The President’s Enumerated Powers, Rulemaking by Executive Agencies, and Executive Orders


Now comes a Lady with enough brains to replace our entire government, and do it right!


What are the Enumerated Powers of the President?
The President’s Enumerated Powers, Rulemaking by Executive Agencies, & Executive Orders

– Publius Huldah  Tuesday, August 30, 2011

On election night, November 2, 2010, Rep. John Boehner said in his victory speech:

…While our new majority will serve as your voice in the people’s House, we must remember it is the president who sets the agenda for our government. … [emphasis added]

Next morning, Ezra Klein commented in the Cult of the President lives on:

I’d like Boehner to show us where in the Constitution it says that the president sets the agenda for the government.

But Boehner is not as astute as Ezra Klein, and does not know that it is our Constitution which sets the “agenda” for the federal government. The agenda the Constitution sets restricts the federal government to war, international relations & commerce; and domestically, the establishment of an uniform commercial system: a monetary system based on gold & silver, weights & measures, patents & copyrights, a bankruptcy code, and mail delivery (Art. I, Sec. 8, cls.1-16). 1

And because none of the House Republicans seem to know that our Constitution sets the agenda, and don’t know that our Constitution also enumerates the powers delegated to the President, they are allowing Obama to carry out his “agenda” to transform our Country into a fascist dictatorship.

What are the Enumerated Powers of the President?

The powers of the President are “carefully limited” and precisely defined by our Constitution. In Federalist Paper No. 71 (last para), Alexander Hamilton asks,

…what would be … feared from an elective magistrate of four years’ duration, with the confined authorities of a President of the United States?…[emphasis added] 2

The answer to Hamilton’s question is this: There would be nothing to fear if Presidents obeyed the Constitution. But they don’t obey it because the dolts in Congress don’t make them obey it!

Well, then! Here is the complete list of the President’s enumerated powers:

Art. I, Sec. 7, cls. 2 & 3, grants to the President the power to approve or veto Bills and Resolutions passed by Congress.

Art. I, Sec. 9, next to last clause, grants to the executive Branch – the Treasury Department – the power to write checks pursuant to Appropriations made by law – i.e., by Congress.

Art. II, Sec. 1, cl.1, vests “executive Power” [see below] in the President.

Art. II, Sec. 1, last clause, sets forth the President’s Oath of Office – to “preserve, protect and defend the Constitution of the United States”.
Art. II, Sec. 2, cl.1:

  • makes the President Commander in Chief of the armed forces when they have been called by Congress into the actual service of the United States. 3
  • authorizes the President to require the principal Officers in the executive Departments to provide written Opinions upon the Duties of their Offices.
  • grants the President power to grant Reprieves and Pardons for offenses against the United States, 4 but he can not stop impeachments of any federal judge or federal officer.

Article II, Sec. 2, cl. 2 grants to the President the power:

  • to make Treaties – with the advice and consent of the Senate. 5
  • to nominate Ambassadors, other public ministers and Consuls, federal judges, and various other officers – with the advice and consent of the Senate.

Article II, Sec. 2, cl. 3 grants to the President the power to make recess appointments, which expire at the end of Congress’ next session.

Art. II, Sec. 3:

  • Imposes the duty on the President to periodically advise Congress on the State of the Union, and authorizes the President to recommend to Congress such measures as he deems wise.
  • Authorizes the President, on extraordinary Occasions, to convene one or both houses of Congress [e.g., when he asks Congress to declare War]; and if both houses can not agree on when to adjourn, he is authorized to adjourn them to such time as he deems proper.
  • Imposes the duty upon the President to receive Ambassadors and other public Ministers.
  • Imposes the duty upon the President to take care that the Laws be faithfully executed, and
  • Imposes the duty upon the President to Commission all the Officers of the United States.

That’s it! Anything else the President does is unlawful and a usurpation of powers not granted.

What is the “executive Power”?

So! The granting of the “executive Power” to the President is not a blank check giving him power to do whatever he wants. The “executive Power” is merely the power to put into effect – to implement – those Acts of Congress which are within Congress’ enumerated powers. Thus, if Congress establishes “an uniform Rule of Naturalization” (as authorized by Art. I, Sec. 8, cl. 4), it is the President’s duty to implement and enforce the law Congress makes. The President is to carry out – to execute – Acts of Congress.

