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June 8, 2019
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June 25, 2019

The US State of Affairs in 2019

What is Going on in 2019

Lots of interesting things are going on in the world economy in 2019. The worldwide recession has started and has finally reached US shores. The downward spiral in economic fundamental numbers was spotlighted by the weaker than expected jobs numbers that came out last week. While the overall labor force participation rate had remained below 2008 levels, the US economy was still generating enough jobs to keep its head above water. Now; however, the jobs numbers are showing enough weakness that it is clear the government cannot keep the Cinderella economy going.

Companies are beginning to realize that consumers are basically tapped out. They can take on no more debt. Their wages are not keeping up with inflation. These trends have squeezed consumer spending on both sides, leaving no room for growth. Christmas spending season ending 2018 was the last hurrah for Americans, who have lived on the easy money policies of the central bank for a generation. But incomes will simply not allow for further expansion. So the economy must pull back.

The government cannot print enough money to keep up production in the industrial and service sectors. Companies also are laden with too much debt that interest costs are at all time highs. And the recent corporate debt binge dating back to the last recession was largely used to buy back stocks, goosing prices for insider sales for corporate leaders. Now that they are out of the stock market, there is not much reason for it to maintain present levels.

Additional dollars from the Federal Reserve are not pushing stock prices higher. Some analysts expect one more melt-up in the stock market before the crash. I do not. While it would not surprise me if euphoria of the markets pushes it to new all time highs, it is highly unlikely that stocks reach a significantly higher plateau and stay there. Sales are down, which has led to reduced return on equity and investment dating back more than a decade. Investors don’t have reasons to believe that stock prices are backed by solid profit numbers.

Now we reach the stage of debt deflation in the US economy, a phenomenon which began last year around the rest of the world. A deflationary recession has already begun to propagate through the economies of the world. There are no overt tools left for Western central banks to support the economy and keep the stock market prices high.

China, Russia, the middle east, and European countries have stopped buying US treasuries. Further, they have reduced trades in US dollars and developed alternative economic systems. China, Europe, Russia, and the Middle East are actively building alternative trade routes in the Belt & Road system. A complex system of rail, roads, and shipping routes, the B&R project will take many years to complete. But it is underway and trade agreements have begun to migrate east. That leaves the US by itself on the dance floor looking for new economic partners.

Corporations Looking for a New Host

One of the major reasons for globalization was for companies to take advantage of new markets. Another reason was to denationalize them and separate ownership from state and national governments. Corporate structures now span world economies, and largely operate above the local laws of the countries they operate in. Companies spend billions every year lobbying congressional and parliamentary bodies for rule changes that reduce responsibility and taxes while increasing power and independence.

International trade treaties are put into place to set new rules of the game outside the constitutional structures many free trading nations have in place. For example, the new agreement with Mexico and Canada brings back many of the protections from the failed TPP and TPIP treaties, effectively giving international trade agreements defacto power over local governments to regulate them.

Given these new trade structures, local governments are often powerless to control growth and expansion of international conglomerates. Companies shift production to wherever there is a labor cost advantage and new emerging middle classes. They have no tie to specific cultures or peoples. When nations can no longer expand sales or production, companies simply pick up and move operations.

The US is Becoming a Wasteland

When the US economy begins to crash, it won’t be the global corporations that suffer. They have already built out their next labor pipelines and developed new populations of middle classes buyers in emerging market economies. This leaves local communities to deal with the fallout. This is what is coming to America.

Our countries’ industrial base gentrified during the 80s and 90s when companies exported production to much of Asia and Latin America. The service sector is collapsing as excessive debt has choked off marginal demand growth.

When the debt deflation gets strong enough, the economy will finally collapse. The collapse will come quickly, and most people will not be prepared. The US will suffer millions of job losses, causing millions of wrecked homes. Homelessness will increase, and so will crime. Local governments will not have the revenues to deal with populations starving from lack of food and suffering from lack of good care. Further, local infrastructure will crumble making trade more expensive and dangerous.

