Impeach Congress

ImpeachCongress — Tue, 09 Dec 2008 17:59:00 +0000

The liberties of our country, the freedom of our civil Constitution, are worth defending at all hazards; and it is our duty to defend them against all attacks. We have received them as a fair inheritance from our worthy ancestors: they purchased them for us with toil and danger and expense of treasure and blood, and transmitted them to us with care and diligence. It will bring an everlasting mark of infamy on the present generation, enlightened as it is, if we should suffer them to be wrested from us by violence without a struggle, or to be cheated out of them by the artifices of false and designing men.
[Samuel Adams]

Start Slide Show with PicLens Lite

Inflating Our Way to a Government-Controlled Economy

ImpeachCongress — Mon, 11 Apr 2011 18:44:55 +0000

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.

Start Slide Show with PicLens Lite

Shut It Down!

ImpeachCongress — Thu, 07 Apr 2011 19:03:30 +0000

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!

Start Slide Show with PicLens Lite

The Federal Reserve Must Implement QE3

ImpeachCongress — Wed, 06 Apr 2011 18:32:22 +0000

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

Start Slide Show with PicLens Lite

When Government Turns Predator

ImpeachCongress — Tue, 05 Apr 2011 17:33:13 +0000

The following article covers an area of gross government tyranny. Offshore banking. The overreach of the government and particularly their nazi force, the IRS, has become so egregious that simply opening a bank account overseas is viewed as a crime. Monty points out precisely that this bankrupt and broken government will stop at nothing to steal the wealth of its productive citizens. It is disgraceful. –impeachcongress

By: Monty Pelerin

Honest US citizens are being turned into prey by the IRS, the victims of a hunt for tax evaders. It is the natural, if lamentable, product of the urge to power our Founders warned us against.

More than two centuries ago, George Washington stated:

Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master.

Over the years, General Washington’s prescience has been demonstrated as government usurped and abused power. The myth that government serves the people should be shattered by now. Increasingly, government behaves as the master, not as the intended servant.

Oppression abounds, but nowhere is the raw abuse of power and coercion more possible and evident than in the Internal Revenue Service. They are the most dangerous member of the government gang. Now they have another tool to bully and expropriate wealth from innocents — US citizens living abroad.

Early in his presidency, Barack Obama pledged to add 800 new IRS agents to punish tax evaders with overseas accounts. In an effort, presumably designed to curtail and punish tax evasion on the part of wealthy Americans, legislation aimed at criminals now threatens the income and savings of the law-abiding.

Background

The Bank Secrecy Act became law in 1970 and implemented the Foreign Bank Accounts Report (FBAR) to monitor money laundering. The FBAR law required that US persons owning or having signing authority over foreign bank accounts report this information to the US Treasury Department. It was not much enforced for the obvious reason that a criminal does not willingly divulge incriminating information. During the first three decades of FBAR, there was widespread ignorance and disregard for the law.

In 2003, the Treasury Department handed over enforcement to the IRS. In 2004 non-willful non-compliance increased to a $10,000 fine per account per annum. Willful non-compliance allows criminal charges, a prison sentence, and fines of $100,000 or 50% of bank account’s contents, whichever is more (see Shepherd, p. 10).

The IRS has implemented two Voluntary Disclosure Programs I (2009) and II (2011), in which they waive criminal charges provided that all back taxes and penalties have been paid, along with an FBAR penalty of 20% (in 2009) or 25% (in 2011) of the account’s highest balance over the last six years. The penalty is lower (12.5%) for balances under $75,000. Persons who were unknowingly US citizens face a 5% penalty (see FAQ 52).

In 2010, Congress passed FATCA (Foreign Account Tax Compliance Act) which forces foreign banks to report on American clients, even if doing so would violate the banking and privacy laws of their country. Implementation of FACTA will be coerced by withholding 30% of US income from banks not in compliance.

The arrogance and brutality of the legislation is apparent. The penalties are severe and disproportionate. Economic blackmail of foreign banks is disgraceful. All of these actions will have repercussions, probably not intended.

US Citizens Abroad

US citizens living abroad must open a foreign bank account because commerce is done in the local currency. All who do are potentially in violation of the FBAR law. Most were unaware of the FBAR requirements; but now that the IRS has rattled its FBAR saber, taxpayers abroad are in a quandary.

Wealthier citizens spend thousands of dollars on accountants and tax lawyers to try to put themselves into compliance with the least financial damage. The average citizen not in compliance has limited options. His choices include:

Do Nothing The IRS doesn’t know about you, so continuing to keep a low profile and ignore the law might be the best route. This option may become impossible once FACTA comes into force.
File FBAR Forms IRS FAQ 17 of the 2011 Voluntary Disclosure Program states that filers who have complied with all taxes and filing requirements except FBAR should not enter the program but simply file the delinquent forms by August 31, 2011 with a letter of explanation. They promise that no penalties will apply to such persons. But given the severe threats of punishment issued to anyone failing to comply, many wonder whether the IRS will accept the excuse of ignorance of the FBAR requirement.
Enter 2011 Voluntary Disclosure Program: Some US citizens who entered the 2009 Voluntary Disclosure Program and were otherwise in compliance with US tax laws, found that the IRS intended to apply to them the full 20% penalty (see, e.g., here and here).
Renounce Citizenship Many US citizens living overseas have lives fully integrated into their new country. They comply with the local tax laws and often possess dual citizenship. Compliance with US tax laws and FBAR are a nuisance and liability that they may be able to live without.

