July 30, 2011
from NIA Website
Our elected representatives in Washington along with the mainstream media have been wasting thousands of hours of time and hundreds of millions of dollars debating a topic that has no meaning at all.
The President, Senate, and House of Representatives are putting on a show to make it look like they care about cutting spending and balancing the budget.
Except for a select few elected representatives
like Ron Paul who care about protecting the U.S. Constitution
and preserving what little purchasing power the U.S. dollar still has left,
every other politician in Washington is putting on a complete charade in
order to trick their constituents into believing there is a difference
between the proposals from the Republicans and Democrats.
There are absolutely no meaningful fundamental
differences between Boehner's plan that was approved by the House of
Representatives yesterday evening, before being killed by the Senate two
short hours later, and Reid's bill, which was just rejected by the House
today in a pre-emptive vote before the Senate even had a chance to vote on
Of the $900 billion only about $750 billion are actual discretionary spending cuts with the rest being an expected reduction in interest payments on the national debt as a result of either bill passing.
When you have an unstable fiat currency
that is rapidly losing its purchasing power and could collapse at any time,
it is impossible to accurately project what our budget deficits will be 5 or
6 years from now, let alone 9 or 10 years from today. As far as the next two
fiscal years are concerned, both proposed bills from Boehner and Reid are
estimated to only cut spending by a total of about $70 billion in fiscal
years 2012 and 2013 combined.
Shockingly, Bush's budget actually projected a
$61 billion surplus in fiscal year 2012, but instead we will have a budget
deficit of $1.1 trillion based on President
latest budget, which takes into account unrealistic GDP growth next year
The advance estimate of second quarter GDP
growth came in at 1.28%, well below the consensus estimate of 1.8%. NIA is
going to really go out on a limb and predict that second quarter GDP growth
will soon be revised downward as well. If this is the highest GDP growth the
U.S. could muster after the Federal Reserve's $600 billion in QE2 money
printing, this should prove once and for all that monetary inflation does
not create real economic growth and employment.
It expects to bring in $172.4 billion from August 3rd through August 31st in tax receipts, but is scheduled to pay out $306.7 billion during this time period for an estimated deficit of $134.3 billion.
The U.S. is scheduled to make its next interest payment on the national debt on August 15th and it will equal approximately $30 billion.
Over the last 9 months the U.S. has spent a total of $385.9 billion on interest payments on the national debt, which means it is on track to spend a record $514.5 billion this year on interest payments alone.
Just a tiny 30 basis point increase in the
interest rate on the national debt would totally wipe out the deficit
reductions proposed by both Boehner and Reid.
Without a raise in the debt ceiling, the U.S. government will have to prioritize who it pays using the tax receipts coming in, which will probably include the,
With $23 billion of the $49.2 billion in Social
Security payments due to be paid on August 3rd and $59 billion in
t-bills due on August 4th, the U.S. Treasury's remaining cash
balance could dissipate very quickly.
With threats of a U.S. debt default making headlines across the world, investors are once again rushing into U.S. bonds as a safe haven. It is almost as if the whole world has gone insane. The world is fearful of the U.S. government defaulting on its debt and not being able to pay off maturing bonds, so as a safe haven let's just all rush into the very asset that will soon be worthless due to either an honest default or default by inflation.
The U.S. dollar bubble is the largest and longest running bubble in world history and U.S. bonds are currently mispriced big time. U.S. dollar-denominated bonds should be the last asset in the world to benefit from fears of a U.S. debt default.
One positive sign that NIA members are having success at spreading our message to the world is that,
Thanks to the efforts of NIA members who worked
tirelessly to spread the word about NIA's economic documentaries including 'Meltup',
Dollar Bubble', and 'Hyperinflation
Nation', a larger percentage of the global population than ever
before is educated about the global currency crisis that is ahead.
Today, NIA estimates that half of the world's investors seeking a safe haven are buying dollar-denominated assets like U.S. Treasuries and the other half are seeking safety in precious metals. By mid-2012, investors will most likely no longer look at U.S. bonds and other dollar-denominated assets as a safe haven.
