Walter Williams: The word “democracy” appears nowhere in the two most fundamental documents of our nation — the Declaration of Independence and the U.S. Constitution. Our Constitution’s Article IV, Section [...]
Williams
Apr 152011
Investor’s Business Daily presents an article by Walter Williams on taxing the rich to raise money.
Tax The Rich? Good Luck With That
So far as Congress’ ability to prey on the rich, we must keep in mind that rich people didn’t become rich by being stupid.
That means whether taxes are high or low, people make adjustments in their economic behavior so as to keep the government tax take at 15% to 20% of GDP. Differences in tax rates have a far greater impact on economic growth than federal revenues.
What’s the evidence? Federal tax collections have been between 15% and 20% of GDP every year since 1960. However, Continue reading »
Mar 242011
Mar 182011
John Williams and Chris Martenson are two analysts whose opinions I respect very much.
Both have been negative on the country’s economic policies, pointing out where they must lead.
Just recently, and independently, both have issued what I consider Red Alerts regarding the immediate future. Their outlooks are rather similar as is their sense of urgency.
It is important to understand what is happening and how it will play out. These gentlemen provide a roadmap for our future, at least as they see it. Their outlooks are not identical, but they both see an economic crisis greater than 2008 and one that is imminent.
I find it difficult to disagree with either of these analysts on most topics. Their take below is no exception. Almost anything they write is useful to understand where we are going, at least in their opinion. Visit their websites for additional insights and then make your own judgment and preparation.
John Williams
John Williams
John Williams
John Williams of Shadowstats.com has been warning of a hyperinflationary depression for some time. Apparently he now believes it could be imminent.
What Mr. Williams envisions is a financial and economic Armageddon, something so terrible that few expect it and even fewer are willing to discuss and/or prepare for the outcome.
His expectations are discussed below via KingWorld News. Sit down before you read this, preferably on the first floor with no sharp objects near you. The emboldening has been added by me.
John Williams – The Great US Collapse Nears
With the dollar remaining weak John Williams of Shadowstats had this to say in a special report, “The U.S. economic and systemic-solvency crises of the last four years only have been precursors to the coming Great Collapse: a hyperinflationary great depression. Such will encompass a complete collapse in the purchasing power of the U.S. dollar; a collapse in the normal stream of U.S. commercial and economic activity; a collapse in the U.S. financial system as we know it; and a likely realignment of the U.S. political environment.”
There is nothing above with which I disagree. Regular readers will have seen these same expectations discussed on this website.
John Williams continues:
“Outside timing on the hyperinflation remains 2014, but there is strong risk of the currency catastrophe beginning to unfold in the months ahead. It may be starting to unfold as we go to press in March 2011, but moving into a full blown hyperinflation could take months to a year, beyond the onset, depending on the developing global view of the dollar and reactions of the U.S. government and the Federal Reserve.
Prerequisites to the crisis unfolding include: the Federal Reserve moving to monetize U.S. Treasury debt; the U.S. dollar losing its traditional safe-haven status; the U.S. dollar losing its reserve status; the federal budget deficit and Treasury funding needs spiraling out of control. The Fed moved to monetize Treasury debt in November 2010.
A much-diminished U.S. dollar safe-haven status has become evident in early March 2011, along with serious calls for a new global reserve currency. The economy is not in recovery and should display significant new weakness in the months ahead, with severely expansive implications for the federal deficit, Treasury funding needs and requisite Fed monetization of debt.
As the advance squalls from this great financial tempest come ashore, the government could be expected to launch a variety of efforts at forestalling the hyperinflation’s landfall, but such efforts will buy little time and ultimately will fail in preventing the dollar’s collapse. The timing of the onset of full blown hyperinflation likely will be coincident with a broad global rejection/repudiation of the U.S. dollar.
With no viable or politically-practical way of balancing U.S. fiscal conditions and avoiding this financial economic Armageddon, the best that individuals can do at this point is to protect themselves, both as to meeting short-range survival needs as well as to preserving current wealth and assets over the longer term. Efforts there, respectively, would encompass building a store of key consumables, such as food and water, and moving assets into physical precious metals and outside of the U.S. dollar.”
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Of course no one can be sure of the future, yet my interpretation of the data points is consistent with Mr. Williams’.
