A Dark Vision of Things to Come…(Read This One!)
By: Rick Ackerman
Tuesday, 9 October 2012
[ Erich Simon, author of jeremiad below, is a hard-core survivalist and the second most bearish person we know, out-doomsdayed only by a Nostradamian pen-pal who believes, for starters, that two World Wars will be fought within a generation. Although we shudder to imagine a world in which all of Erich’s predictions have come true, we do not think his fear is misplaced that Americans will awaken one morning to learn that the banks have closed indefinitely. Our suggestion is that you keep a shoebox filled with $1s, $5s, $10s and $20s for that day, since “plastic” will be useless. Much more elaborate preparations will be needed, however, if you share Erich’s very dire outlook. RA]
The financial vultures are all around. Things took a sharp turn for the worse three years ago, when a wave of store-closings turned strip malls across America into eyesores. In just one year, 42,000 manufacturing businesses in the U.S. closed shop. But the recent announcement by the Fed that it would “buy” $40 billion of mortgage-backed securities every month was a defining moment. What can it hope to accomplish? Printing-press money no longer subsidizes anyone but fat cats – corporate VIPs who can flee in their Learjets to the Southern Hemisphere when troubles that have simmered for years finally reach a boil.
A generation ago, it took $2 of debt creation to generate a dollar’s worth of GDP. Then it took $5…and then $7 before Obama pushed the number off the chart. Now, there is no longer measurable growth relative to each new dollar of credit “stimulus.” In fact, despite all the QE Bernanke can gin up, the economy is sliding backwards. Production is contracting and unemployment is poised to take off, even as new hires take jobs that will never pay them anything close to a living wage. The young are beyond disenfranchised: They are desperate and forlorn. We have reached the point where every newborn faces worsening odds of accumulating wealth to pass on to descendants. So much for the American Dream.