The Coming Perfect Storm

Storm clouds of economic uncertainty are already gathering not to far off in the distance. The winds of change are already blowing moving that perfect storm ever closer into the worlds economy. We all will face very troubling times ahead if things remain unaltered. Or a worse case scenario would be if the Republicans gain control in this coming election. Regardless of the outcome in the United States, in Europe there is a growing foreboding tension that continues to unravel the economies of most of the European Union. Compounding this is the continued aggression in Syria, Iran and the unbending resolve of Israel. The whole world is poised to implode because of policies, and attitudes that have prevailed for far too long by practically every country that wants a bigger piece of the worlds economic pie, sort of speaking still prevails.


Just recently in Cernobbio, Italy economists, and leaders gathered to compose resolutions to these lingering perils. The biggest hurdle is that many, just like our congress, can't come to a consensus on one concise plan of direction that would stamp out all the economic woes that have befallen practically every nation on the planet. With the worlds economies tumbling out of control with so much distention, animosity, jealousy, and intolerance among governmental officials it is no wonder we are faced with yet again another world on a collision course toward disaster.

The one thing that most of those who were in attendance in Cernobbio, Italy agree on is that the world's economy is now attached to that juggernaut of catastrophic destruction, the perfect storm as we call it. The overall prognosis is a crisis that makes the Great Depression of the 1930's pale in comparison. All because of the flawed non structured backing of the European Union and the continued political paralysis in the United States. Which by the way continues toward falling off that "fiscal cliff". These, along with the slowdown of emerging economies that continue to dry up global growth along with the destabilizing prospect of another war in Iran. The onset of war with Iran just because they want to be part of the nuclear family really isn't justified unless they provoke an attack using non conventional weapons.


With the whole world teetering on the edge of darkness has continued to exasperate the nervousness of business which only suppress the appetite for private and corporate expansion, risk, and investment. These only compound and prolong the economic crisis that actually started in 2007. The continued tensions over the mounting United States debt and Europe's inability to balance electorates insistence on national sovereignty over the need for unity to salvage the faltering euro have made the recipe for another economic crisis complete.


Noted economist Nouriel Roubini in analysis of all these contingencies has predicted that indeed the world will face years of unparallel economic gloom. Pretty harsh; but, considering all the factors involve in all likely hood will undoubtedly hold up. Why, because the specific nature of the set of circumstances involved today. One, we continue to have a downward spiral in which the financial meltdown caused by the excess of credit defused by that gigantic stimulus of 2009 which by the way is credited with avoiding a world wide depression. But, in the aftermath it pushed governments too far into the red, or shall we say in debt, for markets to actually rebound. This debt continues even though severe austerity measures were put in place but caused more suppressed spending in which the outcome is only prolonging this original crisis. In other words spending power was shut off thereby eliminating any chance of total economic recovery. The exact antithesis of the Williams Theory of Economic Evolution is rapidly occurring all over the globe.

Through-out history whenever an economic crisis hits where there is too much public and private debt there is a very painful process of deleveraging which involves years of very slow economic growth. Only after years of depressed conditions will countries finally emerge from the darkness of these economic storms. What is occurring in Europe and the United States is economic contractions that has been going on for years now. The likelihood is very promising that the continued contractions will only grow and continue for many more years. This of course if things and policies remain in place. This grim forecast is very consistent to the figures compiled by the OECD. In this report they found that the worlds richest economies are slowing an the anticipated growth will only be just a little under 0.3 percent. The OECD also found out that the continuing Euro crisis continue to snuff out global confidence thus weakening any trade and employment worldwide.


Now the questions we all should be asking is how to avoid this grim forecast or is it too late? The answers are two fold. One has to do with the solidification of the European Union and the other has to do with the elimination of the United States debt. No small task, but never the less these two contingencies must be made if nations are to avoid the grim economic forecast and face a real economic meltdown. Focusing on Europe, where we find Greece, Italy, and Spain are all teetering on the verge of insolvency. This even after the billions of loan guarantees from the World Bank and the IMF have pledged. These initial loan guarantees have failed mostly because those countries don't have the necessary tools in place to diminish it's debt. When money is loaned the means to pay back that loan have to be in place before that loan is issued otherwise more debt will incur. This is what is happening on a grand scale not only in Europe but in the United States as well.

