Edgar Steele's Nickel Ranttm
The Road to Hell
(is Paved with Bailout Money)

by Edgar J. Steele

March 11, 2009

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"The American people will never knowingly adopt socialism. But, under the name of "liberalism," they will adopt every fragment of the socialist program, until one day America will be a socialist nation, without knowing how it happened." He went on to say: "I no longer need to run as a Presidential Candidate for the Socialist Party. The Democratic Party has adopted our platform."
--- Norman Thomas, perennial Presidential candidate of the U.S. Socialist Party (1944)

"The problem with socialism is that you eventually run out of other peoples' money."
  --- Margaret Thatcher, conservative former British Prime Minister

The road to Hell, they say, is paved with good intentions.  Call me naive, but I like to think that Barack Obama had the best of intentions when he signed off on his recent bailout ("Economic Stimulus") package. 

For years, long before the good times even peaked a couple of years ago, I have predicted:

1. The now-in-progress crash of the housing market, which I insist will bottom out at about 10% of the peak values of 2006, just as it did in Depression I.

2.  The now-in-progress crash of the stock market, which I estimate will see the underside of a 2,000 Dow before it begins to trade sideways in earnest.

3.  Depression II, which already has begun, but which will not be acknowledged officially for a year or two.

4.  World War III, which also already has begun, but which will not be acknowledged officially until the first nuclear weapon is exploded, causing an unprecedented ramp-up in hostilities.

The Devil You Don't Yet Know

But, as I like to say of the contents of my book, Defensive Racism, it isn't the predictions I made that have come true that should disturb you - it is the predictions I made that have not yet come true that literally should terrify all of us.  Predictions concerning America's coming race wars and her breakup, much as the Soviet Union "balkanized" along ethnic lines.  Predictions concerning America's defeat in the coming World War.  Predictions for the rise of what I call "New America" from the ashes of our now-terminally-ill nation.

Face it.  Hardly anybody was saying the things I said when I first started saying them.  Practically everybody laughed at my "ridiculous" pessimism then.  Now, those same people are saying pretty much the same things I then said about things economic.  Today, they still are laughing at my projections for the future, even my economic projections, which clearly are on track to be proven conservative, if anything.  Ask yourself:  based upon results, to whom should you be listening?  You be the judge.

Specific Predictions

I even engaged in specifics concerning investments right down the line:  I forecast a gold price of $2,000 to $4,000 when gold had been trading in the range of $350 - $450 for years.  Today, it is about to surmount $1,000 for the second time in a year and clearly will not look back this time.

Just as silver hit $8, I told people to back up the truck.  In fact, I recommended that people sell their gold and buy silver with the proceeds.  Silver then clipped $21 per ounce before being driven back under $10 recently by the government manipulators, whose machinations managed finally to separate the physical price of silver from the phony paper spot price (silver's real-world price, including its ever-increasing premium, never did drop below $15 per ounce, just as I predicted).  Now silver's spot (phony paper) price just popped above $14 per ounce and, like gold, never will look back again.

If you bought Gold Corp (GG) when I first mentioned it, you made a fortune.  If you bought and sold palladium stocks when I said to do so, you made a ton of money.  If you bought Pan American Silver (PAAS) or Couer d'Alene Silver (CDE) or, most recently, Endeavor Silver (ECK), you have done very well, indeed.  If you avoided paper silver altogether and simply took possession of physical silver, as I recommended, you did best of all.  If you went against my advice, as did I, and invested in mining stocks on margin, you got killed this past year.

I steadfastly have argued against putting money into the precious metal exchange traded funds (ETFs), such as SLV and GLD, which are maintained by the very banks that have been manipulating the market.  By doing so, you actually hurt all of us, because they simply use your money to buy and sell futures, thereby manipulating the spot prices.  Think about it:  How could you possibly be buying real gold and silver that the ETFs dutifully buy and put away in a vault without the real-world premiums that real purchases now entail?  How could the ETFs be making the kind of buys they claim to have been making (in the hundreds of tons, incidentally) without those purchases showing up on somebody's transfer sheets, somewhere?

The Home of the Wary

The good news?  We're right on track for a New America - a republic of the newly free and home to the constantly wary. 

The bad news?  We're right on track for the self-immolation of old America.

As Lily Tomlin once sagely observed:  Things are going to get much worse before they get worse.

So - the worse news?  Things are going to get much worse much faster than you possibly can imagine.

