Bernanke Fiddles While The USA Burns Jeff Nielson
In 64 AD, the Great Fire of Rome occurred. It lasted for five days, and roughly half the city was seriously damaged or destroyed. This event took place during the rule of Emperor Nero Claudius Caesar Augustus Germanicus, more commonly known as "Nero".
There are serious doubts that Nero actually "fiddled" while Rome burned, particularly given the fact that the fiddle wouldn't be invented for another thousand years. Instead, his historical infamy appears to be mainly the product of his extravagant spending which threatened to bankrupt the Empire, combined with the ruthless persecution (and execution) of his enemies. He was also apparently prone to spreading rumors and propaganda among the citizenry, to cover-up his misdeeds and maintain his popularity.
Given the metaphor implied by the title, I'm sure there are many readers who believe it should have read "Obama fiddles" or "Democrats fiddle". Rest assured there is no error here. Barack Obama is only the President of the United States. The Democrats merely control the White House, and the two legislative chambers. Meanwhile, Ben Bernanke and the Federal Reserve control the money supply of the U.S.
The United States has an economy which is both saturated with debt, and dependent on ever-increasing injections of new debt in order to function - in other words it is a debt-addict. Given that every new U.S. dollar which is "printed" can only be created through inventing new debt (ever since the U.S. abandoned the "gold standard"), this makes Ben Bernanke and the Federal Reserve the originator of most U.S. government debt, and thus the "pusher" for this junkie-economy.
In pursuing the analogy of the Federal Reserve as drug-pusher, we must remember there are three ways in which the "pusher" exploits (and ultimately destroys) the addict. It is the pusher who first gets the addict "hooked", and then continues to supply the debilitating drug. It is the pusher who makes enormous profits off of this dependency. And it is the pusher who assures the addict that everything is fine, even as the addict's life spirals out of control. It is only when we understand the junkie-pusher relationship that we can understand the inherently malicious and parasitic nature of the Federal Reserve.
Given that the Federal Reserve was created in 1913, it took a relatively long time for the Fed to get the U.S. hooked on debt, as the graph below illustrates. However, now that the addiction has clearly taken hold, Bernanke (and the rest of the private bankers who own and operate the Federal Reserve) have created such a lethal addiction that a fatal debt-overdose (i.e. a default) is now the only possible outcome.
Notice the tiny little dip in this chart which is associated with the United States government funding its entire war-effort in World War II. Then observe how the same graph falls off a cliff - as the U.S. government funds the current Wall Street bail-outs. Keep in mind that virtually none of this money is being used to "stimulate" the U.S. economy. Instead, roughly 90% of every new dollar of debt incurred is either directly or indirectly used to prop-up Wall Street's paper, Ponzi-scheme empire.
Another chart (which I used in a recent commentary) illustrates how these new dollars of debt are being totally wasted, in spectacular fashion.
As you can see, for the first time in U.S. history (and the first time in the history of any major economy), every new dollar of U.S. debt is causing the U.S. economy to shrink rather than grow - and not merely shrinking a little, but at a 50% rate for each new dollar of debt incurred. As an elementary principle of fiscal management, each new dollar of debt should (and does) produce at least some, tiny positive increment of growth - in even the sickest economy (such as the debt-laden Euro-zone economies).In order or each new dollar of U.S. debt to literally destroy the U.S. economy a little more, this dictates two unequivocal conclusions. First, the U.S. economy is now so debt-laden (i.e. addicted) that even in a best-case scenario, the positive return from each new dollar of debt would be no more than a few pennies on the dollar. Second, it signifies that there is no "stimulus" taking place in the U.S. economy. Rather, all this money is simply being used to attempt to fill the "black hole" of Wall Street's structural insolvency, while a few pennies of each dollar are funnelled to the masses - just enough to prevent rioting in the streets.More specifically, "stimulus" spending can be broken down into four basic categories. There are billions of federal dollars being used each month to subsidize state unemployment insurance and welfare payments. There is many times that amount of money being funnelled into the U.S. housing sector, through the literally dozens of subsidies used to attempt to re-inflate this asset-bubble (the primary source of Wall Street insolvency).The net effect of these programs is that the U.S. government has now "nationalized" its entire mortgage market with roughly 95% of all mortgages originated or guaranteed by a handful of government agencies. Worse still, the Obama regime (at the instruction of the bankers) has been doing its best to create another housing bubble - with most of the new mortgages it's approving having zero (net) down-payments. Meanwhile, the Treasury Department has literally authorized infinite debt-guarantees for these government fraud-factories.Even with this endless array of subsidies (along with Wall Street keeping millions of foreclosed properties off the market), all that has been accomplished is that the next leg down for the U.S. housing market has been delayed. Notice in the graph below how yet another U.S. economic chart falls off a cliff. The tiny little hiccup at the bottom of that cliff is being called a "housing recovery".