The European Union has to be solidified where every nation from Finland to Greece have to agree to comply with the currency of the European Union in the issuance of it's common currency, the Euro. They also must have in place, like in the United States, a central guarantor like the FDIC. To achieve this, the extension of the euro's monetary union to which every country uses must be sanctioned by every European nation. Much like the dollar in the United States. The idea of relinquishing individual sovereignty for the sake of the European Union has to be one of necessity. The combined resources both monetary and economic have to be considered to alleviate the growing fiscal calamity that many European nations are facing.

Focusing on the United States where our national debt is soaring, our economy is staggering, and our spending power is rapidly diminishing regardless of who wins in November the prognosis still will be that the grim forecast of economic peril will occur. With the Presidential election coming in November now would be a really good time to educate the American public that their is a fast track to reducing substantially and even eliminating both the national debt and the budget deficit. These are the most potentially lethal aspects of our current economic crisis, The present Administration has a golden opportunity to seize the moment sort of speaking by outlining specific ways in which our nation's debt can be eliminated for the first time since Andrew Jackson.


Many firmly believe like the Republicans that the Federal Government is to top heavy and burdened down by to many duplicating agencies. When one agency is almost a copycat of an other as is the norm today in Washington only encourages more wasteful spending of tax payers money. The Federal Deficit is only getting wider because the government still has to supply the funds to keep programs such as Social Security and Medicare to name a few solvent. The only problem though has been for the past 30 or so years the taxes from income, excise and social insurance as well as payroll deductions of Social Security and Medicare and Medicaid all have been decreasing at alarming rates. The sheer number of jobs lost in these 30 years as made this deficit only grow year after year. Money from a dwindling tax base has only increased Washington's need to either borrow more from China { as was the case in the 2008 bailouts}, or in many cases recently just have the Federal Reserve print more money. In either case this only further exasperates a continually depressed economic climate. The nations debt is actually the accumulated deficits that have grown over the years. So today our national debt is astronomical to say the least.


In a time of financial uncertainty especially with the economic deterioration in Europe the United States is still illequiped to deal with another financial debacle. The status quo of too many millions of Americans spells a continuation of an economic climate that is not conducive to easing the many financial burdens that are currently plaguing so many. Against this backdrop the President has an obligation to spell out a detailed plan of direction that would go a long way is securing the nations financial future. This starts with a prescription that focuses on our nation's debt reduction.


When the past so called Super Committee failed to even come up with a semblance of a workable plan only set the tome for more bipartisan politics. Now the government is set again to where nothing gets done and our debt only gets worse. That prescription for eliminating our national debt and the budget deficit is going to take an informed public that hard decisions have to be made for the greater good and future prosperity for the United States. Where all citizens will be beneficiaries of policies that will invoke a revival of economic commerce and stability for generations to come. Those difficult choices have to be made.


The President already has the means available to inform and educate the population what is actually needed to secure our nations financial future. So far the current Administration is still missing the boat on what needs to be done. Like a spoon full of sugar that makes the medicine go down approach if probably the best analogy in preparing the public of the reforms that will dictate the financial and economic future of America as a debt free country. This is the reasoning behind why National Economic Reforms: Article One on Deficit and Debt Elimination is so imperative.


One of the biggest hurdles facing the country today is already in the hands of the Supreme Court. The Affordable Health Care act of 2010 has been under constant attack ever since it was conceived. A grandiose plan, very ambiguous to say the least, but nevertheless still misses the boat on what this country really needs to have health insurance available for every American and still reduce our national debt.


When the late Senator Edward Kennedy took up the gauntlet of establishing Universal Health Care a single payer plan that would insure every American only to have after his passing a completely watered down version hence the Affordable Health Care Act of 2010 has pushed the economy in a way that only encourages less economic forward momentum. Had the President carried on with the late Senators plan and pushed for the elimination of Medicaid and Medicare while establishing Universal Health Care as outlined by Senator Kennedy the government would have already saved billions of tax payer's dollars today.


