Saturday, January 30, 2010

A Letter To An Awakening Friend

I wrote the letter below to a friend of mine who has just discovered He and I had spoken many times in the past couple of years about the mid-east wars, the economy, politics, etc., and I always knew he was more of a neo-con than a conservative. But he has an open mind, so we were able to talk productively even though we disagreed on the interpretation of current events. Having stumbled on libertarian/conservative information on his own and finding it convincing enough to be disturbed by it means that he is moving more in my direction. I wanted to let him know I agreed.


(Sorry, in advance, for my long response)
I checked out the blog. Interesting. There is a lot of crossover information here with the websites I frequent. My focus has been on the current economic/political situation and the likely unfolding of events in the future. The Survivalist Blog seems to cover much of the same information with the added twist of advising how people can protect themselves. The writer seems sane and measured, not wooly haired and crazy-eyed. There is probably good prudent advice in there that we should all take.

As for the alarming nature of the information: I lose sleep sometimes when I get too far "down the rabbit hole." The causal connections, several times removed, between actions of our "leaders" and the meltdown of our economy and the perversion of our Constitution, sometimes is so clear to me that I cannot understand why other people cannot see it. Then I remember that I've been reading related stuff for the last 35 years, and that I cannot expect the average person to just read one book or article, or even a dozen books and articles, and expect them to come to the same conclusions I have.

I believe we are in for a very difficult time in the future. The large picture is: our economy was fooled by easy money generated by deficit spending, expansionist Federal Reserve policy, and fractional reserve banking.

People thought they were richer than they really were (I was one of them); they borrowed and bought and pushed prices upward for thirty years with the expectation there would be more money tomorrow.

When the new money was not sufficient to fulfull our expectations of ever-increasing prices, prices began to fall.

Falling prices began to reveal unsound investments (think: real estate, but it applies to other areas of the economy also) and the loans that supported them could not be repaid.

The banks and investment houses that were the most leveraged (fractional reserve banks are always insolvent, by their nature) were the first to collapse, leading to a chain reaction of insolvencies and credit contraction, which destroys the circulating money supply (just as increasing credit in a fractional reserve system creates money) and principle paydowns (which sucks money out of the economy).

With a decreasing circulating money supply (despite the trillions the Fed pumped into favored banks to prop them up, which they either can't or won't lend), asset prices will continue to drop...for a far...leading to bone-crunching deflation, unemployment, bankruptcies, etc., a process that, if allowed to happen, would be complete in a year or so as the economy adjusted to the new reality of a lower money supply, then started growing again...

But the trillions of dollars being lavished on the financial houses by the Fed will eventually find its' way back into the circulating money supply.

The new money will begin competing with existing money for existing goods and services, and in a very short time prices will skyrocket...but wages will not (why? because of the large number of unemployed workers who, due to competition with other unemployed workers, cannot demand higher pay).

This will result in bone-crushing inflation for everyone, but especially for people on Social Security, pensions, or other fixed state aid.

If the scenario I have written above is correct, our country is in for an extreme amount of instability, both political and economic. People will be discouraged, and maybe even dangeously hungry. They will get restive, possibly violent. With the instability will come calls for more law and order, which will come at the expense of the Bill of Rights. The question will be: will the American people rediscover the wisdom of the Constitution (which, if followed, would have prevented this scenario to begin with), or will they adopt a different political framework, such as a leader cult or an oligopoly?

There is no way of knowing how it will all resolve itself, but it is unlikely that the America of our youth will be the America of our future.

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