America's Worst Economic Depression

by Robert M Davidson

  President Clinton should be applauded for attempting to address our Runaway Entitlement spending, though Washington wouldn't hear of it.

  President Bill Clinton appointed … the Kerrey-Danforth Commission on Entitlement and Tax Reform … and the Breaux Commission on the Future of Medicare. Both issued eloquent statements on the magnitude of the cost challenge, both gridlocked hopelessly over policy recommendations, and both were flushed by the president who appointed them…. Only a month before Clinton appointed the Breaux Medicare Commission, for example, the Democratic Party ran a demagogic “Mediscare” campaign to vilify any candidate who proposed touching Medicare. [cxliii]

  He was distracted in his second term by questionable business dealings with James and Susan McDougal and an alleged sexual affair with Paula Jones both while Governor of Arkansas. As these problems were beginning to wind down, Clinton’s affair with White House intern Monica Lewinsky became public and later, he was impeached for obstruction of justice.

  Adulterers are liars, and serial adulterers are brilliant liars. Bill Clinton is a glaring example. It was not as shocking that he lied to cover up an affair as it is that he did it so brilliantly and persuasively. He duped those closest to him – his family, his aides, and his cabinet – even in the face of the growing pile of evidence. Habitual lying has poisoned the deepest wells of his character. [cxliv]

  His total accumulated Debt was just under $1.4 trillion.

  George Walker Bush (2001-2009)

  Eight months into Bush the 2nd's first term as president, the September 11, 2001, terrorist attacks occurred. In response, President Bush announced a global War on Terrorism, ordered an invasion of Afghanistan that same year, and an invasion of Iraq in 2003.

  Speaking to an audience of West Point cadets in 2003, President George W. Bush equated American security with global democracy, a theory he was about to test with their blood. America would be secure when the rest of the world became democratic, the president said. [cxlv]

  Bush's war in Iraq has done untold damage to the United States. It has impaired our military power and undermined the morale of our armed forces. Our troops were trained to project overwhelming power. They were not trained for occupation duties. [cxlvi]

  He signed into law the Medicare prescription drug benefits for seniors – new socialistic entitlements that undermine America's fiscal stability.

  The Medicare Drug Benefit program, enacted during Bush's first term, was meant to cost $400 billion during its first 10 years. Turns out, the official estimates included 2004 and 2005, that is, two years before the program existed. The real 10 year cost of the program floated through the news much later at $720 billion. [cxlvii]

  To his credit, Bush began his second term by outlining a major initiative to reform Social Security, which was facing record deficit projections by 2005 though with opposition from Congress – and once again, no progress was made.

  Yet efforts at reform, including attempts by the George W. Bush administration to privatize Social Security, have gone nowhere. This failure probably reflects the reality that those who benefit from an all encompassing social safety net are growing in numbers -- and political clout. [cxlviii]

  In December 2007, the United States entered the longest post-World War II recession. That prompted the Bush Administration to take more direct control of the economy, enacting multiple economic programs intended to preserve the country's financial structure. Bush made it the centerpiece of his domestic agenda.

  In September of 2008, Bush announced a $700BN bailout for banks and mortgage companies against the rising mortgage failures on housing. In December of 2008, Bush extended financial aid to the auto industry as well to avoid their bankruptcy and loss of jobs before Christmas, as he “did not want this on his legacy” per a top staffer. Bush’s support to banks and the automobile industry, while a kind gesture, were socialistic and an affront to a free market system.

  I had to abandon free market principles in order to save the free market system. [cxlix]

  Bush’s cumulative budget deficits from 2002-2009 were $3.35 trillion.

