The US economic "growth" figure for the third quarter came in at 1.6 percent - below market "expectations. The US runs new record trade deficits (the most recent one just under $US 70 Billion) on a routine monthly basis. This year, with the US now owing more to foreign investors than it reaps from its foreign investments, a current account deficit has been added, for the first time in over 90 years. This will inexorably grow larger.
US consumer spending has been utterly out of control for the past decade or so. Since the Bush Administration began way back at the beginning of 2001, out of control government spending has been added to that economically toxic mixture. Now, with the US housing market staring into the abyss and with the new "strength" in US stock markets not coming even close to making up for it, the US consumer is finally beginning to pull his and her horns in a bit.
Since US economic "growth" depends overwhelmingly on consumer borrowing and spending, there must be another source of borrowing to take up the slack. The US federal government is doing its level best in this regard. On October 26, the US Treasury reported its "debt to the pennny" at almost $US 8.566 TRILLION. That's up $US 60 Billion over the first month of the new fiscal year, which started on October 1.
In this context, consider the US debt ceiling. A bit more than seven months ago, on March 16, 2006, Congress voted to raise the debt ceiling by $US 781 Billion to $US 8.965 TRILLION. Over fiscal 2006, Treasury debt rose by $US 575 Billion. Projecting the increase in debt for the first month of fiscal 2007 over a full year, it is on track to borrow another $US 720 Billion this year. One of the many issues which is NOT on the radar screens of American voters in the lead up to the mid term elections next month is this unsustainable debt spiral. Indeed, the last time that the issue was examined at all in an election campaign was when Ross Perot trotted it out in the 1992 Presidential elections.
As the current President undoubtedly remembers, those discussions plus the splitting of the "Conservative" vote which Mr Perot brought forth put paid to Bush the Elder's chances for a second term and brought in Bill Clinton. No, Mr Bush the Younger isn't up for re-election next month, but his Republican controlled Congress is.
As The Privateer has stated in each of its past three issues, the US is not facing the prospects of recession, it is IN recession. You wouldn't know it from the financial markets, especially the stock markets, but a cursory glance at even the government's "massaged" economic statistics leave no room for doubt in the matter. The thing is that economic recessions don't, of themselves, actually kill people. Wars do, and that makes wars, especially fruitless wars, a bigger political issue when it is time to cast the votes.
That is certainly the case as the clock winds down to November 7 and polling day in the US this time. The situation is reminiscent of the 1968 Presidential elections and the 1970 mid-terms. Then, as now, the big issue was war. Then it was Vietnam, now it is Iraq/Afghanistan/"terror". Then, as now, the political rhetoric was focussed on the war and US foreign "policy" in general while economic and financial issues were put well to the back of the stove. And then, as now, the majority of the voters had no inkling of the economic mess that was about to confront them.
After 1968 and 1970 came the "inflationary 1970s" ushered in by the decision to sever the last link between the US Dollar and Gold in August 1971. Thirty-five years after that decision was taken in 2006, the US is facing the legacy of that decision in an economy which has stagnated on a standard of living basis ever since and a currency which retains its standing only because of the military might of the US and the demonstrated willingess of the current Administration to use it.
It is perfectly true that the Bush Administration has lied its way into war, just as the Kennedy and Johnson Administrations did forty years ago. In the case of Vietnam, the visible result is on "the wall" in Washington DC where the names of the Americans killed in the war are to be found. No equivalent memorial remembers the Vietnamese and other southeast Asians who died. The invisible result was the hollowing out of the economic and political substance of the US. The first is exemplified by the conversion of the US Dollar to a fiat currency in 1971. The second is exemplified by the naked inter-party struggle for political power which led to Watergate and the political demise of President Nixon two years later.
When the US Dollar was tied to Gold (however tenuously), there was a limit on political power in the US. Once it was untied, the politicians quickly discovered that those limits had been "repealed". The result has been the intervening 35 years between then and now. While the standard of living of the individual American has stagnated and the once "sacred" rights he or she enjoyed have been eroded to the point where they are no longer a feature in the political landscape, the raw power enjoyed by those who work inside the beltway in Washington DC has waxed exceedingly.
With that has come a push for Empire outside the US and a rapacious consuming of the economic substance of a great nation inside the US. It was the realisation of the dream of all tyrants, the removal of all constraints on the money they could literally borrow into existence, which has brought this about. Now, Americans are facing the end result. What has not yet been realised is that unless the means are taken away from them, the ends will always be the same.
Economically, Gold's greatest service is its use as a medium of exchange, a money. Its political service is even greater. Gold as money is the greatest curb on political power which has ever been discovered. It is the pre-eminent means of bringing the political ideas of freedom, liberty, and individual rights into reality. No government constrained by Gold as money can ever gain the wherewithal to trample on the rights of the people, and none ever has. No free or semi-free nation has ever existed on the basis of fiat money, and none ever will.
The number one issue in the campaign leading up to November 7 is war. But war, especially aggressive war, is the end result of the assumption of political power by a ruling elite. The means used to gain this power has always been control of what is used as money followed by the subversion of what is used as money as a means to literally buy the power they crave. This is the REAL issue, the one which is NOT being faced in the upcoming election.
But if not in this election, then in the next one. If Americans (and the rest of the world) want their lives back, they have to curb the power of government. If they want to do that, they have to remove government control of money. If it doesn't happen in the US, it will happen elsewhere in the world.
The best first step in curbing political power in the US is to vote AGAINST the incumbent, and keep on doing it at ever opportunity. Americans have a great advantage in this respect, they get to vote every two years on a fixed schedule, not at the whim of whoever holds political power as is the case elsewhere. Keep voting out the incumbents and the message cannot fail to get across.
But even that is only a first step. A REAL return to freedom and liberty requires a return to the respect for the principles on which the US was founded. And it requires something else. It requires a money which cannot be manipulated or created out of thin air with which to win favour and buy votes. It requires Gold as money. Nothing less will do.