Renunciation of citizenship is not riskless. Such a decision will set citizens free from future liability, but may subject them to IRS penalties for prior non-compliance. In addition, for covered expatriates, those having two million in assets or $145,000 in average annual tax liability over the last five years, an exit tax is also required.

To appreciate the uncertainty and duress faced by US citizens living abroad, a couple of hypothetical situations are useful. International tax lawyer Phil Hodgen partly inspired the following hypothetical cases:

Hypothetical Case 1: Jim lives in a foreign country and has dutifully filed a US income tax return each year, but was unaware of FBAR filing retirements. Jim operates eight accounts: four retirement accounts (which he reported on his annual tax returns), two trading accounts, a checking account and a high interest savings account. The highest balance in these accounts is $1,000,000 over the last six years. His current balance is $800,000 after the market dip.

Jim doesn’t know what to do. After great worry, he enters the Voluntary Disclosure Program. The IRS assesses Jim a $250,000 FBAR penalty. In order to pay the penalty, Jim must withdraw funds from his retirement accounts forcing an additional tax liability of $100,000 on the income. Jim is no longer able to retire because his $800,000 has been reduced to $450,000, solely as a result of IRS capriciousness.

Hypothetical case 2: Nancy is a teacher and mother of three, married to a citizen of the foreign country where she has lived for fifteen years. She dutifully filed her taxes in the US, but never knew about FBAR. A friend entered the Voluntary Disclosure Program and was assessed $14,000. She contemplates the renunciation of American citizenship, because her foreign husband owns a successful business and Nancy is a signer on business accounts. She fears exposing her husband’s business to the IRS and also fears that upon her death, the IRS will seek its pound of flesh from her estate. She renounces citizenship, though it breaks her heart.

Abuse Of the Law

FBAR was initially a harmless and little known embarrassment for the United States. It began as an ineffective attempt to stop money laundering. Like so many other laws (RICO, Homeland Security, etc.), it began with what some believed noble purposes, only to morph into a tyranny imposed upon law-abiding citizens. It is now a tool capable of arbitrary and oppressive expropriation the wealth of millions of US citizens living abroad.

An insolvent government is a dangerous government. It is akin to a wounded and cornered animal. When conditions become really difficult, it is likely to do anything to survive. Arbitrariness in the interpretation of any law is dangerous to freedom, but especially so when government’s primary concern is survival rather than justice.

There are many reasons to be critical of FBAR. The following two will illustrate:

Excessive fines: Ayn Rand said, “The severity of the punishment must match the gravity of the crime. “This basic principle of human rights, enshrined in the Eighth Amendment, forbids excessive fines. It is immoral for the IRS to intimidate innocent citizens. Any law so uncertain that it could result in a loss of 50% of your wealth, depending upon the whims of the IRS, is not a law. It is government-sanctioned extortion.”
Guilt Presumed: The Fourth Amendment protects (or was supposed to) citizens against arbitrary fishing expeditions by government. Probable cause is required. The FBAR requirements circumvent this Fourth Amendment right, in effect saying: “You will volunteer to open the door to your house and let us look inside.If you don’t, we will fine and/or imprison you.” The IRS demands bank information based on a presumption of guilt even though holding funds in a foreign bank account is no crime.

Unintended Consequences

The term unintended consequences, a convenient euphemism for stupid policy or law, is appropriate. Some of the foreseeable outcomes are the following:

(1) An avalanche of US persons will renounce their citizenship. In July 2010, the State Department implemented a $450 fee for making a renunciation before a consular officer, presumably to exact additional income and possibly (highly unlikely) deter some from making the decision.

(2) Foreign banks and investors may decide doing business with the US is not worth the trouble of compliance with FATCA, particularly as the US economy collapses and the global economy shifts to the East.

(3) US Citizens abroad already find it challenging to open bank accounts both in the US and in their countries of residence. This annoyance makes it more difficult for American companies and their employees to engage in foreign missions, business and trade.

(4) US citizens are already shunned from positions in foreign companies which do not want their banking details revealed to the United States Treasury Department.

Conclusion

The Bank Secrecy Act, passed in 1970, is an example of law designed for one purpose being expanded to be used against innocent citizens. Regardless of its good intentions, it is now a tyranny used to extort wealth from otherwise legal, law-abiding US citizens living abroad.

It represents a classic case of how government usurps freedom. What level of morality must government have to think they are entitled to shake-down hard-working citizens?

Monty Pelerin has never lived abroad or had a foreign bank account. He has friends who do and hopes that exposing this State plunder will cause it to cease in this and other parts of our lives. He blogs at www.economicnoise.com.

Start Slide Show with PicLens Lite

Do Republicans Want the White House?

ImpeachCongress — Mon, 04 Apr 2011 18:53:19 +0000

By: Lee Cary

We Americans live in a political era when it’s reasonable, perhaps even prudent, to consider the unthinkable.

Before the election of Barack Obama, most Americans were unable, or unwilling, to consider what his campaign promise to “fundamentally transform” the nation might mean. Before his election, those who used the word “socialism” to refer to his intentions were chided for being too extreme. (A longtime friend of mine said I’d “gone over the edge” in using such language.)

Not until Newsweek published a February 2009 article entitled “We Are All Socialists Now” did the word become widely acceptable, if used benignly.

The litany of previously unthinkable events that have unfolded since then, most recently including our role in Libya, don’t need listing here. The hits just keep on comin’, with no let-up in sight.