By educating the public that the fear of change from two very antiquated and costly government programs like Medicaid and Medicare to Universal Health Care is unfounded. Establishing Universal Health Care would be far less expensive while targeting those millions of citizens who continue to be without any insurance at all. To further support, like in Canada, an additional 1 cent tax on every bottle of alcohol and pack of cigarettes sold in America would go directly to Universal Health Care. Employee deductions instead of the percentage taken out for Medicare and Medicaid in each pay check a 10% less deduction combined for Universal Health Care would also go directly to support Universal Health Care. The billions of dollars saved from all the fraud and over billing that is currently the trend today in Medicaid and Medicare would be eliminated. Thus a real substantial reduction in America's overall national debt would result. More people are afraid of change but we have to remember that the government is only funding Universal Health Care not the insurance industry that are currently running the hospitals. It is up to the medical professionals that will direct the functioning of Universal Health Care. Our for profit health insurance industry is only causing more financial strife for millions of Americans who are unable to afford any type of health insurance. Universal Health Care is a vital first step in reducing this nations national debt.



There is much talk today about reforming the antiquated and over complicated tax code. A tax code that favors the wealthy. A simple yet effective measure in that second step in reducing our nations debt is establishing a flat tax across the board at 10%. This, and the elimination of the Capital Gains Tax would go a very long way in not only reducing the nations debt but would generate positive economic forward momentum as well.


When many people think of the Federal Reserve they think it is run by the government. It is not. It is a private entity. To realize the significance and importance of just how influential the Federal Reserve is in maintaining our nations debt to heights never before seen we have to learn how such a private institution has been able to grasp such a large piece of the equation in the financial markets that ultimately control our economy along with the rest of the worlds. It starts with the constitution itself. In the Constitution it outlines that only the Treasury has the authority to print money, not the Federal Reserve. All the Federal Reserve does is charge interest on the money it loans to the Federal government. When Thomas Jefferson stated upon the founding of the First Bank of America "A private bank using the public currency is a greater threat to the liberties of the people than a standing army." Jefferson realized that the central bank of the United States much like today's Federal Reserve the private bankers would have unlimited funds to control how lawmakers voted, control the media, and continue to garnish more wealth, power and control over a population.


To trace back to how the Federal Reserve came about is to look at our own Constitution and the history of Europe. There were only two instances when a President literally followed the rule of the Constitution in the issuance of currency. One when Abraham Lincoln and the only other time when John Kennedy both sought to circumvent in Lincolns' case the major banks in New York at the time during the civil war and the other time when John Kennedy issued an executive order allowing the printing of currency by the treasury interest free instead of the Federal Reserve. In President Kennedy's case so that the debt this nation pays alone in interest to the Federal Reserve would decrease. In both cases some might call a coincidence but both Presidents were assassinated soon afterward. The deep reaches of the money changers is to apparent to ignore any longer.


Today, the United States pays in interest over 350 Billion on a federal debt of over 8.5 Trillion dollars last year alone. To help fund that 350 billion I.O.U. the government will have to again sell 30 year bonds. The congressional Budget office released the Budget and Economic Outlook to the year 2016. This report predicts that interest payments on the Treasury Debt Securities, in other words, the gross interest will increase to over 660 billion by 2016. Many question where does the government send that check for our national interest payments? For years the Federal government's Treasury borrows money from the public by selling securities in the capital markets. Our debt is then bought by various buyers, including foreign investors, mutual funds, state and local governments, commercial banks, insurance companies and individuals. Of those groups it is the foreign investors {governments, business and individuals} that own over 50% of all federal debt issued to the public. Nearly 2.1 trillion dollars of the over 4.6 trillion dollars is currently outstanding. Japan, China, and Great Britain have the biggest holdings of U.S. debt.


When it comes to foreign aid to help poor nations climb out of poverty currently the government only allocates less than 20 billion dollars annually.. But, we have no qualms about sending a $250 billion as a transfer payment to Japan, China and any other cash rich nation, business or individual. It is time that the people acknowledge that the only way out of the impending financial disaster about to engulf this nation that will send practically every American down into the abyss of financial and economic degradation is without wholesale reform of government. It is time to follow the rule of the Constitution and let the Treasury and not the Federal Reserve be the sole provider for the issuance of currency interest free.