Republican Experiment Already Failed in EU

The EU has followed what is essentially the Tea Party economic plan for several years and expect a zero to 0.6% growth for the continent as a whole with many countries economies shrinking.

Annual Growth Survey 2012 – European Commission

Do we want to try the same experiment here? If so, will anyone expect different results?

It is standard practice by the other party to blame the occupant of the White House for everything whether or not he has any possible control over it – such as gas prices where the U.S. is producing more oil than ever before but the world is using more while Saudi Arabia is running out – supply and demand – gas prices go up.

But, while I have objections to many of Obama’s policies, mainly because they shouldn’t have been started after Bush created the gigantic deficit with two/3 unfunded wars, the conservative Republican plan of severe austerity, cutting government spending on social programs, lower taxes for the wealthy (already the lowest in a century), and reduce government staffing is exactly what the countries of the European Union have done for two + years.

You see the resulting riots on TV almost every night.

(I actually think the Tea Party has the right idea, just terrible timing – it would have worked great about 1999 or 2000 but cutting spending when in a recession isn’t a good way to go no matter how desperately it needs to happen someday.)

The result of those policies is that while the U.S. economy is growing about 3% not going the extreme austerity route, most countries in Europe are now moving ever deeper into a depression with economies shrinking by up to 4% – while those doing best are growing a tiny .5%.

So, while the Republican plan may appeal to those who don’t understand that it was just tried in Europe, it is mostly backed by the very wealthiest people who stand to profit from any major upheaval.

While Ron Paul has a good plan, it is about 20 years too late to bolster the U.S. dollar by pegging it to some actual commodity such as gold. It could be done, but only by causing a major depression lasting about a decade – just like the last one in the 30’s caused by the same sort of reckless borrowing and spending the previous decade.

Something no main stream commentator dares to say is that the only way to pull the U.S. out of its current economic situation is to devalue the dollar in a major way. Think about it, officially cut the value of the dollar by 50% and the national debt (as well as your mortgage) are instantly cut in half.

Devaluation has been slowly happening for years (consider how much more a car or even food costs than it did in the 50’s. That is just the lower value of the dollar, a hidden tax no politician except Ron Paul tries to address.

What happens when a country’s debt becomes too large to ever pay off (without imposing crippling taxes which no politician ever votes for) is to officially devalue the dollar – it has been done before by Nixon, and Roosevelt to name the most obvious examples.

It gets even worse when governments refuse to act and the currency collapses simply due to economic conditions (Germany in the 20’s) – already other countries are beginning to trade oil in other currencies, the standard which actually made the U.S. dollar the world’s reserve currency.

In 2002 Iraq agreed to sell oil priced in Euros (conspiracy enthusiasts may note that the U.S. really got nasty with Iraq just after that happened.) Other countries are following that example as recommended by the U.N..

The U.S. dollar hasn’t actually been the reserve currency very long, just since 1944. The British Pound was the world reserve currency from about 1820 through the end of WWII when the U.S. got oil producers to agree to accept only U.S. dollars for their oil.

When a currency collapses governments enact restrictions on gold ownership since it represents value not otherwise under government control and restrict the transfer of money out of the country (already happened in the U.S. years ago in the name of a “war on drugs”}.

Did you realize that the government “officially” values all the gold in Fort Knox at about $42.22/oz. vs. about $1600/oz. if you actually want to buy or sell it?

That combined with crippling U.S. debt sets the prime condition for gold confiscation (as in the 30’s) and to devalue the dollar by linking it to gold for a brief period of a few years.

BTW, if you were thinking of buying and hoarding gold remember that even if the government can’t find your hoard when private gold ownership is (AGAIN) made illegal, you won’t be able to sell it except to other criminals.

(Try silver instead – it never gets confiscated.)

With all this in mind, to me the election this year boils down to this, either we re-elect Obama and continue the slow but steady recovery, or take the conservative Republican (tea party) route and get the same results they are experiencing in the European Union which took the tea party austerity path 2-3 years and is paying for it with riots, 25% unemployment, and shrinking economies.

Don’t worry the bankers and politicians are all doing just fine, it is only the lower 99% who are suffering.