  Total accumulated Debt was just over $2.1 trillion. [cl]

  When the debt and deficit hallmarks of the George W. Bush years are carefully examined, the three fastest growing forms of indebtedness -- mortgage debt, financial debt, and the current account deficit (US net foreign borrowing) -- paint an extraordinary picture. [cli]

  Barack Hussein Obama (2009 - Present)

  While America is embroiled in what may be its worst economic years since the Great Depression, President Obama requested and later had approved the largest budget in the history of these United States at $3.53 trillion. Based on the reasonable budget baseline years of 2010-2017, Obama’s cumulative budget deficits as of November 2009 may be as high as $8.4 trillion – 2.5 times higher than his predecessor George W. Bush's $3.35 trillion budget deficit.

  Insensitivity to scope is a major obstacle to understanding the Obama administration’s $3.6 trillion 2010 budget. People simply have trouble understanding a number so big…. After a review of the Obama budget’s numbers before formal submission to Congress, Budget Director Peter Orszag said this year’s deficit will be $1.841 trillion — $89 billion more than previously estimated. [clii]

  Just in the last 12 months, the U.S. Federal deficit has exploded from $454.8 billion in fiscal 2008 to $1.4 trillion in fiscal 2009. It has tripled in size in just one year's time …. This is not just more of the same trend that we have witnessed over the decades. It's a massive, revolutionary change in the entire structure of the U.S. economy ... and it's totally unprecedented in history. [cliii]

  There is not much about his predecessor that Obama has not publicly criticized. In contrast, Bush has "offered his other cheek" to Obama by remaining comparably silent since leaving the White House.

  Obama's most recent released budget request in early February of 2012 forecast a $1.3 Trillion Deficit for the year. Are you beginning to see how America's Political Failings are sinking us deeper and deeper into Debt - the recipe for America's Next Depression?

  On February 17, 2009, Obama signed into law the American Recovery and Reinvestment Act of 2009, a $787 billion economic stimulus package - more socialism - aimed at helping the economy recover from the deepening worldwide recession. While this stimulus money promised to create jobs, it did little if anything in that area. Its first order of business propped up banks, financially, and helped thwart a depression - making the inevitable next downturn far more difficult for all Americans.

  [cliv]

  He had an $800 billion stimulus bill and only three percent of that went to roads and highways. Only three percent total went to any construction on military. So the rest of the remaining ninety-four percent of it I just throw into one big category – social engineering. [clv]

  Obama's penchant for borrowing in his private life carries over to his public life. He gave the Congress virtually free rein in writing the huge stimulus bill. He had no reservations whatsoever about the country assuming so much debt. Other Presidents have tried to work out compromises on spending measures since it is ultimately the President who takes responsibility for the consequences…. President Obama has never faced consequences in his private life when it comes to managing money. He always had enough money simply by borrowing more and more. [clvi]

  Our analysis leads us to believe that recovery is only sound if it does come from itself. For any revival which is merely due to artificial stimulus leaves part of the work of depression undone and adds, to an undigested remnant of maladjustments, new maladjustments on its own. [clvii]

  There was a second "benefit" from the US government's financial stake in most of America's lenders through this 2009 Reinvestment Act. That was an assurance that these banks and lenders would not allow the default on any of their over-leveraged commercial real estate loans. This must have been a secretive pact or understanding between these lenders and the President's inner circle.

  You're inte
lligent enough to know that this policy is more consistent with Socialism, though actually and as you'll learn about still more in your reading, it's like the policies shaped by Karl Marx and Friedrich Engels in the mid-1800s that we know as Marxism. In fact, this has been a growing trend in our country since World War II's end and has reached warp speed recently.

  [clviii] Does it surprise you that this "secretive pact" undermines America's foundational and fundamental greatness, our Capitalistic system of commerce, for which most of the world has held us in high regard? Can you imagine how badly such actions shackle our free markets and our founder’s democratic experiment?

  With the Budget Control Act of 2011 in August of that year, Obama with the Congress’ approval increased the American debt ceiling by another "mere" trillion to the new cap of $16.4 trillion. This latest "lifeline" was expected to extend our borrowing needs well into 2013, but it’s already expended. Are you surprised?

