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The media is feeding you propaganda to support the “resistance”
8/22/2017
Submited by: SL @SLandinSoCal
As recently as 2015, Donald Trump was praised by Al Sharpton and Don King. How did Trump become such a racist, hateful, bigoted man in a single year?
Answer: He didn’t! The media is feeding you propaganda to support the “resistance”. They are lying to you.
Ask yourselves: Do you want the United States to continue as a nation? Or do you want to see the US fundamentals transformed into a socialist NWO? Pick a side, because there is a Coup d’état in progress. Their goal of overturning the Trump administration is clear. They will not wait for the next election. The civil unrest will continue to escalate because this is their method of making the US “ungovernable”. The unrest is not due to Trump being a horrible person, he is not. The unrest is because Trump thwarted their plans for the NWO when he won the election.
This is not a conspiracy theory. If you are a liberal and you want the United States to continue as a FREE sovereign nation, then you need to support President Trump whether like him as an individual or not. You probably supported Bill Clinton and look at the horrible things Bill Clinton did to women. This is not a popularity contest. This is about a presidency that can save our country from fundamentally changed into something we no longer recognize.
These sites show the organized plan to overthrow our government. Ironically, the mission they claim is VERY similar to President Trumps. Based on what they claim they want, they should be whole heartedly supporting the President. That is not what they want. They want a NWO.
https://www.ungovernable2017.com
https://www.theresistanceparty.org
Excerpts from National Review
by JILLIAN KAY MELCHIOR Sept 2015
Sharpton and Trump forged an unlikely friendship over Atlantic City boxing deals that has lasted for decades, through ups and downs. Even as the Tawana Brawley scandal unfolded and Sharpton faced a 67-count indictment involving how he used funding for his youth organization, Trump remained a prominent supporter of the agitator, numerous sources close to the two men tell National Review.
…..
“We did business together, and we revolutionized Atlantic City, bringing in the biggest events that could be put forth,” King tells NR, describing the mogul as “dead set on building Atlantic City.” King recalls how Trump would fly him in on a helicopter to negotiate deals that were “done on a handshake.” King was also close with Sharpton, and he decided to introduce him to Trump, both King and Sharpton say. At the time, King says, “I was the one who subsidized [Sharpton], to give him that ‘F-you money,’ so that you don’t have to worry about going out there.” He continues: “I wanted Sharpton to meet this guy because he was a giant in the business community and a giant in the human community.” King says he thought highly of Trump then, just as he does now, and he realized that Sharpton needed white allies. “Trump was a white ally — and he was one of distinction and renown in the business world,” King says.
How The Corrupt Establishment Is Selling Moral Bankruptcy To America
August 13, 2013 by Brandon Smith
Morality is a highly misunderstood component of human nature. Some people believe they can create moral guidelines from thin air based on their personal biases and prejudices. Some people believe that morality comes from the force of bureaucracy and government law. Still, others believe that there is no such thing; that morality is a facade created by men in order to better grease the wheels of society.
All of these world views discount the powerful scientific and psychological evidence surrounding Natural Law — the laws that human beings form internally due to inherent conscience, regardless of environmental circumstances. When a person finally grasps inborn morality, the whole of the world comes into focus. The reality is that we are not born “good” or “evil.” Rather, we are all born with the capacity for good AND evil, and this internal battle stays with us until the end of our days.
Every waking moment we are given a choice, a test of our free will, to be ruled by desire and fear, or to do what we know at our very core is right. When a man silences his inner voice, the results can be terrible for him and those around him. When an entire culture silences its inner voice, the results can be catastrophic. Such a shift in the moral compass of a society rarely takes place in a vacuum. There is always a false shepherd, a corrupt leadership that seeks to rule. Rulership, though, is difficult in the face of an awake population that respects integrity and honor. Therefore criminals must follow these specific steps in order to take power:
Pretend To Be Righteous: They must first sell the public on the idea that they hold the exact same values of natural law as everyone else. The public must at first believe that the criminal leaders are pure in their motives and have the best interests of the nation at heart, even if they secretly do not.
