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Schizophrenic Bernanke Trying to Save His Legacy

Isn’t it funny, in a Greek tragic comedy sort of way, how incompetent people in positions of power whose ideology and methodology fails utterly and completely can never seem to own up to their failures, or at least just fade away and let the process of cleaning up their mess get underway?

Such is the case with Fed Chairman Ben Bernanke, or Bernyankme if you prefer. Bernanke and all of the other liberal progressives keep trumpeting that things would have been much worse if we hadn’t spent hundreds of billions, and now trillions of dollars that we didn’t have, don’t have, and will never have. Yet they make these assertions with no real data to back them up. Just ‘feelings.’

In the first article below, Bernyankme is running around trying to salvage is legacy and convince everyone what a great job he did by spending trillions and monetizing our debt, but when confronted by a college student for concrete proof and even methodology behind his decision making on the bailouts, he can’t answer the questions. Then, in the 2nd article below, he says/admits that continuing the course that he played a major part in putting us on will lead us to total economic collapse a whole lot sooner than anyone is letting on. That’s the first really honest and competent thing I’ve ever heard him say.

I’ve said it before, and now even the Fed Chair agrees with me, we hurtling headlong into a repeat of the Weimar Republic economically, and socially if we do not RADICALLY and DRASTICALLY change course NOW. Not in 5 years, not in 10 years. We don’t have that long. If Washington doesn’t stop the deficit spending NOW, put us on a course to begin paying down our debt, get out of the way and let our economy take off, most of America has not the foggiest idea how bad things are going to get.

MCKINLEY AND FITTON: Bernanke’s fairy tale recession story for kids

Records show Fed had no coherent strategy for bank bailouts

By Vern McKinley and Tom Fitton | Wednesday, April 11, 2012

It’s an oldie but a goodie for our Federal Reserve chairman. In one of his recent lectures at George Washington University (GWU), Ben S. Bernanke made the self-congratulatory assertion that the “forceful policy response” led by the Federal Reserve in 2008 helped avoid a more serious economic downturn.

Continue reading


Understanding the Danger of the Debt

This, friends, is why we absolutely CAN NOT afford another bailout, CAN NOT afford the multi-trillion dollar government takeover of health care, CAN NOT afford to ship BILLIONS of dollars over seas every year under a Cap-and-Trade treaty, and just CAN NOT continue to endless stream of government handouts and freebies with no accountability. The Obama/democrat spending train MUST be derailed before our nation implodes.

Recognizing the Danger

As of today, the United States government has borrowed $12,013,338,919,392.31. Such an enormous debt poses short-term and long-term dangers.

The most immediate problem is that we are spending huge amounts of money just paying the interest. In 2008, we spent $253 billion on interest alone — that’s six times what we spend on the Department of Education, or thirteen times more than NASA. All just for interest payments, and much of it to foreign governments.

Over the next ten years, the debt is expected to almost double in size, to about $20 trillion. Our annual interest payments will grow even faster, to $675 billion in 2019. That’s more than all the money we spend presently on national defense, and much of it will flow to other countries.

A growing debt means higher taxes, painful cuts in government services, job loss, and a very real danger of economic catastrophe. Unless we stop this out of control spending now, the consequences could be devastating.

How bad could it get?

To understand how bad the debt situation could get, it’s important to understand who we actually owe the money to. The government can get loans from a few different sources:

  • Private investors
  • Foreign governments
  • The Federal Reserve
  • Intragovernmental holdings

The majority of the debt is in the first two categories. Those investors include individuals and businesses (especially banks), as well as foreign governments (especially China). Other countries buy our debt because it is a good investment — they trust us to pay them back, with interest. The most recent figures show we owe about $3.3 trillion to the governments of other countries, including nearly $800 billion to China alone.

The debt is dangerous because it isn’t under control. We cannot force anyone to loan us money, and the interest we pay can become more expensive. If that happens, our expenses go up, but our income doesn’t — so we sink even further into debt.