For example, when Fox Nation recently reported that former Clinton administration official Jamie Gorelick is on the short list to be the next director of the Federal Bureau of Investigation, we weren’t shocked; we’ve grown accustomed to the unthinkable.

The New Socialist Democrat Party is now fully engaged in a relentless pursuit of what was, throughout the 20th Century, an intermittently-enacted, comprehensive, progressive agenda. The Tea Party Movement (TPM) emerged as a wrench, perhaps not unexpectedly but with unanticipated energy, tossed into the progressive machine. Consequently, über-progressive Democrats, like Senators Harry Reid and Chuck Schumer, simply label the TPM based on their experience of it. Anyone, or anything, that gets in their way is, by definition, “extremist” — a label used by tyrants, big and small, throughout history to refer to their opponents.

Jump now to the 2011 budget battle underway in the House and Senate, with a focus on the House where scores of new members of Congress arrived, metaphorically carried on the shoulders of Tea Partiers.

Before the paint was dry on their office doors, speculation began as to whether they would be change agents and fundamentally transform the new Republican majority in the House, or merely conform to the well-entrenched good-ol-boy principle of go-along-to-get-along.

We’ve heard it said that the best tactic of House Republicans with regard to the 2011 budget is to compromise on cuts by backing off their promise to cut $100 billion from the remainder of this year’s federal expenditures, so as to save their powder for the bigger battle over the 2012 budget.

Already it sounds as though the House Republican leadership is justifying the need to avoid a government “shut-down” — which actually isn’t a shut-down — by meeting Democrats part way. “Compromise” is in the D.C. air, while TV pundits speculate over which party would be blamed for any potential “shut-down.” (Talk concerning who could gain the credit for a shut-down is, on the other hand, conspicuous by absence.)

The “narrative arc” — words Senator Obama liked to use during the campaign — suggests that Speaker John Boehner will successfully cobble together a consortium of Republicans, perhaps excluding many of the newly elected members, along with moderate Democrats, meaning those Dems who want to be re-elected to their conservative-leaning districts in the next election.

At the end, the more progressive House Democrats will agree to insignificant 2011 budget cuts they’ll say are necessary to placate the cold-hearted Republicans whom they’ll accuse, with crocodile tears, of caring little for the poor, the elderly, the children, and the puppies. And that hollow metallic sound we’ll hear will be the infamous can being kicked further down the road.

If this happens, conservatives in sympathy with the TPM, whether or not they ever attended a public gathering, will conclude this: The House GOP leadership caved to the Democrat minority because they care more for their careers than for the nation.

Already, the major meme voiced among House Republicans pushing a compromise is that, after all, they only control one-half of one-third of the federal government. (Imagine where we’d be if General George Washington at Valley Forge had said, “We only control a few thousand soldiers, so let’s compromise with the British.)

If this is how the 2011 budget battle plays out, we’ll have at least two ways to interpret it.

Conventional wisdom will say that Boehner and the Boys were careful to avoid blame for shutting down the government a la Newt Gingrich v. Bill Clinton in 1994-95. A shut-down would have weakened their position in the upcoming 2012 budget battle. (It’s hard to see how surrendering in a small battle before a bigger one yields strength to the loser.)

But since this is the era when it’s reasonable, perhaps even prudent, to think the unthinkable, let’s suppose Boehner and the Boys do understand both the message and power of the TPM, and they’d rather not have it so closely aligned with the GOP going forward. Why? Because they fear the “extremist” label being applied to them.

Furthermore, let’s think this unthinkable: that the GOP’s primary goal in 2012 is to win the Senate, not the White House. And, given a choice, they’d choose the Senate. To that end, the House Republicans’ willingness to negotiate an agreement with the Democrat-controlled Senate on the 2011 budget could eventually be cited as evidence of the GOP’s ability to work cooperatively with a Democrat minority in the Senate, and, yet, temper the progressive initiatives likely to emerge out of a second term Obama White House.

The answer to the question — Do Republicans want the White House? — might be this unthinkable: No. Here’s why: If the GOP controls both the legislative and executive branches after 2012, when the inevitable economic axe falls on our debt-ridden nation, they’ll suffer the blame that will automatically befall the party of the incumbent Chief Executive.

Start Slide Show with PicLens Lite

Perceptions of America

ImpeachCongress — Mon, 04 Apr 2011 15:44:37 +0000

By: David P. McGinley

Since 9/11, one of the big concerns of America’s ruling class is what the rest of the world thinks of the United States — hence the lamentation of “why do they hate us?” In fact, one of President Obama’s goals when taking office was to change the world’s perception of America. Of course, the ruling class is worried about only what its elitist counterparts think, not your typical citizen of another country.

So what does that typical citizen think?

Since moving abroad last year, I have gained some insight into answering this question. One recent discussion with one of my law students was quite illuminating. The student, who is from Cambodia, complained to me that the U.S. government was going to deport a Cambodian national who had been permanently living in the U.S. for over twenty-five years. The prospective deportee had moved to the U.S. in the 1980s to escape the communist killing fields of the Khmer Rouge. In those twenty-five years, he never bothered to become a citizen.

Recently, the man in question was convicted of committing a felony. Suddenly, the place to which he had fled that saved him from being massacred, the place that has provided him with a level of personal liberty nonexistent in his place of birth — even before the Khmer Rouge — is supposedly treating him unfairly.