Those who have prepared for what is coming will fare better. None of us will be immune from economic collapse, but in planning we can deal with the many problems by having backup plans in place. Extra money, food, skills, and strong networks with others will increase chances for survival.

Politically, the West is Fracturing

Western nations are fracturing along lines between the people and their governments. The rise of President Trump, along with Nigel Farage, Marie La Pen, and Boris Johnson are signs that western peoples are tired of the status quo in their political leaders. The question is whether it is too little too late.

As mentioned already, much of economic production has been moved out of the US, so what are current administrative leaders to do to save the US economy? China is not just competing for industrial production; they have also built out a strong services sector. They have made generational advancements in software, telecommunications, and the military. Chinese companies are in better financial shape than their Western counterparts, mostly due to state intervention in the form of grant money and some cheap debt.

Many European countries are in a state of slow cultural suicide. The influx of Middle Eastern migrants into Europe has begun to destabilize their cultures and economies, leading to the political chaos we see now. In Europe, the controlling parties are losing seats to the populists upstarts, which for the time being is freezing those nations ability to pass legislation to deal with the economic issues.

Even the most skeptical citizens of European countries do not want to give up their entitlement programs, which serve as the economic base for which migrants are able to live within those societies. The wealth that was supposed to support the inhabitants of Europe that have lived their for centuries is being transferred to migrants, many of them illegal or pumped in through government bureaucracies. This is being done right under their noses in their towns with their money. And many feel powerless to stop it with government officials complicit in the fraud.

Populists will likely begin to seize majority power in Europe before too long, but it will likely be too late. They will lose influence when economies crash, and are blamed for the current state of problems. This will happen though the issues begun over 100 years ago after the second World War and the policies put into place during the treaties signed thereafter.

BREXIT

Theresa May has failed to bring a compromise BREXIT strategy to Europe and the UK. She has largely been unable to reach agreement between both sides. Despite numerous extensions now until Halloween of this year, it is not expected the two sides to reach an amicable agreement. Many are now calling for a hard BREXIT strategy, meaning tear off the band-aid first and then negotiate from the bottom a new strategy preserving Britain’s sovereign trade rights.

In truth, BREXIT does not require an amendment to law – the treaty is an agreement between the sovereign leadership of each nation. It can be rescinded with a pen stroke. But the supporting laws need to be reworked to accommodate the new trade relationship. The latter is what has been holding up the process. In effect the bureaucrats of both countries are avoiding the separation by arguing the minutia before agreeing to go separate ways and working out new provisions. This has angered and frustrated populations of both the UK and European member nations.

In addition, it is affecting their markets every time news comes of failure to reach an agreement. This has roiled stocks and is affecting sovereign bond markets. Losses are already substantial for current investors, and the separation hasn’t even happened yet.

The British Crown is advocating for hard BREXIT and appears to want to keep their sovereignty. The British Royals apparently intend to go it alone after seeing the Euro currency nearly fail. European market participants are feuding with each other over debt levels, bailouts, social program expenditures, and disparities of wealth. The future of the European experiment does not appear to be going well, and the UK wants out before it collapses and each of the participants go their own way.

North American Trade Agreement Roadblocks

What once was a plan for super-regional powers across the globe governed by a global aristocracy elite appears to be a backing off into Plan B. Originally, the US, Mexico, and Canada were supposed to merge economies with talk of a common currency, the Amero. While NAFTA and the new USMCA trade agreements have succeeded in aligning national interests, governments of each country appear to have differing goals. And the peoples of each nation have different views on how each nation has benefited from the agreements.

While Mexico has received flows of manufacturing to build it’s economy, the corruption of officials both Federal and local have succeeded in tamping down real growth. Infrastructure, overcrowding, monetary inflation, and violence are still major problems in the Mexican economy.