But note well: His Oath of Office – to “preserve, protect and defend the Constitution”, shows that the President must use his independent judgment 6 as to which acts of Congress are and are not constitutional. Thus, as shown in this paper, “The Oath Of Office: The Check On Usurpations By Congress, The Executive Branch, & Federal Judges”, the President has the duty, imposed by his Oath, to act as a “check” on Congress (and on federal courts, as well).

Accordingly, when Congress makes a “law” which is not authorized by the Constitution, it

…would not be the supreme law of the land, but a usurpation of power not granted by the Constitution”… Federalist No. 33 (last two paras); 7

and since the President’s Oath requires him to “preserve, protect and defend the Constitution”, the President must refuse to enforce an unconstitutional “law” made by Congress. Otherwise, he’d be in collusion with the legislative branch to usurp power over The People. 8

So, then! Acting as a check on Congress (and federal courts) by refusing to enforce unconstitutional “laws” (and opinions), as well as the duty of entertaining foreign dignitaries, are the only occasions where the President may act alone. His prime responsibility is to do what Congress tells him.

Article I, Sec. 1 & The Unconstitutional Administrative Law State

Now, you must learn of “administrative law” – i.e., rulemaking by Executive Agencies. 9

Article I, Sec.1, U.S. Constitution, says:

All legislative Powers herein granted shall be vested in a Congress of the United States.

That little phrase is of immense importance. It means what it says, that only Congress may make laws: laws are to be made only by Representatives whom we can fire every two years, and by Senators whom we can fire every six years.

But in Joseph Postell’s “must read” paper, “ Constitution in Decline”, he shows that during the administration of the nefarious Woodrow Wilson, Congress began delegating its lawmaking powers to agencies within the Executive Branch. Since then, Congress passes an overall legislative scheme, and delegates the details to be written by un-elected, un-accountable bureaucrats in the various Executive Agencies. They write the “administrative rules” which implement the Legislation. The result is the execrable Code of Federal Regulations (CFR), which is accepted, by the indoctrinated members of my profession, as “law”. Go here to see the abominable CFR.

May the President Lawfully Make “Executive Orders”?

The Guiding Principle is this: The President has no authority to do ANYTHING apart from constitutional authority or statutory authority (assuming the statute itself is constitutional).

1. So! Respecting those matters within his constitutional authority & duties, and authority & duties imposed by constitutional statutes, the President may make “orders” – call them “executive orders” if you like.

For example: It is the President’s constitutional duty “to take care that the Laws be faithfully executed”. Thus, he has the duty to enforce [constitutional] laws made by Congress. How does he enforce the laws? Sometimes, by means of “orders”.

To illustrate: Say Congress makes a law, as authorized by Art. I, Sec. 8, clause 6, making it a felony to counterfeit the Securities and current Coin of the United States. If U.S. Attorneys are not prosecuting counterfeiters, the President should “order” them to do it. Or fire them.

But say Congress makes a law which purports to make possession of shotguns shorter than 18 inches a crime. Since the President’s Oath requires him to “preserve, protect and defend the Constitution”, he is obligated to “order” the U.S. Attorney General and the U.S. Attorneys to refuse to prosecute anyone for possession of sawed-off shotguns. Why? Because such a “law” is unconstitutional as outside the scope of the legislative powers granted to Congress in Our Constitution. It also violates the Second Amendment.

Clearly, such an order to refuse prosecution falls within the President’s constitutional duties (enforce the Constitution), and he is giving an order to people within the Executive Branch. The President is the one who is charged with carrying out the Acts of Congress – he has the “executive Power”. But because of his Oath, he may not carry out unconstitutional “laws”. That is one of the checks on Congress.

The President may also properly make orders addressing housekeeping issues within the Executive Branch: Dress codes, no smoking or drinking on the job, he may encourage executive agencies to hire qualified handicapped people, and the like. Just as if you have a business, you may make orders addressing such matters.

So! Do you see? The President may lawfully make orders to carry out his constitutionally imposed powers and duties, and powers bestowed by statutes which are constitutional; and he may address “housekeeping” issues within the Executive Branch.

