Wednesday, February 24, 2010

Our fake lives in the fake economy

By Steve Curtin

The vast majority of Americans go about their lives thinking everything they have is real. Their job is real, the money they get paid at that job is real, the car they financed, or the home they mortgaged, are real. The appliances and furniture and gadgets they've filled their homes with are real. Their clothes are real. Aside from the obvious, that our various interpersonal relationships are very real (although obsession with the material has caused us to become more and more detached from the emotional), what I'm talking about is real in terms of economics.

From an economic standpoint, everything in your life is fake, top to bottom. None of the money used to pay for anything ever really existed, yet we still must pay the interest on it (all money being created from debt), be it personal or government debt. The Federal Reserve loans our government money that doesn't exist, at interest, which they then spend on things that usually are of no particular consequence to you (except that your tax dollars will eventually be used to pay the money back). And you may think your tax dollars go towards funding this inept, criminal leviathan that we call government, but your federal income tax pays for nothing except the interest on the national debt, which accounts for more than half of our debt, with payments now over half a trillion dollars a year and forecast to soon be the largest item in the Federal budget.

While the government perpetuates this fraud, in much the same manner your bank loans you money that doesn't exist so you can buy your home, or your car. If you don't repay the loan, the money for which never existed, they take your home, or your car, which does exist. Bankruptcies, foreclosures, and defaults are inherent to the system, as is the system's ultimate collapse. From the very beginning, 97 years ago, the question has never been if it will collapse, but when. When is happening right now. You are not meant to know this.

So you can be sure that, as the Fed prints up money to pay employers to hire, those jobs won't really exist either, because they were paid for with money that doesn't exist. And when that money runs out, so too will the jobs, because the jobs are worthless - they don't produce anything, they don't provide a service. Only job growth spurred on by productivity and profit can produce jobs that have meaning, as the business invests its own capital to expand to meet the rising demand for its goods and services. But there is no demand, so these jobs will basically be people sitting in a room trying to figure out a Rubix Cube. Maybe they'll put an X-Box in their cubicle. What else are they going to do? Unless they're government sector, which are almost all make-work jobs for the otherwise unemployable.

And thus any numbers or statistics used to disseminate the health (or lack thereof) of the economy are also completely fake. The government tells the recession is over and that the economy is growing. What they don't tell you is that half of the GDP is government spending. Or that a one percent increase in government spending as a percent of GDP raises the unemployment rate by approximately .36 of one percent. They tell us unemployment has dipped below 10%. What they don't tell you is the methodology used to determine this is a complete fraud, that the real unemployment rate is upwards of 20% or more.

The banks are raking in record profits, because they - being the majority stockholders in the private Federal Reserve - printed up going on near thirty trillion dollars and "loaned" it to themselves. Now they're posting record profits (not sure you can call money that was stolen and then leveraged as "profits", but whatever) and handed out, as a collective, $20.3B in bonuses the last year alone. There's your "recovery": the banks are looting this country like never seen before in human history. People of sense see what's really happening, that the ship is sinking and they're taking anything not bolted down as they abandon it.

Meanwhile, the stock market made a brief foray into the 10,000 point range, and people thought that was a sign of recovery, when really all it was was an indicator of how weak our dollar is. The currency is a rotting corpse, particularly because our debt has already reached critical mass with no possibility of return. Obama guaranteed this when he spent more in one year than all previous administrations in the history of our Republic, combined, and continues to spend at suicidal, catastrophic levels. But you can be sure they'll tax whatever wealth you're still fortunate enough to have in order to facilitate the illusion of attempting to get the deficit under control, when all that will really happen is you'll be left penniless when they finally take this country off life support and let it die.

And while you were sleeping, still a little jittery but hopeful as any red-blooded American must be - we are exceptional, after all, immune from the laws of economics, unlike Weimar or Argentina or Zimbabwe, etc - nobody bothered to notice that, what with Americans not spending any money, retail sales are way down. Even Walmart is posting losses - Walmart never posts losses. And when retailers don't make money, they can't pay their bills, and they go out of business. And when they go out of business, the malls they were located in can't pay the loans they took out to finance their construction, and pretty soon they're going to default. The recent "unexpected" dip in consumer confidence (every bad economic report is "unexpected") foretells of further misery. The imminent commercial real estate crash will make the housing crash look like a trip to Disney World, not only for its effect on the stability of our economy, but on the psyche of the American people. The depression will set in for many, as they drive past empty malls that once contained worthless novelty stores packed with ignorant Americans drunk on fiat-driven and thus also fake boom they were hoodwinked into thinking would last for all eternity.

What will not be fake will be what follows: misery, suffering, crime, violence, death. When the currency collapses under its own weight, when millions more are out of work, when the shelves become empty due to inevitable government price controls, when people are starving, then the reality of this fake economy will set in. And the great unwashed masses, with no more football or reality TV to distract themselves with, will wander around, stupefied, muttering, "How could this happen to us?"