When I questioned my student as to why, during those twenty-five years, the felon did not become a U.S. citizen, my student, quite matter-a-factly, “Because [the felon] was Cambodian.” So, I asked, since the felon considers himself a Cambodian, why does he have a problem with being deported back there? My student responded that the felon had been gone too long and no longer knew the culture. So this felon considers himself Cambodian and therefore does not want to become an American citizen, but he also does not want to return to Cambodia — and the U.S. government should accommodate him.

I then asked the student whether the government of South Korea (where I am currently teaching law) has the right to deport me if I commit a felony (or for any reason, for that matter). The student had no problem answering “yes” and added that “Korea is for the Koreans!” I then asked, “Whom is America for?” He did not answer.

This exchange came as a revelation to me. My student essentially alleged that the United States is there for his (i.e., the world’s) benefit if and when he needs something. Korea is for Koreans. Cambodia is for Cambodians. But America must be for anyone and everyone. Korea and Cambodia have the right to keep you or kick you out, but America does not.

This perception, while problematic at times, is not all bad. America has always been a beacon for the oppressed. It is a source of hope for millions. While most will never make it to her shores, America’s very existence is a comfort of possibilities: as long as America stands strong, a better life is possible.

But the perception typified by my student certainly is not all good, either. It presumes that America should expect nothing in return. It also presumes that the world gets to dictate what America can and cannot do. Thus the deportation of even a convicted felon is unfair. How dare America have her own laws, her own sovereignty?

Most of Europe views America, especially her military, in the same way. For the past sixty years, Europeans have looked down their noses at America for its large defense budget. However, Europe gladly accepted and relied upon U.S. protection during the Cold War while spending little to nothing for its own defense. Instead of being grateful, Europeans maintain a faux moral superiority. Of course, it’s easy to be “anti-war” when someone else is willing to fight your battles. Nonetheless, when the U.S. goes to war for her own self-interest, Europe, cozy in the safety not of its own making, preens with jilted outrage. America must protect Europe, but Europeans think they should get to decide when America can protect herself.

America’s immigration issues are tainted with this same perception, especially concerning arguments made in support of illegal aliens. Not only, as the arguments go, should the illegals be allowed to stay, no questions asked, but they also should have access to all the benefits of citizenship. And this is not a request or desire; it is a demand (a “right”). Thus, America’s laws are to be ignored, but her benefits must be administered, with the American taxpayer footing the bill. Everyone who crosses into America’s borders has a right to America’s largesse, but America has no right to ask for or expect anything in return — not even that her own laws are followed.

In a sense, America does belong to the world. For centuries now, America has been a place where the rest of the world’s people have come to get away from the rest of the world. Lately, however, the rest of the world have asked (demanded) only what America can do for them. Well, America and most of her citizens do more than enough. How about doing your part?

Start Slide Show with PicLens Lite

NIA Responds to Harvard Economics Professor About Inflation

ImpeachCongress — Wed, 30 Mar 2011 00:26:23 +0000

By: national inflation association

Harvard economics professor Gregory Mankiw wrote an article that was published in the NY Times yesterday entitled, “It’s 2026, and the Debt Is Due”. In this article, Mankiw gave a hypothetical Presidential address the President of the U.S. might make in the year 2026 after a failed bond auction. Mankiw’s hypothetical Presidential address takes place in a scenario where in the year 2026, the U.S. Treasury “tried to auction its most recent issue of government bonds” but “almost no one was buying.” According to Mankiw’s hypothetical speech, during this 2026 crisis the President will admit, “The private market will lend us no more.”

Unfortunately, Professor Mankiw fails to understand that the U.S. has zero chance of surviving until the year 2026. What Mankiw predicts will happen 15 years from now is already happening today right under his nose, but somehow he fails to realize it.

The public today has already stopped buying U.S. treasuries. The Pimco Total Return Fund, which was the largest private holder of U.S. government bonds, has just reduced their holdings down to zero. The private sector was buying 30% of U.S. treasuries, but today is no longer buying at all. The Federal Reserve is currently buying 70% of U.S. treasuries. If it wasn’t for the Federal Reserve buying U.S. treasuries, we would already be experiencing failed bond auctions today.

According to Mankiw, the President will say in 2026, “Today, most of the large baby-boom generation is retired. They are no longer working and paying taxes, but they are eligible for the many government benefits we offer the elderly.” The fact is, the last baby-boomer turned 46 years old in 2010 and 46 is the age in which the average American reaches peak consumer spending. Therefore, even though most baby-boomers might not be retired, baby-boomer spending is now in free-fall while baby-boomers are simultaneously signing up for entitlement programs at record pace. This will begin to affect our economy today, not 15 years from now.

Mankiw’s hypothetical speech has the President admitting in 2026 that we “have to cut Social Security immediately, especially for higher-income beneficiaries. Social Security will still keep the elderly out of poverty, but just barely” and we “have to limit Medicare and Medicaid. These programs will still provide basic health care, but they will no longer cover many expensive treatments. Individuals will have to pay for these treatments on their own or, sadly, do without.” The truth is, if the U.S. government cut 100% of all spending except for Social Security, Medicare, and Medicaid, we would still have a budget deficit from these entitlement programs and interest payments on our debt alone. If the U.S. wants to prevent hyperinflation and survive until 2026, we need to make major cuts to these programs today. By 2026, it will be over a decade too late and these programs will no longer exist at all.