2. But a President may not lawfully, by means of “orders”, exercise powers not delegated to him by the Constitution or by (constitutional) Acts of Congress.
Yet Obama has issued various executive orders which are unlawful because they are not authorized by the Constitution or by (constitutional) Acts of Congress. Here are two executive orders which are particularly pernicious because they undermine our foundational Principle of “Federalism”, and have as their object the “improper consolidation of the States into one … republic.”: 10

E.O.13575 – Establishment of the White House Rural Council: This E.O. provides for over 25 federal departments & agencies to run every aspect of rural life!

E.O. Establishing Council of Governors: The effect of this E.O. is to erase the Independence and Sovereignty of the States and consolidate us into a national system under the boot of the Executive Branch.

Joseph Stalin couldn’t do better than this. These E.O.s are blatantly unconstitutional as usurpations of powers not granted in The Constitution! So, Nullify them!

3. Likewise, executive agencies may not, by means of “administrative rulemaking”, usurp the powers of Congress. (Remember, because of Art. I, Sec.1, all rulemaking by executive agencies is unconstitutional)!

Here are several cases of such unconstitutional rulemaking:

a) When Congress refused to pass the DREAM ACT, which provided a path to citizenship for certain categories of illegal aliens, ICE had no authority to implement it, in whole or in part, by executive “memo”! Power over Rules of Naturalization (i.e., who qualifies for citizenship and what are the procedures) are expressly granted to Congress by Article I, Sec. 8, cl. 4, which grants to Congress alone the Power “To establish an uniform Rule of Naturalization”.

The President has no constitutional power over immigration & naturalization except to enforce the Acts of Congress respecting those subjects. Article II, Sec. 3, which imposes upon the President the duty to “take care that the Laws be faithfully executed”, requires the President to enforce such constitutional Acts of Congress.

But if Congress refuses to make a law respecting naturalization, a President who enacts it anyway, via “executive order”, or “administrative regulation”, or “administrative memo” by his underlings in the various executive agencies, is acting lawlessly. His unlawful acts should be nullified, and he should be removed from office for his usurpation.

b) Congress recently did not pass three sinister and grotesquely unconstitutional bills Obama wanted: “Card check”, “ Cap and Trade”, and the Disclose Act. These bills are unconstitutional as outside the scope of the legislative powers granted by our Constitution to Congress. Nowhere does our Constitution give Congress authority to make laws about labor unions (“card check”), or to regulate carbon emissions – CO2, the stuff humans and animals exhale, and plants & trees need for photosynthesis (“cap and trade”), or requiring people with federal contracts to report their personal political activities to the Executive Branch (“Disclose Act”)!

Since Congress may not lawfully make laws on such subjects, no one can. Yet, Obama is circumventing the Constitution and implementing these three failed & unconstitutional bills by agency rulemaking or executive order!:

The National Labor Relations Board, is implementing “card check” by agency regulation. Read this.

The Environmental Protection Agency is implementing “cap and trade” by agency regulation. Read this.

And it appears that Obama – in furtherance of his “agenda” to reward his supporters and punish non-supporters – is considering signing an executive order implement the Disclose Act. Read this.

So! Let us sum this up: The President must always uphold our Constitution. When Congress makes an unconstitutional law, the President must refuse to implement it; and he may, by means of executive orders, instruct people in the Executive Branch not to comply. E.g., if a President orders the U.S. Attorneys to decline to prosecute persons for possession of sawed-off shotguns, he would be acting lawfully because Congress has no authority to ban them. But the President is violating the Constitution when he implements “card check” by agency rules made by the NLRB; when he implements “cap & trade” by agency rules made by the EPA; and the “Disclose Act” by executive order, because the President and executive agencies (as well as Congress) do not have authority over these objects; and further, no one in the Executive Branch has authority to make “laws”!

What Should we do about illegal Executive Orders & Rules made by Executive Agencies?

A Congress filled with he-men and she-women, instead of ignorant cowards, wusses, and wimps, would impeach obama for his usurpations in signing unconstitutional executive orders, and in circumventing Congress by having executive agencies implement, by means of administrative rules, legislation which Congress did not pass. In Federalist Paper No. 66 (2nd para), Hamilton expressly states that impeachment is an essential check on a President who encroaches on the powers of Congress; and in Federalist No. 77 (last para), points out that impeachment is the remedy for “abuse of the executive authority”.

