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Inflating Our Way to a Government-Controlled Economy

Apr 11

Posted by ImpeachCongress in Abuse of Power, Economics, Economy, Inflation, Opinion | 2 Comments

By: Lee DeCovnick

Spiraling food prices, record energy costs and federally mandated health insurance reflect this Administration’s slavish ideological devotion to the centralized planning of key sectors of the American economy. So, what are the current results of Obama’s indoctrination of America into progressive collectivism? Global food costs have risen an astonishing 29 % in the past year, and almost 4% a month between October and January of 2011. Retail prices for gasoline have doubled in the 26 months since Obama was inaugurated. And the Democratic majorities in Congress passed a mandated health insurance bill that is not only unconstitutional, but also riddled with exemptions, political payoffs while adding 159 new boards, commissions and programs.

The current quagmire of budget deficits coupled with the viral growth of the federal government continues to be carefully planned and executed. We can especially thank the silent and complicit MSM for allowing this radical Administration and Obama’s handpicked shadow government, the thirty-nine unconfirmed czars now running the Federal bureaucracies, to eviscerate trillions of dollars of earned capital. The Marxists’ natural enemy, the professional capitalists (the American “bourgeoisie” in classic Marxist terminology) are rapidly losing significant chunks of disposable income to inflation and energy prices without a formal tax increase. The first and second quartiles (the two lowest socio- economic populations) are far more more dependent on government subsidies then 26 months ago. Plus the federal government last week plummeted an additional $7.7 billion deeper into debt each day.

Honestly, the Marxists and progressive collectivists who populate the senior levels of this Administration could be popping Veuve Clicquot nightly in celebration of their wildly successful, ongoing financial dismemberment of the upper middle class of America.

Here are two photos that refute the USDA propaganda that inflation in food costs will only increase 3% to 4% in 2011.


Yes, five dollars for a loaf of bread and six dollars for a 27.5 ounce box of corn flakes plus a few tablespoons of sugar. How absurd are these prices? Yuban coffee costs 24 cents an ounce, Frosted Flakes now costs 21.8 cent an ounce, and a loaf of bread runs 20.3 cent an ounce.

The World Bank’s brief account of February 2011 maize (corn) prices reminds us that seemingly good intentions can easily subvert a great nation and its food supply.

Maize prices have increased sharply and are affected by complex linkages with other markets. In January 2011, maize prices were about 73% higher than June 2010. These increases are due to a series of downward revisions of crop forecasts, low stocks (U.S. stocks-to-use ratio for 2010/11 is projected to be 5% the lowest since 1995), the positive relationship between maize and wheat prices, and the use of corn for biofuels. Ethanol production demand for corn increases as oil prices go up, with sugar-based ethanol less competitive at current sugar prices. Recent United States Department of Agriculture (USDA) estimates show the share of ethanol for fuel rising from 31% of U.S. corn output in 2008/9 to a projected 40% in 2010/11.

Read that stat one more time. “In January 2011, maize prices were about 73% higher than June 2010.” That is a jaw-dropping annual inflation rate of 146%, for the most basic of food commodities. Corn also feeds cattle as well as making Frosted Flakes. Also, “Recent United States Department of Agriculture (USDA) estimates show the share of ethanol for fuel rising from 31% of U.S. corn output in 2008/9 to a projected 40% in 2010/11.” Why does anyone think that harvesting food crops for fuel is a good idea?

We can no longer waste newsprint or electrons on whether this Administration and it’s appointed political thugs are incompetent, naïve or Machiavellian. They are all of the above as it suits their purposes. Those purposes, after 26 months in office, are undeniable.

Using the silent complicity of the MSM, these progressive collectivists want an uncontested control of the six key sectors of the American economy: food, energy, healthcare, auto manufacturing, higher education and non-military government workers. Why this headlong plunge toward the centralization of planning and production? What is the end game?

