I hear hurricanes ablowing.
I know the end is coming soon.
I fear rivers over flowing.
I hear the voice of rage and ruin."
- Creedence Clearwater Revival
Most people don’t want to hear bad news. I surely don’t.
Most people like to believe that when the ride gets bumpy, things will soon smooth out - and not get bumpier. Many people have faith that our elected leaders will not let the ship go down.
However, if we’re going to be realistic, then we need to face reality.
This country is in some economic trouble. And it’s not looking good.
Many of you have probably heard the news by now - Fannie Mae and Freddie Mac in distress. IndyMac, one of the largest mortgage banks in the country going belly-up. The Bear-Stearns bailout.
And that’s just the recent news.
The US government has pretty much stepped in to say that they will not allow these large financial institutions to go under - that the government, i.e. US taxpayers, will be the lender of last resort.
While this may sound like a reasonable, necessary and immediate solution, it will only make things worse in the long run.
Consider that the federal government is now approximately $9.5 trillion in debt - and that’s only the debt that we know about, the debt that’s "on the books."
To get some perspective on this $9.5 trillion national debt - if you took one dollar bills and stacked them in a single pile, this pile would be approximately 568 miles high. Picture driving from Pittsburgh to Nashville.
Hmmmmm.
We have an economic system in this country that is built on debt. Even the so-called money we carry around in our wallets and pockets represents nothing more than a debt instrument.
While I’ve mentioned that the housing market in Pittsburgh has not seen the wild swings of other markets, we need to keep in mind that our fair city does not exist in a vacuum. Buyers in this area access the same lenders that people all over the country use. And as these lenders tighten the screws, we’ll feel it over here as well. Even local lenders will be forced to become far more conservative when it comes to handing out money.
In fact, this is already coming to pass.
I’m not an economist nor a politician. I have trouble understanding most of the mumbo jumbo we hear from people who are economists and politicians.
But the mumbo jumbo is there for a reason - to confuse people; to lead us to believe that it takes economic wizards and esoteric incantations to figure out what’s going on.
I believe that economics does not reside in a supernatural realm where only the initiated may partake of ancient wisdom.
I believe the solution to all this is fairly simple: This country needs to get on sound economic footing by reducing the size, and therefore the expense, of government. We need to do away with fractional reserve banking. We need to return to a constitutionally-based dollar, which is gold and silver coinage.
This may sound quaint (even conspiratorial!) to some, but this is the only way to get the economy on solid ground.
Making these changes would be painful for a while. But not nearly as painful or long-term as allowing this present system to run its course.
Some folks might call me an alarmist. My take is that if you smell smoke, you sound the alarm. Waiting for the building to first go up in flames seems fairly useless.
It could take many more years before everything implodes, but in the meantime the writing is clearly on the wall.
If we don’t heed these warning signs soon, there will be much weeping and gnashing of teeth.
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