Thursday, February 09, 2006

American Economic Collapse - Part II

Income Growth Negative:
After Adjusting For Taxes, Population, and Inflation


Meanwhile, the most comprehensive data — from the national accounts — shows that the year-on-year trend in after-tax income per capita has now swung into negative terrain for the first time since 1960. The trend is actually weaker now than during any of the past six recessions.


The file shows:
Chart 1: Year/Year Growth In After-Tax Personal Income Per Capita Now Below Zero
Chart 2: Here’s The Chart In Real Terms—Down 2.8% Year/Year


When the **real** economy, not including government spending, slows, a slowdown in Federal tax revenues will result in a massive increase in the US Federal budget deficit, which means increased US federal borrowing, or when the world will not loan anymore to the US, increased rate of USD creation (by the Treasury and Fed) out of thin air by fingers dancing on a key board hooked up to a computer. Digital dollars for free, baby! Or, the further devaluation of existing US dollars.


"History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible, to maintain their control over governments, by controlling money and its issuance." -James Madison

"How fortunate for governments that the people they administer don't think" - Adolf Hitler

"Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet that did not commit suicide." -- John Adams

"We have gold because we cannot trust governments…Paper money is a great aid to politicians: it makes it possible for them to confiscate the savings of the people by manipulation of inflation and deflation". - President Herbert Hoover

America is extending its reach at precisely the moment when its economic power base is weakening -- a classic warning sign of the fall of a Great Power. - Stephen Roach, Morgan Stanley

"Whoever wishes to foresee the future must consult the past; for human events ever resemble those of preceding times. This arises from the fact that they are produced by men who ever have been, and ever shall be, animated by the same passions, and thus they necessarily have the same results." -- Machiavelli

"...the control of credit also has become dangerously centralized ... The great monopoly in this country is the monopoly of big credits. So long as that exists, our old variety and freedom and individual energy of development are out of the question. A great industrial nation is controlled by its system of credit. Our system of credit is privately concentrated....This money trust, or, as it should be more properly called, this credit trust, of which Congress has begun an investigation, is no myth; it is no imaginary thing. It is not an ordinary trust like another. It doesn't do business every day. It does business only when there is occasion to do business. You can sometimes do something large when it isn't watching, but when it is watching, you can't do much. And I have seen men squeezed by it; I have seen men who, as they themselves expressed it, were put "out of business by Wall Street, because Wall Street found them inconvenient and didn't want their competition. "
- Woodrow Wilson

"How did you go bankrupt?"
"Two Ways. Gradually, and then suddenly."
- Ernest Hemingway, The Sun Also Rises

Why the S.E.C. or the Commodities and Futures Trading Commission (CFTC) allow this, is the real question. Perhaps this can best be explained in a quote from the Governor of the Bank of England, Edward A.J. George as he identifies the consequences of the sudden, unexpected escalation in the gold price in 1999 (from $265 to $330), after the signing of the Washington Agreement, limiting the European central bank gold sales:

“We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The U.S. Fed was very active in getting the gold price down. So was the U.K.”

The wavelike movement affecting the economic system, the recurrence of periods of boom which are followed by periods of depression, is the unavoidable outcome of the attempts, repeated again and again, to lower the gross market rate of interest by means of credit expansion. There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved. - Ludwig von Mises, Human Action

* * *

Ask yourself if Bernanke is going to voluntarily stop the credit expansion.
If any of the puppit masters suspected that for a minute, he would never have gotten Alan's job.

* * *

The Dow continues to build a weakening megaphone formation.
The NASDAQ has put in a confirmed head & shoulders pattern with prices breaking down below the neckline.
The S&P has put in a confirmed head & shoulders pattern with prices breaking down below the neckline.
GE - General Electric has hit a new 52 week low the other day.
GM and Ford have mountains of debt that have been given junk status.
"As goes motors so goes the US economic recovery."
Google just had more than $100 dollars knocked off the price of its shares.
The house builder shares are caving in.

Meanwhile in 2005, gold was going up **despite** the USD going up in a bear market rally. This little reaction that gold and silver are in can be over real fast.

It's going to get ugly.


Anonymous said...

does gold price increment proportional to oil price rise

Anonymous said...

Yes bill, most definitely.