But since the people in Congress are too ignorant and weak to rid us of the abomination in the White House, the States and Counties must nullify unconstitutional executive orders and administrative rules, or submit to slavery and the destruction of our Constitutional Republic. Since State and County officials have taken the Oath to support the U.S. Constitution (Art. VI, last cl.), they are bound by Oath to refuse to submit to illegal executive orders and illegal agency rules.

And of course, WE THE PEOPLE and our businesses must also spit on such illegalities by the Executive Branch. Our “creature” ( Federalist No. 33, 5th para, Hamilton), has turned into Frankenstein, and has lost all legitimacy. PH


1 In Federalist No. 45 (9th para), James Madison, Father of Our Constitution, says,

The powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite. The former will be exercised principally on external objects, as war, peace, negotiation, and foreign commerce; with which last the power of taxation will, for the most part, be connected. The powers reserved to the several States will extend to all the objects which, in the ordinary course of affairs, concern the lives, liberties, and properties of the people, and the internal order, improvement, and prosperity of the State. [boldface added]

2 In Federalist No. 48, Madison points out that in our representative republic,

…the executive magistracy is carefully limited; both in the extent and the duration of its power… (5th para) [i.e., limited & enumerated powers and 4 year terms]

…the executive power being restrained within a narrower compass [than that granted to the legislative branch], and being more simple in its nature… (6th para)

In Federalist No. 75 (3rd para), Hamilton says,

…The essence of the legislative authority is to enact laws, or, in other words, to prescribe rules for the regulation of the society; while the execution of the laws, and the employment of the common strength, either for this purpose or for the common defense, seem to comprise all the functions of the executive magistrate… [boldface added]

In Federalist No. 78 (6th para), Hamilton says,

…The Executive not only dispenses the honors, but holds the sword of the community. The legislature not only commands the purse, but prescribes the rules … The judiciary … has no influence over … the sword or the purse …and …must ultimately depend upon the aid of the executive arm … for the efficacy of its judgments. [boldface added].

Read the list of the President’s enumerated powers! The President’s powers really are “confined” and “carefully limited” to carrying out laws made by Congress and enforcing certain judicial decisions, military defense (a power shared with Congress), appointing officials (subject to Congress’ approval), and entertaining foreign dignitaries. That’s it!

3 Only Congress has the power to declare war (Art. I, Sec. 8, cl. 11)! See clauses 12-16 showing that Congress has the power to determine the funding for the military, and to make the Rules for the discipline & training of the military and the Militia.

4 Re “Offenses against the United States”: I explain here the criminal laws Our Constitution permits Congress to make. It’s a short list. Take note, you federal criminal defense lawyers.

5 I explain the treaty making power of the United States here and here.

6 During the Terri Schiavo case, Alan Keyes spoke on the radio about the constitutional powers of the President. I seem to recall that Dr. Keyes spoke of the President’s obligation to exercise his “independent judgment” as to whether an act of Congress or a federal court opinion is constitutional. Whatever he said, he opened my eyes, and enabled me to see the elegant beauty of our Constitution.

7 Hamilton also says in Federalist No. 33 (6th para)

…it will not follow…that acts of …[the federal government] which are NOT PURSUANT to its constitutional powers, but which are invasions of the residuary authorities of … [the States], will become the supreme law of the land. These will be merely acts of usurpation, and will deserve to be treated as such… [T]he clause which declares the supremacy of the laws of the Union [Art. VI, cl. 2]…EXPRESSLY confines this supremacy to laws made PURSUANT TO THE CONSTITUTION … [caps are Hamilton’s, boldface mine]

8 Madison says in Federalist No. 44 (last para before 2.):

…the success of the usurpation [by Congress] will depend on the executive and judiciary departments, which are to expound and give effect to the legislative acts; … [boldface added]

The President must not collude with the executive or judicial branches to usurp power over The People!

9 Most of the existing “federal” executive agencies are unconstitutional. They meddle in matters which are not the business of the federal government, as power over the matters is not granted by our Constitution to the federal government. Here are a few of the unconstitutional federal agencies: the Departments of Agriculture, Labor, Health and Human Services, Housing and Urban Development, Energy, Education, Transportation, and Homeland Security. Likewise for the Environmental Protection Agency, the Federal Communications Commission, the Office of Science and Technology Policy, the Office of National Drug Control Policy, the National Economic Council, the Small Business Administration, the Council on Environmental Quality, etc., etc., etc.