The American Moronocracy

One of the many little homilies that Benjamin Franklin first wrote down in his best-selling Poor Richard's Almanack, thus getting (probably undeserved) credit:  When you find yourself in a hole, stop digging.  What you see going on in Washington, DC, just now is legions of government workers, digging like crazy, soon to be digging even faster, due to Obama's new bailout initiative.  And, already, they are starting to whisper about his second economic "stimulus" package.  The cost of just the first installment of what is to become a neverending stream of Obama bailout proposals:  Nearly $11,000 per taxpayer.  The per-taxpayer portion of our national debt, including just the current welfare obligation projections:  Over $700,000.  How you gonna pay all that off, Bunky?

So long as we keep digging, we keep hurtling downward.  Remember that it isn't the fall from the top of a building that will kill you, it is the sudden stop at the bottom.  Bush's and, now, Obama's bailout packages serve only to delay that inevitable stop, not to mention aggravating the effect once we do hit bottom.

Remember - unwarranted spending got us to where we are in the first place.  More spending will serve only to move our economy into a state of hyperinflation.  Yes, it is that simple, folks.  They quite literally are trying to douse a fire by hosing it down with gasoline.  Such is the state of America's Moronocracy today.  Even the Three Stooges never thought to film such a debacle.

Will the Ancient Mayans Have the Last Word?

Oddly enough, we quite literally just moved into the astrological "Age of Aquarius" a couple of weeks ago.  Peace, love and all that hokum that any fool can see just ain't gonna happen.  And, so long as I am on weird, touchy-feely stuff, I might as well mention in passing that the Mayan calendar, created thousands of years ago and more accurate than anything devised by modern man, quite literally ends on December 21, 2012.  Now, I don't know about the significance of December 21, but 2012 is about as far as I see America's hole being dug.  Strange, huh?  And we have ringside seats.  Hell, we're the main attraction, actually.  Lucky us.

Rule by Morons

Obama demanded and got immediate action on his "stimulus" package, just as did Bush for his term-ending bailout debacle (but, then, Bush threatened Congress with martial law unless they passed it intact and quickly).  Now it has come to light that literally not one single Congressman read Obama's bill, yet they overwhelmingly passed it, just as they passed Patriot Acts I and II for Bush without bothering to read them.

You think this is the end of the bailouts?  Think again.  This is just the beginning.  Consider the straits in which state and local governments now are wallowing, yet the Federal bailout of those entities has not yet begun.  When it does, the concept of government bailout will be redefined for all of us, yet again.

The Newer Deal

During the next four years, trillions more dollars in bailouts will be coming.  Call it Obama's "Newer Deal," since he views himself as FDR II. 

What's more, the amount of formal government bailout money will be, as today, dwarfed by the money stealthily created by the Federal Reserve Board, the beneficiaries of which they refuse to divulge, though the debt thereby created is hung around our necks.

Huge Federal spending deficits are in the offing, folks.  As far as the eye can see.  As a result, US bonds will be downgraded and interest rates will be forced up, thereby pushing deficits even higher, causing further bond downgrades and even higher interest rates and so on.  You get the idea.  Ultimately, the dollar itself will fail in a storm of hyperinflation, to be replaced by currencies that our erstwhile masters fancy themselves capable of more closely tracking (and more thoroughly take a slice of, every time it passes "Go," incidentally).  The Amero has been suggested for the coming NWO state of North America.  I have dubbed its successor, an all-electronic form of money, the Globo, and have written about this transition process for years.

The Road to Hell is Paved with Bailout Money

Price inflation now is cooked into the world economy's cake, the inexorable result of massive fiat monetary creation by all World governments, including China's.  The U.S. doubled its own monetary base in 2008 alone, though GDP declined by about 5%.  While America's price inflation is a "mere" 15% right now (because bankers have put their bailout money beneath the banks' mattresses for the time being), I foresee 20% by the end of 2009 and 30% when 2011 rolls around.  2012 should see at least 100% price inflation, with true hyperinflation then redefining the word inflation for all of us.  Think not?  Then consider this simple fact:  food prices have doubled in the last three years alone.

Dow, as in Down

The stock market has not yet come close to bottoming.  Corporate earnings are accelerating downward and the old price-earnings relationship is reasserting itself as people search for something - anything - of real value, into which to stash their wealth.  I foresee the Dow, which already is at half its high-water mark at about 7,000, plunging all the way down to 2,000 and possibly lower before we see a true "dead-cat bounce."  Then expect to see the Dow trade for a long, long time in the range of what today would be 2,000 to 4,000 (recall that the Dow's absolute level is a function of price inflation, too).

Derivatives Explained

The towering house of cards we call derivatives already has begun falling. 

People tend to forget that the subprime debacle we now are undergoing is all about the failure of derivatives.  Subprime mortgages were "securitized" (meaning that people sold off shares in bundles of subprime mortgages, bundles they disingenuously called "tranches").  Those "securities" derived their value from the underlying mortgages, of course, which is why they are called "derivatives."  Many have become completely valueless and we now have gotten only about halfway through the variable mortgage reset points, which is where the payments blow up and stop coming in to the banks.