The US and Canada are both suffering from bloated social entitlement spending coupled with loss of income from industry and manufacturing sectors. The service sectors are starting to collapse due to lack of wage growth in the middle classes. The dependent classes of each country threaten to bankrupt the treasuries and throw each country into a protracted recession.

United States is Following Europe

The same situation that is boiling over in Europe is brewing in the United States. Mass migrations from Latin countries, much of which includes illegal immigration, has overwhelmed government workers within immigration offices. The judicial system is jammed with cases they cannot hear; there are simply millions too many of them. This has brought border control under siege, forcing Trump to send precious military resources on the border at a time when most soldiers are fighting the empire’s battles overseas on every continent.

Speaking of Trump, he is also under siege from his own bureaucracy, put into place from past presidents that do not want to give up power. Call it the deep state or just the consequences of allowing Federal power to grow too large -something the Founders of this country warned us repeatedly about. He also appears to be compromised as his behavior has become more globalist and moves farther away from his campaign promises to the people.

The timing of the President’s compromise lines up with the seizure of Cohen documents by the deep state. They have something on him which appears to have given them the power to turn him away from his desired policies. He signed into law FASB 56 which allows absolute lawlessness and lack of accountability with regard to US government financial reporting and spending. FASB 56 appears to be the funding mechanism for a runaway government oligarchy to do as they please with no Constitutional grounds or oversight.

He has allowed the neocons to take over foreign policy in the Middle East and South America. And he is allowing his children to wreak havoc over his domestic political plan though they were never elected by the public. We did not get just Trump in this election, but his far left liberal family which appears to be running much of his policy in line with the neocon and globalist wishes.

A Brief Comment on Trump

I am not for nor against Trump. I voted for the Constitution Party which is a vibrant and growing third party. My goal is to put people in government offices who are fiscally conservative, and understand the liberal rights of individuals provided by the Declaration of Independence, Constitution, and Bill of Rights. Government in all forms (Executive, Legislative, Judicial, and the un-elected bureaucracy) have for far too long abrogated and ignored individual rights in favor of increasing central government power.

I hope as many do that all of our Presidents succeed in supporting the Constitution. I also wish for a withdrawal from all foreign wars, the dismantling of the deep state (swamp cleaning), reduction in unsustainable social programs, and a return to small federal government with balanced budgets. That being said, Trump has allowed his cabinet to steer just the opposite result in most cases with their policies.

It is not that I expect one man to fight the government power structures by himself, but I would like to see better decision making with whom he puts into power and how he holds them accountable for their actions.

Individual Action

Trump is not able to clean out the deep state by himself. In reality, the largest check and balance on government power is the will of the people. One person, even the President of the US, cannot be expected to unravel a century of power built upon deception and fraud. The only way the US government can be held accountable is if the people rise up and take over the government for themselves.

This must start at the local level and branch out to state by state political change. The globalists cannot control each community in the US on a daily basis. They only have power where local politicians fall in line. Communities can begin taking back their power by placing honest people in local governments, rolling back socialistic legislation designed to weaken the Constitution, and using those local power bases to influence state policies. Once each community and states have strong, independent leadership, the ability of the Federal government to steal from them will stop. And the Federal behemoth will collapse.

The Fed gets most of their power, and almost all of their funding, from the local levels. In truth, we control much more locally than we are even aware. We only need to get involved in our communities to affect real change. But each of us must do our part, or the efforts of the few honest will be overcome by the sheer determination of the wicked in power.

To be prepared for this collapse, regardless of whether engineered by globalists, or through a rising wave of local community action, one must protect oneself during the transition. The easiest way economically is to store wealth in gold and silver bullion. The second step is to invest in personal skills that can be used to generate income, or can at least be traded for staples like food, water and shelter.

These skills include many that have been lost in American culture, dating back to a time when Americans were self resilient, independent, and had the pioneer’s spirit. The current laziness and dependency infecting American culture must be reversed, and it starts one person at a time. Government cannot inspire the people; the people must inspire a new culture and new government for America.