Mankiw’s hypothetical 2026 Presidential address goes on to say that “over the last several years” the U.S. has experienced a “vicious circle of rising budget deficits” and “as the ratio of our debt to gross domestic product reached ever-higher levels, investors started getting nervous”. Does Mankiw realize that the U.S. just reported a budget deficit for the month of February 2011 of $222.5 billion, more than the entire fiscal year of 2007? In our opinion, our budget deficits can’t rise much more viciously than what they already are today, without the U.S. experiencing an outbreak of hyperinflation. We need to begin sharply reducing our deficits immediately or else hyperinflation this decade is inevitable.

Our real debt to GDP ratio in the U.S. today is already north of 500% when you include unfunded liabilities for entitlement programs, as well as other commitments like the backing of Fannie Mae and Freddie Mac. It will simply be impossible for this figure to rise much higher without the U.S. experiencing hyperinflation. NIA believes that unless the U.S. government completely eliminated Social Security, Medicare, and Medicaid, there is no way the U.S. government will be able to stay afloat for another 15 years with such an unprecedented level of debt.

In 2026, Mankiw believes the President will admit that, “Our efforts to control health care costs have failed.” He suggests the President will proclaim that, “We must now acknowledge that rising costs are driven largely by technological advances in saving lives. These advances are welcome, but they are expensive nonetheless.” Does Professor Mankiw own a laptop computer, plasma TV, or mobile phone? These technologies are improving by leaps and bounds yet prices are falling. Technological advances are not driving health care costs higher! It is the government’s involvement in the health care sector and their failure to allow the free market to operate that is driving health care costs through the roof.

Professor Mankiw believes the President will continue by saying, “We have to cut health insurance subsidies to middle-income families.” NIA believes it is the very same subsidies Mankiw is referring to that are driving health care costs sky high. It is just like in the college education industry. If the government didn’t provide subsidies for students to learn voodoo Keynesian economic theories from professors like Mankiw, college tuitions would be a lot more affordable.

To solve this supposed 2026 crisis, Mankiw believes the President will announce, “We will raise taxes on all but the poorest Americans. We will do this primarily by broadening the tax base, eliminating deductions for mortgage interest and state and local taxes. Employer-provided health insurance will hereafter be taxable compensation.” Although NIA believes employer-provided health insurance should be taxable compensation because it would end the employer based health insurance system and make health insurance cheaper for all Americans, we believe it will be impossible for the government to raise any additional revenues from tax increases. We are at a point where any additional taxes will drive economic activity overseas and result in less tax receipts. When hyperinflation soon arrives, taxes will become irrelevant. The government will fund over 99% of its spending by printing money and less than 1% from taxation.

Mankiw also believes the President in 2026 will, “increase the gasoline tax by $2 a gallon. This will not only increase revenue, but will also address various social ills, from global climate change to local traffic congestion.” Come 2026, gasoline will probably cost $20,000 per gallon, if we are lucky. An additional $2 gasoline tax will be absolutely pointless and meaningless.

Mankiw suggests that the President in 2026 will, “secure from the I.M.F. a temporary line of credit to help us through this crisis.” The I.M.F. recently sold a large percentage of its gold reserves and by 2026 will likely be broke. Even if the I.M.F. was still around 15 years from now and did provide the U.S. with a line of credit that helps it survive the crisis, the largest line of credit the I.M.F. could possibly financially provide would only support a U.S. government that is less than 1/10 of its size today. Therefore, NIA believes the U.S. government should begin dramatically reducing its size immediately, before it is in need of a line of credit from the I.M.F.

It would be nice to think that the U.S. will be able to borrow and print money for another 15 years to fund endless budget deficits and that 2026 is some magical year when all of our debts will come due. The economy does not work this way and it is disgraceful that our nation’s most prestigious ivy league schools are teaching such dangerous economic principles. Considering that a large percentage of our highest ranking government officials graduated from Harvard, it really explains a lot when you look at who is teaching economics at Harvard. Mankiw is the same professor who in April of 2009 called for the Federal Reserve to implement negative interest rates. Mankiw called for savers to be punished and for all Americans with $100,000 in the bank to have only $98,000 one year later.

It is the destructive Keynesian theories of economists like Mankiw that have gotten the U.S. economy into the dire situation it is in today. Mankiw and other professors like him are brainwashing American students into believing that forcing people to spend is the key to a healthy economy and the way to solve all economic problems is to create a lot of inflation. All across America, students are graduating colleges with hundreds of thousands of dollars in debt, no jobs, and no idea of how the economy actually works. They will spend the rest of their lives paying off their debts and trying to get the false economic information they were taught out of their heads. The college education system in America is the single largest fraud that exists today, and NIA is going to expose the truth about the government’s conspiracy to turn American students into debt slaves in our next feature documentary, coming in April.

Start Slide Show with PicLens Lite

The Question of Imperialism

ImpeachCongress — Mon, 28 Mar 2011 00:37:12 +0000

By: Jeremy Egerer

Of the many difficult questions a person can ask about the rights of man, one of the toughest is whether the people of a country are ever their own supreme authority. To err toward an absolute “yes” or “no” seems to lend credibility to a variety of atrocities, and trying to strike a balance between the two extremes can plunge the answer into useless subjectivity. But a good answer is readily available for those who concern themselves with sound principles.

First, a claim to nationhood is a positive claim to geographical authority, which implicitly forfeits jurisdiction beyond a country’s expressly defined boundaries. But this jurisdiction may be extended should desperate situations or intolerable violations of natural law occur (Second Treatise of Government, sect 144). As such, a nation’s majority vote by itself does not necessarily grant that nation’s behaviors international legitimacy, as our natural rights provide the basis for both international justice and what is known as imperialism.

