SIGN UP - IT'S FREE!
SEARCH FSM
| National Debt Clock |
A million seconds pass in 12 days.
A billion seconds pass in 31 years.
A trillion seconds pass in 31,688 years!
September 3, 2009
Exclusive: Answers from the Past? What April 1865 and the Weimar Republic Can Teach Us
We face a crisis in government unprecedented since the end of the Civil War. Disciplined ideologues of the left have been incredibly effective in “gaming” our legislative and political systems in their drive to end our system of Representative Democracy and Capitalism. Where are we now, and what can we learn from history?
The first big effort was in jamming through the stimulus bill, which was done by creating a panic crisis, then slamming in a 1,000 page budget bill with a $3.6 trillion deficit. They knew that by calling for instantaneous passage, they could be sure the bill would never be read in its entirety by a single legislator, in either the House or Senate. In fact, as we found out last week, the bill was not written by a single legislator nor by any of their staffers, but rather came out of special interest groups who wrote the entire bill, insuring that every single element of pork barrel wishes was included, but failing to address the real crisis.
Last week, the Congressional Budget Office revealed for the first time that the estimated budget deficit of such spending extended over 10 years had been underestimated, and that it would in fact be not $7.2 trillion, but rather $9 trillion. Given our USG’s historic failures at competent estimation, no one can trust the latter number, described even by Democrats as being beyond a “rounding error.” In fact, every single estimate of every single entitlement program since FDR has been not just low, but grossly and artificially low, to the point of indicated solid incompetence, or an insurmountable integrity problem.
Before the end of 2008, there was a single day when the Federal Reserve printed $1 trillion in currency IN A SINGLE DAY. Conservative estimates of money supply now show estimates of increase of anywhere from $4 trillion to $15 trillion since Obama was elected. Today, M3, Money Supply, can only be estimated at near $20 trillion, up from $5.5 trillion in March, 2006. This can only produce one outcome ultimately, which is a drastic devaluation of the core value of the American dollar, and if history is any guide, a period of inflation spiraling into hyper-inflation.
The Obama Administration has quadrupled the national debt since taking office, creating two times more debt than any President in history. If you add his current legislative agenda to this, including his stimulus plans, the Cap and Tax bill, and Obamacare for the 15 percent of Americans (who vetted this number?), we are looking at a national debt load greater than even Germany as a multiple of Gross Domestic Product. Does anyone really believe this $14 trillion dollar economy can survive this debt load?
I am continually prompted by what it is we can do to save this. I don’t have an answer in U.S. history for hyper-inflation other than that under Carter, and as regards the divisive chasm this has created politically and emotionally, I have to go back to the end of the Civil War.
Germany finally had to realize it could not solve its debt and currency problems, and they eventually came to what is known by my friends as a “Do Over” solution. They zeroed out all national debt, reduced or eliminated all personal debt, wiped out the leveraged capital of their banks, and left title in the hands of their original holders, and instituted a new national currency that was tied to national production. Everyone was off the hook, provided they supported the redo, and if they didn’t, they got only their physical assets.
I would have said this was undoable here until Obama wiped away the meaning of contracts with his bailout structures for Fannie Mae and Freddie Mac, and then GM and Chrysler. I believe his solution was unconstitutional on almost every imaginable level. Having said that, I think he has left the door open for the unthinkable. If that is his approach, we need to adopt it too, and it is time to think outside of the box.
Obviously, our foreign debt holders have to be accommodated, and the only way I can see for that to happen is to give them U.S. assets. They can’t treat them the same way they have U.S. debt holders. We know this Administration doesn’t care about that.
The terrible price of all this has been the most rancorous and disturbed public discourse of my adult life, leaving even the Vietnam War in the dust. This administration has chosen the low road in public discourse, attacking the integrity, patriotism, intelligence and much more of those who dare to question their agenda or tactics. They do things daily that, had President Bush done them, the left-leaning press would have gone ballistic over.
This level of division between the left and the right has never been so severe, and indeed, I would contend that it has now been pushed to a breaking point. We face a similar crisis to the one which confronted this country in April, 1865. This pivotal month in US history produced an incredible outcome that could never have been predicted by any of the participants. What would have happened if GEN Robert E. Lee had sent his troops into the mountains to wage guerrilla warfare? What if Vice President Andrew Johnson had also been assassinated along with Lincoln, as was intended? There are a literally more than a hundred such paradoxes in this one month, which had only a handful gone the other way, the American experiment would have died right there.
In fact, the paradoxes apply as much to our Civil War as they do to the very Revolution that produced our independence. Anyone reading David McCullough’s book 1776 could never have imagined that they would successfully make War against what was certainly the most powerful country in the World then, Great Britain. No one could have predicted that this War would not actually be formally resolved until 1783, two years after the defeat of Lord Cornwallis. How on earth could a tiny handful of men who represented only a tiny percentage of the total populace project what would happen?
I say to you now, that no one can imagine where this will end, with what level of confrontation. Well-educated men I respect are negative at a level unprecedented in my lifetime. We are watching an attack on the core fabric of our foundation, of the separation of powers, between the three branches of Government and with the States, and on our fundamental rights under the Constitution. If you support the Constitution as written, you are not in power in this Government.
If you think this is a bleak picture, factor in the risk elements of one class of derivative securities being 4 times the GNP of the Globe, over $650 trillion. We have a forward liability from entitlement mandates and projected deficits exceeding $100 trillion, on an economy of only $15 trillion GNP. I can only paraphrase a line from a movie I revisited recently, Finding Forrester. “This is not a soup question.” One of the great questions arising from our more technical world has been this: Is this a simple problem needing a complex solution, or a complex problem needing a simple solution? I know several answers to both questions, and neither of them allow us to stand on our principles.
FamilySecurityMatters.org Contributing Editor C. Austin Burrell is a corporate finance generalist with over 30 years of Wall Street and related experience. He was a senior derivatives specialist and development stage company investment banker for more than 35 years on Wall Street.He is a 1968 Graduate of the U.S. Military Academy and a graduate of the Army’s Finance Officer Advanced Course.
Reader Comments: Submit Your Comment (0) | Sign Up for FSM Updates!
