Fed Reserve has a major challenge ahead after the US$ correction
restoration of confidence in the USdollar will be an awesome task
it is fast becoming the USfolly
here are the hurdles to overcome, but many are not in its control
here are the challenges as I see them:
1. eliminate the consumption insanity on credit funding
this has exacerbated the high dollar and cheap import phenomenon
the GoGo Generation must first see several million more bankruptcies for this to be rectified
without a mountain of BK's, I SEE THIS AS UNFIXABLE
2. restore and revive the US Mfg base
we need a mechanism from which to reduce the trade gap by means of price leverage
with China and Asian Tigers on the scene, I SEE THIS AS UNFIXABLE
3. eliminate the USMilitary as the world's Police Force and Sentry Service
the United Nations is nothing but an African mouthpiece
with 20-30 new African nations being created annually, their sheer numbers dominate UN politics
the Security Council has morphed into a DeadBeat Dad
the US must reduce its defense and offense spending
let's be clear that much of what we do is offensive
without reduction of DOD spending, I SEE THIS AS UNFIXABLE
4. we must reverse the entitlements within the US Federal Budget
we must contain the costs of Health Care to our aging population
much talk comes about the Sochacurity issue
but what about pensions for Military, Cabinet, Agencies, Judicials, etc?
they are miles more generous than the private sector
now Congress is about to pass a bill on Health Care Drugs
Medicare is already a monster burokracy
the Drugs bill will be another backbreaker
without containment to Health Care costs and other Entitlements, I SEE THIS AS UNFIXABLE
5. we must allow natural economic forces to work, i.e. RECESSION
we must allow a recession to occur for cleansing the system
if you forbid a good defecation, eventually the entire backside explodes with brown matter
since 1997 we have legislated away the Business Cycle
we will earn a Depression if this continues
with $4.5 needed now to produce $1 added GDP, we are spinning gears
we need a moderate recession, one which might risk a worst contraction
without policy allowance of recession, I SEE THIS AS UNFIXABLE
6. reinstitute a Gold Cover Clause
many cite the impracticality of gold-convertible dollars
our nation would run out of gold within a couple years
in fact, I think we are almost out now, as is Canada and England
a cover clause would allow for 5-10% of our money to be backed by gold
without a hard asset like gold to back our dollar, we are cooked
by default the dollar is then backed by Trez debt
my saying for months has been "flip over a dollar and its back side is a Trez security"
we cannot rely on stable currency when outofcontrol debt backs our currency in default as financial assets decline
we cannot now rely upon rising financial asset valuations to fortify our currency
that puts our currency at risk of decimation from cyclical risk
without gold backing, esp with Asian & Islamic movement in that direction, I SEE THIS AS UNFIXABLE
7. force thru political pressures a lift revaluation of Chinese Yuan
as long as the yuan is absurdly low, the delationary damage will spread from Japan to the United States
Chinese leaders are well aware of this distortion
but for now they enjoy huge pricing advantages for exports
Japan is being hollowed out from its mfg base
after China accumulates another year of trade surplus, and stores it in the form of capital investments and gold Central Bank additions, they can then afford to trade revaluation upward in Yuan for political capital internationally
without the Chinese Yuan revalued up, I SEE THIS AS UNFIXABLE
that is enough
plenty of challenges out there AFTER the dollar correction
the trouble is that we have set up a mammoth risk now
the USDollar decline will carry with it a VICIOUS CIRCLE
we have tinkered and tilted and jiggered the system too much
I dont concern myself much with the new system afterwards
the explosions and chaotic corrections upcoming will be written about in history books for a 100 years
just like the Great Depression of 1930
/ jim |