10 Progressives have erased the concept of “federalism” from our minds. “Federalism” refers to the form of our government & the division of powers between the national government and the States.A “Federation” (which is what our Constitution creates) is an alliance of independent States associated together in a “confederation” with a national government to which is delegated authority over the States in specifically defined areas ONLY (i.e., the enumerated powers granted to Congress by our Constitution). Those enumerated powers are the only areas wherein the national government is to have authority over the States. In all other matters, the States have supremacy, are independent, and sovereign! Learn more of “federalism” here and here.

Our Framers warned against the consolidation of the sovereign States into one national sovereignty:  In Federalist No. 32 (2nd para), Hamilton writes,

An entire consolidation of the States into one complete national sovereignty would imply an entire subordination of the parts; and whatever powers might remain in them, would be altogether dependent on the general will. But as the plan of the convention [the Constitution] aims only at a partial union or consolidation, the State governments would clearly retain all the rights of sovereignty which they before had, and which were not, by that act, EXCLUSIVELY delegated to the United States…. [caps are Hamilton’s; boldface mine]

Federalist No. 62 (5th para) says,

… the equal vote allowed to each State is at once a constitutional recognition of the portion of sovereignty remaining in the individual States, and an instrument for preserving that residuary sovereignty. So far the equality ought to be no less acceptable to the large than to the small States; since they are not less solicitous to guard, by every possible expedient, against an improper consolidation of the States into one simple republic. [boldface mine]

And in Federalist No. 39 (6th para), Madison says,

“But it was not sufficient,” say the adversaries of the proposed Constitution, “for the convention to adhere to the republican form. They ought, with equal care, to have preserved the FEDERAL form, which regards the Union as a CONFEDERACY of sovereign states; instead of which, they have framed a NATIONAL government, which regards the Union as a CONSOLIDATION of the States.” And it is asked by what authority this bold and radical innovation was undertaken? The handle which has been made of this objection requires that it should be examined with some precision….[caps are Madison’s]

Madison then gives a brilliant exposition of the “national” and “federal” aspects of Our Constitution. More than any other Paper, No. 39 addresses the primary political problem of our Time: The national government’s destruction of “federalism” by eradicating all vestiges of sovereign & independent States.

We are a trusting People easily lead astray. Make something sound “patriotic”, and we are all for it. Since 1892, American public school children have been indoctrinated with the statist Lie that ours is an indivisible national government. This was done by means of the Pledge of Allegiance: “….one nation … indivisible…”. Is it any wonder that the author of this nasty bit of poison, Francis Bellamy, was a socialist who worked with the National Education Association to institute this statist indoctrination into the public schools? This pernicious pledge is why you don’t know, and no one knows, that our Constitution created a “federation” of sovereign & independent States, united only for the limited purposes enumerated in the Constitution. Wikipedia has good info on Bellamy. PH
Publius Huldah
Most recent columns

Publius Huldah is a retired lawyer who lives in Tennessee USA.  She writes on the U.S. Constitution and posts her papers at  Before getting a law degree, she got a degree in philosophy where she specialized in political philosophy and epistemology (theories of knowledge).
Using primarily The Federalist Papers, which were written during 1787-1788 by Alexander Hamilton, James Madison & John Jay, in order to explain the proposed Constitution to the American People and induce them to ratify it, Publius Huldah explains the true & original meaning of the U.S. Constitution.  She also shows how modern day judges on the U.S. federal courts have completely abandoned the U.S. Constitution and have substituted their own personal views and opinions for The Constitution.

Publius can be reached at:









Bernanke warns over Washington wrangling



A rough summary of Ben Bernanke‘s speech at the Federal Reserve’s gathering in Jackson Hole on Friday is that the US economy needs more help from policymakers — but that the central bank will only provide a bit of it.

“I do not expect the long-run growth potential of the US economy to be materially affected by the crisis and the recession if — and I stress if — our country takes the necessary steps to secure that outcome,” the Fed Chairman said.

The implicit message of those words is that, while the Fed will do everything it can, other policymakers are not taking those necessary steps. The Fed’s job is to deliver low and stable inflation and economic stability, but “most of the economic policies that support robust economic growth in the long run are outside the province of the central bank”.

