It's official. The Catholic Knight is retired.  I'm hanging up the helmet and passing the torch. There will be no more articles, no more commentaries, no more calls to action. THIS BLOG IS CLOSED. I've spent a very long time thinking about this, I believe the time has come, and is a bit overdue.  I want to thank my readers for everything, but most especially for your encouragement and your willingness to go out there and fight the good fight. So, that being the case, I've spend the last several weeks looking for bloggers who are fairly active, and best represent something akin to the way I think and what I believe.  I recommend the following blogs for my readers to bookmark and check on regularly. Pick one as your favourite, or pick them all. They are all great..... In His Majesty's Service, THE CATHOLIC KNIGHT

Monday, June 8, 2009

Stimulus Bills Fail - Economic Depression Looms

Special thanks to "Innocent Bystanders" blog for this information: read more here.

THE CATHOLIC KNIGHT: As all the experts (with a good track record) predicted, the economic stimulus packages, passed under both the Bush and Obama administrations, have failed miserably. While the Obama administration claims it will retool stimulus programs and spend more stimulus money, the same experts (with a good track record) are predicting this will fail too. The United States of America is sliding into a Great Depression and there is nothing anyone can do to stop it. 

Now anybody who reads this blog knows 'The Catholic Knight' is no fan of alleged President Barack Obama. Likewise, anybody who's been reading this blog for some time knows 'The Catholic Knight' didn't care much for George W. Bush either. In all fairness to both men however, I would like to point out that this enormous market adjustment, which will put our nation in a Great Depression, is neither man's fault. Yes, they did stupid things to contribute to the problem, and even make it worse, but they themselves are not the root cause. The origin of this Great Depression goes back to the 1960s with the massive government expansion of entitlement programs such as Social Security, Medicare, Medicaid and Welfare. While Franklin Roosevelt did his share of socializing America back in the 1930s, it was President Lyndon Johnson who really pushed America into full socialism mode. The expansion of these federal entitlement programs massively increased the federal deficit, and with those deficits year after year, the federal debt grew to levels never before seen in peace time. For all their rhetoric, the Republicans didn't do much to reduce the federal deficit over the last fifty years, except for a brief time between 1995 and 1999 when they cut spending considerably, while working with (and sometimes against) Democratic President Bill Clinton. However, this was short lived. When Republicans controlled the Congress and the Whitehouse from 2001 to 2006 they went on a spending spree that would make any beltway liberal proud to be American. Nearly fifty years of reckless government spending have passed. The Democrats became known as the "Tax & Spend Party," while the Republicans became known as the "Borrow & Spend Party." Under both parties the government printed more money, to help cover the expenditures of each.  So as the market was flooded with more U.S. dollars, the value of those dollars went down, down, down. Over the last fifty years we've seen tenfold inflation. What used to cost a dollar in 1960 now costs ten dollars as of the date of this blog entry (6/8/2009). What cost $10 in 1960, now costs $100. What once cost $100, now costs a thousand! Unfortunately, that's the good news.

The bad news is that for the last thirty years, ever since the end of the Carter administration, the federal government has been refusing to let the market correct itself. Every time we slump into a recession, the fed immediately pumps cash into the market, or lowers interest rates, to keep the economy moving. The problem is that this has been going on for too long. Neither the Republicans nor the Democrats have allowed the market to do what it's supposed to do. Every time an economic bubble would burst, the fed would intervene somehow, creating a new bubble bigger than the last. That's fine until that bubble grows so big that it's time to burst again. So the fed steps in and inflates an even bigger bubble. The problem is you can't keep doing this indefinitely. We've reached that point now, and the federal government has effectively sacrificed it's own currency in the name of trying to prevent the market from correcting itself. The latest example of this is the ridiculously low interest rates, coupled with the massive economic stimulus packages passed under both Republican (Bush) and Democratic (Obama) administrations. Now the Federal Reserve can't drop the interest rates much lower, and there isn't enough money to pay for these massive stimulus packages. Naturally, the politicians will try to get more money by taxing the people. However, with everybody losing their jobs, and the rich tightening their belts, there isn't nearly as much money to tax as there once was just a year ago. So what's left? Print more money of course, and that is exactly what the treasury department is doing. It's printing more dollars than have ever existed before. Of course, what is that going to do to the dollar? It's going to drive it's value way down, causing a surge in the cost of goods and services - runaway inflation. Usually during an economic recession the value of currency increases. This is part of how normal market corrections usually work. However, in this case, we've actually seen the value of the dollar slide as the recession worsens. That is unprecedented, and it means the dollar is in trouble. If the value of the dollar is going down at a time when it's supposed to go up (right now), then what does that mean the dollar will do at a time when it's supposed to go down? It means the dollar will crater! So what does that mean for Americans? It means we're hosed! Because even when the economy finally does recover, which won't be for some time, the value of our money will be going down. In other words, the average American will not significantly benefit from an economic recovery. When the recovery happens, (again that won't be for a long time), the dollars coming back in to the average American's bank account won't be worth nearly as much as they once were. They may even be near worthless.

