The perfect storm is brewing!

The-perfect-stormThe U.S. is in an economic mess and its citizens are ready to revolt, as can be witnessed by a visit to any presidential candidate rally, but the sad reality is that the damage has been done and the resulting economic collapse is both inevitable and unstoppable. There are two distinct groups entirely responsible for this condition, American citizens and the American government. American citizens are to blame because since the new millennium began, all attention and considerations have centered exclusively on personal rights; the right to own an arsenal, the right to be stupid and inconsiderate, the right to abort because contraception is inconvenient, the right to be happy at the expense of others, and on and on and on. To say the least, human rights have taken a far back seat to personal rights. More than a third of U.S. citizens couldn’t achieve a passing score on the naturalization exam that immigrants have to pass in order to become a citizen. Americans were born into it, so they don’t have to care, participate, or benefit others. The same group of ingrates is the first to complain and the last to serve. This disconnect is a big part of the reason for the 2008 banking debacle. The American government is even more responsible than that group for their; failure to honestly inform (and I’m not talking about Area 51), utter ignorance of important facts and their complete lack of leadership in making appropriate adjustments. Wall Street has been as careless and irresponsible as the 1/3 of ignorant citizens, simply because the government has permitted and promoted it:

  • The federal government knowingly sponsored and promoted the activities of Fannie Mae and Freddie Mac, then put U.S. citizens on the hook to clean up the mess.
  • Elected legislators passed laws encouraging banks to lend to subprime borrowers.
  • The Fed kept interest rates too low for too long which primed the real estate bubble and continues to wreak havoc on markets today.
  • The federal government is responsible for regulation of banks, mortgage companies, and the agencies that rate them, but provided no such regulation.
  • Once the collapse occurred, banking hierarchy was given a free pass from criminal charges, a free pass from liability, and a golden parachute to enjoy life at the expense of others.
  • Credit default swaps should have been traded through central clearing houses and on exchanges that provide transparency.

Instead of identifying and addressing the derivative swap situation, it was swept under the rug. The practice was not scrutinized or vilified and no changes were made. The danger imposed by derivatives today is greater than 2008 and “too big to fail” banks are now 25% bigger than before. The Fed’s sudden hurry to increase interest rates is not a well-thought long term plan. If a more perfect economic storm could be created, I don’t know how. Precious metals are the world’s only real currency. If you and your family don’t have a sufficient supply, then who becomes the newly elected President will be the least of your concerns.

Although the information in this commentary has been obtained from sources believed to be reliable, American Bullion does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. American Bullion will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.