He called for “good, proactive housing policies”, expressed an implausible degree of confidence in Europe’s ability to tackle its sovereign debt problems and, in some of his harshest words ever on fiscal policy, he said that Washington’s agonized debate on raising the federal debt ceiling had hurt the economy.

“The country would be well served by a better process for making fiscal decisions. The negotiations that took place over the summer disrupted financial markets and probably the economy as well,” Mr. Bernanke said.

Mr. Bernanke has gradually ramped up his rhetoric on fiscal policy in recent months but it was the first time that he has suggested that the US budget process is so dysfunctional that it needs reform.

“These were some very strong words from chairman Bernanke on fiscal policy, and we can only hope policymakers take note. There is no question that with all that needs to be done to grow the economy, fiscal policy continues to be the missing link,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.

Although he did not say so outright, Mr. Bernanke implied that he would support more fiscal stimulus now, in order to tackle the long-term unemployment that he said could leave a “major scar” on the US economy.

“Our economy is suffering today from an extraordinarily high level of long-term unemployment, with nearly half of the unemployed having been out of work for more than six months,” he said. Fiscal policymakers urgently need to deal with America’s long-term budget problems but they “should not, as a consequence, disregard the fragility of the current economic recovery”.

Mr. Bernanke’s words reflect a growing sense that, while the Fed can and should do more to make sure inflation stays at its 2 per cent target, tax and spending decisions have greater power to influence an economy in which consumers are still paying down debt after the financial crisis.

His statement that the Fed “is prepared to employ its tools as appropriate to promote a stronger economic recovery” was a fairly robust signal that the central bank is ready to do more, most probably at its next meeting in September, which was extended to last for two days.

But the rest of the speech, which lacked any discussion of those tools and focused on longer-run challenges and the role of fiscal and other kinds of policy, seemed designed to limit expectations of how much the central bank might do.

In particular, there was no encouragement to think that the Fed will soon launch a third round of quantitative easing — a QE3, like the QE2 announced last November — under which it would buy hundreds of billions of dollars more in long-term assets as part of a further attempt to drive down long-term interest rates.

Even though Mr. Bernanke did not elaborate in Jackson Hole, a more likely easing option is to tilt the Fed’s existing portfolio of assets towards more long-term securities, a policy with its own nickname, a “twist”.

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The Largest Bubble in U.S. History



The Largest Bubble in U.S. History

On August 6th after S&P downgraded the U.S. debt rating from AAA to AA+ with a negative outlook, NIA prayed that Americans would not make the mistake of buying U.S. Treasuries as a safe haven. We normally don’t pray about economic matters, but only God can save the U.S. economy today as well as investors who have been brainwashed into believing U.S. government dollar-denominated bonds are a safe place to store wealth. Unfortunately, only when hyperinflation arrives will the majority of American citizens realize that fiat U.S. dollars should be used as a medium of exchange only and not a place to store wealth.

 Since NIA was launched two and a half years ago, the overwhelming majority of our economic predictions have come true, with many of our accurate predictions being unique only to us. Sometimes we are a bit early with our predictions, but they almost always eventually come true. One of our predictions that we have been wrong about in the short-term, but will be proven right about later this decade, is the collapse of the U.S. Treasury market.

 We thought there was a chance that many Americans would once again make the mistake of buying U.S. Treasuries during the recent sell-off of global financial markets, but we were shocked to see the yields of some U.S. Treasuries such as the 10-year bond, decline to new record lows. The yields of many government bonds have fallen through their lows of late-2008, but unlike the liquidity crisis of late-2008 when gold prices declined to a low of $720 per ounce, gold futures on August 22nd reached a new all time nominal high of $1,899.40 per ounce.

 NIA likes gold as a bet against the U.S. Treasury market, which we believe is the largest bubble in world history. Any investor buying 10-year Treasuries with a yield of only 2.20% needs to have their head examined. Based on official Bureau of Labor Statistics (BLS) data, year-over-year price inflation in the U.S. is already 3.63%. NIA estimates the real rate of price inflation to currently be approximately 8% and we project real price inflation to reach double-digits next year. NIA finds it very unlikely that the U.S. will be able to survive the next ten years without hyperinflation.

 Take a look at the long-term chart of 10-year yields below. After the inflationary crisis of the 1970s, 10-year yields surged to a high in the early-1980s of 14.5%. After inflation began to decline in the mid-1980s, the 10-year yield bottomed at 7% before rising again to 9%. In the 1990s, the 10-year yield averaged around 6.5%.

