Hosni Mubarak, the 31 year sock puppet despot of the Anglo-American governments, is already deposed whether he yet recognizes such or not. The Egyptian people (like Tunisia) already awoke to their own power and are overthrowing oppression.  The limits of tyrants are prescribed by the endurance of those whom they oppress.

Here's a well done 2 minute composition of clips from the revolution: http://www.youtube.com/watch?v=ThvBJMzmSZI&feature=player_embedded

Interestingly just last year, 2010, Mubarak's party won landslide elections with over 90%. Re-elected time and again, and with such overwhelming public support at the voting booth, how can there be any public opposition? [Sarcasm]

Unfortunately for Mubarak, the Egyptian army has shown up as ordered but is refusing to turn on the people. At best they have taken a neutral stance to merely suppress looting.  At worst for Mubarak they are actively supporting the revolution. Here is a video of Egypt armored vehicles intervening between Mubarak's Praetorian national police who began firing on the citizens.

http://www.csmonitor.com/World/Backchannels/2011/0129/Army-protecting-Egypt-protesters-from-police-video

The US and UK governments were shocked at losing their puppet ruler in Tunisia. Now I think they are "shitting bricks" to use a colloquial term. All those years of foreign welfare money propping up puppet despots down the drain. But they should not be concerned. It is high time to end foreign welfare. Aside from the immorality of distributing your earnings to overseas foreign aid welfare queens, the U.S. is broke and the inevitable consequences of its economic irresponsibility are only just beginning to manifest. These people need to make and control their own government and find their own pathways to freedom and prosperity; and they will. The transition will certainly come with costs too as they always do. 1776 was not a free ride for the USA either.

Freedom cannot be imposed by a foreign government through a puppet governor, or through any means by an outside force. People themselves must create it through the very process of fighting for it. It is through the very struggle for freedom that people win their rights and appreciate the value of freedom. What is achieved too easily is appreciated too lightly.  Freedom’s value is divine, and sometimes it has a price. As Jefferson wrote, "The tree of liberty must be refreshed from time to time, with the blood of patriots and tyrants.  It is its natural manure." An oppressed people become aware of their great power by coming together yet acting individually for a common purpose, possibly arming themselves. They achieve their freedom, political authority and legitimacy by exercising their power in action against their oppressors, by force if necessary. Through their common struggle and experiences, and the sharing of values, ambitions and ideals they develop an appreciation for liberty and the principles for their future society.

The precipitating factor of both these revolutions was economic. Tunisia and Egypt were both suffering terrible inflation, high unemployment, overbearing government regulation, taxation and tariffs. In Tunisia, a married father of four with a college degree who could not obtain a job was trying to earn money selling produce in an open market. The Tunisian police confiscated his produce, threw him out of the market, publicly humiliated him in the street and fined him for not having the proper permits and license, and paying the fees and taxes to sell his produce. He went to the city council the next day to plead his case to obtain the proper legal credentials to earn a living and to pay whatever cost they wanted from the earnings he could make. They refused, threw him out of the council and locked the doors. In protest he doused himself in lighter fluid and lit himself on fire at the entrance to the council. His treatment was not unusual. That was the spark (no pun) that triggered the revolution in Tunisia.

Since that event, there have been six cases of self-immolation in Egypt, three in Algeria and one in Saudi Arabia out of similar acts of desperation.  

These events are only the start of a much larger chain. 2011 Will be the first "summer of hell" in a growing series.  The economic harpies of the U.S. and much of the world economy have not been slain. To the contrary the political leaders have only fed them, expanded their numbers, and pretend they don't exist. The U.S. is not immune to the same events transpiring overseas. In the end it will suffer economic consequences as it has never experienced before - worse than the 1970s stagflation or the great depression. No one in 1931 had any idea that they were at the start of the Great Depression. The government and almost all of the pundits advised the downturn was over and the economy was on the road to recovery. 2011 is parallel to 1931. Only this will not be a deflationary depression. It will be a horrible inflationary depression. By the end, it will make the 1970s look like a paragon of economic prosperity. Some asset prices will continue to drop in nominal value, but consumables, food, energy, clothing, products, fuel will begin rising in price and accelerating. How the national government, the states, the people react and deal with it is unknown. The inflation (expansion of the money supply) has already been created and is accelerating. The price increases are the lagging consequences and are only just now beginning to appear. Never before in US history has the money supply been expanded at a rate as fast as it has these past 15 years and these past three were even greater with each year successively setting new records. The rate of expansion has already exceeded what it took to spin Weimar Germany into a hyperinflationary spiral, and much greater than the 1960s expansion that sent the 1970s into price inflation.

