European Debt Crisis Threatens the Dollar
The global economic situation is becoming more dire every day. Approximately half of all US banks have significant exposure to the debt crisis in Europe. Much more dangerous for the US taxpayer is the dollar's status as reserve currency for the world, and the US Federal Reserve's status as the lender of last resort. As we've learned in recent disclosures, this has not only benefited companies like AIG, the auto industry and various US banks, but multiple foreign central banks as they have run into trouble. Nothing has been solved, however, by offering up the productivity of Americans as a sacrificial lamb. Greece is set to be the first domino to fall in the string of European economies at risk. Rather than learning from Greece's terrible example of an over-consuming public sector and drowning private sector, what is more likely from our politicians is an eventual bailout of European investors.
The US has a relatively small exposure to overwhelmed Greek banks, but much larger economies in Europe are set to follow and that will have serious implications for US banks. Greece is technically small enough to bail out. Italy is not. Germany is not. France is not. It is estimated that US banks have over a trillion dollars tied up in at-risk German and French banks. Because the urge to paper over the debt with more credit is so strong, the collapse of the Euro is imminent. Will the Fed be held responsible if the Euro brings the US dollar down with it?
The most disingenuous aspect of the narrative about the European sovereign debt crisis is that entire economies will collapse if more resources are not bilked from productive people around the world. This is untrue. Tough times are coming for the banks, to be sure, but free people always find a way back to prosperity if the politicians leave them alone. Communities within Greece are coming together and forming barter systems because they know the Euro is becoming unstable. Greeks are learning how to engage in commerce with each other, without the use of fiat currency controlled by central banks. In other words, they are rediscovering what money really is, and they are trading with each other in ways that cannot be controlled, manipulated, squandered, inflated away and generally ruined by corrupt bankers and the politicians that enable them. Farmers will still grow food, mechanics will still fix cars, people will still make things and exchange them with each other. No banker, no politician can stop that by destroying one medium of exchange. People will find or create another medium of exchange.
Unfortunately, when politicians try to monopolize currency with legal tender laws, the people find it harder and harder to survive the inflation and taxation to which they are subjected. Bankers should take their dreaded haircut rather than making innocent people pay for their mistakes. The losses should be limited and liquidated, rather than perpetuated and rewarded. This is the only way we can recover.
Government debt is often considered rock solid because it is backed by a government's ability to forcibly extract interest payments out of the public. The public is increasingly unwilling to be bilked to make bankers whole. The riots and the violence in Greece should tell us something about the sustainability of this system.
If we continue to bail out banks and bankers so they can continue to lose money, if we cavalierly put this burden on the taxpayer, it is all too predictable what will happen here.
Posted by Bobby7 on 11/18/11 02:39 PM
'Ron Paul's Ties to Jewish Supremacism and World Government'
Christopher Jon Bjerknes
'Ron Paul is closely tied to the late Ludwig von Mises through his ideas and the institute which bears his name. Ludwig von Mises was in turn closely tied to the Jewish supremacist and organizer of World Government, Richard Coudenhove-Kalergi. Richard Coudenhove-Kalergi promoted the idea of a European Union and a pan-American Union. Rothschild and Warburg sponsored him.
'Coudenhove-Kalergi also stated that the Jews are a superior race which should lead the World, but that all the other races should be mixed, which according to him would result in the manifestation of the worst traits and the disappearance of the best traits in the Gentile races. Zionist British Prime Minister Benjamin Disraeli had made similar claims.
'Coudenhove-Kalergi wanted the different 'races' to mix in intermarriage so that the children of these unions would be inferior to their parents and would lose any sense of cultural and ethnic heritage. He wanted to then substitute a new culture of obedience and servitude among this new degenerated 'race', subservience to a ruling Jewish elite. He would have the Jews remain nobly segregated and preserve them as rulers over all others. It is a fact that many of Coudenhove-Kalergi's policies have been instituted. Ron Paul is fronting for these von Misian forces.'
The truth is, Ron Paul is a free trade globalist who desires an international currency. The following statement was made by Congressman Paul in an address to the House of Representatives in 2001:
'There's nothing to fear from globalism, free trade and a single worldwide currency... . The effort in recent decades to unify government surveillance over all world trade and international financial transactions through the UN, IMF, World Bank, WTO, ICC, the OECD, and the Bank of International Settlements can never substitute for a peaceful world based on true free trade, freedom of movement, a single but sound market currency, and voluntary contracts with private property rights... . The ultimate solution will only come with the rejection of fiat money worldwide, and a restoration of commodity money. Commodity money if voluntarily and universally accepted could give us a single world currency requiring no money managers, no manipulators orchestrating a man-made business cycle with rampant price inflation.' (Congressional Record, 13 March 2001)
Posted by DwightMann on 11/17/11 07:46 PM
The banks are the problem, not the people. . .