From eHow.com, a very concise paragraph on economic models points the way:

The Marxist economic model is based on the economic and sociopolitical theories of 19th-century philosopher Karl Marx. Marx proposed that all human struggles could be traced back to the capitalist system and its unequal distribution of private wealth. The Marxist model of economics seeks to correct social and economic inequalities through public confiscation of private property. [the redistribution of wealth] This model supports a completely public economy, in which the state controls and manages all wealth and property for the benefit of people rather than for profit. The Marxist socialist model eventually — if implemented according to Marx’s design — gives way to a completely classless system known as communism.

Exactly so.

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Shut It Down!

Apr 7

Posted by ImpeachCongress in Abuse of Power, Deficit, Economy, Inflation, Opinion | No Comments

By: J.B. Williams

There should be no debate over spending in D.C. at this point. Over the last seventy years, our federal government, behaving as an unconstitutional supreme central power, has sent the most productive and prosperous nation on earth on the path toward third-world status.

Bickering over a few billion in planned deficit spending above $1.65 trillion in just the next year — when the nation is already more than $14 trillion in unsustainable debt threatening the very existence of our dollar — is the definition of insanity.

Democrats are forcing a so-called shutdown in their effort to keep spending money we don’t have. Republicans are calling for only a symbolic level of spending cuts. Nobody in Washington, D.C. seems serious about ending the fiscal insanity. Even the president’s bipartisan debt panel is recommending deficit spending for at least another twenty-five years.

I say, shut it down! The federal government has done as much to harm the union of states as it has ever done to improve freedom and liberty in America. We will be better off without a federal government, with each state able to fund and govern itself better than the Fed ever could.

Extreme threats demand extreme measures, and nothing threatens the future freedom and prosperity of the United States more than our own federal government. Enemies beyond, we can deal with. It’s the enemy within which threatens us most today. It’s time to shut it down and reset.

As we have proven in election after election, changing the players on the field from time to time does not change the game. We need a game-changer here, beginning with forcing our elected servants to live within the confines of the Constitution, existing laws, and the budget that we allow them.

Everything in this country seems backwards, upside-down, and inside-out. The people can never win a game in which they are not even a player. D.C. players make up the rules as they go, and those rules rarely benefit the people.

When Obama and the Democratic Socialists of America passed unconstitutional acts like ObamaCare; green-lighted Obama’s czars; and authorized deep intrusions into private-sector banking, manufacturing, and education — that’s when Republicans should have shut it all down.

They simply didn’t have the backbone to do what they should have done on behalf of every American citizen, including the ones not smart enough to know that they can’t survive a bankrupt nation, either.

As British Prime Minister Margaret Thatcher said so well,

“The problem with socialism is that you eventually run out of other people’s money.” We ran out of other people’s money more than $14 trillion ago.

Republicans should up the ante here. Instead of allowing Democrats to accuse them of shutting down the government over a measly $30 billion, they should force Democrats to blame them for eliminating the entire $1.65-trillion deficit proposed in Obama’s budget.

Are Republicans scared of being accused of balancing the budget? Most Americans want somebody to balance the budget and stop the insane march into the financial abyss under the unbridled command of the international socialist left now known as the Democratic Party.

Our federal budget has been balanced only once since Andrew Jackson was president. Republicans in Congress balanced one annual budget during Bill Clinton’s second term. Democrats under Obama have increased the debt of every American taxpayer by more than 40%, or $4 trillion during Obama’s first two years in office.

To put it lightly, Obama is unsustainable. Democrats are unsustainable. And only Republicans have the power to do something about it.

Shut it down, and shut it down now!

Don’t start it up again until you have a balanced budget approved and signed by the president, who makes a drunken sailor look like a penny-pincher.

At this late date, the people of this nation are on an austerity program no matter what happens in D.C. But unless they force Republicans to put the feds on an austerity program now, the people will be all alone in their austerity, and the feds will drive this nation into a financial disaster that the nation cannot survive.

It may be too late for fiscal sanity already, but here’s where we are. We can’t change the past, and our only hope of altering the future is by acting today.

The decision is easy. If we refuse to face the music today, there will soon be no decision to make.

A federal shutdown does not mean that the federal government will actually shut down. That would be nice, but it won’t actually happen.