Second, those totally rejecting the legitimacy of imperialism oftentimes forget that most people, whether citizens of the USA or the UAE, have not had the opportunity to enter into a social contract. In fact, most are born under the authority of governmental entities, regardless of consent. In addition, although many vote to influence their government, the ability of individuals to reject authority according to their personal reason and cultural development is not necessarily a universal right. Instead, most people find themselves under the legal authority of others, both past and present.

And thus, it is necessary to recognize that the moral value of the democratic republic exists partially in its reflection of the majority’s will, but never in a refusal to subject unwilling citizens to law. Interventionism, for its part, can be similar to strictly national laws in that people are held to moral standards regardless of their consent, and by countries which they did not necessarily form or expressly choose. And perhaps more interestingly, this similarity increases greatly when influenced governments are ruled by despots.

Third, it is only fair to say that even should the entire world not arrive at an entirely uniform consensus of what is “good,” for a people to become less evil and more good under the influence of others is not only beneficial, but moral. And conversely, it is fair to say that a people remaining evil or influencing others to become more evil is not only less beneficial, but also wrong.

Therefore, since no nation can ever be its own supreme authority, and all governments must force someone to abide by law against his will, and positive influence is always good, the question arising from cultural imperialism is not whether it should take place. Rather, the question concerns who is right and what is good.

Herein lies great danger, as even the most ignorant and unstable people are oftentimes convinced that if the world were Plato’s allegory of the cave, they would be the sole escapee to have discovered the sun, and they thus believe themselves entitled to impose their “enlightenment” upon others. Within this tendency toward narcissistic ignorance is found the likelihood of barbaric imperialism, by which morally inferior cultures seek to influence others by force or the threat thereof, for purposes contrary to the unalienable rights of man.

Resulting from such immoral imperialism, two primary reasons exist for a nation’s forgoing interventionism. The first reason exists in the acknowledgment of multiple morally variable, ethnocentric cultures with armies, and thus in the interest of self-preservation. But the second reason for non-intervention, which errs in the opposite philosophical direction of wrongful imperialism, results from a relativistic, multicultural worldview.

It is interesting to note, however, that while many multiculturalists claim to oppose cultural imperialism and an objective code of morality, their actions suggest otherwise. In one instance, President Obama decries our “imperialist” past, yet he declares that “[t]he genocide in Darfur shames the conscience of us all.” It is impossible for Darfur to shame us unless we are called to justice beyond our borders in order to stop those who — also in the name of necessity, morality, and even democracy — commit atrocities.

Thus, the only true and moral answer to the question of intervention is that there lies within man an understanding, however polluted by environment and selfishness, of natural law (as explained by C.S. Lewis). There must either be a standard by which men judge both themselves and the world, or men must never war, intervene, argue, or vote unless something affects them in a displeasing way. That is to say, they must only act entirely selfishly. And if man’s motives are entirely rooted in subjective selfishness, then he has lost his claim to moral superiority in affairs both foreign and domestic. In short, he must always appeal to a universal concept of civilization if civilization is to exist at all.

America’s forefathers knew where this code of civilization originates. It is not in contradictorily defined and enforced ideals such as liberty and equality, and it has not evolved from the ape to the human, nor is it evolving in our day and age. It is and must necessarily be a declaration from our Creator, a Truth which exists beyond the authority of the human, beyond the tampering of intellectuals, beyond culture, beyond race, and beyond nation (Second Treatise, sects 135 and 136). And to those who disagree, it is only fair to ask from where their Truth and rights come and whether or not someone who disagrees with them has a right to enforce another standard.

It must be confessed that the purpose of this article is not to foster an interest toward the invasion of every country in the name of human rights. Americans are not moral enough as a people to do so, nor do they have the resources to do so, nor would uncivilized people necessarily recognize the benefit of Judeo-Christian liberty given to them against their will. But it must be recognized that cultural imperialism in itself is neither necessarily evil nor disposable, and it is practiced by almost every person on the globe on some level or another. In certain cases — such as nearly uncivilized Rome — it has even been beneficial in the long term. And it must also be realized that conservatives (particularly Biblical Christians) have been hoodwinked into rejecting the universal applicability of conservative values, yet leftists will not reject the universal applicability of leftism.

Americans must understand that imperialism is not imperialism when it is an enforcement of real, objective morality. Rather, imperialism under these circumstances becomes the cause of justice, of righteousness, and of goodness. But without the firm acknowledgment of the Noble Code, man’s government comprises subjectivity, sheer will, and brute force, with tyranny as his only form of intervention.

Jeremy Egerer is a recent convert to Christian conservatism from radical liberalism and the editor of the Seattle website www.americanclarity.com.

Start Slide Show with PicLens Lite

12 Warning Signs of U.S. Hyperinflation

ImpeachCongress — Sun, 27 Mar 2011 00:33:23 +0000

by: National Inflation Association

One of the most frequently asked questions we receive at the National Inflation Association (NIA) is what warning signs will there be when hyperinflation is imminent. In our opinion, the majority of the warning signs that hyperinflation is imminent are already here today, but most Americans are failing to properly recognize them. NIA believes that there is a serious risk of hyperinflation breaking out as soon as the second half of this calendar year and that hyperinflation is almost guaranteed to occur by the end of this decade.