If investors are unwilling to lend the U.S. money, the government can go to the Federal Reserve. The Fed can literally create money out of nothing (print it), and then lend it to the government. This already happens — the Fed has lent about $270 billion to the government in the last year, in response to the credit crisis. But creating new money has a catch — inflation. Printing money can lead to a vicious cycle, as inflation devalues the money already in the economy.

What If We Can’t Pay it Back?

If the debt keeps growing, eventually we just won’t have enough money to pay the interest. There are two options at that point: default or inflation.


We don’t know for sure what would happen if the U.S. defaulted. Credit depends on trust and expectations, and for much of our history the United States has been acknowledged as the most trustworthy and reliable borrower in the world. We benefit tremendously from that trust, as people are willing to lend us money even when everything seems to be going wrong. But if that trust is broken, the mountain of debt would cause economic chaos far beyond anything we have seen in the past few years.

Not only would defaulting destroy our credit rating, but everyone who has invested in Treasury bonds would lose their savings. Thousands of pension funds would fail, and tens of millions would lose their retirements.

The problem would be all the worse because U.S. Treasury bonds are supposed to be the safest investment of all: they don’t pay a high interest rate, but investors buy them with the money they cannot afford to lose.


In a worst-case scenario, the alternative to defaulting on our loans is to borrow more money from the Federal Reserve. But if the Fed starts printing trillions of dollars, that will dramatically lower the value of the money already in the economy. Once a cycle of government-caused inflation is started, it is very difficult to stop. Many countries have fallen into an inflation trap, including Argentina, Zimbabwe, and Hungary. Learn more.

Every year that we overspend, we are depending on investors to lend us money. As long as they believe we will repay the money, we can keep spending. But as Nobel-winning economist Paul Krugman writes, if we allow our debt to expand without a credible plan to get it under control, “investors will eventually conclude that America has turned into a third world country, and start to treat it like one. And the results for the U.S. economy won’t be pretty.”

How Can We Defeat the Debt?

The solution is simple, but that doesn’t mean it’s easy. When you already owe a lot of money, the first step toward recovery is not borrowing more money. Every year we wait to address this problem, the debt grows larger and the solution gets more expensive.

If we spend less than we collect in taxes, the difference can go towards paying down the debt. In 1999 and 2000 we had a budget surplus of about $360 billion, but since then we have borrowed about $6 trillion, or $6,000 billion.

That ability to pay down debt came from increased tax revenues, which in turn were the result of an expanding economy. But the massive size of the new debt threatens to slow our economic growth and make repayment much more difficult..

Not Another Zimbabwe

Out-of-control debt led Zimbabwe, once one of the strongest economies in Africa, into economic ruin and a humanitarian crisis that has yet to be resolved.

Descent into Debt: Zimbabwe’s Story

Some critics worry that our escalating national debt will lead to an inflationary crisis. A look at the first inflationary crisis of the 21st century, in the African nation of Zimbabwe, provides an illuminating case study of the consequences of runaway debt.

Zimbabwe’s 12 million inhabitants have experienced some of the worst currency inflation in history. By one estimate, over the last decade, Zimbabwean currency was devalued (i.e. lost its value) by 89 sextillion percent. (One sextillion is a billion trillion or 1,000,000,000,000,000,000,000!)

Defaulting on the Debt

While inflation of the Zimbabwean dollar had been high for years (approximately 50% in 1998, 1999, and 2000), it wasn’t until 2001 that the crisis began in earnest. In 2001, Zimbabwe defaulted on its loans from the International Monetary Fund, and on top of that, owed more than $4.5 billion to foreign countries, the African Development Bank, European Investment Bank, and the World Bank. The IMF estimated that in 2001, Zimbabwe’s external debt totaled 64% of the nation’s GDP. The country’s credit was ruined, and the government could not get loans elsewhere. Investors around the world were understandably unwilling to risk their money by lending to a nation that had just reneged on billions of dollars in outstanding debt.