Then there are the corporate subsidies, with "Cash-for-Clunkers" being a primary example of this totally wasted spending. This was a program which removed (and destroyed) millions of functional vehicles - hard assets which at least were mostly paid-for. It then goaded millions of Americans to buy vehicles which they didn't need and couldn't afford, totally wasting billions of precious consumer dollars. The auto-makers simultaneously raised all their sticker-prices to claw-back the full amount of the government subsidy - meaning that most of these lemmings traded-up to get a vehicle they didn't need, couldn't afford, and without one penny of "savings" to justify the transaction.The last-and-largest category of wasted debt are the endless hand-outs to Wall Street, and the rest of the U.S. financial sector. This subsidization comes in many forms. First, there was "TARP": part of the original $10 trillion package of hand-outs/loans/guarantees. Then there is the trillions of dollars of worthless "mortgage bonds" which the Fed has been buying-up (with taxpayer dollars) - as it tries to shovel the tons of financial feces off of the balance sheets of the Wall Street crime syndicate. Finally, there is the infinite supply of 0% interest "loans" bestowed upon Wall Street (via U.S. taxpayers), which the U.S. government (i.e. taxpayers) must borrow at a rate of interest several percent higher.Naturally, we cannot forget the massive profits which this pusher is making off of its debt-junkies. Currently, the U.S. government (i.e. U.S. taxpayers) owes the Federal Reserve roughly $5 trillion - $5 trillion which U.S. taxpayers must pay interest on in perpetuity, in return for the paper currency which the Fed simply conjured "out of thin air". Of course, that staggering total of debt is just the tip of the iceberg in an economy drowning in roughly $60 trillion of total public/private debt.The U.S., with only 5% of the world's population, has incurred more debt than all other nations, through all of history, combined - now that is a serious addiction. It is a "monkey on the back" of the U.S. economy which will provide the parasitic bankers with a massive, annual windfall, for as long as they can prop-up the addict, and delay default (i.e. the 'death' of the addict).This brings us to the third (and now most-important) aspect of the pusher-junkie relationship: continued reassurances to the junkie by the pusher that the excessive (and terminal) drug-use by the junkie is no cause for concern. It is in this respect that Ben Bernanke is unequaled as a master-pusher. No other pusher in history has kept so many addicts so deluded, for so long.Keep in mind that the entire U.S. housing-bubble was a supply driven event, unique in economic history. This was not a case (as Wall Street and the propaganda-machine claim) that average Americans suddenly became insatiably greedy overnight (like bankers) and then began a "feeding frenzy" on U.S. homes. Instead, the Fed (and Wall Street) dumped the largest of mountain of cheap debt onto the U.S. economy in history - through being allowed (by the Federal Reserve) to triple their leverage, and thus lend-out three times as much money to the same population.This ocean of available debt was ruthlessly and relentlessly "marketed" to Americans. First, they were tempted to "unlock the equity in their homes" (i.e. squander their life's savings). Then, once the supply-driven housing bubble began to gather its own momentum, these debt-pushers simply switched to the age-old "con" of all swindlers: "get rich quick".U.S. house prices tripled in little more than a decade, while the average incomes of home-buyers were falling steadily. In other words, it was obvious from the very beginnings of that bubble, that every dollar of that increase was totally unsustainable - and that there would be a subsequent "crash" which would eventually eliminate the entire rise in prices. Yet even in the weeks and days before this massive, obvious bubble burst, Bernanke referred to this Ponzi-scheme economy as a "Goldilocks economy" - the mirror-opposite of the truth.Even after the world's largest bubble had burst, Bernanke claimed that the housing sector would experience a "soft landing", and their would be no "contagion" from this collapse spreading to the broader U.S. economy. Again, this was the mirror-opposite of the truth.Now we have Bernanke, the shameless pusher, telling us that