Derivatives are a form of hedging, whereby one buys and sells the risk portion of an investment.  Those who bought now are hanging out there.  Most banks are insolvent, but the Fed won't admit it and it won't let them fail, as they should in order to cleanse the system.  Derivative failure alone, in the hundreds of trillions of dollars worldwide, guarantee that Western Civilization will go down in a hyperinflationary heap.

Housing Hypocrisy

Housing prices, closely related to the mortgage mess because repossessed houses now dictate the going rate in the marketplace, have much further to go.  For years, I have forecast that prices will plunge to 10% of their 2005 high, just as house prices did in Depression I.  Prices now average about 45% of what they did in 2005 and the value of the dollar has plunged by half.  Do the math:  40% x 50% = 20%.  We already are at 20% of the 2005 highs, folks, which is something they simply do not want you to realize.  Can 10% be far behind?  Recall just the huge monetary expansion we already have seen take place:  100% in 2008 alone, which guarantees another near-term halving of the value of the dollar.

Bank bailouts actually guarantee more foreclosures, as banks are infused with the capital necessary to follow through with evicting Americans from their homes.  Get this fact really clear:  Our children's future is being mortgaged to finance the theft of our homes, farms and small businesses from us.  Yes, it is that simple, folks.  Result:  More homelessness, more hunger, more untreated medical problems, more misery all around.  Your taxes at work.

Consider the following words of Communism's father, Karl Marx, written in 1867:  "Owners of capital will stimulate the working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be  nationalized, and the State will have to take the road which will eventually lead to communism."   See?  This stuff isn't so hard to forecast, not if a meatball like Marx could do it over a hundred years ago.

Industrial-Strength Deindustrialization and Socialism

America's industrial collapse continues and, in fact, is accelerating.  The carmaker bailouts now are in their second round, already.  This will do no good, rest assured.  Both GM and Chrysler are insolvent and on track to full-on collapse, with the bailout money simply delaying the inevitable.  Once folded into Ford, the resulting company will be nationalized outright by the feds.  This story is being played out in every corner of America's economy, echoed by every industry.  Massive unemployment, already the order of the day (15% in pre-Clinton-era calculations, not just the 7% to which the feds now are admitting) will accelerate and exceed the 25% seen in Depression I.  Depression II is going to be really nasty, folks.

With the collapse of America's industry will come the realization that pension funds have been drained and rendered worthless by the drop in value of their underlying securities.  Taken over by the government directly, this will be yet another major step in the march toward America's full-on socialism.

Speaking of socialism, with the industrial collapse will come the necessity for government to step into the breach of failed employer medical plans.  Skyrocketing inflation means skyrocketing elder poverty throughout America, which guarantees the true socialization of medicine throughout the nation.

Lions and Tigers and Bears - Oh, My!

As if all the foregoing were not enough, the world shows signs of accelerating natural disasters such as earthquakes, volcanoes, floods, tsunamis and drought.  I maintain that these are a consequence of an as-yet unrecognized solar "super-cycle" that has taken place all down through the unrecorded history of the planet.  Consider the earth to be an orange in your outstretched hand as you turn slowly in a circle and squeeze your hand on that orange.  Recent extraordinary solar activity/inactivity is the harbinger of things to come - acceleration in the effects that we mistakenly have called "global warming," for one thing.

Global natural catastrophes mean global hunger, homelessness, water shortages and global disease pandemics due to the lack of proper nutrition and medical care.  I foresee, as a result, massive global population declines and shifts from the third world to what we now think of as first- and second-tier countries.  The third world, especially Africa, Indonesia, India, Latin America and China, will be hit especially hard. 

A Tsunami of Third-Worlders

Western nations quite literally will be overrun by a flood of refugees from third-world countries, resulting in civil unrest and riots well beyond that which we already see taking place in several European countries.  Governments will fail, just as already has occurred in Iceland, of all places.  Civil wars and ethnic cleansing will be the order of the day as the world descends into a maelstrom of chaos, from which World War III will arise.

In addition to all the foregoing, America will see battle lines drawn between whole classes of people, both economic and racial.  When Whites begin to shoot back, due to the inevitable ramping up of the low-grade racial war that has been raging in the streets of American cities for years, government will begin to shoot people wholesale in the streets.  Truly, that will mark the end of America, as she erupts into full-blown Civil War, the result of which will be her breakup into some predictable chunks, not the least of which will be the new country of Aztlan in the Southwest.

The New American Revolution will be the result and only then will New America come into being.  But, first, things must get much worse before they get worse, don't forget.

New America.  An idea whose time has come.


Copyright 2009 Edgar J. Steele

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