-By Dan Scott
A number of people recently have been commenting on how the economy seems to be showing signs of recovery, all without a single penny of the so called stimulus bill having been spent. The stock market has been moving up of late giving investors a sense of hope that the bottom has been reached signaling an end to their financial losses. Hope is good but false hope is dangerous as it causes people to lower their defenses against the oncoming train wreck. Counting on an economic recovery is occurring due to a bear market rally, is false hope. The psychology of the bear rally is based on false hope.
Have you noticed the price of gas lately? Its been creeping back up and now is up to $2/gallon. It’s not due to domestic demand but the world price of oil. Because of the misconduct of the RULING POR (Pelosi, Obama, Reid) Party causing over a trillion dollars to be printed, the dollar is devaluing and the price of oil is going up as a result. If the price of oil continues to rise we will soon reach the tipping point where the economy will stall again. That tipping point is somewhere around $2.50/gallon based on what happened in January 2007 when unemployment started it’s steady climb. The economy then took a nosedive as the price of gasoline hit $4/gallon. Of course President Obama continues to talk in non-sequiturs claiming in order for the economy to recover he must impose a carbon tax to create “green jobs”. He plainly admitted such a tax scheme would cause the price of energy (electricity) to “skyrocket”, his term not mine. While he was specifically speaking of coal in regards to electricity, such a tax would also hit petroleum products like gasoline almost as hard.
I pointed out the effects of printing money, their term is monetizing the debt, which causes the devaluation of the dollar. As the rest of the irresponsible deficit spending plans are enacted I am predicting $100/barrel oil by the end of the year based on a 60% devaluation of the dollar. With oil at that price any economic recovery will be aborted. They already printed $1 trillion, they plan to print at least $2 more trillion in short order, thus quadrupling the total dollars in circulation.
Here in the US, the Federal Reserve is the Treasury’s buyer of last resort, how do you think Germany and England met their bond obligation when there was no PRIVATE or even foreign government money to buy their bonds? They printed money JUST like the Federal Reserve did, that is why the Euro and Pound fell in value from last summer until currently when the US began it’s printing spree, now the roles are reversed. The Europeans reluctantly printed more albeit smaller amounts and so the dollar has been falling against these two currencies. Obama knows there isn’t enough private and foreign government investment dollars out there to fund his utopian dream so he is doing the next best thing, monetize it. However, he can’t do that without getting all the other countries to do the same otherwise the dollar collapses in value and no one will buy bonds at all, only the Fed with more printed money.
The Europeans have flatly said they have spent all they are going to spend, they did most of it last year with no effect. During that period The British Pound dropped by 30% and the Euro dropped as well. Now that we have begun printing money, the dollar is falling against both the Pound and the Euro. The reason why Obama wants the Europeans to spend/print more is so their currency will fall in tandem with the dollar, which would disguise the devaluation to the public and especially to the bondholders and oil producers.
The Europeans apparently are not going along with the deception. If they did agree together to devalue their currencies in tandem, the price of oil being denominated in both Euros and Dollars would not change, however, if only the dollar devalues then the Euro will be the determinate value place holder for the price of oil and thus the price of oil would rise for us but not for them (Europeans). What Obama is really asking the Europeans to do is collude with him in a scheme to defraud the taxpayer, the government bondholders and the oil producers. Since the Yen (Japan) and Yuan (China) are pegged to a defined range on the dollar, their currencies would also fall and thus disguise their currency losses on the bonds they hold, however their losses will still occur as evidenced by other currencies rising in value like the Swiss Franc or a commodity like Gold. Of course the taxpayer is on the hook for all the trillions of dollars in government debt the phony (printed) money purchased. Here’s a hint, use the Swiss Franc to monitor the performance of the Euro and Dollar, when you compare the trends, the Euro”> dropped against the Franc until just recently.
Those who own bonds, especially foreigners who are exposed to currency risk will be subject to huge percentage losses. Here’s a hint to the Chinese and Japanese who are the first and second largest holders of US Bonds, respectively and who hold nearly half the US debt, President Obama plans to devalue the dollar and so cut his effective debt value in half at the foreign bondholder’s expense. He is already doing it. How was the South American debt crisis solved? Do you really think President Obama is going to do something different than the South American countries when he ran up the debt in the same way they did? The estimates on the financing of the debt are out in public for all to see, ask yourselves, is $800 billion a year sustainable? Don’t get caught in the same mistake the international banks made with the South American countries thinking a government wouldn’t default on it’s own bonds or force a write down of principal. President Obama in fact has already shown his willingness to play this game by doing the exact same thing to the US banks holding home mortgages, a write down of principal and lower interest rate. You know what’s coming, consider yourself warned. GET OUT NOW before a self-serving POR Party fleeces you! Only by telling the ruling POR in Washington that you plan not to buy their Bonds and in fact start unloading them will their delusional utopian dream be stopped. Trust me, you’re doing us (taxpayers) and yourselves a favor by dumping the bonds now, otherwise if you continue to enable the ruling POR Party in their spending spree both you and us are going down together.
Anyway you slice this pile of news, the US economy is going to take it hard. Whether the bondholders like China and Japan balk at buying more bonds and thus begin unwinding their positions or not, the ruling POR Party is determined to spend for their utopian dream. Either result is an exploding national debt ending with unsustainable interest payments since the Federal Reserve will print up what bonds are not bought. Whether the Europeans go along with Obama in colluding to devalue their currencies in tandem or not, the price of gasoline is still going to go up because the Ruling POR will fruitlessly chase after the potential $2 trillion in carbon taxes to offset some of their spending spree. The economy in response to higher energy costs will tank just like before thus putting even more people out of work. The taxpayers who are protesting now with their Tea Parties won’t be listened to, the ears of the ruling POR Party are deaf to the chattering classes that refuse to have faith in the agenda to bring about the utopian dream. We are headed for a train wreck unless someone in the political class has the courage to grab the brake or uncouple the cars from the runaway engine.
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Dan Scott calls himself a “Member of the Global Capitalist Cabal preaching Capitalism and personal responsibility as the economic solution to world poverty.” He is also a member of the 14th Amendment Society — victimhood is a liberal code word for denying the civil rights of others. He is also a proud member of the Global Warming Denier Cabal, insisting that facts not agendas determine the truth.
Dan can be seen on the web at http://www.geocities.com/fightbigotry2002/ as well as http://www.geocities.com/dscott8186/saidwebpage.htm, And can be reached for comments at dscott8186@yahoo.com.
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