Printing Money

Deprived of foreign sources of credit, the government began to simply print large amounts of money to pay for its operations. The money was then sold on the foreign-exchange market for U.S. dollars, and used to pay the country’s loans. This attempt to restore the country’s credit rating flooded the market with vast amounts of Zimbabwe’s currency, devaluing the money held by Zimbabwean citizens.

The government quickly became addicted to printing more and more money in order to pay its internal and external debts. As a result, all the money in circulation was being constantly devalued.

If a new municipal building project was needed, the government of Zimbabwe simply printed more money. With little revenue with which to pay public employees, the government printed new money to pay them every day. The international community quickly caught onto the scheme, but the country’s citizens were trapped.


This cycle of hyperinflation destroyed people’s life savings. The economy fell into ruin. A functioning economy became impossible when the value of currency literally dropped by the hour. Long term investments disappeared. Basic goods and services were nowhere to be found. Credit was non-existent.

The pace of inflation was so fast that the value of the Zimbabwean dollar changed by the hour, and by 2008, prices were doubling every 1.3 days. At that rate, a bag of rice that cost $10 on Monday would be $80 by Friday. In July of 2008, the inflation rate was estimated at more than 200 million percent, though many say that number fails to capture the heights to which inflation had soared. Time Magazine reported in July 2008 that a pint of milk cost three billion Zimbabwean dollars, or about 30 U.S. cents. Another estimate by the Institute of Commercial Management claimed that 1.2 trillion Zimbabwean dollars was worth one British pound.

Despite the government’s attempts to rebase the currency by literally lopping off 10 zeros in August 2008 and 12 zeros in February 2009, inflation continued to rocket out of control.

The Death of a Currency

By early 2009, the Zimbabwean dollar was effectively worthless. The government was issuing bills in denominations up to one hundred trillion dollars.

At the end of January, citizens of Zimbabwe were allowed to conduct business in any currency, and on April 12, 2009, the Zimbabwean government gave up on the official currency and suspended its use.

Zimbabwe’s Tragedy

Once one of the most successful countries in Africa, Zimbabwe is now one of the poorest in the world.

With no regard for the future of the country, Zimbabwe’s leaders chose a path of reckless borrowing—and then tried to pay their debts by printing more money. This devastated the economy and precipitated a humanitarian crisis and the death of a currency.

The United States is not Zimbabwe, nor will it ever be. However, as we consider the magnitude of our growing national debt, it is useful to look to the example of a nation that chose to ignore its own national debt for too long and paid a very, very dear price.

Top Ten Inflation Rates in the World In 2008

  1. Zimbabwe 11,200,000.00%
  2. Ethiopia 44.40%
  3. Seychelles 37.00%
  4. Venezuela 30.40%
  5. Mongolia 28.00%
  6. Burma 26.80%
  7. Kenya 26.30%
  8. Iran 25.60%
  9. Ukraine 25.20%
  10. Kyrgyzstan 24.50%
Source: CIA World Factbook, est. 2008

They Never Saw it Coming

Many nations have been devastated by unexpected debt crises.


In 2008, the state of California needed to borrow or raise $40 billion. In a special election, voters rejected higher taxes. Because state law requires politicians to balance the budget, the state was forced to lay off thousands of employees, raise some taxes, and cut billions from popular programs. Californians will pay far more to borrow in the future, as the state’s credit rating dropped from “A-” to “BBB”. Despite the size of California’s crisis, that $40 billion shortfall is only 0.3% of the size of our national debt.


A stock market and real estate bubble in Japan led businesses and individuals to borrow far more than they could repay. When the bubble burst in 1990, the Japanese economy was crippled. As of 2008, the Japanese stock market was actually lower than it was in 1982.


From 1975 to 1991, Argentina’s government embarked on a strategy of printing money to pay its debts. The eventual inflation was so great that 100 billion Argentine pesos in 1975 were worth 1 peso in 1992. If the same thing happened in America, Bill Gates’ fortune of $60 billion would be worth 60 cents.


