Tuesday, August 13, 2013

The Collapse of 1995 cont.

To finish off the musing about the projected collapse scenario of 1995 as promised I needed to go back and try and figure out just what had gone wrong with the authors predicted scenario. Certainly the government did not institute any of the actions the authors (Figgie/Swanson) recommended.

In the book "Bankruptcy 1995" the end game scenario mentioned bank runs, inflation, pension crisis, unemployment and city bankruptcies followed by IMF control of the US economy. In short almost everything the doomsayer economist are predicting for our immediate future now. The question is why didn't these things happen back in 1995 as they predicted?

The date 1995 was chosen because of one simple reason it seems. The interest on the national debt was predicted to rise above what taxes would be collected and remain that way indefinitely afterwards. What the authors could not fathom at the time was the FED intentionally dropping the interest rates. I believe from reading the book this time around that the authors were too much true believers in capitalism to understand how dropping interest rates on US debt could actually bring in more stolen money than honest investments.

In truth since 1995 interest rates on the national debt have almost always declined. There are a couple of exceptions with very minor increases but taken as whole the overall interest rate has fallen from 6.68% in 1995 to 2.24% in 2012. That is a whole lotta interest money saved.

I also believe the authors never thought for a minute that the housing bubble would turn into such a toxic asset investment scam nor that the government would resort to such outright misleading creative accounting.  What we ended up with in a sense by 2009 was the first part of the authors predictions coming true but the government had managed to hold it off for over 14 years.

While the two methods above certainly helped the whole thing limp along the authors also missed the most important aspect which current day doomer economist identified a few years ago. The fact that the dollar is the world reserve currency and the currency of oil or the Petro-Dollar. Those two aspects kept the world pretty much trapped in jail with the US economy and continue to do so but there is one other important feature of the dollar they also did not count on. It is a dollar backed by bullets as well.

US military might has kept the enforcement of the Petro-Dollar going. Until recently no country could challenge that but I believe that is changing rather quickly.

We maybe a bit premature yet but as things clicked into place and I relived the military build up of China and the rebuilding of Russia's strength and then looked at the current Middle East turmoil I began to look to the rather uneasy upcoming G20 summit next month.  Something is amiss with this Summit and rumors are flying about it around several financial boards.

I know financial doomers have been going on and on about the US reserve currency status for years and to date no outward move has been made to remove the dollar from it's status. There have been several moves that looked like they were going that direction though.

We maybe much closer to things coming apart than we realize.

Keep Prepping Everyone!!!


  1. If things remain unchanged, it could all fall apart next Spring. Just a guess on my part, but ...

    1. RP - It will take some time to totally unravel. I think it might be a bot soon yet but if the G20 does make some moves next month the final lap will have started I think.

      I am going to be watching the G20 Summit closely.

  2. Within the last day or so I just saw a video where sum dude in China is now pushing to drop the axe and force the changing of the reserve currency from the dollar to the yuan.


    1. Matt - Even though China has dumped most of their US bonds my bet is they are not happy about the continued monetizing the debt and devaluing the dollar. I am surprised they have let it go as long as they have.

  3. Another great stop and think post. I will reread it again later, Not feeling well just trying to keep up.

  4. Well, if things go down the hole I have enough pork and beans to last it out a long time. If the pork and beans don't make me fat, so my blood pressure goes up....

    Everything costs so much now that I sometimes feel like I wouldn't lose much if the money did go worthless.

    1. HF - I sometimes really wonder how some of the people I see out there are managing. I really do. People I used to work with especially. I mean I know what they made and it wasn't shit. I was ok but only because I had ZERO debt but these people had new cars and insurance and rent. I just never could figure it out.

    2. Your comment right there Preppy nails it- debt slavery. Debt slavery of the majority white middle class is the only thing that keeps things going.

      The trouble is now race relations. Whites are finally getting the picture that they are being used a d abused. We have a black president who has NO respect for whites. This is trickling down tk the white masses.

      When the white middle class in its entirety wakes up and says eff it to paying its debts, that's when the shift will occur. When working whitey looks to see Section 8 housing being place right next door while he has to actually pay his mortgage, he won't be happy.

      The financial scales will tip when the middle class rebels.

      White Mom

  5. I have the feeling that a lot of the experts are planning based on best case. Lucky we have a professor in control of the country, he is smart!

    1. SBF - Ya know I think alot of that started in the business world back in the 90's when it became unfashionable and a sure fire way to the unemployment office to even breath a whisper about circumstances that were less than ideal.

      I don;t think their attitudes have changed in any way.

  6. It also ignores the fact that when other countries intentionally weaken their currencies so they can export more to you, it allows you to run up a huge debt as the only way to keep their currencies from rising (which is what they don't want) is to buy your debt or sit on your cash.

    Thus China is sitting on a wad of our cash and debt: neither of which is of all that much use to them.

    It should be noted that this is not a get out of jail free card for the Chinese (or Japanese, or whomever). These policies greatly hurt the purchasing power of their common citizens. Poor Chinese are poorer because of it. It is not a bad ramp up strategy, but it is a hard addiction to beat.


Leave a comment. We like comments. Sometimes we have even been known to feed Trolls.