Timing is the most difficult aspect of any forecast. Williams expects the development of hyperinflation to “take months to a year” once the currency crisis begins. He does not provide an expected date for that event, nor does he provide a definitive marker that identifies its beginning. His outside limit for hyperinflation is 2014, which presumes that a currency crisis begins no later than late 2013 or early 2014. He also indicates that it could begin as early as today.
No warning lights or bells signal hyperinflati0n. What appears to be inflation or high inflation shifts without warning and almost instantly into hyperinflation. Once begun, it will be as sudden, unexpected and as devastating as the tsunami that struck Japan.
There are major differences between our economic situation and Japan’s human tragedy. Our economic tsunami will not cause immediate physical and human destruction. We had years of economic warnings which should have enabled us to avoid the impending tragedy. The horror of nature that struck the Japanese could not have been foreseen or prevented.
It is now too late to prevent our economic calamity. It is not too late to take precautions to protect yourself and your family against some of the coming damage. Mr. Williams’ recommendations for protection appear wise if you envision the future to unfold as he predicts.
Chris Martenson
Chris Martenson has just issued “the highest level alert to my readers … The threshold for an alert is one or more world events that personally cause me to take action.”
According to Mr. Martenson, who has been tracking these matters for over five years:
major world-changing events are now underway and … your personal preparations for an uncertain future should either be completed or take on a new sense of urgency.
He believes that the economic meltdown has begun. His concern is as great as it was in October 2008 when many feared the world financial structure would implode.
Here are the stages he expects: Continue reading »
Chris Martenson
John Williams
For more than a year, I have argued that regardless of what you want to call our current economic crisis, it is not current and not cyclical. It is secular. That is, the problems that surfaced began many years ago, back in the 1970s.
Chris Martenson, who interviewed John Williams of Shadowstats.com, obtained the following quote from Mr. Williams:
If you look at the government’s latest statistics – the poverty survey of 2009, which is the most recent release, with average and median household income adjusted for inflation (and they use a really gimmick low inflation rate with that one) – it shows that not only has household income been falling the last year or two, but it’s below its near-term peak before the 2001 recession. Household income has not recovered above that, and if you use the CPI-U (the usual inflation rate to deflate that by instead of the gimmick one) it shows that household income today is below where it was in 1973. Again, the average household has not been able to keep up here. If income growth is not keeping ahead of inflation, very simply you can’t have consumption growing faster than inflation on a sustainable basis.
Many will attack median household income, claiming that there are more single head of households today than in the past. That is true, if you go far enough back, and probably true for the period under discussion. The War on Poverty started the disintegration of families in the mid 1960s.
A different measure, not dependent upon families, is weekly wages. Real weekly wages today, using the government’s arguably understated inflation figures, are lower than they were in 1964. This drop is not a function of the current economic problem because they dropped below in the early 1970s and never recovered.
In the interview (podcast), Williams and Martenson discuss the how the following came about:
- John came to understand how changes in the way the key economic indicators are calculated has resulted in an outcome in which they no longer reflect reality. No one believes, values or knows how to accurately apply them anymore.
- There is rampant precedent for political manipulation of how these indicators are calculated. Past administrations forced changes in the forumlae for many reasons – a common one being optics.
- Using erroneous indicators is dangerous – not just for the governement, but for everyone. When inflation is running higher than most expect (as it is today), investors are cheated out their returns, wage earners wonder why their paychecks buy less goods, and fixed income earners suffer greatly. Unfortunately, there are myraid incentives for politicians and corporations to embrace artificially-low calculations – as they justify reducing obligations owed.
- The key approaches to calcualting inflation are especially convoluted, especially the practice of applying hedonics. If we instead calculate inflation according the formula used in 1980, we would see a number closer to 8%+ vs today’s 1.5% rate.
- Similarly with unemployment, John calcualtes the true rate in the country today is 22% (vs the reported 9%).
- In sum, he sees the US suffering from structural issues that are extremely hard to address – but impossible if we continue to let fantasy data be our guide. Our circumstances are not sustainable and, in his eyes, have us on an inexorable path to higher inflation – and likely hyperinflation.
Martenson provides additional commentary on his site or you can read the linked article here.
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