On top of that the acknowledged national debt ($14 Trillion) is greater than it was in 1970s or any time in history. The actual debt if accounting standards required of private business were applied to the government is somewhere between a low of $70 trillion of a high of over $200 trillion. People sometimes do not comprehend these large numbers. If one were to spend a million dollars every single day beginning all the way back at the birth of Christ, then today that person still would not have spent $1 trillion dollars. The trade deficit gap is also worse than at any other time in US history. On top of that all major U.S. banks are insolvent by ethical accounting standards. They hold paper assets such as mortgaged backed securities, mortgages and derivatives on the books as if they were dollar reserves in account. The Fed has eliminated the requirement to price these assets to their market price and instead they can now mark them on their records at imaginary prices that are several times above actual value. It would be as if I had an old rusted VW bug that did not drive, but I could list it at a value of $100,000 and use it as collateral for loans at that price. They maintain their function now by having access to the Fed's discount window to borrow at 0% (zero). The Fed of course just manufacturers as much new money as it wants anytime it needs to lend more. The Fed wants the banks to loan this money out because it believes the answer to over extended debtors is to incur more debt. What do the banks actually do with the virtually unlimited money they can now borrow for free? They are not lending but instead turn around and buy treasuries or else deposit the new money from the fed at the fed and earn interests from the fed on the money that is not theirs which they borrowed for free. What a deal for the bankers.  Let me borrow a few billion dollars at no cost and buy treasuries and earn interest on money that is not mine.

Social Security is already negative spending $45 billion more in 2010 than it took in. This is because there is no trust fund. Prior Social Security excess revenues were spent in the general budget to give the appearance of smaller deficits in prior years at the expense of being replaced by general revenues later when the payments come due (now). 2010 Social Security was $45 billion in the red. Each successive year that Social Security deficit increases. Plus the high unemployment from a stagnant economy further diminishes Social Security revenues thereby exacerbating the deficit in coming years.

Medicare/Medicaid is in the same situation and soon goes into the red.

The governments' economic experts at this month’s meeting at Davos Switzerland advised that despite so many governments (Greece, Ireland, Portugal, Spain, Italy, U.K. soon U.S., Japan and others) and other entities debt problems, the solution is that the world needs to incur $100 Trillion (yes that is trillion with a T) in additional debt to keep functioning. Unbelievable! Watching this stuff makes one feel like Alice falling into the rabbit hole and being in Wonderland. Nothing makes sense.  The irrational is proposed and followed as official policy. Up is down and debt is solvency.

On top of that the dollar situation has the unique position in history of being a world reserve currency. This has enabled the U.S. to effectively export its inflation. New dollars created are spent overseas in exchange for goods, services, oil, minerals, resources, foreign aid buying dictators, etc. Foreign governments and central banks also buy up U.S. dollars as if they are gold. This limits the number of dollars circulating in the U.S. and tremendously dampens the price increases that would otherwise flow from inflation of the money supply. This has allowed the U.S. government to spend lots of money through deficits but avoid the otherwise detrimental consequence of high price inflation at home. There are more dollars accumulated overseas than in the U.S. Effectively all these overseas dollar reserves and accounts are capacitors or stored reservoirs of inflation.

As soon as Japan or China or Brazil or England or Saudi Arabia or India or Chile or any other nation that has accumulated dollar reserves starts to get nervous about those reserves losing purchasing power they can begin to use them to buy assets, commodities or other currencies instead. It may be a simple pension bond fund that begins the little snow ball. At some point it will trigger a run on the dollar and there will be a race to get out of the U.S. dollars. All of these dollars will come flying home to the U.S. to buy materials or anything else they can get before they lose more value. These inflation reservoirs stored up from past monetary mismanagement will come flooding back all at once.

Another possible trigger may simply be the overseas inflation. If a country like Saudi Arabia or China or Jordan that are already experiencing bad inflation sees these revolutions triggered over the rising costs of food and fuel etc., they may try to do something about it. They can take their dollar reserves and start spending them to buy their own currency up to strengthen the purchasing power of their own currency to halt inflation. Or they may alternatively buy food or gas or materials directly with those dollars to provide them to their people at reduced prices in order to appease their populations suffering from price inflation. By spending those stored dollar reserves it increases the dollars in circulation, drives up competition for products and goods in dollar prices and eventually those dollars make their way back to the U.S. to be redeemed for US goods. The devaluing dollar may trigger others to begin exchanging their dollar reserves as well before they lose too much purchasing power, and again you have the snow ball down the mountain effect and it becomes a run to get out of the dollar. There are many other possible scenarios. One of them is inevitable. The world cannot continue accumulating U.S. dollars at ever increasing rates.