  Analysts from the Bipartisan Policy Center projected that the United States will hit its $16.4 trillion debt ceiling between late November 2012 and early January 2013 due to lower-than-expected corporate tax revenues and the recent extension of the payroll tax holiday . [clix]

  In April of his first year, President Obama had our Labor Department's Bureau of Labor Statistics (BLS) redefine how unemployment numbers are calculated. Obama has been lowering the Civilian Labor Force Participation Rate. You're intelligent to know that this action understates how many total unemployed persons there are in America with each reporting period.

  One of Obama's cle v er ploys for reducing unemployment has been to persistently lower the Civilian Labor Force Participation Rate. After averaging around 66.5 percent for the past 20 years, it has plunged in the past 18 months. In spite of population growth, the U.S. Civilian Labor Force fell in August [2010] from a year earlier, as 2,231,000 Americans were arbitrarily subtracted from the "labor force" with the stroke of a bu r eaucrati c pen. [clx]

  Fundamental to this change in the BLS monthly calculation is to remove from our US unemployed totals any and all persons who have been unemployed for more than four weeks or who are part-time employed. Imagine how you would feel if you were unemployed and looking for work for 4 weeks and 1 day, and all of a sudden with the stroke of a DC pen you aren’t in the labor pool? What if you had a part-time job, though were continuing to look for full-time employment? Do you think you should be considered as unemployed in either of these situations?

  Bureau of Labor Statistics (BLS) spokesman Gary Steinberg tells Newsmax that the bureau publishes its methodologies for calculating the unemployment rate online. While its tweaks its various formulas to keep them up to date, he states there has been no major change in how the rate is calculated in over a decade. “The definitions have not changed . . . if someone is not actively looking for work for the four weeks preceding the reference week, they’re not in the labor force ,” he says. “That was true years ago, and it’s true today.” [clxi]

  Could President Obama have only been taking a cue from his Democratic predecessor President Bill Clinton? In 1994, during President Clinton's term, the BLS for the first time in history decided to report as the unemployed American totals only those persons who had been out of work for one year or less. This unemployment calculation is now known as U-6, though it is not publicized.

  As the author of Zero Hedge comments, "In other words, the BLS has a definitive mandate to under-represent the 'current ' . weekly data and to allow it to catch up with reality once it has become 'prior,' and thus no longer market moving." [clxii]

  [clxiii]

  The BLS terms President Obama's new unemployment totals calculation as U-3. Thanks to the work in this area by John Williams, founder of Shadow Government Statistics, and the research he posts at www.shadowstats.com , you have ready access to the correct unemployment numbers and other valuable truths.

  On August 2, 2013, the BLS released its U-3 unemployment rate of 7.4% for the month of July. They had also calculated the U-6 unemployment rate of 14.0%, though did not release this to the public. John Williams calculates that the historical rate calculation would put July’s unemployment at 23.3%. Which of these 3 calculations do you feel represents the most accurate rate for America's unemployment today?

  Apparently, Obama's distortions are not limited to just unemployment. Some contend that his administration distorts our GDP as well.

  The unemployment data are not the only economic statistics being distorted by the administration. GDP is another. Barack Obama has taken his economic play book right out of the pages of Pravda. Under his watch, the U.S. government has replaced the late Soviet Union as the champion fabricator of economic lies in the world. [clxiv]

  Obama and his Democratic controlled Congress passed - no rammed through - the new socialistic entitlement of National Health Care for all Americans, even though 93% of American citizens opposed it, at the time.

  Entitlements, as you may recall, are almost like a cancer to people. They often make persons dependent on the government. Sadly, aside from creating a new and very large ObamaCare entitlement, President Obama has increased by 23% the number of Americans who are dependent on our government.

  The American public’s dependence on the Federal government shot up 23% in just two years under President Obama, with 67 million now relying on some Federal program, according to a newly released study by the Heritage Foundation. [clxv]

  Obama's push for a more socialistic America and a redistribution of the wealth in this otherwise democratic experiment is a path akin to the destruction of many former economic world powers. Most persons of today are unaware that Britain, until its socialistic path in the 1970's, where there was also a push to redistribute the wealth, had enjoyed a 200 year reign as leader of the free world. At this time, America emerged as the unquestioned leader of the free world - lead by its free market economy, and its US dollar became the world's reserve currency.

  [clxvi]

  The picture above offers an excellent view of Britain's 200+ year reign as leader of the free world. It is also evident where America takes over that leadership and begins to build its own empire. Of course, with technology and so much moving faster, empires are not lasting as long as they used to.

  Today, America’s foreign creditors are increasingly leery of making more loans to our “spendthrift lifestyle.” So, Obama, through his pawn the Federal Reserve Bank, has been printing dollars furiously since only a few months after his election until the present day to cover his budget and socialistic agenda.

  This action is certain to usher in high inflation in the years ahead, as it devalues our currency, and likely costs our American dollar its reserve currency status. These relentless dollar printing activities will have grave consequences that must be borne for decades to come by the current and future US generations.

  It should be noted that the printing of money to pay the government’s bills will be one of the last, and certainly the most desperate measures because of the potential severity of the consequences. [clxvii]

  [clxviii]

  Schiff blames the Federal Reserve's loose monetary policy for the debasing of the U.S. dollar: rock-bottom interest rates coupled with QE1 and then QE2. If the Fed keeps this up, and continues to print money, he says the U.S. dollar could be worth less than toilet paper. His Bottom Line : Expect the dollar to continue losing value while the price of food, gas and other commodities continue to rise. [clxix]

  Thanks to the Fed's legal counterfeiting schemes, the U.S. dollar is now worth 11.5% less than it was a year ago . That means, if you had given Uncle Sam a one-year loan this time last year, he would now be repaying you with dollars that are worth only 85 cents! President Obama and Fed Chief Bernanke are not only refusing to defend the dollar, they are intentionally causing its demise with out-of-control spending and money-printing. [clxx]

  [clxxi]

  In addition to the wrongs of our dollar printing presses, the Obama Administration has been calling on China to inc
rease the value of their Yuan against our US dollar. The Administration have publicly stated that they want the Yuan to appreciate against the dollar so our exports will increase. Certainly, a lower dollar should advance US exports, but that's not the real story.

  The charades going on between China and the US is cold and calculating. America really needs the dollar to go down against the Yuan, because it is very close to defaulting on its debts to China and others. A weaker dollar makes for easier debt repayment.

  China has another objective which America, as China's servant according to Solomon, is only too willing to oblige. The Obama Administration wants to assist China in having its Yuan replace the US dollar as the world's reserve currency. Depreciating the dollar will, in time, decimate its reserve value. With that, your dollar holdings - like my own - will fall in value like never before.

  Washington’s dance with China is multi-fold. You might appreciate that America may also be appeasing China relative to our huge debts to them. In short, America doesn’t need China coming after us militarily because we can’t re-pay the money we owe them.

  [clxxii] To understand Washington’ s “dance with China” better, listen to what Larry Edelson of Weiss Research, a resident in Asia, offers in this August 1, 2012, report:

  The Chinese are coming ... in a big way. Their banks are some of the healthiest in the world and some of the most profitable. In fact, 30% of the world’s banking profits are now in Chinese banks’ hands. And of the world’s five most-profitable banks, FOUR are Chinese — ICBC, China Construction Bank Corp., Bank of China Ltd. and the Agricultural Bank of China Ltd.

  What’s more, Chinese banks are now lending to, and acquiring, U.S. companies in a very big way. In July, ICBC purchased an 80% stake in the U.S.-based Bank of East Asia in California, the first time the Federal Reserve had approved a Chinese bank’s purchase of a U.S. bank . And, as I recently reported to you, China Development Bank is ready to invest $1.7 billion in Lennar Corp.’s development projects in Treasure Island, San Francisco.