Instead, Democrats will aim the shutdown where their voters will feel it the most. They will keep business as usual, except for targeting their voters’ benefits in order to motivate those voters into a revolt in the streets, just as they did in Wisconsin over the state budget battle.

Democrats will try to make even a partial shutdown as painful as possible for the voters in this country who are trained government dependents. They are already out telling their voters to hold Republicans responsible for the big “shutdown,” which in reality will impact only government dependents.

Since social spending now exceeds 60% of the entire federal budget, there is no way to rein in the federal government without reining in social spending.

Yes, it will be painful — but not as painful as driving the nation and every state into bankruptcy and then cutting off all aid to those truly in need.

Republicans simply must summon their fortitude and do the work they were elected to do. Cutting Obama’s spending spree by a lousy $30 billion is merely symbolic, an effort to demonstrate to their voters that they did something, even though it amounts to nothing.

The cuts need to be fifty-five times that number: $1.65 trillion. Even then, the interest alone on past spending will still add to the current debt level. But at least we will have stopped the bleeding and set a new course for fiscal sanity.

If the voters throw Republicans out for doing that in 2012, then the voters deserve national bankruptcy.

Go ahead — shut it down, and don’t open for business again without a total fiscal restructuring that demonstrates a willingness in government to be much better stewards of the people’s resources.

Go ahead — shut it down now! It’s the only hope for freedom and liberty to survive!

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The Federal Reserve Must Implement QE3

Apr 6

Posted by ImpeachCongress in Economics, Economy, Inflation, Opinion | No Comments

By: Naional Inflation Association

Gold prices surged today to a new all time high of $1,463.70 per ounce, while silver prices soared to a new 31-year high of $39.785 per ounce. Silver is now up 129% since NIA declared silver the best investment for the next decade on December 11th, 2009, at $17.40 per ounce. The gold/silver ratio is now down to 37, compared to a gold/silver ratio of 66 when NIA declared silver the best investment for the next decade. This means that not only is silver up 129% in terms of dollars since December 11th, 2009, but silver has also increased in purchasing power by 1.78X in terms of gold.

Gold is the world’s most stable asset and the best gauge of inflation. This brand new breakout in the price of gold leads us to believe that the Federal Reserve is getting ready to unleash QE3 at the end of June. The Fed will surely not call it QE3, but NIA can pretty much guarantee that the Fed will continue on with their purchases of U.S. treasuries. If the Fed pauses after QE2, it will mean that treasury bond yields will need to surge to a level where they attract enough private sector and foreign central bank buyers in order to not only support the funding of our rapidly rising budget deficits, but to support the redemption of maturing treasury securities.

In the month of March, the U.S. government spent more than eight times its monthly tax receipts, when you include the money spent for maturing U.S. treasuries. The U.S. treasury netted $128.18 billion in tax receipts during the month of March, but paid out a total of $1.05 trillion, which included $49.8 billion in Social Security benefits, $47.4 billion in Medicare benefits, $22.58 billion in Medicaid benefits, and $37.9 billion in defense spending. However, by far, the U.S. paid out the most for maturing U.S. treasuries, which equaled $705.3 billion.

In order for the U.S. government to stay afloat with only $128.18 billion in tax receipts, it had to spend $72.5 billion from its balance of cash, which ended the month at $118.1 billion, and sell $18 billion worth of TARP assets. But most importantly, the U.S. treasury had to sell $786.5 billion in new treasury bonds.

The U.S. government is the largest ponzi scheme in world history. We can only fund our government expenditures and pay off maturing debt plus interest, by issuing larger amounts of new debt. Americans are lucky that we have been blessed with record low interest rates for an unprecedented amount of time, but NIA believes that as we roll over U.S. treasuries in the future, we will have to refinance them at much higher interest rates. Our national debt is now so large that interest payments on our debt will become the government’s largest monthly expenditure.

If the Federal Reserve doesn’t implement QE3, NIA believes it will just about guarantee a bursting of the U.S. bond bubble in the second half of 2011. If the Fed stops buying U.S. treasuries, there is a chance that we won’t find foreign buyers for our bonds no matter how high interest rates rise. The world is waking up to the fact that the U.S. government is insolvent, and the benefits of propping up the U.S. dollar are no longer worth the expense to our foreign creditors. The U.S. government ponzi scheme will soon be exposed for the world to see.