the U.S. has been undergoing "an economic recovery", which is now officially more than a year old. And, once again, what Bernanke the Pusher is saying is the mirror opposite of the truth.We can start with the simple arithmetic. As the previous graph of return-on-debt illustrates, it is impossible for the U.S. government to have generated "economic growth" through its "stimulus package". Since each new dollar of debt causes the U.S. economy to shrink even more, all that ever could have possibly been accomplished was to cause the U.S.'s Greater Depression to intensify (which is exactly what has happened).We can see this very clearly when we stand back and look at "the big picture". It is here where we can easily envision a Roman Emperor, fiddling merrily - while a conflagration rages around him. It is also here that we see a seeming paradox: an entire economy drowning in debt, while the vast majority of the society's debt-junkies have either had their "fix" greatly reduced, or else are being forced to go "cold turkey".As we see in the graph below, at the exact same time that Americans are more addicted to debt than any society in history, U.S. "bank credit" (i.e. new/available debt) has turned negative - for the first time in recorded history. How can this be?
The answer is that the Wall Street Oligarchs broke the cardinal rule of all pushers: never get "hooked" on your own drug. Lacking even the discipline of the lowly drug-pusher, Wall Street's debt-pushers got themselves even more lethally-addicted to debt than the American people. With Wall Street banks legally and illegally hiding $trillions (or $10's of trillions?) in debt-defaults and write-downs, they need (and demand) every penny of new debt created by the Fed - just for their own addictions.Yes, the Federal Reserve could conjure-up even more trillions of its debt-drug (out of thin air), but doing so would dilute the drug (i.e. the value of those U.S. dollars) - and Wall Street needs its own 'fix' to be as pure as possible, just to satisfy the needs of the banksters' own debt-addiction.Two more graphs on the U.S. jobs-market illustrate both the continued, extreme suffering of the general American population (due to being deprived of their 'drug') and the obvious frauds being committed in jobs reports via the numbers concocted by the Bureau of Labor Statistics.
The first chart shows the unprecedented duration of unemployment: once Americans lose their jobs, few manage to ever get rehired.
The second chart (an excellent compilation by "Calculatedriskblog.com") illustrates a point I have been making month-after-month: that the "weekly lay-offs" being reported by the U.S. government are still at such a high level that "jobs growth" is utterly impossible. As we can see, the best weeks reported by the U.S. government during this "economic recovery" are equal to the worst weeks of the previous two recessions. The U.S. government and the Federal Reserve have been nothing less than Orwellian in fabricating their jobs propaganda, month after month.The net result of all these lies, and all these debt-addictions can be seen in the last two graphs. As we can see, federal spending continues to explode in an exponential manner, while tax receipts are collapsing. Again, simple arithmetic tells us that with spending exploding at the same time revenues are plummeting that this debt-junkie economy is hurtling toward its inevitable, fatal overdose, meaning debt-default.
Worried that their endless lies and deceptions will not fool U.S. debt-addicts (and the multitude of foreign creditors) for much longer, the U.S. propaganda-machine now focuses most of its energies in attempting to distract market sheep - with its relentless fear-mongering of European debt issues.Certainly, European debt issues are nothing to sneer at. However, as I have clearly demonstrated in previous commentaries, a previous presentation, and this current piece, the U.S.'s terminal debt-crisis is much more advanced than even the much-maligned economy of Greece.
While we know that Nero did not "fiddle" as Rome burned, there can be no doubts about either the actions or intentions of Ben Bernanke. Not only is he "fiddling" while the U.S. economy burns to the ground, but he leads an entire propaganda orchestra all fiddling the same, false tune - a composition titled "A U.S. Economic Recovery".
Jeff Nielson
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