During future times of uncertainty, NIA believes
that precious metals will receive nearly 100% of safe haven buying, just
like the U.S. dollar received 100% of safe haven buying in
NIA believes it is only a matter of time until China ends its currency peg with the U.S. dollar. The world is flooded with trillions of dollars in U.S. Treasuries that will soon have no buyers except the Federal Reserve.
There is no chance of yields falling below
record lows from December of 2008.
Since then, the U.S. currency system has been
completely fiat and the national debt has increased by 3,400%.
The U.S. debt default of 1971 was many times more significant than the pending debt default, because back then our foreign creditors expected to receive real money and not a piece of paper with no real value that we print.
The average American family has experienced a
dramatic decline in its standard of living since 1971. The U.S. dollar and
its reserve currency status is currently serving as the last thread that is
keeping our "house of cards" economy propped up.
Since 1962, the U.S. has raised its debt ceiling
74 times. Any public company that needed to raise its authorized shares 74
times would likely have seen its stock price decline by 99.99% from above
$10 to below 1 penny.
The U.S. is currently supposed to have 8,133.5 tonnes of gold reserves at Fort Knox. We don't know for sure if these gold reserves still exist because the last audit of our gold reserves took place in 1954 and we had the little minor issue of our real debt default in 1971.
Assuming that all of our gold is still there, this gold is worth $426.5 billion at the present time, enough to cover our U.S. government's deficit spending for almost four whole months. The U.S. government also owns valuable land, buildings, monuments, and other types of Real Estate, that could also be worth hundreds of billions of dollars.
Although we don't support selling all of our
gold and Real Estate, if the U.S. government isn't going to implement real
spending cuts that will lead to a balanced budget, we rather sell our assets
than see the dollar-denominated savings and incomes of all Americans lose
its purchasing power.
As the Chinese, Japanese, and our other creditors are paid back in U.S. dollars that are rapidly losing their purchasing power, they will be reluctant to increase their purchases of U.S. Treasuries in the future, which we desperately need them to do in order to fund our spending increases.
With the Federal Reserve likely to become the
Treasury buyer of last resort, the world will lose their confidence in
the U.S. dollar and hyperinflation could potentially break out as soon
Federal Reserve Chairman Ben Bernanke to do everything in
his power to avoid a double-dip recession at all costs.
It is a joke that we are debating spending cuts of $70 billion over the next two years, when only very dramatic across the board spending cuts of 50% or more of the total budget will give the U.S. any hope of balancing the budget and avoiding hyperinflation.
Best case scenario, if the U.S. government cuts spending by 50% or more in all areas of the budget including entitlement programs and is able to prevent hyperinflation, NIA still believes we will see the U.S. dollar lose 90% of its purchasing power this decade with the price of gold rising to above $16,000 per ounce.
August 01, 2011
If the deal is approved on Monday, it will raise the debt ceiling by between $2.1 and $2.4 trillion in three installments:
With no tax increases included in this plan, all
of this additional debt will eventually be monetized and paid for through
If our elected representatives were serious
about cutting spending, they would have the bulk of the spending cuts now
and not in the future when many of them will be out of office.
As price inflation spirals out of control in
the years ahead causing the purchasing power of the dollar to plummet,
all government employees will demand higher salaries and it will cost more
to run all parts of the government. Future Congresses will raise spending
and make the spending cuts proposed in this deal meaningless.
The reality is, although the tea party movement
helped Republicans take over the House of Representatives so that Democrats
didnít have free rein in Washington, most of the new Republicans elected to
Congress havenít followed through with their promises and have failed to
make any kind of a positive difference.
The interest rate that the U.S. paid on its total marketable debt in the month of June was only 2.38%. Exactly one decade earlier, in June of 2001, we paid 6.162% interest on our total marketable debt or 159% higher than current average interest rates. On August 15th we owe our next interest payment of approximately $30 billion.
Imagine if that payment rises 159% higher to $77.7 billion or $932.4 billion annualized.
Later this decade, interest rates will not only
rise back to normal levels like we had in 2001, but will likely rise to
artificially high levels to balance out the damage being created today from
artificially low interest rates.
A new Gallup Poll shows that 53% of Americans oppose raising the debt ceiling compared to only 37% who favor an increase.
We pray that millions of Americans march to
Washington tomorrow in protest of this bill and that millions more call,
email, and fax their elected representatives in the morning demanding that
they vote no.