In our estimation, the most likely time frame for a full-fledged outbreak of hyperinflation is between the years 2013 and 2015. Americans who wait until 2013 to prepare, will most likely see the majority of their purchasing power wiped out. It is essential that all Americans begin preparing for hyperinflation immediately.

Here are NIA’s top 12 warning signs that hyperinflation is about to occur:

1. The Federal Reserve is Buying 70% of U.S. Treasuries. The Federal Reserve has been buying 70% of all new U.S. treasury debt. Up until this year, the U.S. has been successful at exporting most of its inflation to the rest of the world, which is hoarding huge amounts of U.S. dollar reserves due to the U.S. dollar’s status as the world’s reserve currency. In recent months, foreign central bank purchases of U.S. treasuries have declined from 50% down to 30%, and Federal Reserve purchases have increased from 10% up to 70%. This means U.S. government deficit spending is now directly leading to U.S. inflation that will destroy the standard of living for all Americans.

2. The Private Sector Has Stopped Purchasing U.S. Treasuries. The U.S. private sector was previously a buyer of 30% of U.S. government bonds sold. Today, the U.S. private sector has stopped buying U.S. treasuries and is dumping government debt. The Pimco Total Return Fund was recently the single largest private sector owner of U.S. government bonds, but has just reduced its U.S. treasury holdings down to zero. Although during the financial panic of 2008, investors purchased government bonds as a safe haven, during all future panics we believe precious metals will be the new safe haven.

3. China Moving Away from U.S. Dollar as Reserve Currency. The U.S. dollar became the world’s reserve currency because it was backed by gold and the U.S. had the world’s largest manufacturing base. Today, the U.S. dollar is no longer backed by gold and China has the world’s largest manufacturing base. There is no reason for the world to continue to transact products and commodities in U.S. dollars, when most of everything the world consumes is now produced in China. China has been taking steps to position the yuan to be the world’s new reserve currency.

The People’s Bank of China stated earlier this month, in a story that went largely unreported by the mainstream media, that it would respond to overseas demand for the yuan to be used as a reserve currency and allow the yuan to flow back into China more easily. China hopes to allow all exporters and importers to settle their cross border transactions in yuan by the end of 2011, as part of their plan to increase the yuan’s international role. NIA believes if China really wants to become the world’s next superpower and see to it that the U.S. simultaneously becomes the world’s next Zimbabwe, all China needs to do is use their $1.15 trillion in U.S. dollar reserves to accumulate gold and use that gold to back the yuan.

4. Japan to Begin Dumping U.S. Treasuries. Japan is the second largest holder of U.S. treasury securities with $885.9 billion in U.S. dollar reserves. Although China has reduced their U.S. treasury holdings for three straight months, Japan has increased their U.S. treasury holdings seven months in a row. Japan is the country that has been the most consistent at buying our debt for the past year, but that is about to change. Japan is likely going to have to spend $300 billion over the next year to rebuild parts of their country that were destroyed by the recent earthquake, tsunami, and nuclear disaster, and NIA believes their U.S. dollar reserves will be the most likely source of this funding. This will come at the worst possible time for the U.S., which needs Japan to increase their purchases of U.S. treasuries in order to fund our record budget deficits.

5. The Fed Funds Rate Remains Near Zero. The Federal Reserve has held the Fed Funds Rate at 0.00-0.25% since December 16th, 2008, a period of over 27 months. This is unprecedented and NIA believes the world is now flooded with excess liquidity of U.S. dollars.

When the nuclear reactors in Japan began overheating two weeks ago after their cooling systems failed due to a lack of electricity, TEPCO was forced to open relief valves to release radioactive steam into the air in order to avoid an explosion. The U.S. stock market is currently acting as a relief valve for all of the excess liquidity of U.S. dollars. The U.S. economy for all intents and purposes should currently be in a massive and extremely steep recession, but because of the Fed’s money printing, stock prices are rising because people don’t know what else to do with their dollars.

NIA believes gold, and especially silver, are much better hedges against inflation than U.S. equities, which is why for the past couple of years we have been predicting large declines in both the Dow/Gold and Gold/Silver ratios. These two ratios have been in free fall exactly like NIA projected.

The Dow/Gold ratio is the single most important chart all investors need to closely follow, but way too few actually do. The Dow Jones Industrial Average (DJIA) itself is meaningless because it averages together the dollar based movements of 30 U.S. stocks. With just the DJIA, it is impossible to determine whether stocks are rising due to improving fundamentals and real growing investor demand, or if prices are rising simply because the money supply is expanding.

The Dow/Gold ratio illustrates the cyclical nature of the battle between paper assets like stocks and real hard assets like gold. The Dow/Gold ratio trends upward when an economy sees real economic growth and begins to trend downward when the growth phase ends and everybody becomes concerned about preserving wealth. With interest rates at 0%, the U.S. economy is on life support and wealth preservation is the focus of most investors. NIA believes the Dow/Gold ratio will decline to 1 before the hyperinflationary crisis is over and until the Dow/Gold ratio does decline to 1, investors should keep buying precious metals.

6. Year-Over-Year CPI Growth Has Increased 92% in Three Months. In November of 2010, the Bureau of Labor and Statistics (BLS)’s consumer price index (CPI) grew by 1.1% over November of 2009. In February of 2011, the BLS’s CPI grew by 2.11% over February of 2010, above the Fed’s informal inflation target of 1.5% to 2%. An increase in year-over-year CPI growth from 1.1% in November of last year to 2.11% in February of this year means that the CPI’s growth rate increased by approximately 92% over a period of just three months. Imagine if the year-over-year CPI growth rate continues to increase by 92% every three months. In 9 to 12 months from now we could be looking at a price inflation rate of over 15%. Even if the BLS manages to artificially hold the CPI down around 5% or 6%, NIA believes the real rate of price inflation will still rise into the double-digits within the next year.