Japan has been the most consistent buyer of U.S. treasuries. With Japan needing to raise $300 billion to rebuild parts of their country that were destroyed by the earthquake, tsunami, and nuclear disaster, we believe they will be forced to dump their U.S. treasuries, at a time when the U.S. desperately needs Japan to roll over their treasuries into larger amounts of new ones. Not only that, but with Arab revolutions taking place across major Saudi states and the U.S. beginning to occupy Libya for no reason at all, we will likely see Gulf states follow in Japan’s footsteps and stop purchasing/dump U.S. treasuries. Plus, China appears to be becoming more reluctant to continue buying U.S. treasuries, and is positioning the yuan to be the world’s new reserve currency. Without Japan, Saudi states, and China, there will be no buyers left for U.S. government bonds.

The fact is, with no QE3, we could literally see the 10-year bond yield double from 3.52% to north of 7%, overnight. Even then, it is unlikely to attract foreign buyers and we will likely be faced with failing bond auctions, which would cause a massive rush out of the U.S. dollar and trigger the currency crisis NIA has been predicting. NIA sees no other option for the Fed, but for it to continue on with its endless money printing and destructive inflationary policies.

Federal Reserve officials discussed last month in closed-door meetings the possibility that rising commodity prices could cause inflation. The fact is, rising commodity prices don’t cause inflation, they are a symptom of inflation. When the Fed leaves interest rates at 0% for over two years and prints $600 billion as part of QE2, that money printing and easy money is the inflation of our money supply, and rising prices are the result.

The Fed is narrow-minded and continues to focus on the CPI, which only grew last month by 2.11% year-over-year. Fed Chairman Ben Bernanke says he expects rising commodity prices to create a “transitory” boost in U.S. inflation. Meaning, when the CPI rises even higher in the upcoming months, Bernanke will likely place the blame on what he considers to be temporarily high oil and soft commodity prices.

The CEO of Wal-Mart is now saying that U.S. inflation is “going to be very serious” and that Wal-Mart is already seeing “cost increases starting to come through at a pretty rapid rate.” He predicts that because of huge increases in raw material costs, along with soaring labor costs in China, and skyrocketing fuel costs around the world, retail prices will start increasing at Wal-Mart and all of their competitors in June, especially for clothing and food.

When asked about the predictions of Wal-Mart’s CEO, Bernanke said that he expects price pressures to remain largely stable, but then added, “Wal-Mart has more data than the government does.” Bernanke was also quoted as saying, “We have to monitor inflation and inflation expectations extremely closely because if my assumptions prove not to be correct, then we would certainly have to respond to that and ensure that we maintain price stability.”

The European Central Bank (ECB) is expected to raise interest rates tomorrow for the first time since 2008. Many people are now speculating that the Federal Reserve will begin raising the Federal Funds Rate at the end of 2011. NIA is receiving many new ‘NIAnswers’ and email questions on a daily basis, asking us what will happen to gold and silver prices if the Federal Reserve were to raise interest rates.

In our opinion, the Federal Reserve raising the Fed Funds Rate would actually be very bullish for gold and silver prices, because it will serve as an admission that even the Fed believes inflation is becoming a major problem and beginning to spiral out of control. Historically, the best performing time period for precious metals has been when the Fed begins to raise artificially low rates. Remember, when the Fed begins to raise rates, they will probably raise rates only 1/4 or possibly 1/2 of a percentage point at a time. Interest rates of 1% or 2%, although higher than 0%, are still artificially low and will do nothing to curtail inflation. NIA believes the real rate of U.S. price inflation is now 6% and we will need to see the Fed Funds Rate rise to a level that is higher than the real rate of price inflation, if the Fed wants to have any hope of preventing hyperinflation.

It is important to spread the word about NIA to as many people as possible, as quickly as possible, if you want America to survive hyperinflation. Please tell everybody you know to become members of NIA for free immediately at: http://inflation.us

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