Odds and Ends

In this section I will cover several topics in short form, meant to keep you updated on a wide variety of relevant topics to your freedom.

Robotics and AI

China and the US are squaring off in the field of Artificial Intelligence. China has made great strides with their social scoring systems, using AI to control the expressions of the population. They are working on unmanned submarines and other military vessels. They have done much with robotics in manufacturing. And their Cybersecurity capabilities are growing stronger by the day. Once thought of as spray and pray computer hackers, the Chinese are quickly developing advanced technical attack capabilities to rival that of Russia and the USA.

The US is developing AI to monitor all Internet activity. In addition, school systems in Texas and NY have implemented classroom AI that is capable of reading expressions. The technology is being hailed as pre-crime capability to stop violence in the classroom, and of course is being justified in the name of terrorism and school shootings.

Once the Chinese behavioral algorithms and the US’ facial recognition systems are finished, look for both countries to share their AI capabilities with one another. The merging of the technologies will fuel the rise of the machine state in both countries. Such capabilities will allow officials to monitor, control, and punish whomever they deem as offenders. Most likely it will be focused on those who dissent official government propaganda.

Break Away Societies

Catherine Austin Fitts of the Solari report (solari.com) has outlined at least $21 trillion missing from the DOD and HUD using government records. She has documented, along with the help of Dr. Mark Skidmore of Michigan State University, how officials have admitted to making trillions in undocumented adjustments to government ledgers. Given the expanse of the government bureaucracy, many estimate the true amount of stolen money to be above $50 trillion.

What has the government done with this money? How did they steal it, print it, and launder it away from the official books? The answers are not known, but Catherine believes this gives the US government the capability to keep the economic charade going on in the US for years to come. She believes the Military, who has benefited the most from the missing funds, will be used to support the dollar even in the current multi-polar financial world that we have now.

I am not sure this is true because now many people have been made aware, through official statements and records, of the massive missing money that eclipses the entire national debt. Given that bond and stock market participants now know of the clandestine US money printing and spending, it is likely to hasten the exit of the US dollar from the top class of world currencies. Such results would crash the US debt system and cause the US to default, thereby disabling ability to finance the large military it has built.

Adversarial Military Advancements

This leads us to a discussion on China and Russia’s military advancements. Both have developed their own aircraft carriers. While they do not rival the sophistication of the US Navy’s, they do provide both countries with Naval arsenals to support the new Belt & Road trading system which will put a severe crimp on US trade and reduce our viable trading partners. This will have the effect of weakening the US dollar in trade, making imported goods much more expensive. This will have the effect of reducing US GDP and slowing the economy more.

The Russians and Chinese have also developed strong missile capabilities which are superior to the technology the US military publicly claims to have. In reality, all three countries have secret weapons programs. The only question is how far ahead is the US from Russia and China, and how quickly can the latter two countries close the gap.

If the economic collapse happens within the next couple of years, it will cause these major geopolitical powers to draw sharp lines. When these lines are invariably crossed in an attempt to capture more of the global trade pie, real war will likely start between the countries. Then we will know who has what level of weapons, and whether the US can withstand the onslaught of the Chinese and Russians while mounting a viable response.

Remember, European, African, South American, and Middle Eastern countries are joining China and Russia in trade. The US will have less supplies and less partners to fight a long war. Most likely the next war is relatively short (compared to other previous world conflicts), and fought on more than one battleground.

Looking Forward

I will look deeper at the potential for war and the capabilities developed in a future edition of this digest. There is much to discuss, and much for you to prepare for. Start with your economic situation, because tough times are ahead regardless of which direction things move first. You control your economic situation now, but may not in the future. Better to be prepared. Start with gold and silver, and then build your individual skills. Each step will support your future ability to survive in an increasingly troubled world.