In the 1990s, the Thai government accumulated a huge amount of foreign debt. In 1997, the government was so overextended that it could not afford to protect the value of its own currency. In a few months, the Thai baht lost 40% of its value, 1.5 million people lost their jobs, and the Thai stock market lost about 75% of its value.


After Iceland’s biggest banks declared that they were unable to repay their loans, the government nationalized them to avoid disaster. The country had to borrow huge amounts of money to afford the takeovers, and now every Icelander owes the equivalent of $156,000.


This small African nation has experienced some of the worst inflation in history. For a decade, the government continually printed more money to pay its debts, so all the money in circulation was constantly devalued. The pace of inflation was so fast that prices were doubling every 1.3 days. At that rate, a bag of rice that cost $10 on Monday would be $80 by Friday. By one estimate, Zimbabwean currency has been devalued by 89 sextillion percent. (One sextillion is a trillion trillion!)

The Obama Press Conference… A Cornucopia of (censored)

A solid article by Mr Eberle with a few of my comments to flesh out his otherwise clear thoughts. You just can’t deny it anymore. The evidence is overwhelming. Obama and the constellation of people he has surrounded himself with are hardcore socialists. They have lied, and are lying every time they open their mouths. Their “tax cuts” are signified by an increase in the amount I pay to the government each paycheck. Their “new era of fiscal responsibility” is marked by spending more money than all presidents in history up to this point COMBINED. Obama’s promise to eliminate lobbyists from government has been carried out by filling his cabinet with them. Obama’s new spirit of bipartisanship consists of reminding the Republicans that “I won.” Hope and change? More like Ropes and Chains, or Cope with Pain.

The Obama Press Conference… A Cornucopia of !%&&%#*

Posted By Bobby Eberle On March 25, 2009 at 7:03 am

President Obama went before the American people (again) in order to pitch his brand of socialist policies. His budget has come under attack, as I reported yesterday, and on Tuesday night, Obama tried to clarify why massive government spending and saddling America with unprecedented levels of debt are justified.

A number of statements and comments really caught my attention. From Obama saying that his administration needs to make some “tough budgetary choices” to a his comment that there will be “zero growth” if his agenda is not passed, there were plenty of sound bites to make the American people shudder. Please Republicans… step forward and lead… we can’t let Obama take us down the path to socialism.

First, a note about the teleprompter… As reported in the Associated Press story on GOPUSA, Obama had a new teleprompter in place to deliver his opening remarks. As the AP notes, “President Barack Obama took no chances in his second prime-time news conference, reading a prepared statement in which he took both sides of the AIG bonus brouhaha and asked an anxious nation for its patience.”

Next, how about a quick fact check. As noted in the AP “fact check” story, Obama notes that recovery from the recession “will take time, it will take patience.” Yet, his own budget predicts a relatively quick end to the recession with “solid 3.2 percent growth for 2010, followed by three years of more than 4 percent growth each year.” He uses these numbers to support his budget that adds trillions to the national debt. As I noted yesterday, the Congressional Budget Office predicts even more debt than Obama does… a debt that would cripple this nation.

The AP next focuses on Obama’s statement that in the budget, “we have made the tough choices necessary to cut our deficit in half by the end of my first term even under the most pessimistic estimates.” In reality, “Not all credible estimates foresee a deficit halved in that time.”

In one exchange, Obama was asked about his budget which breaks new records in deficit spending. The reporter quoted Obama from just last week when he said, “I didn’t run for president to pass on our problems to the next generation.” Well, that is EXACTLY what he is doing… in addition to raising taxes and imposing more big government on the American people now. The reporter went on:

  • “But under your budget, the debt will increase $7 trillion over the next 10 years. The Congressional Budget Office says $9.3 trillion. And today on Capitol Hill, some Republicans called your budget, with all the spending on health care, education and environment, the most irresponsible budget in American history.”
  • “Isn’t that kind of debt exactly what you were talking about when you said passing on our problems to the next generation?”

