Sure, economics often came into play, but, be they either Authoritarian regimes or Communist aggressors, these conflicts can each be winnowed down into a battle of one ideology pitted against another in the final sum.

Further, in each of these cases the US has, for the most part, fought under the battle standard of individual rights and free market capitalism, and in each case, typically using superior offensive capability against aggression.  Also within these conflicts, the opposing Left represented an untrusting authoritarian or collectivist State,  virtually always run by a comparatively small group of men, or an Oligarchy of sorts, which is anathema to Liberty's sensibilities.

The US, to further explain in part,  has been universally agreed upon as being Leader of the Free World since World War II, and has always put forth the concept that the people themselves should be in electoral control under a rule of law and individually protected by centralized excess via a Constitution while being nourished under a Free Market.

Until now.

Many, it now seems, appear to be falling under the understandable impression that the US is no longer that same country, and they may be tragically correct as things currently stand.  While a vast majority of Americans still operate under the cynosures of Liberty and self determination, the leadership of the US has taken a decidedly differing stance over the last five years. During these  five years, and even before, Americans have seen uncorrected error after uncorrected error spin a deliberately confused, if not deluded, America out of both economic and ideological balance.  America has resultantly become a superpowered welfare state with a hierarchy of wealth administered by Her government.  However, as a result of this odd configuration, She is faltering and mightily as America's debt is slowly toppling Her over into a super-debtor nation.

America can be a superpower or a super-debtor welfare state, but certainly not both.

Make no mistake, the US has quickly become the most prolific debtor nation in the history of the world, the girth of Her debt being only surpassed by the breadth of Her indignant self-denial of that same debt.

The Debt Escalator

The result of this economy of imprudent errors culminates in the fact that we now find both ourselves and our vast nation caught between Scylla and Charybdis with very few avenues of recourse.  The various politico's still will rather pathetically talk, even deprecatingly, of these issues, as if we still have vast avenues of correction and we can either tax or perhaps cut our way out of our dire situation effortlessly and in very short order.

They will dismiss the warnings of hard correction from the experts within the financial sectors as if these industry experts know less than little, while mattering even less than that.  They will talk of actually raising the already gargantuan debt limit as if it were a simple thing that simply must be accomplished, when in fact, the raising of the debt limit, under practical terms, would be akin to trying to cure a child's dangerously high fever with the most potent of poisons at this juncture.

The question that continually comes to mind with regard to the debt ceiling is simply this:  Why call it a debt ceiling if is incessantly being raised?  Would not a debt escalator be a more accurate term?

They will declare that a simple recourse is available, while blaming the dwindling number of wealthy and dismissing an odd increase in the super-wealthy, and while still ignoring the daisy chain of actions by those who have brought these event upon us, and in earnest, in the first place.

However unfortunately, it would seem that we are now nearly upon the current day's Event Significus, as discussed much earlier, that will have ever far-reaching implications for both America and the world for the unlimited foreseeable future.  As we have researched and learned over a number of years, while constructing what we hope are very informative articles, so have we researched where America's finances are today and over a period of months.

The verdict from everything that we have been able to divine is not exactly great, as I am sure anyone can gather. You see, when we speak in terms of trillions of dollars, you will see a number of people's eyes go blank, their attention meander, while their jaws go absently slack.  But it is this fact of disconnected comprehension that is actually part of the problem.  It is a difficult number for many to even contemplate, as well it should be.  The thing to remember is simply this:

One thousand ones is a thousand, just as one thousand thousands is a million, just as one thousand millions is a billion, just as one thousand billions is a trillion.

$ 1 trillion dollars is a huge sum of money, and the US currently collects a total revenue of about $ 2.2 trillion dollars a year, and that, somehow, just isn't enough.  Despite this mind-boggling sum of money, America is still running an annual deficit estimated at $ 1.6 trillion dollars.  So, even if we were to stop spending more than we are bringing in, we are still faced with a standing $ 14.3 trillion dollar deficit, which presents much like an elephant standing stubbornly in the middle of the room.

The thing to remember, when we hear Congress or the President throwing around $ 20 billion dollars here or $ 100 billion dollars there, is that outside of our entitlement income of approximately$ 865 billion per year (Social Security, Medicare and Medicaid), America only has about $ 1.1 trillion dollars of hard income to play with outside of several other smaller streams. $ 200 billi0n dollars, at present, comes from our corporate tax structure, and about $ 900 billion dollars comes largely from the taxation of the wealthy, the middle class and closely held corporate small business men.  Remember also that of that $ 865 billion, American business pays over 50% of that. Now, we have heard from a large proportion of the Left, including the President, that we should raise taxes on all of those who are paying taxes now.  Nevermind the nearly 50 % of all Americans who pay nothing.

Quantitative Idiocy

However, the simple fact is that even if America were to double the tax on each of its taxpayers, we would still be incurring a debt shortfall of over $ 100 billion per year. So, when you look at the numbers as presented above, it becomes easy to rationalize that it's not so much that taxation is at issue, but rather it is the welfare state spending and several other expense streams which simply must be reigned in, but is that even enough at this point?