7. Mainstream Media Denying Fed’s Target Passed. You would think that year-over-year CPI growth rising from 1.1% to 2.11% over a period of three months for an increase of 92% would generate a lot of media attention, especially considering that it has now surpassed the Fed’s informal inflation target of 1.5% to 2%. Instead of acknowledging that inflation is beginning to spiral out of control and encouraging Americans to prepare for hyperinflation like NIA has been doing for years, the media decided to conveniently change the way it defines the Fed’s informal target.

The media is now claiming that the Fed’s informal inflation target of 1.5% to 2% is based off of year-over-year changes in the BLS’s core-CPI figures. Core-CPI, as most of you already know, is a meaningless number that excludes food and energy prices. Its sole purpose is to be used to mislead the public in situations like this. We guarantee that if core-CPI had just surpassed 2% and the normal CPI was still below 2%, the media would be focusing on the normal CPI number, claiming that it remains below the Fed’s target and therefore inflation is low and not a problem.

The fact of the matter is, food and energy are the two most important things Americans need to live and survive. If the BLS was going to exclude something from the CPI, you would think they would exclude goods that Americans don’t consume on a daily basis. The BLS claims food and energy prices are excluded because they are most volatile. However, by excluding food and energy, core-CPI numbers are primarily driven by rents. Considering that we just came out of the largest Real Estate bubble in world history, there is a glut of homes available to rent on the market. NIA has been saying for years that being a landlord will be the worst business to be in during hyperinflation, because it will be impossible for landlords to increase rents at the same rate as overall price inflation. Food and energy prices will always increase at a much faster rate than rents.

8. Record U.S. Budget Deficit in February of $222.5 Billion. The U.S. government just reported a record budget deficit for the month of February of $222.5 billion. February’s budget deficit was more than the entire fiscal year of 2007. In fact, February’s deficit on an annualized basis was $2.67 trillion. NIA believes this is just a preview of future annual budget deficits, and we will see annual budget deficits surpass $2.67 trillion within the next several years.

9. High Budget Deficit as Percentage of Expenditures. The projected U.S. budget deficit for fiscal year 2011 of $1.645 trillion is 43% of total projected government expenditures in 2011 of $3.819 trillion. That is almost exactly the same level of Brazil’s budget deficit as a percentage of expenditures right before they experienced hyperinflation in 1993 and it is higher than Bolivia’s budget deficit as a percentage of expenditures right before they experienced hyperinflation in 1985. The only way a country can survive with such a large deficit as a percentage of expenditures and not have hyperinflation, is if foreigners are lending enough money to pay for the bulk of their deficit spending. Hyperinflation broke out in Brazil and Bolivia when foreigners stopped lending and central banks began monetizing the bulk of their deficit spending, and that is exactly what is taking place today in the U.S.

10. Obama Lies About Foreign Policy. President Obama campaigned as an anti-war President who would get our troops out of Iraq. NIA believes that many Libertarian voters actually voted for Obama in 2008 over John McCain because they felt Obama was more likely to end our wars that are adding greatly to our budget deficits and making the U.S. a lot less safe as a result. Obama may have reduced troop levels in Iraq, but he increased troops levels in Afghanistan, and is now sending troops into Libya for no reason.

The U.S. is now beginning to occupy Libya, when Libya didn’t do anything to the U.S. and they are no threat to the U.S. Obama has increased our overall overseas troop levels since becoming President and the U.S. is now spending $1 trillion annually on military expenses, which includes the costs to maintain over 700 military bases in 135 countries around the world. There is no way that we can continue on with our overseas military presence without seeing hyperinflation.

11. Obama Changes Definition of Balanced Budget. In the White House’s budget projections for the next 10 years, they don’t project that the U.S. will ever come close to achieving a real balanced budget. In fact, after projecting declining budget deficits up until the year 2015 (NIA believes we are unlikely to see any major dip in our budget deficits due to rising interest payments on our national debt), the White House projects our budget deficits to begin increasing again up until the year 2021. Obama recently signed an executive order to create the “National Commission on Fiscal Responsibility and Reform”, with a mission to “propose recommendations designed to balance the budget, excluding interest payments on the debt, by 2015″. Obama is redefining a balanced budget to exclude interest payments on our national debt, because he knows interest payments are about to explode and it will be impossible to truly balance the budget.

12. U.S. Faces Largest Ever Interest Payment Increases. With U.S. inflation beginning to spiral out of control, NIA believes it is 100% guaranteed that we will soon see a large spike in long-term bond yields. Not only that, but within the next couple of years, NIA believes the Federal Reserve will be forced to raise the Fed Funds Rate in a last-ditch effort to prevent hyperinflation. When both short and long-term interest rates start to rise, so will the interest payments on our national debt. With the public portion of our national debt now exceeding $10 trillion, we could see interest payments on our debt reach $500 billion within the next year or two, and over $1 trillion somewhere around mid-decade. When interest payments reach $1 trillion, they will likely be around 30% to 40% of government tax receipts, up from interest payments being only 9% of tax receipts today. No country has ever seen interest payments on their debt reach 40% of tax receipts without hyperinflation occurring in the years to come.

Start Slide Show with PicLens Lite