Side note: If Obama’s budgets are put in place, America will reach the point where it is paying more each year on the interest to the national debt than it is paying for national defense. Talk about throwing money away. We simply can’t keep borrowing and borrowing.

Obama began his response to the question by saying, “First of all, I suspect that some of those Republican critics have a short memory, because as I recall, I’m inheriting a $1.3 trillion deficit, annual deficit, from them. That would be point number one.”

Excuse me… but the last several budgets that were passed were voted on by a Democrat-led House and a Democrat-led Senate. What you inherited was the result of a Republican president and Democrats in Congress, so at least be honest with the American people.

Obama then goes on to compare his deficit numbers with those of the CBO:

  • “Where the dispute comes in is what happens in a whole bunch of out years. And the main difference between the budget that we presented and the budget that came out of Congressional Budget Office is assumptions about growth.” (This is just cooking the books. He states the economy will grow as if it were already historical fact. His oppressive policies will cause the economy to collapse rather than grow.)
  • “They’re assuming a growth rate of 2.2. We’re assuming a growth rate of 2.6. Those small differences end up adding up to a lot of money. Our assumptions are perfectly consistent with what blue chip forecasters out there are saying.” (Blue chip Obama supporters who have the same socialist agenda.)

The main point I’d like to make here is, “Who cares if Obama’s numbers turn out better than CBO’s!!!” Obama’s numbers still lead to $7 trillion in additional debt.

I could go on and on regarding what Obama said and what it means for the country, but let me tie two more items together. First, it’s this quote from Obama:

  • “Here’s what I do know: If we don’t tackle energy, if we don’t improve our education system, if we don’t drive down the costs of health care, if we’re not making serious investments in science and technology and our infrastructure, then we won’t grow 2.6 percent; we won’t grow 2.2 percent. We won’t grow.”

The next statement is this one:

  • And there’s a interesting reason why some of these critics haven’t put out their own budget. I mean, we haven’t seen an alternative budget out of them. (The Republicans have put forth several ideas counter to the Obama plan. But that’s the problem, they COUNTER his agenda. In his first meeting with the Republicans he said “I won” when Republicans spoke of bipartisanship, throwing up the iron curtain between the two parties. Every time the Republicans propose an idea, Pelosi and Reid shoot it down.)

The first quote is a shameless attempt by Obama to trick the American people into accepting his socialist agenda. Make no mistake… America will come out of this recession. The question is, “How will it look when it does come out?” We will have growth, and for Obama to say that the only way to grow is to spend, spend, spend, and tax, tax, tax is completely insane.

Here’s a proposal. What if we totaled up the price Obama wants to spend on health care, infrastructure, education, science and technology, etc. and didn’t spend it but rather gave it back to the people in the form of tax cuts. Does anyone, Republican or Democrat, think that more money in the hands of each and every American citizen would lead to zero growth? I don’t think so.

And so, we have the second statement where Obama is actually right. We haven’t seen an alternative plan, and we need one. If the American people only hear from Obama, then he is the only one they will listen to. (The proposals have been made, but ignored by Uh-Bama. Cut income taxes, corporate taxes, and capital gains taxes, eliminated mark-to-market, get rid of the DEMOCRAT ORIGINATED policies of lowering lending standards, and DRILL FOR OUR OWN OIL. All but the drilling make up an INSTANT stimulus. As has been proven time and time again, the government will also get more revenue from sales taxes, not less as the liberals claim. The other key elements to our continued long term survival is getting rid of much of the social spending that has become so common place. We must get back to being a society of individuals who pull their own weight, yet help others in need out of our abundance, not because we are forced to.

As I just mentioned, reducing the power and scope of government and returning that money to the people would result in massive growth. People could hire other people. People could save for college. People could purchase goods and services. They could do all of this according to their own personal agenda and philosophy… and not be subject to the social engineering being put forth by the Obama administration.

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