We must now examine how a new Presidency looks at averting a long overdue economic collapse. GW Bush knew what he faced going in and obviously influenced the Federal Reserve to drop interest rates, create a real estate boom, distract Americans as they were counting their money flipping houses and launch another phony war which temporarily increases production of war goods and distracts from the realities of the economy. Obama entered office with another more self-indulgent agenda, social aims plus more intense crony capitalism that morphed into fascism (examples: forced to buy health insurance, forced vaccination). Fake economic numbers (inflation was 6-9% not the target 2.2% claimed by the Fed; unemployment was ~20%, not the 5-6% claimed by the Dept. of Labor—see ShadowStats.com) were never challenged by the bought-off news media and Obama looked good on paper. Long-standing bubbles and propped markets will predictably fail now as entrenched forces aim at trump and shoot themselves. [Casey Research]
Trump will struggle to look good. But he will reign over the collapse of his avowed enemies. His base is the little people, the disillusioned, the under and unemployed, the working class (not necessarily the welfare class).
He has to act like a toreador and become a target and let the entrenched forces do themselves in. The elites and the financial classes created this false economy, now they get to stew in it. The financial classes own most of the wealth now and they will be the ones to take the fall.
Read Gary North where he says the next generation isn’t going to be burdened with the overwhelming National Debt ($18 trillion and counting). Those debts will simply be repudiated (mortgages simply went unpaid; student debt unpaid). Read Charles Hugh Smith’s essay on the steep decline in labor’s share of GDP as the left abandoned labor in favor of wealth and power. (The collapse of the Left)
It doesn’t matter what the market numbers are (real estate or investment), most Americans aren’t a part of that and they should have gotten out of these bubbles by now anyway. Don’t forget, as the stock market falls so do most pension plans. And no, the dream of gold bugs will be realized. China & Russia figured it out before any one else did. [Marketwatch]
While increased incomes are not likely, lower cost of living is, and that is just like a pay raise. A drop in gasoline prices has given Americans ~$130 billion ($320 average per household) to spend, save or pay down bills.
When the real estate market collapses and home values crash by a predictable -30% (guesstimate), that is the way more Americans will be able to afford a home. If the lending markets cease handing out home loans to people who marginally qualify the market collapses any way you look at it. As real estate values collapse so does the asset value that banks use to offset their loans. Money in the bank is risky.
Get into energy saving industries, public works, industries the trump administration are likely to fund.
Will the trump economy embrace a hydrogen car (water is its exhaust)? About 70% of oil production is consumed by cars. [Quora] About 24% of petroleum is imported from foreign countries. With a hydrogen car, there are no oil imports. Money doesn’t leave the country. (But then the middle-eastern oil states won’t be buying up our US treasury bills with their petro-dollars. Then what?)
Will the trump administration truly re-build a more functional and cost effective electricity grid? (Obama said he would and just installed a few token Smart Meters). There is unused US technology that is self-funding with an estimated $60 billion in recouped billings for lost energy as it is transmitted (composite transmission cable).
I’ve written about trillion-dollar answers for the economy. The bringing back of $2 trillion from overseas by US corporations as corporate tax rates decline. The buying of foreign currencies to match when overseas nations buy US dollars and falsely drive up the value of the dollar, thus making US goods less affordable in the export market (the so-called $500 billion trade imbalance); lowering taxes so the wealthy stop the offshore hoarding; the closure of many military bases congressmen oppose. A trillion dollars here, a trillion dollars there; who knows, America might find its way out of its self-induced quagmire.
The US is over-extended. Think of a family that owns a house, has huge credit card debt and keeps spending money to provide security guards for its neighbors in order to keep them under a thumb. That is the US. NATO is an archaic relic. Wars today are economic, electronic, roboticized, weather-controlled, etc. Stacking army tanks on the border of Russia is only a token maneuver to make it look like the current administration is not soft on Russia. Read Ron Paul on the over-reach of America. Economist David Stockman says the US can no longer be a bully. It must form alliances. It just has to do that with China and Russia without looking like it is soft on communism. Trump threw war-minded Neocons a bone when he said he would throw $5 billion at a renewed Navy.
It would be a good time to get rid of the middle man distributor of money (the Federal Reserve). The feckless Fed has driven itself into oblivion. Why go through a distributor who creates it from nothing, loans it out at 0.25% interest, and says they made a profit for the country. Whatever the fed reserve claims to make in profit that is turned back to the government is like holding money in your left hand and putting it in your right hand and declaring a profit. Distribute the money to banks directly from the US Treasury Department (remember those US Notes John F Kennedy had printed?).
The fed grew an imaginary “magic trick” profit, not a profit yielded from loaning out money to build homes, office buildings, assemble cars, true value-added asset creation. It’s purely an electronic profit. But if you get rid of the Fed, what do you do with those $3 trillion of bad home loans they bought up, which is precisely why we have a double bubble.
The Federal Reserve is the “Wizard of Oz” in this political theatre. Recall when the puppy dog pulled away the curtain and the Wizard was exposed as a false deity. “Pay no attention to that man behind the curtains” said the Wizard.
If you want to understand the smoke and mirrors going on at the Fed, read Harley Hahn’s explanation how the fed creates money out of nowhere and when it withdraws those same funds it vanishes. [Independent.com]
The federal reserve said in 2011 that it doesn’t just “print money” but rather it only creates money when it is matched by a corresponding increase in reserve balances held by the banking system. [Federal Reserve] We know better. That is a bunch of double talk as the banking system held $3+ trillion in bad home loans the Fed took off of banks ledgers and placed on theirs. This is circuitous double talk.
Keep you eyes on the fed interest rate. As it goes up, the US will inevitably have to pay higher interest on the national debt. The US now pays ~$400 billion a year now on interest on the national debt. That figure will predictably soar.
It’s going to be a wild ride. And it could all happen quickly. What is bad is good in the upcoming economy. Shed the old, in with the new. Currency reform is badly needed, but no mention of it yet.
Entrenched forces want trump nailed to a cross. Like they did in the election, they will only empower him by diminishing themselves.