Posted by taxesbyanyothername on 11/17/11 04:03 AM
A further and in many areas just as easily manipulated choke point is water. Thirst kills much faster than hunger.
Posted by Dilence Sogwood on 11/16/11 10:23 AM
Danny, a little substance is needed here. By oil companies, do you mean the locally owned retail gasoline distribution pumps or do you mean the producers of oil.
Believe me, oil producers will accept gold or other assets of value. Generally, oil producers are free market companies who risk substantial capital to find and develop an energy rich resource. They have to fight all the communists to do so.
Now, if by "oil companies" you refer to quasi-governmental organizations like BP or Shell (ENI, PEMEX, etc) you are talking about avery specific power structure.
Generalizing about "oil companies" only promotes regulation, which promotes consolidation into the fascist organizations. For support see GS's Blankfien's comments yesterday about how regulation helps GS.
Posted by Frank on 11/16/11 10:22 AM
"Bankers should take their dreaded haircut rather than making innocent people pay for their mistakes." - RP
Yes they should, but they won't. They are too powerful and have learned well how to weasel out of paying for their own mistakes. In fact, the very top central bankers COUNT on being able to take advantage of innocent people and these corrupt bankers then bankroll puppet politicians who then "buy" their elections via various means with a dumbed-down electorate. Until the electorate wises up, nothing will change. Sadly, the electorate is still grossly ignorant about the gem of a politician they have in Ron Paul, who wrote this article.
Posted by Dave Jr on 11/16/11 08:00 AM
So would food be a third choke point? Think of the five major agribusinesses and the vast number of city dwellers.
Taxes can be used against those without mortgages. And since there are no longer any local mortgagees, and big banks are sitting on foreclosed properties and Freddie, Frannie are leading the way in "holdings", shelter might be said to be a choke point.
So the big three are food, fuel and shelter. The three big necessities to sustain life.
The elite are no dummies.
Posted by MADDOX1930 on 11/16/11 02:43 AM
Simple question: MSM is an acronym for?
Reply from The Daily Bell
MainStream Media ...
Posted by Danny B on 11/16/11 12:05 AM
There is MUCH written about alternative currencies and barter economies. There are 2 choke points. Fuel purchases and property taxes. You can bet that the oil companies will refuse anything but dollars. Same for the county tax collector. A barter economy would slow the velocity of money WAY down. Money will be very hard to come by.
Only 1% of Americans are involved in agriculture. People in the colder areas will have very little "home grown" food production. Walmart won't barter. Hospitals are doubtful.
I bought farmland.
Posted by runderwo on 11/15/11 11:18 PM
Here is Clive Crook, FT and Bloomberg columnist, offering a synthesis:
Click to view link
Nonetheless, popular concerns about the drift of political power from Europe's nations to the EU's center are well-founded. New demands for central supervision must therefore be combined with a reversal of centrism in other areas. From now on, Europe should ask governments to surrender sovereignty only when strictly necessary. Starting now, voters must be talked to and heeded. Where integration has gone further than is necessary or wanted by voters, it should be rolled back.
You might say this is little to ask. In fact it will represent a wholly new approach. For years EU leaders have pursued an ambitious program of political integration, and voters have had little to say about it. At the outset the idea was to perfect Europe's internal market. Regulatory and other policies acted as internal trade barriers. It made sense to harmonize them. That would lessen intra-EU economic frictions and get the greatest benefit from Europe's single market.
Even that process, I think, should have been pursued with more restraint -- and more regard for popular consent -- than Europe's leaders brought to the job. By degrees, though, the goal of political integration became an end in itself, not just a means to closer economic union.
The single currency was itself an instance of that, desired as much for its political and geopolitical potency as for its economic benefits. Attempts to integrate foreign policy, criminal justice and other spheres of governance had almost no economic rationale. On all this, Europe's visionary politicians moved ever further in front of Europe's voters.
This is why the present upheaval is so dangerous. The risk now is of an undiscriminating populist backlash that puts the EU's undeniable achievements -- the economic union and, despite everything, the euro -- in peril.
With hindsight, no doubt, Greece and some others would have been better off never joining the monetary union. But there is no easy way back. Europe's leaders need to understand that they have no choice but to make the euro work. In the future that must mean, among other things, limited but effective curbs on fiscal sovereignty.
Will Europe's voters accept this? They might, despite their anger at the EU and its works, if the need was for once explained to them -- and, above all, if the Union's leaders started giving popular sovereignty some voice in other aspects of the EU project.
Posted by nithsdale on 11/15/11 09:16 PM
Dr. Paul is always on point in his essays.
