BROKEN GLASS
By John Galt
The photo of the JP Morgan Chase building in Houston, TX with all of the broken windows thanks to Hurricane Ike is the perfect metaphor for our shattered financial system. The symbolism of the fractured chunk of a window in the photo above is the ultimate image for describing what is happening to our economy and worse an indication of the destroyed solvency of the Federal Reserve banking concept. The irony is that it was good old J.P. Morgan who concocted and promoted the very system which is now at risk.
The transparency that glass is supposed to provide for those on the outside and inside is often smoked over or tinted by these financial towers so Joe Q. Public can not look in to see what is happening inside. This same discoloration of the glass to diffuse or block the ability of the public to see what is happening also obstructs these “Masters of the Universe” and their view of Main Street, U.S.A. These “giants” of our financial industry have absolutely zero perception or understanding of how the average man or woman lives in this nation. To make matters worse, the majority of them have little if any empathy for the small or mid-sized entrepreneurial businessman or the jobs their enterprises create. Now, after a disaster of such monumental economic proportions, we are not asked, but told it is our duty to trust what is happening behind these darkened buildings and pay for their mistakes.
Today, that window is broken, as is our banking and financial system.
Jagged glass falling from a damaged skyscraper can cut or kill a person or in this case, an economy. The destruction of the credit establishment and expansionist enterprises in our banking sector will eventually result in a deflationary depression unless action is taken to expunge the bad paper or debts immediately. The question is the path that will be chosen to reach this final result. The logical solution would be for the central banksters of these United States, our Federal Reserve, and their partners in crime, the politicians, to protect their Ponzi scheme and inflate their way out of this mess, passing badly devalued dollars off between each other and foreign powers to eliminate the overhanging corporate sector and government debt. This action would cause great distress domestically and internationally but who cares about the citizens of these nations and the pain they would suffer? The main thing in the eyes of the politicians and banksters is to protect the system, not the nations involved in this system.
The alternative path which in their eyes protects their fiefdoms, is to deflate and unwind the overhanging issues, eliminating competition and contracting the size of the banking system, once again inflicting unmentionable pain on citizens not just in the United States, but worldwide. Unfortunately for these Princes and Lords, the world political situation and level of civility is far different than in years past. America is no longer an overwhelmingly dominant geopolitical power with unending military resources to plant the flag and push or persuade our friends and enemies into a desired outcome. The theory that our money is the greatest thing since gold no longer holds true. The purity of our motives when our military is used can no longer be trusted. And sadly, the arrogance of our political class has soured some alliances while encouraging old enemies of the once discounted Marxist bloc to re-establish new alliances to counteract our hegemony.
A deflationary decline and depression this time would not be another Ma and Pa Kettle version of The Grapes of Wrath with Americans pulling together in every corner of the nation and living off of the resources of the land. The technocrats who have distributed our bounty and manufacturing capabilities world wide have seen to that outcome being null and void. The ideal by these theoretical heretics who figured that giving America’s dominance in economic affairs to our friends and enemies alike to maintain world peace and allow economic expansion to defeat the natural business cycle now comes with a price. When the fraud the government and Federal Reserve foisted on the world in 1973 with Nixon’s closing of the gold window allowed the acceptance that our paper was as good as gold and we would never issue a fiat currency scheme that was inflationary nor manipulative (heaven forbid), some who studied economics for decades realized the risk that would be taken with our future.
That future is now.
After thirty-five years of irresponsible economic policy by our government and the associated managers of the economy, the Federal Reserve, the failure to maintain a stable currency along with an inability to control the urge to spend money on any project or concept that lines the Imperial Senate’s pockets will have a major consequence. The full faith and credit ideal is about to see just how much faith the world has in our leadership and how much more credit they are willing to extend.
Thus the most dangerous idea, a deflationary unwind, might carry much more risk than the banking class is ready to endure. The societal instability it would create in America’s major cities is something the political class will not stand for, thus creating the final and over due conflict between the neo-capitalist class and the quasi-socialist elected officials. The instability this conflict is going to create as we migrate from a post-1970’s inflationary solution to a Franco-Chinese hybrid socialist-corporatist model will last at least one decade.
Japan experienced the “Lost Decade” as their never ending recession thanks to corporate fraud and government deceit destroyed the model Americans were told we should emulate. Then the Chinese who were willing to sacrifice everything for a better life, mainly because if they did not they could be shot, adopted a modified corporatist model where the political elite retained ultimate control via the fixed bayonet.
Thanks to the “We are the World” bunch and their perverted globalist economic theories, America will now have to restructure its entire economic model, configure a solution to replace a rapidly aging workforce, create a new economic growth model under government supervision, and fight off societal instability all while facing a revival of Marxism thanks to the re-emergence of Latin American classical revolutionary movements and the Russian Bear. The largest obstacle to our future, besides millions of furious and soon to be bankrupt retirees and investors who will open their statements and see “$0.00″ or worse “X,000,000,000,000,000.00″ like they do it in Rhodesia proper (Zimbabwe for the politically correct), will be the regionalized instability an American collapse will create. When, not if, we fall into a depression death spiral our neighbors to the south will probably have to deal with a full blown Civil War. This means our border states and those states with large “immigrant” and “illegal immigrant” populations will be directly or indirectly involved in the fighting.
Think I’m crazy? Think again. The vacuum created when a nation’s economic system collapses is one thing; when an Empire’s system collapses the void brings forth destructive forces that have been bubbling for years as the masses within the imperial borders enjoyed bread and circus, all the while dismissing problems in other nations as regionalized issues of little concern. The only logical outcome will be the one imposed by the political class to declare direct oversight of every aspect of our financial system and the liquidation of another U.S. Central Bank, the Federal Reserve, and the creation of some sort of modified European Union type regional banking system with direct political control of every aspect of its function and scope. The prospects of losing that type of control could motivate the Federal Reserve to begin monetizing the debts to prevent such an evolution in thinking, especially if a leftist regime seizes power in D.C., a given should economic conditions continue to accelerate over the next fifty something days.
Although I fear the risk of a deflationary depression does exist, the actual demand on raw commodities worldwide due to basic demographics in addition to the risk of major domestic and regional instability will ultimately lead to the Great Reflation which will lead to a monetization of debts and corporate structured instruments in an effort to buy more time and implement greater societal changes. In the eyes of the powers controlling our banking system, ten years of little or no economic expansion is a much more palatable outcome than to having their system replaced with a new financial and economic management model. The prospect of maintaining some leverage or control of the system’s future in cooperation with a new political regime is far more acceptable than losing a century of control. Power sharing and negotiation is the key thing to watch for and the one thing all of us will have to monitor to get some clue as to just how great a currency devaluation and redesign will be endeavored upon.
The people will be willing to tolerate a revision of our society’s structure or sacrifice of freedoms to maintain the illusion of wealth and security. That is the sad statement of fact that our Founding Fathers worried about when an undisciplined people elected scoundrels to office and bandits to run their finances. The only hope for our society now is that enough people will prepare themselves financially and spiritually to endure the hard times and take a leadership role to rebuild our system devoid of Lenin’s ideals and conniving leaders like Senator Nelson Aldrich. There will be a purge one day, but for now, the creators, the producers should consider the idea that the time to go on strike is near.
Just as the namesake of this editorial articulated in Atlas Shrugged.
Sword At-The-Ready 