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Last Updated: 07/24/14 11:20 PM CST

Collapsing America: QE, Fiscal Cliff, Unemployment, Debt Ceiling and Taxes

FreedomBrief.com

AUTHOR Joshua Wychopen

United States National Debt

The private central bank, Federal Reserve, announced Wednesday yet another round of easing, once again devaluing the US Dollar. As expected, citing fictitious unemployment numbers, they announced their plan to aggressively accelerate their debt-buying program, known as quantitative easing, by $45 billion a month. The Fed announced in September their plan through QE3 (or QE-Infinity), to purchase $85 billion in “long-term” securities every month, which included $45 billion in treasuries and $40 billion in mortgage-backed securities—becoming the majority owner of all of these assets. That brings us to a grand total over $125 billion a month the fed is currently pumping into the market.

Surprisingly, the Fed pledged to keep long-term interest rates near zero and keep them there until unemployment falls below 6.5% and inflation tops 2.5%—a very bold move which essentially keeps the Fed in the easing business indefinitely. In the short term, at the surface things seem to be working. However, the long-term side affects of such a move are catastrophic in the opinion of some economists, including former Secretary of Labor Robert Reich, who predicts unemployment will stay high for at least a decade. With its new purchases of long-term treasuries, the Fed’s investment portfolio, which is nearly $3 trillion, would swell to nearly $4 trillion by the end of 2013 if its bond purchase programs remain in place. Each month the Fed purchases more assets the US Dollar devalues. In short, the Federal Reserve announcement means interest rates will remain near zero for the foreseeable future and unemployment will remain high.

Earlier in the year, Fed Chairman, Ben Bernanke coined the phrase, “Fiscal Cliff” which has been used by both republicans and democrats to evoke fear throughout the economically uneducated and generate a very specific response. The objective, just like with quantitative easing, is to further drive the American people to their knees by devaluing the dollar, dwindle savings, job loss and growth of personal debt to all time highs.

As Congress and the White House engage in a fake fight, one thing is sure, taxes will be raised at the beginning of the year, regardless of what solution comes out of the “fiscal cliff” talks. While Speaker John Boehner and the Republicans pretend to be fiscally conservative and take a principled stand for the American people, President Obama, Sen. Harry Reid and the democrats attempt to convince Americans they’re the ones to save the day and avoid the “fiscal cliff.” Dramatic increases in federal spending and horrible monetary policy over the past few decades by both republicans and democrats have gotten us to this point.

While the “fiscal cliff” fight continues, a dividing line is being further driven into the argument. Most Americans think the fight is about whether or not we’ll be going off the “fiscal cliff.” This is undeniably, laughably, even disgustingly false. We’re going off the “fiscal cliff” whether we like it or not. In reality, the true fight is the difference between jumping off the “fiscal cliff” at 5,000 feet or 4,000 feet. From a practical standpoint, the outcome is the same. Taxes are only a portion of the real issues that create the “fiscal cliff” scenario. Either way, if we don’t dramatically change our monetary policy, tax code and spending levels we’re going “off the cliff,” and at this pace, sooner rather than later. One thing is certain, at the end of the day, Republicans will wave the white flag and cave on taxes—but not after making it look like a good fight. While a few representatives fight for legitimate and substantial change, the establishment continues the status quo to economic hell—by continually increasing the debt ceiling, pumping the market and raising taxes, essentially, we’re ensuring our own financial collapse.

Although federal spending has already attained an unsustainable level, ultimately, federal spending will not stop. As a by-product, the American people who were once independent and self-sufficient are becoming more dependent on government than ever before. As unemployment rises, personal debt increases and the American dream is slowly being buried in a shallow grave, many will ask how we got here.

The answer is, we did it to ourselves.

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