The credit collapse, martial law and you
A personal credit collapse of truly monolithic proportions is starting to
become a reality across the country. While the very concept of a national
credit (read debt) collapse was purely a subject of speculation and debate in
years past, it has now becoming a living reality and a simple peek into the
various channels of mass communication in America will bear this out.
There was a time not too long ago when information outlets such as Gold
Eagle were the only ones discussing the coming credit crisis. Today,
virtually everyone is barraged with a steady diet of commercials on radio,
television and Internet advertising ways to "get out of debt" and "reduce
your mortgage payments. This mostly falls under the category of "too little
too late." Even worse, in many instances it is simply a matter of exchanging
an existing debt for another, in some cases at an even higher rate of
interest.
For example, a radio commercial for a local Nissan car dealer here in the
Wilmington, N.C. area is advertising new cars with an added bonus: the buyer can have his credit card debt completely extinguished just for agreeing to buying a new Nissan at 0.9% interest. The commercial concludes with these words, "Credit card debt is a serious issue in this country, and here at [name deleted] we aim to do something about it while helping you walk away with a new car." This has got to be a first in the annals of American advertising-trading in one debt for another's and in the name of "saving" the country from financial collapse!
The lending institutions which only two or three years ago were handing
out free credit cards to everyone with a pulse have given way to the
inevitable result of trying to reel in outstanding debt any way possible.
Profligate spending by the average American debtor over the past few years
has gone a long way in crippling the economy and will only hasten the
unavoidable K-wave depression descending upon us. America is truly paying
for yesteryear's playing.
Another proxy that America's credit card debtors are in for a rude
awakening is the fact that American Express has reduced its amortizing grace period for cardholders from 25 to 20 days, the first such reduction in
memory. This clearly represents an effort to stay ahead of the downward
curve on the part of America's most prestigious personal lender.
Perhaps the most sinister aspect of the yawning chasm that is America's
collective personal credit debt is the fact that the average rate of interest
on most bank-issued credit cards is an usurious 18%-23%! These rates were a product of the hyper-inflationary, high interest rate period of the late
1970s and early '80s, yet the rates on most major credit cards were never
dropped even though the natural rate of interest has since fallen
extraordinarily low. This greedy tactic on the part of banks has gone a long
way in bringing America to the threshold of financial disaster.
Martial law is never a pleasant subject to discuss, especially since the mere mention of the words automatically brings accusations of "paranoia,"
"conspiratorial delusions," "lunacy," or some other unpleasant moniker. But
the fact remains that with each passing month America is sliding closer into
a totalitarian dictatorship controlled by military/police rule. Already we see undeniable signs that America is sliding headlong into the path of military rule. For example, in a recent headline news article published by Time Warner, a photograph was shown of an airport security officer dressed in military black from head to toe and wielding a machine gun. A machine gun!
Even considering the heightened tensions in response to the Trade Tower
bombing, is this really necessary? When was the last time you walked into a
U.S. airport to be greeted by military men with automatic weapons? This only happens in Third World countries already under the control of a military
state.
What, you may ask, does this have to do with the developing credit collapse? Our response: Everything. The fact that martial law is slowly beginning to emerge as an accepted extension of the federal government is a sure sign that Washington fears the social and political ramifications of what the credit collapse will bring. This is truly a fearful sign and one that should cause every American to reevaluate his trust in the "system" which has as its basis certain Constitutional guarantees of personal and financial freedom. Piecemeal, these Constitutional guarantees are being stripped away at an alarming pace.
The latest from U.S. President George Bush is that he has asked the
nation's governors to post National Guard troops at airports this week as a
first step to take federal control of airline security and coax Americans
back into the skies. "This nation will not live in fear," he told the Associated Press. What he didn't explain is how the sight of armed troops walking the corridors of the nation's airports will do anything but instill fear and paranoia.
Bush's plan envisions stationing 4,000-5,000 troops at the nation's 420
commercial airports for up to six months while the federal government
prepares to step in. Also, many more in-flight air marshals would be trained
and a federal agency would be set up to oversee the screening of passengers
and luggage. In other words, more invasion of privacy. The very fact that
air travel is being federalized and regulated by military rule is proof that
a de facto martial law is already in place since restriction of interstate and international travel is the heart and soul of martial law. Also, keep in mind that the term martial law literally means rule by military force. If 4,000-5,000 heavily armed troops walking the nation's airports and inspecting luggage isn't rule by force then we don't know what is.
"When you're in a time of war, you don't question the commander-in-chief," said Minnesota Gov. Jesse Ventura. He may as well have said "martial law" instead of "war."
The question that should now be swimming in every gold investor's mind is, "What will this mean for my precious metals holdings? Will they be subject to confiscation or other forms of control?" This is doubtful, because a.) gold as an investment represents but a mere drop in the bucket for most Americans, and b.) the tale of the gold tape is undeniably one of insider accumulation, which means there are no existing plans to control the gold market a 'la FDR during the Great Depression. The tape and chart would
definitely show it if the government had any plans of controlling gold since
it would show up in the form of massive selling.
In truth, gold remains the sole form of financial wealth beyond the long and ever-growing reach of a government bent on rule by military force. The depression of tomorrow will be one in which gold alone reigns supreme as the
sound instrument of monetary transaction and storehouse of wealth. Get it
today-at bargain basement prices-while you still can.
Clif Droke
October 1, 2001
Clif Droke is the editor of the weekly Bear Market Report, a combined forecast and analysis of U.S. stocks and indices and international precious
metals stocks, and is the author of numerous books on trading and technical
analysis (most recently Gann Simplified, published by Traders Library). For
a FREE COPY of the Bear Market Report send e-mail to: cdroke9819@aol.com or write:
The Bear Market Report
Clif Droke, P.O. Box 3401
Topsail Beach, NC 28445-9831
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