The Fed is already faced with being on the cusp of trying to control a huge hyperinflation problem from all of the money that has been printed via quantitative easing (QE), along with the trillions of dollars spent during the financial meltdown.  However, the printing of dollars in huge sums is just the beginning of the problem.  A number of experts believe that if the US were to cut spending across the board at 50% and raise interest rates to 5 or 6%, hyperinflation could be avoided, but then that would lead to another problem.  One of the reasons that the Fed has been utilizing QE in the first place is due to America's tremendous debt problem in the form of US Treasury bonds, which is the $14.3 trillion dollar number that we keep seeing.  You see, at present the US spends about $ 200 billion per year in bond interest payments on this Federal debt.  If the US were to allow interest rates to naturally rise to 5 or 6%, then the  payment of interest yield at the current 1.5% would be increased by a factor of perhaps four times that amount.

This would mean that the current $ 200 billion would quadruple to around $ 800 billion per year.  Therefore, 70-to 80% all of our hard taxation revenue would go towards bond interest payments alone, leaving very little for anything else.

So, do you see the problem, now?

The QE is only forestalling a problem which must be dealt with at some point in the near future, but the practice of QE, which is a form of monetizing the debt by the Treasury's purchasing of its own debt with debt, is what is nominally forestalling the inevitable at present.  But then there is another problem at work when the US initiates Quantitative Easing.

Many have speculated that the riots occurring all over the globe are largely a result of a massive yearning for Democracy.  Poetic indeed, but what if it these mass uprisings have a common seed which is rooted in something even more basic than freedom, that being hunger?  The huge debt, in conjunction with the QE that America is initiating, has caused food inflation to soar across the globe.  This is because America's currency is being diluted worldwide due to that same quantitative easing.  Remember, the US dollar is the world's reserve currency, meaning everyone across the globe trades with it.  The US is, in effect, spreading our debt misery into countries whose inhabitants have nowhere near the capability of handling the 30% rise in food costs that some Americans can handle, which then leads us into another problem.

There has been much talk over the past 12 months suggesting the world should adopt another world reserve currency rather than the US dollar.  If this were to happen, then the US could no longer afford to print money at a whim due to the fact that the dollar would no longer be in demand the world over.  The US dollar would immediately face huge currency imbalances as the dollar would be devalued to near worthlessness overnight with America's huge debt level.  The only saving grace may be found in the fact that most of the countries that hold our debt will not wish to see their sum reduced to worthlessness overnight, which means the US may yet still have time.

America's 57th State: Denial

However, we can already see a particular hesitance on behalf of the world to purchase any more American debt.  China and other countries have already divested themselves of short-term US treasury bonds. With all of these problems at play, can anyone not see why talk of increasing the debt limit is beyond madness?  Throughout history, and even much more recently, nation after nation has seen its currency stumble through what eventually ends up as a national default, which is where America appears to be headed and quickly.  The only saving grace in the latest round of national debt meltdowns was due partially to the fact that other countries were willing to bail these smaller countries out to some degree.

But who will have the ability or even the desire to bail the monstrous US economy out?

The problems that we face, in a nutshell, are massive, and there are few who seem willing to come into full acceptance of these facts.  But, as with all things historical, we can only wonder what will happen when the significant event is reached and when it will actually happen?  When we factor in the unrest that is seething the world-over, along with the pressures being brought to bear in the world of Islam and the Mideast, we can see an America which could soon become a terribly hungry, but still large and powerful tiger.

Another mystery is simply the trillions of dollars "lost" by the US during the 2008 financial meltdown.  Many have speculated on where this money may have ended up along with the precarious timing of a  collapse that occurred only a month before a national election.  Did certain global financiers have anything to do with the collapse that nearly brought down the world's economy?  The best laid plans of the globalists may prove to backfire if America ever finds that this particular world-shattering scenario was contrived.

So, the question then becomes, how will both the US and the world react, and what events will be sparked when the Leader of the Free World in America reaches Her financial breaking point?  Unarguably, there will be those who will scoff at the doom-saying, and there will be others who will say that this simply cannot happen, which brings up an old saying that proves itself to be truer and truer as more knowledge is gained:

Ignorance is bliss.

Love's Legacy Lost

Ironically, I am what may be called an eternal optimist, always despising a negative outlook and, in truth, even if the worst actually happens, some good may yet come out of all of this for America.  There is always a measure of chance that we may yet navigate our way out of this mess intact; however, to think that there will be no pain in the doing is to deny reality, a thing that Americans have become expert in, no doubt.  We will, in fact, need the best thinkers in America in positions of leadership in the coming days.  Unfortunately, the current crew will find themselves where they have always traditionally found themselves when outside of Academia--which is in a position of being in over their heads.  But, as we further piece together the chain of events that led America to this point in Her history, what will play out into a significant event of such magnitude  that history will forever study America's present State of inaction, if not denial, and declare, "Behold, this is what caused it?"

Perhaps one of  the main problems with all of this boils down to the fact of a difficult legacy, at best, being left to our children. I can no longer look at a youngster, nor even embrace my own young teenage children without feeling a certain shame that our generation has broken the chain of trust which was left to us by our hard-working forebears.

Our children, it would seem, will have their work cut out for them, and, like it or not, we are all culpable to one degree or another, either in our failures to forestall the inevitable or for those others in the enabling of the destruction of our economy in the first place.

But every day that passes without any meaningful correction being applied becomes one day closer for our lives as we know them to be forever altered. You see, the vast array of numbers, when couched in the prism of history, simply cannot be denied.

America is in deep trouble and America's leadership is in even deeper denial.

The Stansberry Letter and the National Inflation Association contributed to this article