Pretend To Be Patriotic: Despots often proclaim an untarnished love of their homeland and the values that it was founded upon. However, what they really seek is to become a living symbol of the homeland. They insist first that they are the embodiment of the national legacy, and then they attempt to change that national legacy entirely. A corrupt government uses the ideals of a society to acquire a foothold, and when they have gained sufficient control, they dictate to that society a new set of ideals that are totally contrary to the original.
Offer To “Fix” The Economy: Tyrants do not like it when the citizens under them are self sufficient or economically independent. They will use whatever methods are at their disposal including subversive legislation, fiat currency creation, corporate monopoly and even engineered financial collapse in order to remove the public’s ability to function autonomously. They will begin this process under the guise that the current less-controlled and less-centralized system is “not safe enough,” and that they have a better way to ensure prosperity.
Offer To Lend A Hand: Once the population has been removed from its own survival imperative and is for the most part helpless, the criminal leadership moves in and offers to “help” using taxation and money creation, slowly siphoning the wealth from the middle class and raising prices through inflation. Eventually, everyone will be “equal”; equally poor that is. In the end, the whole nation will see the rulership as indispensable, for without them, the economy would no longer exist and tragedy would ensue.
Create External Fear: Once in place, the criminal leadership then conjures an enemy for the people, or multiple enemies for the people. The goal here is to create a catalyst for mass fear. When the majority of people are afraid of an external threat, they will embrace the establishment as a vital safeguard. When a society becomes convinced that it cannot take care of itself economically, little coaxing is required to convince them that they are also not competent enough to take care of their own defense. At this point, the establishment has free reign to dissolve long cherished freedoms while the masses are distracted by a mysterious threat hiding somewhere over the horizon.
Create Internal Fear: They move the threat from over the horizon, right to the public’s front door, or even within their own home. The enemy is no longer a foreigner. Now, the enemy is the average looking guy two houses over, or an outspoken friend, or even a dissenting family member. The enemy is all around them, according to the establishment. The public is sold on the idea that the sacrifice needed in order to combat such a pervasive “threat” is necessarily high.
Sell The People On The Virtues Of Moral Relativism: Now that the populace is willing to forgo certain liberties for the sake of security, they have been softened up enough for reprogramming to begin. The establishment will tell the people that the principles they used to hold so dear are actually weaknesses that make them vulnerable to the enemy. In order to defeat an enemy so monstrous, they claim, we must become monstrous ourselves. We must be willing to do ANYTHING, no matter how vile or contrary to natural law, in order to win.
Honesty must be replaced with deceit. Dissent must be replaced with silence. Peace must be replaced with violence. The independent should be treated with suspicion. The outspoken treated with contempt. Women and children are no longer people to be protected, but targets to be eliminated. The innocent dead become collateral damage. The innocent living become informants to be tortured and exploited. Good men are labeled cowards because they refuse to “do what needs to be done,” while evil men are labeled heroes for having the “strength of will” to abandon their conscience.
Thus, the criminal leadership makes once honorable citizens accomplices in the crime. The more disgusting the crime, the more apt the people will be to defend it and the system in general, simply because they have been inducted into the dark ceremony of moral ambiguity.
The actions of the state become the actions of all society. A single minded collectivist culture is born, one in which every person is a small piece of the greater machine. And, that which the machine is guilty of, every man is guilty of. Therefore, it becomes the ultimate and absurd purpose of each person within the system to DENY the crime, deny the guilt, and make certain that the machine continues to function for generations to come.
Though we have already passed though most of the above stages, Americans are still not yet quite indoctrinated into the realm of moral relativism. This is, though, swiftly changing.
The Current Sales Pitch
Just take a look at the attitude of the Barack Obama Administration and the mainstream media towards Edward Snowden and his recent asylum approved by Russia.
The White House, rather than admitting wrongdoing in its support for the NSA’s mass surveillance of American citizens without warrant, or even attempting to deny the existence of the PRISM program, is now instead trying to promote NSA spying as essential to our well being, and wag a shaming finger at Snowden and the Russian government for damaging their domestic spy network. Obama lamented on Russia’s stance, stating that their thinking is “backwards.”
