Politics

Weak leaders always take office at the top of a cycle of expansion and they’re always blamed for the following economic collapse. Colder, dry climates signal a downturn in the economy, and whenever there is one, the leaders in charge and vilified for it.

In the chart above, you can see how Presidents are judged based upon the performance of the economy while they’re in power. I’ve marked a checkmark above all the US Presidents that were judged in the top 50% of the 44 Presidents to date. The Presidents that were judged as failures receive an X (lower 50%).

The blue bars below the names denote Democrats, red is for Republican.

You can see that by and large, when the climate turns cold and dry, the economy goes into a tailspin. The leaders in these economic downturns suffer the consequences. They have nothing to do with the economy, of course, but in good times, they take credit for it, so they’ve, in a sense, “made their own beds.”

In the most recent ups and downs since the year 2009, climate has been extreme (consistent with predictions and signalling a major climate turn from hot to cold), with a major drought forecast to accompany the cold. The next President will likely be Bernie Sanders (as major depressions tend to move towards socialism, as happened in the 30s and 40s) and Obama will be vilified for the major crash that’s about to happen before the end of his term. You can see the recent trend towards socialism across the globe.

Our Political System: Democracy

You have to wonder at our political system. Voters are not taught about the importance of various candidates’  policies or given guidelines as to how to determine who best to vote for. As a result, elections become a popularity poll, having little to do with capabilities of the candidates.

When the economy is at the top of an expansion phase, we vote in the weakest leaders, who are unprepared to deal with a the financial meltdown that’s on the horizon.

We elect these leaders to spend our money, get us into a huge amount of debt, and then they walk away from the problem 4-5 years later. There is no ownership of the growing debt problem and it eventually blows up, leaving the population at risk.

The government also fuels a social acceptance of debt, aided by central banks that lower interest rates, which simply encourages people to borrow beyond their means. When interest rates rise and the economy falters, larger percentages of the population default on the loans they were encouraged to take on.

The other crime against the population of a country is the promotion of inflation by governments and central banks. Inflation is the government’s way of stealing our money right in front of our eyes. With the attempt to keep the interest rates at 2% a year, they are actually decreasing the value of our currency 2% a year. Since 1913, our currency has decreased 94% in value. That’s why products and services seem to be getting more expensive every year: Because they are!

Governments do this because it allows them to borrow more money each year against the earning power of the population, or GDP. If prices rise within the country overall 2% a year, the overall gross domestic product (or what we produce and sell) goes up in value. Central banks and money lenders look at this higher income level and will advance a higher loan value against it.

As a result, our debt grows each and every year until it is unsustainable. In other words, we each owe more money in debt that we can ever hope to pay off. We are bankrupt. This leads to a lack of confidence by lenders and the country eventually defaults. We lose services, promised social security payments, and governments eventually collapse or “print” vast quantities of money to end up in hyperinflation.

At the same time as we are nearing bankruptcy, elected leaders continually tell us “everything is OK.” They know that telling us the truth will not be a good thing for their future popularity or electability. Politicians get thrown out of office every time the economy “tanks,” even though they have nothing to do with it. They are simply in the wrong place and the wrong time.

You can see this playing out in the US congress with the Tea Party. They want to cut the deficit and debt, but it’s certainly not popular with either President Obama, or the general public. It results in inaction.

It the end, everyone suffers even more for the years of ignoring the problem.

It’s in the government’s best interest to tell us what we want to hear, rather than the truth. That’s the real craziness of this system.

The Value of Currency: Nothing

In 1971, President Richard Nixon decoupled the US dollar from gold. It had been pegged to gold since the Bretton Woods agreement after World War II (1944). In other words, up until 1971, you could exchange your hard earned dollars for gold (which is real money, because it keeps its value over time). Gold is the heart of any solid economy.

Currency not tied to gold is called “fiat” currency. This means that it is currency that is backed only by the promise to make good on its value by the government in power. Well, the government in the US is bankrupt. They owe over $19 trillion dollars, far more than can ever be paid back.

If the public loses confidence in the ability of the government to provide that promised value, the economic system collapses.

Fiat currency allows the government to inflate, or print money. If it was tied to gold, they would not be able to create more money unless they had the gold to back it up. Or they would have to publicity devalue the dollar. Creating inflation, as we know, lets them borrow more, and we’re back into another kind of cycle—a man made one.

It happens over and over again in history.

In my programs, I take you in more depth through an exposé of the political system so that you understand how our system works and how to begin to protect yourself from the inevitable crash.