The Big Picture

I’m beginning to fear that all of the political hoopla going on is just a shell game to distract us from how bad the situation really is. Unfortunately, I am so far out in the woods that all I can do is listen, watch and try to understand what is going on.

Here is an excellent article from Bayou Renaissance Man. I highly recommend that you read it. It will take a few minutes, but it will be worth it. And I have to say that I think he probably understands this subject better than I do.

A summary is that Bernanke is about to, in effect, print $600 billion dollars and inject it into the economy. Because this does not represent any new real wealth, it debases the value of all money in the system, everywhere. This is what we call inflation; since the actual value of goods does not change, their price goes up by the same percentage the value of the dollar drops. In effect, it is a hidden tax on us, because the government spends that extra $600 billion.

When we pay an extra dollar at the gas pumps, in effect the government took that dollar out of the other end of the financial system. It is essentially a universal hidden tax.

It’s far worse than that, though, because of the international interactions of the financial system. Read the article, for details. There is a real possibility that the countries with which we trade may balk; < UPDATE: WOW, that didn’t take long – go here. > and depending on how this all goes down, it could completely collapse our economic system, bringing a true second great depression. If I only heard this from one source, I’d think it was unlikely, but I am seeing similar articles in various places elsewhere. The fact that I am seeing it discussed on the news as well lends credence to the possibility.

What is the probability that collapse is coming? I don’t know. I do know that it is certainly non-zero. It may even be inevitable.

Voting Conservative was definitely the right thing to do, because they at least are making noises as if they are aware of the problem. The liberals don’t seem to care; in fact they are the instigators of most of this. They are still trying to increase spending.

But the fact is, what I’ve heard the Republicans discuss doing in terms of cutting spending and keeping the Bush Tax Cuts is not going to be nearly enough to offset what Bernanke and the Federal Reserve is going to do. It’s beginning to look like we are going to be in serious trouble because the political will does not exist to do the massive surgery it would take to save us. Discussing cutting earmarks is ludicrous in the face of the magnitude of this threat. It’s like treating a tick-bite on the arm of somebody having a heart attack.

The politicians are playing their violins, while the U.S.A. burns.

I suspect that economic and market forces are already in play that may make it effectively impossible to save this country. Furthermore, I conjecture that this is exactly what the progressives and Obama want.

I could be wrong; in fact, I very much hope I’m wrong. One thing for sure; we are going to get to find out.


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