Did I miss something here? I’m no fan of the Russian oligarchy, but shouldn’t Obama and most of the NSA (let alone every other Federal alphabet agency) be sitting in a dark hole somewhere awaiting trial for violating the Constitution on almost every level? Yet, we are instead supposed to despise Snowden for exposing the crime they committed and distrust any country that happens to give him shelter?
Due to public outcry, Obama has attempted to pacify critics by announcing plans to make NSA mass surveillance “more transparent”. First, I would like to point out that he did not offer to end NSA spying on Americans without warrant, which is what a President with any ounce of integrity would have done. Second, Obama’s calls for more transparency have come at the exact same time as the NSA announces its plans to remove 90 percent of its systems administrators to make sure another “Snowden incident” does not occur.
Does this sound like an agency that plans on becoming “more transparent”?
Second, would Obama have called for ANY transparency over the NSA whatsoever if Snowden had never come forward? Of course not! The exposure of the crime has led to lies and empty placation, nothing more.
In the meantime, numerous other political miscreants have hit the media trail, campaigning for the NSA as well as other surveillance methods, bellowing to the rafters over the absolute necessity of domestic spy programs. Fifteen years ago, the government would have tried to sweep all of this under the rug. Today, they want to acclimate us to the inevitability of the crime, stating that we had better get used to it.
Their position? That Snowden’s whistleblowing put America at risk. My questions is, how? How did Snowden’s exposure of an unConstitutional and at bottom illegal surveillance program used against hundreds of millions of innocent Americans do our country harm? Is it the position of the White House that the truth is dangerous, and deceit is safety?
I suspect this is the case considering the recent treatment of military whistleblower Bradley Manning, who has been accused by some to have “aided Al Qaeda’s recruiting efforts” through his actions.
How did Manning do this? By releasing information, including battlefield videos, that were hidden from the public containing proof of U.S. war crimes in Iraq and Afghanistan.
Perhaps I’m just a traditionalist and not hip to modern diplomatic strategy, but I would think that if you don’t want to be blamed for war crimes, then you probably shouldn’t commit war crimes. And, if you don’t want the enemy to gain new recruits, you should probably avoid killing innocent civilians and pissing off their families. Just a thought.
So, just to keep track, U.S. government commits war crimes, but is the good guy. Bradley Manning exposes war crimes, and is the bad guy. Moral relativism at its finest. Moving on…
The shift towards moral bankruptcy is being implemented in the financial world as well. Investors, hedge funds, and major banks now surge into the stock market every time the private Federal Reserve hints that it may continue fiat stimulus. When bad news hits the mainstream feeds, people playing the Dow casino actually cheer with glee, exactly because bad economic news means more QE from the Fed. They know that the Fed is artificially propping up the markets. The Fed openly admits that it does this. And they know that our fiscal system is hanging by a thin thread. And you know what, very few of them care.
The Fed created the collapse with easy money and manipulated interest rates, and now, some people cheer them as the heroes of the U.S. financial structure.
The American narrative is quickly changing. There has long been criminality and degeneracy within our government and the corporate cartels surrounding it, but I believe what we are witnessing today is the final step in the metamorphosis that is totalitarianism. The last stage accelerates when the average citizen is not just complicit in the deeds of devils, but when he becomes a devil himself. When Americans froth and stomp in excitement for the carnival of death, and treat the truth as poison, then the transformation will be complete.
-Brandon Smith
It’s YOUR Constitution Obama is Shredding
The United States of America was formed on the foundations recorded in our Declaration of Independence. As acknowledged by even our federal government archives, “Drafted by Thomas Jefferson between June 11 and June 28, 1776, the Declaration of Independence is at once the nation’s most cherished symbol of liberty and Jefferson’s most enduring monument.”
That document and the foundation of our nation has but only three fundamental precepts –
- “When in the course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.”
- “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain inalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.–That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed;”
- “That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.”
Precept #1 establishes that everything that follows is not based upon British Common Law, but rather upon “the Laws of Nature and of Nature’s God.”
Precept #2 establishes that the government has no power without the consent of the governed. That which the people do not consent to, is beyond the scope and power of the government, period.