Current policy is unsustainable. Politicians like to state that obvious fact, but they either do not believe it or willfully act contra to it. Here is a good visual explanation of our government's plan to attack its fiscal irresponsibility. This video refers to Obama, but the Republican position is no better (except for perhaps a few members): http://www.youtube.com/watch?v=Yk_jToBbpWU&feature=player_embedded

Some say when inflation hits, the Fed can simply raise rates and soak up the excess dollars like Paul Volker finally did near the end of 1970s-80. Then banks were solvent and had reserves and yet many still failed. Now any raising of rates will begin tipping banks into failure immediately. The FDIC based on its own projected outlays is already in the red. It cannot insure your accounts. The Fed will then also have to bail out the FDIC by printing new dollars as banks fail. Plus rising mortgage rates will send the real estate market back into a tailspin worse than where it already is by making mortgage costs higher. Banks and Fannie and Freddie have a plethora of foreclosed and ghost house assets they cannot sell right now. With rising rates it becomes even harder. Eventually the Fed will have to bail out Fannie and Freddie and more banks with more newly created money compounding the problem. The Fed is already buying Treasuries at the rate of $80 billion worth per month in order to fund the national government because there is not enough demand on the market to buy U.S. treasuries otherwise without the rates rising significantly. The Bernanke is simply creating new money to buy treasuries to keep the national government running on a debt funded basis - monetizing the debt. This is the creation of inflation. This is the government financing that sent the many Latin American countries into hyperinflationary collapse in the past decades as well as Zimbabwe more recently.  

Additionally as soon as rates rise the US budget deficit begins spiraling out of control. In 2010 the cost of simply servicing interest on the national debt, even at these ridiculously low rates, was $413 billion and rising with the rising debt. If the interest rate were to rise to 5% the cost of the interest alone for 2010 would be $740 billion. That is more than any other budget item - eclipsing Social Security, Medicare, or even the military budget (not counting off budget and war spending). The market already will not buy U.S. Treasuries at the current rate. That is why The Bernanke is buying the treasuries and will not stop.

There is no good economic news for the U.S., and the outlook will only get worse. There is no solution. Severe economic pain is inevitable. The causes of it already occurred. The only question is whether to take action now and experience very severe economic pain now, or delay the pain for a while at a cost of exponentially increasing pain.

I do not see the president, any of his cabinet, congress (save a couple) or anyone else in power proposing anything necessary to correct U.S. pathway. What are necessary are drastic measures. It requires completely ending of the foreign occupations of Iraq and Afghanistan, the closing of foreign bases and a large portion of domestic bases. On top of that it requires shrinking the rest of the federal government to less than half its size – eventual phasing out Social Security and Medicare, eliminating entire programs - PBS, CPB, CIA covert ops - returning it to an intelligence only agency again, BATF, EPA, TSA - transferring responsibility of passenger security to the airlines. It requires eliminating entire departments - Departments of Education, Energy, Transportation, Labor, HHS, and Homeland Security. It is a matter of necessity and inevitability.  The budget must be reduced to such an extent that surpluses are obtained and not spent, but used to pay the debt. Only such measures can save the value of the dollar. Nothing else short of such drastic measures will save the government budget, financial system and U.S.  currency. This is what it will take to save the nation. Take your choice: save the nation or save your special program or foreign military base at least for a little while longer, but eventually you lose that too. That is the point we are at now. If you insist on saving your precious Department of Energy or Department of Education or Japanese military bases, or Afghanistan occupation then realize here and now that you do so at the cost of destroying the USA. Do you still insist on acting like a spoiled, greedy toddler? – “I want PBS”, “We must have HUD housing,” We can’t lose our bases” “We must ‘win’ the occupation of Afghanistan no matter how many decades or what the cost”. Do you want to see the consequences of your choice? Take a look at Argentina 1989, or the Soviet Union during the 1990s.  Only the economic hardships on the USA will be worse, and the bulk of the America people will not be able to adapt as well as Argentinians and former Soviet citizens. Those citizens were far more accustomed to hardships and getting by with less. They did grow and can and process their own food, and mend their own wardrobes, and neighbors had a sense of community and knew one another.

Although a separate issue than fixing the fiscal damage, to insure the government does not again go down the same path of fiscal irresponsibility, the monetary system would need to be corrected to adhere to the Constitutional based gold and silver based currency and the central planning Federal Reserve System eliminated. This eliminates the politicians' ability to incur perpetual debt and imposes fiscal responsibility on the government. They would not be able to borrow newly created money. They would only be able to borrow actual money in existence that had been saved.

Unfortunately presently there appears no reasonable likelihood of Congress or the President taking anywhere close to the measures necessary to correct the financial problems. Even with such measures comes severe economic pain. The situation will unfortunately continue to devolve until the circumstances are dire and the suffering severe, or perhaps to complete total monetary collapse. Many events can happen along the way however - military coup, revolution, regime change, constitutional change, use of emergency powers, or implementation of martial law. Launching an external war is one measure that governments of nations collapsing internally have historically resorted to as a means of rallying the peoples’ loyalty and distracting them from internal decay.

Es Tu Spartacus?