Today, I’ll be writing of a topic that has gestated in my “future article” file for some time; i.e., the financial repression rapidly overtaking the Western world – but particularly, the “land of the free.” The catalyst for writing today was last night’s news that the Democrat-controlled Senate failed to pass a bill extending unemployment benefits for the nearly 1.4 million people whose benefits terminated December 28th. And thus, there’s not a chance the Republican-controlled House will take up the slack.
As a rule, the government loves to spend what it doesn’t have; but unfortunately for said 1.4 million, their “timing” was bad – as this week, Congress will pass the $1.1 trillion, fiscal 2014 discretionary budget. Thus, if it agrees to spend $18 billion for extended unemployment benefits, nearly the entire $20 billion of supposed cuts ballyhooed by last month’s farcical budget deal would be immediately spent. The fact that such “cuts” are really taxes in disguise – the majority of which, won’t be enacted until 2020 and beyond – is immaterial. However, what does matter is that from a public relations standpoint, the Republicans – intently eying November’s mid-term elections – can’t possibly justify such a quick retreat from Paul Ryan’s “budget cuts.”
And thus, America’s 6.7% “unemployment rate” could fall significantly further this month; potentially nearing 6.0%, irrespective of how many “jobs” are created. Worse yet, another 3.6 million’s unemployment benefits are scheduled to expire this year; and thus, unless they find jobs or Congress relents, said “unemployment rate” could fall significantly further. Now do you see why the Fed trashed its initial 6.5% ‘threshold’ for ending Zero Interest Rate Policy, or ZIRP?
Of course, said “budget cuts” will be lost in other ways – such as an inevitable explosion in food stamps and other entitlement payments. I have no idea if such “spending increases” are subject to Congressional approval, but something tells me they aren’t. In other words, it’s highly unlikely food stamp payments are “capped”; and thus, given it currently costs $80 billion to feed 47 million people each year, an additional four million participants would add roughly $8 billion to “SNAP’s” annual outlays.
For all intents and purposes, this population segment is heavily “financially repressed”; in that typically, they have negative net worth and little or no savings – for 15% of Americans, qualifying as “poverty stricken.” In fact, more than half of all mortgaged homes remain underwater; and care of free Fed money doled out to Wall Street, the “buy-to-rent” boom has caused surging rental prices for those trying to escape onerous mortgage payments.
Not un-coincidentally, the amount of food stamp participants is exactly the same as those under the poverty line; and with the potential of up to five million new entrants to this category this year, the ranks of both could swell significantly in the coming months. Moreover, with millions of others barely above this “line of demarcation,” more than 25% of U.S. citizens face lifetimes of financial servitude, with another 25%+ struggling to make ends meet. A recent survey concluded that just 43% of American’s believe the “American Dream” is still achievable – or as we call it, the “American Nightmare.”
Sadly, the “financial repression” noted in today’s title is not referring to the lower rungs of America’s economic hierarchy; but instead, the dying “middle class.” To wit, the impetus for writing today may have been last night’s unemployment benefits fiasco, but what catalyzed my interest in the topic in general was the below table. In it, the progression of officially-sanctioned – and in most cases, overtly orchestrated – post crisis repression schemes is memorialized; starting with 2008’s politically strong-armed, taxpayer funded TARP bailouts; to 2013’s “bail-ins”; and this year’s FATCA implementation. Given the unchecked, irreversible growth of global debt and unemployment, such regulation will likely worsen considerably in the coming years. And thus, the time is now to protect your assets – while you still can.
Coincidentally, as I was putting this article together, this article was published by the great Michael Snyder. Apparently, the annual “Index of Economic Freedom” was just published – depicting an unprecedented seventh straight decline for the United States, dropping it to 12th on the global list. To wit, in 2013 alone, the U.S. government issued more than 80,000 pages of new rules and regulations, adding 40% to the 200,000 page volume of the nation’s Code of Laws. Putting this volume into additional perspective, 2010’s twin albatrosses – i.e., the Affordable Healthcare and Dodd–Frank Wall Street Reform and Consumer Protection Acts – are 11,000 pages and 14,000 pages, respectively. Not surprisingly, the cost of maintaining, enforcing, and complying with such acts is enormous to the average citizen – whilst proving a boon to the large corporate interests that helped finance shape them.
Finally, I thought it relevant to highlight this article by the always relevant Mises Institute – of how hyperinflation will not only be pursued above all other alternatives (as it always is); but that government PROPAGANDA will be utilized to create the perception such a strategy is “necessary, proper, patriotic, and ethical.” Which of course it will – just as all such schemes have been “covered” in times past.
According to governments – and the banks that control them – inflation is the only way to avoid the dreaded deflation scenario of the 1930s. No matter that real unemployment is already close to the 1933 peak of 24% (amidst a so-called “recovery”); or that with each passing day, thousands more succumb to a the unending “creep” of the U.S. cost of living – which in many foreign nations, is far more than a simple creep. Your hard-earned life’s savings are on the line, as “the 1%” will stop at nothing to enrich themselves at the altar of “the 99%.” Such a progression is historically tested, tried and true; and thus, will you allow it to run you over – perhaps, as early as this year?