With the help of NIA’s critically acclaimed economic documentaries including ‘Meltup’, ‘The Dollar Bubble’, and ‘Hyperinflation Nation’ that have been seen by millions of people, a larger percentage of the investment community is educated than ever before about the currency crisis that is ahead. We estimate that about 1/10 of our country now finally understands that as long as we are running massive budget deficits with our government making no real attempt to cut spending in a meaningful way, gold will keep increasing in nominal value and the U.S. dollar will continue losing its purchasing power. However, 9/10 of our nation still doesn’t understand why they should own gold and would chase after $1,000 in cash being blown by the wind before picking up a 1 oz gold coin lying below them on the ground.

 Investors today are buying and selling assets based on what they perceive to be risk assets and safe haven assets. Market volatility is now at a level last seen in March of 2009 towards the end of the last financial crisis. On days with either positive economic news or rumors that Bernanke is getting ready to unleash QE3, stock prices rise while the prices of both gold and U.S. Treasuries fall. On days with either negative economic news or rumors that Bernanke is unlikely to unleash QE3, stock prices fall while both gold and U.S. Treasury prices rise. Investors are buying both gold and U.S. Treasuries as a safe haven. Those buying U.S. Treasuries as a safe haven are doing so based on the market’s actions in late-2008 when Treasuries rallied with the stock market collapsing. They fail to realize that every financial crisis is different and the next crisis will be nothing like 2008.

 In 2008, we had a crisis due to a lack of liquidity. Today, the world is flooded with liquidity, but most people don’t realize it yet because trillions of dollars are being hoarded on the sidelines and not chasing goods and services. Nobody knew for sure in 2008 how the Federal Reserve would react to the liquidity crisis. If the Federal Reserve did the right thing and allowed banks to fail we would have experienced many years of deflation. The Federal Reserve has made it clear that they will print enough money to bailout all major banks or other companies deemed “too big to fail”. We are in a situation where the worse the economy gets, the more money the Fed will print and the higher prices of all assets will rise.

 NIA predicts right now that over the next 16 months between now and the end of calendar year 2012, we will see the largest short-term increase in 10-year bond yields on a percentage basis in history. With CPI growth increasing for eight straight months and even the Fed’s misleading core-CPI growth up 290% since October on a year-over-year basis, investors will soon realize that it is far too risky to own bonds that are paying such low yields.

 President Obama yesterday nominated Alan Kreuger to lead his Council of Economic Advisers. We laughed when he heard Obama tell Kreuger that it will be tough for him to fill the shoes of Austan Goolsbee, who recently left his post to resume teaching at the University of Chicago. Whether it be Kreuger, Goolsbee, or Christina Romer (who preceded Goolsbee), they are all Keynesians who believe that more government spending and intervention is the key to bringing down unemployment and having a healthy economy.

 Krueger worked in the White House during the first two years of the Obama administration as assistant Treasury secretary for economic policy. Krueger received his Ph.D. in economics from Harvard University and has worked at Princeton University since 1987, where his mail frequently gets mixed up with fellow Keynesian and New York Times op-ed columnist Paul Krugman. Krueger is the author of a book that was written solely to convince readers that having a high minimum wage doesn’t cause unemployment. It should be common sense to all NIA members that if the government raised the minimum wage to $50 per hour, unemployment would rise dramatically as most jobs paying wages below $50 per hour would be destroyed. The truth is, eliminating the U.S. minimum wage would create thousands of new entry-level jobs in America and help lower the unemployment rate. Krueger was also instrumental in developing the “cash-for-clunkers” program, which NIA has written about on many occasions as being a monumental disaster for the U.S. economy.

 It is absurd how the mainstream media calls Ron Paul an extremist for wanting to eliminate government intervention in our financial markets, reduce government spending, balance the budget, stop the Fed from printing money, and return to sound money. In NIA’s opinion, Krueger is the real extremist. If there was no minimum wage and there never was “cash-for-clunkers”, many unemployed 17 year old kids who are home on Facebook, could instead be out earning enough money to buy their own used car. The youth unemployment rate is currently double the overall unemployment rate and used car prices are up 20% during the past year, because of the policies supported by Krueger.