Precept #3 establishes that when “the governed” deem it that their government has become destructive towards Life, Liberty and the Pursuit of Happiness… it is the right and the duty of “the governed” to alter or abolish that government and institute new government that will once again serve the common interests of Life, Liberty and the Pursuit of Happiness.
It is important to note that in the original handwritten document, the term used to describe these rights is “inalienable” – not to be confused with “unalienable” used in many reproductions of the Declaration today.
While these two words are similar, they are not the same, or they were not the same at the time the word inalienable was written into the Declaration. Whereas unalienable simply meant – “Not alienable; that cannot be alienated; that may not be transferred; as unalienable rights.” – the word inalienable is much more specific and restrictive – “Unalienable; that cannot be legally or justly alienated or transferred to another. The dominions of a king are inalienable. All men have certain natural rights which are inalienable. The estate of a minor is inalienable, without a reservation of the right of redemption, or the authority of the legislature.”
The entire foundation for our Charters of Freedom is based not upon man-made laws, but upon the inalienable God given Rights which exist in Natural Law, and remain forever beyond the scope and authority of the legislature. Our inalienable rights are “endowed by our Creator,” and protected by the Charters of Freedom.
In essence, inalienable natural rights are beyond the authority of the legislature, the only branch of government entrusted by the people with the authority to make law. It is upon these foundational inalienable rights that the US Constitution was drafted and adopted by the early colonies in 1787.
Noah Webster’s 1828 First American Edition Dictionary defines our Constitution as follows –
“The established form of government in a state, kingdom or country; a system of fundamental rules, principles and ordinances for the government of a state or nation. In free states, the constitution is paramount to the statutes or laws enacted by the legislature, limiting and controlling its power; and in the United States, the legislature is created, and its powers designated, by the constitution.”
A constitutional government is a limited government, which explains why many anti-American politicians and law professors want to terminate the Constitution, unleashing an unbridled government power operating without and at odds with the consent of the governed.
The preamble of your Constitution is critical to everything that follows.
“We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”
It is this brief text which lays the foundation for everything else. It identifies the point of origin, “We the People of the United States”… it identifies the purpose, “in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity,” and it identifies the context, a constitutional government, a very limited governmental power.
It is all of these foundational precepts which Barack Hussein Obama and his cabal of anti-American thugs hope to destroy forever. Before going further, I must point out for our nations ill-educated, that by General Welfare, our founders did not mean food stamps or free cell phones.
Obama has repeatedly said “we are not a Christian nation” – even though nearly every Founder was a Christian, Jefferson borrowed all of his concepts from Judeo-Christian teachings and based everything on God given inalienable rights and Natural Law; and the fact that over 70% of Americans still proclaim the Christian faith today, over 90% proclaiming a faith in God.
Obama did not say this just to appease his Muslim brothers and sisters, though I’m sure his words were quite comforting to jihadists everywhere. He said this because he knows that a Christian nation places its trust in God, God given inalienable rights and the Laws of Nature, not of men.
Obama said this because before men can truly rule all mankind, they must first destroy God and the Christian social fabric that created this nation and once dominated the nation and the world. Obama said this to open the gates of the nation to all worldly evils.
Barack Hussein Obama is not a fool, he is the great deceiver. But God is not deceived and neither are God’s children. Our Founders told us that what they created in our Charters of Freedom were only well-suited for a moral society and they were right.
In a speech to the military in 1798, John Adams warned his fellow countrymen stating, “We have no government armed with power capable of contending with human passions unbridled by morality and religion . . . Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.”
Things have changed a bit since then. Today we do have a government armed to the teeth, which is seeking to disarm decent honest American citizens in direct violation of the Charters of Freedom and everything they stand for.
Noah Webster, author of the first American Speller and the first Dictionary said, “[T]he Christian religion, in its purity, is the basis, or rather the source of all genuine freedom in government. . . . and I am persuaded that no civil government of a republican form can exist and be durable in which the principles of that religion have not a controlling influence.”
But people who exist in an immoral abyss are easily deceived by men like Barack Hussein Obama. Still, the children of God see right through the deception. This explains why Christians are mocked, belittled, and labeled as “extremists” or “crackpots” or even “potential domestic terrorists.”
It is not God’s laws that immoral people revere, but rather man-made laws, specifically, laws put in place to benefit them at the expense of other Americans. Even though the government will turn their guns on these people as well, so long as they are free to feed from the public trough, they are not concerned with where or how the government fills that trough.
The best example is the current assault on Americans Second Amendment Rights under the guise of stopping the next Sandy Hook tragedy. No crime statistics support the current gun grab by federal Marxists and even if they did, the Charters of Freedom place the individual right to keep and bear arms beyond the constitutional authority of the federal government.
“I ask, Sir, what is the militia? It is the whole people. To disarm the people is the best and most effectual way to enslave them.” – George Mason, Co-author of the Second Amendment
“The people are not to be disarmed of their weapons. They are left in full possession of them.” – Zachariah Johnson
“Firearms stand next in importance to the constitution itself. They are the American people’s liberty teeth and keystone under independence;” – George Washington, First President of the United States
There are no constitutional restrictions on what type of arms citizens have the inalienable right to keep and bear. Our nation’s Founders were quite clear about their intentions… “To preserve liberty, it is essential that the whole body of the people always possess arms and be taught alike, especially when young, how to use them.” – Richard Henry Lee
Many modern liberals who support federal gun control claim that the Founders meant muskets, as those were the arms at the time. Of course, there was no federal government capable of threatening American sovereignty and security with the full arsenal of today’s U.S. Military and ATF at that time either.
That’s really the point… as our federal government would become more powerful, it would become more tyrannical as well. The Founders dealt with this problem for all posterity by simply saying – “whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government” and providing the Second Amendment as the means by which to secure liberty.
The point to all of this is that the Charters of Freedom remain the foundation of these United States. Without those documents, there is no United States. The Federal Government was created by the several states to exist at the pleasure of the states and the people.
When the federal government no longer serves the common interest of Life, Liberty and the Pursuit of Happiness, it is the right and duty of the people to alter that government, returning it to its constitutional foundations.
Contrary to modern propaganda, our federal government does not have “supremacy” over the states and the people. Only within the enumerated powers authorized by the people and the states does the federal government have any power at all.
The people must create a ground-swell movement that will alter the current state and direction of the federal government before there is no choice but to abolish it and start over.
To save this nation, the people must first save their individual states by enacting legislative measures that will return each state to .
Unless and until the people clean up a highly corrupt and fraudulent election process, the election booth is off the table as a means of solving anything.
If the people allow a runaway federal government to strip them of their Second Amendment rights, they will have no other rights. And unless the people unite to fight, divided, they will fall.
No matter what side of the political arena you sit on, this stuff matters to you and every American, unless you are a fool.
As JFK put it, “Those who make peaceful revolution impossible will make violent revolution inevitable.”
Unite and fight peacefully now while you can alter rather than abolish the system of self-governance created some 236 years ago. Our Founders created a system designed to protect freedom and liberty forever, so long as the people remained forever moral and vigilant.
The future of the United States is not in Obama’s hands, unless the people allow it.
JB Williams
Co-Founder
www.PatriotsUnion.org
www.VeteranDefenders.org
www.ThePatriotsNews.com
Related articles
- The sovereign authority of armed citizens… (jericho777.wordpress.com)
- The Right to Shoot Tyrants, Not Deer (mountainrepublic.net)
Exposed: Harry Reid should not be allowed to manipulate Senate rules to further stifle Senators’ freedoms
On Tuesday, Senate Majority Leader Harry Reid (D-Nev.) accidentally drew back the curtain on fabricated tales of Republican obstructionism and revealed the dark secret of Democrats who have been promoting “gridlock” in the U.S. Senate for nearly a full four years. It happened so quickly anyone who blinked missed it.
Upon filing for Senate consideration of the Transaction Account Guarantee (TAG) Act, Sen. Reid immediately “filled the tree” by offering the maximum amount of amendments permitted under the rules and filed cloture on the bill before any other Senator could speak, offer debate or filibuster the bill.
Senator Reid essentially asked the Senate to consider a bill then immediately asked to end consideration on that bill, all within the space of a mere two minutes. Some have speculated this parliamentary slight-of-hand may have made history with its sheer speed.
While proclaiming the need for filibuster “reform” and complaining of its over use by the minority, Senator Reid continues to apply these tactics, limiting debate and preventing Senators of both parties from submitting their own ideas through amendments. His actions essentially produce a “majority filibuster” which prevents the voices of citizens throughout every one of the 50 states from being heard through their Senators.
Yet, even while setting a new speed record, Sen. Reid’s tyrannical control of the calendar is nothing new. Reid has spent the last four years turning such bold obstruction into regular operating procedure for the Senate – with Tuesday marking the sixth-ninth time Sen. Reid has launched a majority filibuster.
These actions are atrocious in their violation of the purpose of the Senate in our federal government and their steamrolling of two key rights of all Senators.
On the official Senate website, the Senate Historian notes: “All senators have two traditional freedoms that, so far as is known, no other legislators worldwide possess. These two freedoms are the right to unlimited debate and an unlimited opportunity to offer amendments, relevant or not, to legislation under consideration.”
Since Democrat Senate Majority Leader Harry Reid has successfully manipulated standing Senate rules to severely stifle (and in many cases, entirely eliminate) the second of these unparalleled freedoms by routinely “filling the amendment tree,” only one of those freedoms remains. With Reid’s iron-fisted control of the process — frequently preventing even Senators from his own political party from offering their own amendments — it is no wonder Senators of all stripes question the wisdom of removing their remaining freedom. In fact, it is a wonder Majority Leader Reid does not face a mutiny from within his own party.
But the story gets much, much worse. Because Reid cannot capture enough votes (despite a Democratic majority of 55 Senators) to institute his radical rules change under the existing rules (which requires 60 votes), he has proposed a method that ignores the rules entirely. Instead, Reid’s grand plan is to pretend the “Standing Rules of The Senate” simply do not exist during the first day of a new Congress – and only during the first day.
This runs into a major problem through a simple reading of Rule V, Section 2, which itself clearly states that (emphasis added): “The rules of the Senate shall continue from one Congress to the next Congress unless they are changed as provided in these rules.” Furthermore, this rule was initially adopted, at the will of the Senate itself, in recognition of the Senate’s unique place in our legislature.
For Majority Leader Harry Reid to completely ignore the rules in order to re-write the rules (something he promised he would never do) in the name of political expediency would violate matchless freedoms of every U.S. Senator while also violating the Constitution itself.
Ultimately, this boils down to three observations. One, the pervasiveness of majority filibuster and obstructionism of their own agenda has helped slow action in the Senate. Two, this atrocious behavior by the Senate Majority Leader snatches away exceptionally unique freedoms and rights of Senators from both sides of the aisle, and all deprived Senators should demand reform. And three, Majority Leader Reid’s proposal, if carried through, would irreparably depart from the rules and Constitutional provisions guiding our “most deliberative” legislative body.
This is the essence of the current debate between totalitarian forms of government and conservatives: whether existing rules can be ignored for political or popular expediency, or whether the rules must be followed in order to protect the unique freedoms and force compromise which truly moves our nation forward.
Regardless of what reforms are needed in the Senate, the rules are the rules – and those rules must be followed in order to bring about credible, positive and lasting improvement.
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The Real Fiscal Cliff
The media is now fixated on an apparently new feature dominating the economic landscape: a “fiscal cliff” from which the United States will fall in January 2013. They see the danger arising from the simultaneous implementation of the $2 trillion in automatic spending cuts (spread over 10 years) agreed to in last year’s debt ceiling vote and the expiration of the Bush era tax cuts. The economists to whom most reporters listen warn that the combined impact of reduced government spending and higher taxes will slow the “recovery” and perhaps send the economy back into recession. While there is indeed much to worry about in our economy, this particular cliff is not high on the list.
Much of the fear stems from the false premise that government spending generates economic growth (for stories of countries experiencing real growth, see our latest newsletter). People tend to forget that the government can only get money from taxing, borrowing, or printing. Nothing the government spends comes for free. Money taxed or borrowed is taken out of the private sector, where it could have been used more productively. Printed money merely creates inflation. So the automatic spending cuts, to the extent they are actually allowed to go into effect, will promote economic growth not prevent it. Even most Republicans fall for the canard that spending can help the economy in general. But even those who don’t will surely do everything to avoid the political backlash from citizens on the losing end of any specific cuts.
The only reason the automatic spending cuts exist at all is that Congress lacked the integrity to identify specifics. Rest assured that Congress will likely engineer yet another escape hatch when it finds itself backed into a corner again. Repealing the cuts before they are even implemented will render laughable any subsequent deficit reduction plans. But politicians would always rather face frustration for inaction than outright anger for actual decisions. In truth though, only an extremely small portion of the cuts are scheduled to occur in 2013 anyway. If it comes to pass that Congress cannot even keep its spending cut promises for one year, how can they be expected to do so for ten?
The impact of the expiring Bush era tax cuts is much harder to assess. The adverse effects of the tax hikes could be offset by the benefits of reduced government borrowing (provided that the taxes actually result in increased revenue). But given the negative incentives created by higher marginal tax rates, particularly as they impact savings and capital investment, increased rates may actually result in less revenue, thereby widening the budget deficit.
In reality, the economy will encounter extremely dangerous terrain whether or not Congress figures out a way to wriggle out of the 2013 budgetary straightjacket. The debt burden that the United Stated will face when interest rates rise presents a much larger “fiscal cliff.” Unfortunately, no one is talking about that one.
The current national debt is about $16 trillion (this is just the funded portion…the unfunded liabilities of the Treasury are much, much larger). The only reason the United States is able to service this staggering level of debt is that the currently low interest rate on government debt (now below 2 per cent) keeps debt service payments to a relatively manageable $300 billion per year.
On the current trajectory the national debt will likely hit $20 trillion in a few years. If by that time interest rates were to return to some semblance of historic normalcy, say 5 per cent, interest payments on the debt would then run $1 trillion per year. This sum could represent almost 40 per cent of total federal revenues in 2012!
In addition to making the debt service unmanageable, higher rates would depress economic activity, thereby slowing tax collection and requiring increased government spending. This would increase the budget deficits further, putting even more upward pressure on interest rates. Higher mortgage rates and increased unemployment will put renewed downward pressure on home prices, perhaps leading to another large wave of foreclosures. My guess is that losses on government insured mortgages alone could add several hundred billion more to annual budget deficits. When all of these factors are taken into account, I believe that annual budget deficits could quickly approach, and exceed, $3 trillion. All this could be in the cards if interest rates were to approach a modest five per cent.
If the sheer enormity of the red ink were to finally worry our creditors, five per cent interest rates could quickly rise to ten. At those rates, the annual cost to pay the interest on the national debt could equal all federal tax revenues combined. If that occurs we will have to either slash federal spending across the board (including cuts to politically sensitive entitlements), raise taxes significantly on the poor and middle class (as well as the rich), default on the debt, or hit everyone with the sustained impact of high inflation. Now that’s a real fiscal cliff!
By foolishly borrowing so heavily when interest rates are low, our government is driving us toward this cliff with its eyes firmly glued to the rear view mirror (much as the new French regime appears to be doing). For years I have warned that a financial crisis would be triggered by the popping of the real estate bubble. My warnings were routinely ignored based on the near universal assumption that real estate prices would never fall. My warnings about the real fiscal cliff are also being ignored because of a similarly false premise that interest rates can never rise. However, if history can be a guide, we should view the current period of ultra-low rates as the exception rather than the rule.
Peter Schiff’s new book, The Real Crash: America’s Coming Bankruptcy – How to Save Yourself and Your Country is now available. Order your copy today.
For in-depth analysis of this and other investment topics, subscribe to Peter Schiff’s Global Investor newsletter. CLICK HERE for your free subscription.
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- Lawmakers signal deep ‘fiscal cliff’ deadlock in Congress (mercurynews.com)
- Fitch Ratings keeps US at top ‘AAA’ credit rating (seattlepi.com)