So here's the scenario. The entitlement programs expanded during the 1960s and after, have caused the federal government to run billions of dollars in deficits for nearly fifty years. Those billions of dollars in deficits have added up to $9 trillion of debt in that same amount of time. Meanwhile the panic caused by the early market correction in 2008 caused the federal government to pump another $2 trillion dollars into the market in less than a year, raising our national debt to over $11 trillion. Simultaneously, there are way too many dollars in the world, and the fed continues to print more, causing the value of the dollar to decline at a time when it should be increasing, leaving open the probability of a complete collapse of the dollar once economic recovery sets in (at a time when the dollar is supposed to decline). Meanwhile, during the last fifty years, the United States has completely lost it's industrial and manufacturing base due to outsourcing and plant relocation to other countries. This is the result of bad tax law and bad trade laws. Leaving American business with no infrastructure to produce it's way out of economic hardship. The final economic bubble is about to burst, which is the "bailout bubble" designed to protect the commercial retail market, probably within months of this blog entry (6/8/2009). Once that goes the game is over. POP! The fed can't lower interest rates enough to compensate. The government has no one left to tax. All the treasury can do is print more money, while the government floats more debt. That will make the dollar worthless, while the federal government has no choice to print more money to start paying down the debt, or risk defaulting on the bonds (an option which is unacceptable). So that's it. Game over. America is economically FINISHED!  The post World War II Era of American Supremacy has come to an end.

In the coming years the nation will be immersed into a Great Depression, possibly worse than the one seen during the 1930s. It's an economic reality nobody is prepared for, and the entire world will be affected. No politician can stop this. No political party can save us. There is no plan, no model, and no quick fix to this problem. We just have to go through this. Unemployment will reach at least 10% by Christmas 2009 and will be pushing 20% by Christmas 2010. Yes, there will be political ramifications of this, but don't expect the Republicans to do as well as they would like in the 2010 election. Remember, this problem is fifty years in the making, and the Republicans share just as much of the blame as the Democrats. Both organizations are run by criminals that have robbed this once great nation of it's wealth. They just happen to be criminals of two different flavors - red and blue.

Crime will certainly increase in the years ahead, everything from identity theft to street muggings. Kidnapping for ransom will become a regular everyday occurrence in this country, just as it is in many third-world nations. By the 2012 election, this nation will be prime for revolution. What kind of revolution? Your guess is as good as mine. Will it be bloody? Who knows. Will it be communist? I sure hope not. Will it be a revolution that throws off the shackles of big government and returns to the founding principles upon which this nation was built? We can only hope. Will the political borders of America remain stable during this revolution? I don't know. Will some states attempt to secede and form their own countries? I suspect some may try, but their success is questionable. Yes, the United States of America is headed for some very hard times, not seen since the American Revolution and the post Civil War era.  May God have mercy on us all.

So naturally, the philosophical question that arises is why? Why did this all happen? What caused it, and how can it be prevented from happening again? Americans will have a lot of time to think about this in the months and years ahead, while they're struggling to pay their rent and mortgages, and simultaneously trying to put food on the table.

If I may be so bold as to offer my own impression, I would have to say it all comes back to God. During the early years of the 1960s, both the United States government, and American society at large, simply forgot about God. Religion simply wasn't taken as seriously as it once was - particularly the Christian religion. The reckless deficit spending of our federal government was more of a symptom than a disease. Our politicians really thought they could play "masters of the universe" with American tax dollars. In a sense they were playing God. The role of government took on the characteristic of divinity - as we've seen in European socialist governments, and Asian communist governments. Within a decade, Uncle Sam became the primary provider for the poor and economically disadvantaged. No longer was it the primary role of the Church to take care of these people. In this sense, the Church was put out of business. Government became the new "church" of America. Of course as the years rolled by the real Church became more impotent, while the government "church" advanced in size and power. The tragic issues of abortion, euthanasia, and government promoted homosexuality added to the list of symptoms. Meanwhile the federal government spent more money, accruing more power, piling on greater debt, and ultimately sowing the seeds of it's own destruction.