 The U.S. government used “cash-for-clunkers” to buy phony GDP growth in 2009, stealing from future automobile sales. After the “cash-for-clunkers” program ended, General Motors reported that their sales in August of 2010 declined 25% from sales in August of 2009. NIA predicted on September 1, 2010, that this would lead to a sharp contraction in GDP growth and cause the Fed to unleash the mother of all quantitative easing. Two months later on November 3, 2010, the Fed announced $600 billion in additional quantitative easing.

 GDP growth in the 4Q of 2010 declined to 3.14% on a year-over-year basis, down from 3.51% in the 3Q of 2010. GDP growth has continued to decline lower this year to 2.24% in the first quarter and 1.55% in the second quarter (which was just revised downward from an initial estimate of 1.62%). The BLS used a price deflator of only 2.5% in the 2Q. In our opinion, real GDP in the U.S. today is already in negative territory. With it becoming increasingly likely that official year-over-year GDP changes will become negative by the end of calendar year 2011, it is only a matter of time before the Federal Reserve unleashes QE3 in disguise under a new name.

 With the Federal Reserve no longer reporting the M3 money supply, the broadest measure of money supply currently reported by the Fed is M2. During the past few weeks, the U.S. has been seeing a very alarming rise in M2. The M2 money supply has risen $228.5 billion over the past four weeks to $9.5218 trillion. On an annualized basis, this equals a 32% increase in M2. Much of this gain can be attributed to people moving funds from institutional money funds and large time deposits into checking and savings accounts. Investors are nervous about the state of our economy and as soon as the investment community begins to realize that the next economic crisis will be a currency crisis, not a liquidity crisis, we will see the world lose confidence in the U.S. dollar and rush out of U.S. Treasuries and into gold, silver, and other real assets.

 It is important to spread the word about NIA to as many people as possible, as quickly as possible, if you want America to survive hyperinflation. Please tell everybody you know to become members of NIA for free immediately at:






Some year’s back I stumbled onto one of Marilyn’s articles and out of ignorance disagreed with her. That inspired me to confront her with an email that I thought was sufficient to correct her. To my surprise she interpreted my letter more harshly than intended, and put me in my place in no uncertain terms, which caused me to conclude I was up against a brick wall, and any further communication would be fruitless. After more thought I offered an apology which she graciously accepted, and that was the smartest thing I have done in my lifetime. Since that day, I have been the beneficiary of a relationship that I have never before had, and I would not trade her friendship for any amount of gain. She, and my wife, are the only two people on earth I completely trust. We still have different opinions on some things, but there is no animosity between us. The same can be said for my wife. Even though we are very close in age, If I could have chosen who would be my Mother, it would be her. She is one of the few authors who have the ability to blend fact with fiction, and has proven it with her two books on banking, how it has been controlled in America, and what to do about it. (When the Swan’s neck Breaks) and (Flight of the Black Swan) The reader is advised to read them both, As it is seldom that you can learn something valuable while still being entertained. Both were impossible for me to put down, and concentrate on something else. For those with a discerning mind, there is a lot to learn in these two books. Since I could write reams on how much I trust her intelligence and knowledge, I will conclude with this statement. I have never voted in my life, and for damn good reason, but if she would run for any office, I would break that habit and vote for her. I cannot think of anyone in America or anywhere else who could be trusted to make a difference in America, if she were given the power to do so. She knows how to fix America, and you can bet the Bank on that. Marilyn for President in 2012!



By Marilyn M. Barnewall
July 31, 2011

Watching Congress create a fear-based crisis over the debt ceiling limit this past week has been anything but entertaining. It’s like watching someone with one foot nailed to the floor run in circles, thinking because he/she is moving, it represents progress.

It’s interesting that whenever “they” want to achieve something major… whether it’s the Patriot Act or war in the Middle East or an enemy called “terrorists” that will unify the nation… they use fear as the primary motivator. Fear is one of the strongest. The only thing stronger is faith.

The entire process reminds me of an end-around run. The President, as quarterback, hands the ball off to John Boehner (wide receiver) who passes – but the ball is intercepted by Harry Reid (pass defender) – who changes the direction of the play. When anyone gets close to a touchdown, the President moves the goal posts and the game remains scoreless… but the cheering squads on the sidelines keep chanting the message of one team or the other. