Debt and Drugs. Rock and Roll, not so much

Debt and the Prostitution of America

"The borrower is a slave to the lender." Proverbs 22:7

BY CRIS SHERIDAN

Our entire nation is largely indebted to a single private corporation! Yes, that's right, the Federal Reserve—a privately held bank that is closing in on being the 2nd largest holder of US debt. At the rate its going, the Fed may actually be the number 1 largest holder in just a few months, surpassing that of China and Japan. If the above verse from Proverbs is correct, America is (or is certainly becoming) a slave to both private banks and foreign nations.

Since America is the largest debtor nation in the world, its survival depends on borrowing other people's money in exchange for a temporary service. Really, this is a form of prostitution. You see, when someone lends money to another in exchange for debt, the debtor is now indebted to the lender to continually perform a service until paying them back in full. Since this arrangement carries a considerable amount of risk, the debtor will usually entice the other party to offer their cash with a show of interest. If the deal appears attractive, money is given and the services rendered. Normally, however, with debt-based arrangements, if the one taking the money—the debtor—doesn't pay up in return, the lendor has full rights to their personal property. In the past, this meant you became their slave and performed whatever services they required.

Now, in the case of America, you have one single nation that is servicing so many clients simultaneously that fear is starting to rise over the threat of STDs. These “Sovereign Treasury Defaults”—as we may refer to them—were largely unheard of, however, until America decided to no longer allow the use of protection in all of its service-based relationships. The gold standard, as this protection was known, was put in place to maintain the financial health of the debt-issuer and ensure against the temptation of debasement, or inflating one’s currency.

In transition from the world’s greatest lender to the world’s greatest borrower, the US realized that it could no longer honor its vows and issued, in essence, a bill of divorce to its partners abroad. This was a direct admission that America was no longer financially healthy, i.e. living below its means, and that it was, instead, going to engage in servicing as many people as it needed in order to finance a growing tower of consumption and debt. Thus, the world's most desired bride soon became a harlot.

There is a huge reason, however, why foreign nations continue to slum it up at the Treasury auction every year—they are drunk with American money! They cannot sober up because the US has inflated and multiplied her debased currency all over the world. Madam America is fighting hard to keep her clientele happy, but her assets are becoming visibly stretched. The American taxpayer cannot afford to pay the bill. Therefore, she has no choice but to continually inflate or die!

Many are bewildered by the huge increase in gold's value over the past decade. To them, it is an anomaly; something that can't be explained in terms of modern finance. They are deceived; unable to see outside their unyielding faith in paper money because it is issued in God's name—"In God We Trust"—or because they believe that nations, and not just companies, are too big to fail. History proves otherwise...and God does not look favorably upon blasphemy.

I do not believe this system will end soon. Though America has risen to a precarious position atop an unwieldy beast, her services are still loved more than she is hated. Eventually, however, one will outstrip the other...turning what has been, so far, from a tolerated agreement of global submission into a forced act of retribution. Until then, America will simply continue to further debase her value and become a slave to the banking system and foreign nations—prostituting her wealth and selling her body to the highest bidder. The question is not if, but when will the final day of reckoning come?

"For all nations have drunk of the wine of her fornication, and the kings of the earth have committed fornication with her, and the merchants of the earth are waxed rich through the abundance of her delicacies. And the kings of the earth, who have committed fornication and lived deliciously with her, shall bewail her, and lament for her, when they shall see the smoke of her burning. Standing afar off for the fear of her torment, saying, Alas, alas, that great city Babylon, that mighty city! For in one hour is thy judgment come." (Revelation 18)

Prostitution is a topic that most Americans would rather not discuss. As long as it’s done behind closed doors, in the dark of night, or away from the public eye we don’t have to think about the desperate circumstances that lead women to sell themselves for money, battle drug addictions, and commit to an unsustainable lifestyle that often ends in pain, trauma, or suicide.

Then again, I’m not talking about college students facing massive debt, or single mothers left to raise children alone, or any of the other thousand or so individuals that decide prostitution is the easiest way to reverse the hole they find themselves in. No, I’m talking about our nation.

It is tempting to think that prostitution is simply a moral issue. However, prostitution is just as much a matter of circumstances, or even economics, than it is of morality. What are the circumstances often associated with prostitution then? Debt and drugs: two things our nation—that is, our economy—has much in common.

It doesn’t stop there though. The similarities between prostitution and the American economy are with profound historical precedent to numerous nations and empires that, without changing course, all faced a similar fate.

Yesterday I posted a video showing a portion of the documentary I.O.U.S.A., which told a parable of Thriftville vs. Squanderville—a story written by Warren Buffett to simplify the “problems inherent with persistent and large trade imbalances.” It describes what happens to a nation that continually consumes more than it produces. The moral of the story is that eventually the consuming nation will have spent all its money and must resort to selling itself, i.e. its land, property, assets, etc., to maintain its luxurious lifestyle. When the land can no longer produce or has all been sold, it becomes the property of another. A long time ago, and perhaps still true in some places today, this often resulted in a family selling their children as slaves or indentured-servants for money. Not only is this sad state of events a reoccurring pattern throughout human history but also, perhaps, the origins of prostitution itself. To me, the link between debt, slavery, and prostitution is extremely well-established.

Consider now what most Americans face. Michael Hudson put it quite well when he pointed out:

“In order to qualify for professional jobs in America, [students] have to take out loans that put them deeply in debt. Then, when it comes time to start a family, they have to take on a lifetime 30-year mortgage debt. They need to take out an auto loan to buy an automobile to drive to work, especially where public transportation has been dismantled…  And when their paychecks are squeezed more, they can maintain their living standards and social status only by taking on credit card debt.”

This sad state of affairs could not happen without a monetary policy, government, and culture that rewards consumption and spending over savings and investment.

This didn’t happen overnight. Nor is it the result of a single factor. America became a debt-ridden “service-based” economy through a long-series of poor decisions that, like the prostitutes now standing on street corners, must now choose to service as many as they can and hope that make-up and lipstick will hide the signs of deterioration. Supply and demand is no longer a productive exchange of goods, but of maintaining appearances.

As the nation’s former Comptroller General, David Walker, says, “We suffer from a fiscal cancer. It is growing within us and if we do not treat it, it could have catastrophic consequences for our country.”

Like any disease, if not dealt with, it will eventually kill its host. Unfortunately, the rot, corruption, and dependency on debt-based consumption has gone so deep that to drastically cut spending will almost certainly lead to major withdrawal.

If prostitution was merely an economic issue, the solution would be easier. But, as we all know, it is also a moral and spiritual one. If this were not so, then consider this: If a woman were to plead with her possessors to help her lead a productive life, would a moral entity force her into further debasement and give her drugs to ease the pain? When god is money, the choice is obvious.

This is exactly how the Federal Reserve—our central bank—is treating the disease that is ailing America: through currency debasement and large doses of monetary injections. Long-term sustainability is not the goal. It is to keep America "servicing" as many clients as long as possible until she has been taxed, regulated, and starved of whatever productive value she has left.

In order to end this we must stand up and fight. We must learn to save and not just borrow. We must learn to produce and not just consume. This part is a fight against ourselves.

The second part is a fight against monetary policies that do not serve the long-term interests of the U.S.

As laid out in Jim Rickard’s testimony before the Senate Banking’s Subcommittee on Economic Policy, we must begin by:

·        Raising interest rates in stages to provide positive real returns to savers.

·        Banning over-the-counter derivatives that serve no role in capital formation but greatly increase systemic risk.

·        Breaking up too big to fail banks that pose systemic risk.

·        Offering real price stability. Two percent inflation is not benign, it is cancerous.

·        Create a favorable investment and growth climate by ending regime uncertainty in areas such as taxes, healthcare, regulation and other government impositions.

If we do not do some of these things ourselves, they will be forced upon us by circumstances or others instead. America is still in a position to make good choices. If we wait until the "handwriting is on the wall", it is too late