It would be helpful if Dr, Paul would capsulize for his followers what was done at Cancun, when Reagan was President. That well planned meeting of financial minds from around the world on what had been a deserted hurricane riven beach peninsula in Mexico, built quickly, like an olympic village, to house the thousands of participants in what was an international crisis then, could well be the bellweather for what will happen now. That conference had all the problems we have now but was compounded by the element of fraud because so much of the debt claimed against mainly third world, South American, African and Asian, participants was questioned since the flow of money to the debtor nations could not be confirmed. In essence for every million of debt, there appeared to be a paper track of only 100,000 dollars.
This was in legal paper issued, based on funds voted by the Congress to help so many start their climb into the new century,repayment to be "serviced" by the banking houses using banking staffs from all our major banks. That paper, in turn, was sold to state and local banks, pension funds for reserves that were "good as gold", now called into question!
I find it disturbing that there is no reference to Cancun as we delve into similar problems now. I would like to know why Cancun is not referenced now.
Posted by dotti on 11/15/11 05:56 PM
Your point is well taken. They would love to have a scapegoat to take the blame when the walls come tumblin' down.
Then they could create order out of the chaos--that they had really caused.
Yep. That would work.
They have the media, the educational system, and the politicians. I can't blame the citizens that are so busy taking care of their families that they are oblivious to the things that seem so clear to us here at DB.
Thanks for your posts!
Posted by Dave Jr on 11/15/11 04:44 PM
"But, Dave. Do you really think that a Ron Paul could turn this situation around?"
If Ron Paul were elected, I have no reason to believe he wouldn't move to end the Fed. But before he does, the Fed would probably crash the system and blame it on his policy. At that point, if the American people have the mettle to do what is right, refuse a world currency, I have no idea.
Posted by dotti on 11/15/11 04:00 PM
Yeah. This waiting and wondering when the ax is going to fall is unnerving. The PTB have held this together for longer than I thought possible. The stock market recovery, etc.
And Joe will do okay in a "crash" environment--the rural Joes that is. I just don't think that prior to the Great Crash Joe will choose to use any paper currency other than the USD. He will recognize the value of a 90% silver coin or a silver eagle.
A country boy will survive. Cities will be a mess.
Posted by laceja on 11/15/11 03:53 PM
I have no plans to get off the Paul train. I'm pretty sure he won't get the Republican nomination, so I'm hoping he'll run as a third party candidate. Obviously, Ron Paul isn't the most charismatic guy on the planet, but he's the only one running for President, who has any honor. The rest of them have already sold their soul for four years of free food and meals. Huh, well I guess there are a lot of Americans who are not willing to vote themselves lots of freebees. Let's just hope there are enough to vote in some sanity.
Posted by dotti on 11/15/11 03:52 PM
I am afraid that Romney is the other "Manchurian Candidate".
Maybe we should print a bumper sticker: Just Write Ron!
But, Dave. Do you really think that a Ron Paul could turn this situation around?
Newt weilds a lot of power. Do you think that he is one of "them?"?
Posted by laceja on 11/15/11 03:46 PM
Joe Sixpack will figure things out pretty quickly, when it comes to barter. He'll figure out pretty quickly, how many hours he's willing to work for a loaf of bread or carton of milk. I'd sure rather get to that point than where we are now.
Posted by Dave Jr on 11/15/11 01:38 PM
If I had to bet a dollar, I would predict the "election" will be between Obama and Romney. Naw, on second thought, keep the dollar, it doesn't really matter. But, I will still write in Ron Paul for the heck of it.
Posted by Dave Jr on 11/15/11 01:31 PM
The PTB have time. It depends on what transpires and what they need most; war, diplomacy for banking / trade deals, social programs, etc. I think what is foremost on their minds is getting Obamacare up and running. Is Obama best for the job, or Romney who has some experience in the matter? Or will some emergency transpire needing a war president? You up for that Newt?
Posted by dotti on 11/15/11 12:52 PM
So many people like ron Paul. And most don't seem to be abandoning Herman Cain as expected. Then there's Newt--getting off to a late start no doubt. I always thought of Romney as the PTB ssecond choice: if they thought Obama was unelectable, Romney would be their fallback position.
At some point a decision will be made by the PTB whether to totally support their man--Obama--or have to prepare for the contingency that he may not can win a second term. If they are certain they can push him to victory, then they will pick a Republican candidate who can be pumped and dumped.
If they have doubts as to whether Obama can take it all, they may have to be sure that both Repub and Dem candidates belong to them.
If you are the PTB, you have to always be prepared.
It's not easy ruling the world.
Especially with this DB crowd always interfering with your plans.
Posted by Dave Jr on 11/15/11 11:44 AM
I think the canidates are groomed and now they already know who the winner will be in the primaries. But they like the campaign contributions and will continue to tow the line. We all will know as the media glorifies the choosen and digs up dirt and ridicules the not choosen.