America's Economic Tribulation

December 30, 2000

The economic horizon is dark with approaching storm clouds. This much is obvious to any reasonable person wondering what the new year will bring. The official Y2K begins on December 31st at midnight. We will yet see the level of economic devastation I worried about this time in 1999. The reason being the combination of the storm and our ship's condition as we head into it. If the United States Ship Economy was a real ship, the captain, if he survived, would stand trial for criminal negligence. Hear me well, Alan the Magician. Hear me well, leaders of the Federal Reserve and the global banking oligarchy. Your economic bubble has imploded; you will eventually be held accountable for your economic treason. Woe to the worthless economic shepherds. Woe to the lapdog press and the gutless politicians who have deceived and betrayed the ignorant and apathetic American people. The economic disaster which is now unfolding will sweep away all our dreams, hopes and illusions. If it is bad enough, it will sweep away our American Republic and possibly our lives. Time will tell.

In several of my earlier essays, "The Perfect Storm", "The NASDAQ'S Three Illusions" and "Swarms of Earthquakes", I went into great detail about the causes of our economic tribulations. I will not repeat myself describing the reasons for our economies looming recession/depression. You are entitled to your opinion. You are certainly entitled to think I'm a lunatic. I firmly believe every American citizen has a constitutionally protected right to be ignorant, foolish and wrong. Unfortunately, you also bear the responsibility for accepting the consequences of your beliefs. I do also, but my preparations for Y2K left me in a much better position to weather the coming economic storm than people who ignore my warnings are in.

Why do I use the biblical term "tribulation" to describe what will happen to the United States, and by extension the global economy, in the immediate future? Simple. I happen to think the Greek term translated "tribulation" is the most accurate on to describe what people are going to go through the next several years. While I don't consider myself a Bible scholar, I do focus in on specific terms that are translated into modern English. For example, I once read a footnote in Ezekiel 38, the chapter where Russia is predicted to invade the MidEast, that listed chariots as an alternative to horsemen. Obviously in English, horsemen implies Cossacks in fur hats making massed cavalry charges. And just as obviously, this is ridiculous in modern, mechanized warfare. Except here is an alternative translator rendering which says a horse powered, mobile platform for launching projectiles and with a crew will be used. Now, I was in a tank unit and I think that's a pretty good description for a modern armored tank. Specific words matter. I think tribulation fairly describes our immediate economic future.

This Greek term means grapes being crushed in a wine press. The English adjective Great added before it means the normal pressure will be greatly enhanced. I like to think of it as using one of those junkyard car crushers instead of a wine press. Putting a few pounds of grapes into a press designed to crush a car into the size of a bookcase- well, you get the idea. Harsh and savage economic times are about to come upon the earth. The likes we have not seen since the 1930's. Brutal times which will try men's souls and crush the spirit and hope out of them. America in particular, is about to thrown whining and wailing into the mouth of the Great Economic Tribulation. I happen to think our cell phones, reduced to the size of a pea, will be all that remains. Whether the self indulgent American populace has the moral fiber to withstand its date with economic tribulation remains to be seen. As Florida and the election showed, America is a bitterly divided mob, surrounded by an apathetic majority, existing in a corporate dictatorship. Not exactly the kind of political situation which makes one hopeful for a positive collective response to an economic downturn. Still, this is America and the blood of patriots is still in some of our veins. There is hope the scales will fall from the people's eyes and America will return to the wisdom and truth of our ancestors. Or then again, as Mr. Heston so aptly put it in "Planet of the Apes", when he viewed the Statue of Liberty sticking out of the beach, "You blew it up." The decision to destroy the American Republic lies in our hands and no others.

If this is our political condition as we head into the hurricane, what of our economic one? A few statistics will highlight both my point and our peril. The total United States Gross Domestic Product, our total economy, is around ten trillion dollars per year. Consumer debt is seven point five trillion. Corporate debt is ten point six trillion. Corporate debt alone exceeds the entire economic production for one whole year. The list goes on and on and on, just like the Energizer bunny. NASDAQ losses are estimated at nearly four trillion dollars. Despite the lap dog press spin on government surplus', our national debt is over five trillion dollars. The trillions just keep adding up on a global basis. I saw one estimate of over 96 Trillion dollars in derivatives and the like. I mean, who are these fiat lunatics kidding? Do they think it's even theoretically possible to pay off these trillions? Or are they just milking the interest until the planned collapse?

In a nutshell, America's attitude has changed. On a subjective basis the people realize things are looking bleak. Consumer confidence is down. The reverse stock wealth effect is in full swing. Heating oil, natural gas and energy prices are devastating home budgets. The people realize recession is coming. Why was Christmas such a retail bust? What do you think will happen to the stock market in January when the retail profit figures come in from Christmas? Wal Mart may sell a billion dollars of stuff on the day after Thanksgiving, but that doesn't mean they made any money on it. What will happen to the global economy when America stops playing the vacuum cleaner? Are you following my drift here? We're talking global economic tribulation here. The seven fat years have come and gone. The seven lean ones are here. Are we ready?

If one designed a situation to maximize the economic damage to America, entering a recession with insane levels of debt would be it. Guess what, gold-eagle.com readers, this is precisely the economic condition the United States finds itself in. In one of my earlier essays I wrote about the old sea movie. The one where the storm hits and the ship's steering wheel is seen spinning and spinning. We're not quite there yet. Here's where we are right now. We can see the storm getting closer. We're feeling the wind and waves, crashing surf and dark ominous clouds. We should be taking reasonable, prudent and sea tested actions to weather the storm. Are you listening to me Captain Alan GreenSpan? So what are we doing? We are doing the exact opposite of what we need to be doing. We are doing things that will eventually damage, and possibly sink, our ship. Every sailor knows that you furl, roll up and tie to the mast, all your sails when a storm threatens. You do this to minimize strain on the masts, control your speed and prevent masts breaking and crashing to the deck. But not our Mr. GreenSpan. No, our Fed version of Captain Ahab, is ordering the sails unfurled, the anchor chain cut and another round of party drinks.

In my brilliant little allegory here, levels of debt are the sails. The anchor is the value of the dollar. Captain GreenSpan/Ahab has blissfully allowed every stitch of canvas sail to be unfurled in the face of our looming recession. Alan the Magician is even going to cut the anchor chain and let our economy drift at full speed into the reefs. The Federal Reserve has two choices in this coming storm: protect the economy or protect the dollar. They cannot do both. Having created a bubble economy and stock market through massive debt creation, the Fed can neither furl or unfurl the sails. If they cut rates, the dollar is in peril. If they don't cut rates, the economy is in peril.

In a second nutshell, this is why things will be bad this time around. It's not even about the economy this time stupid. It's about the value of the dollar. Keep your eyes on the EURO and inventory your gold and silver life preserver. You will soon need it. Thanks Alan; thanks a lot.

With gold stolen by Conquistador Francisco Pizarro from the Inca Empire in 1532, Spain financed its conquest of Europe.

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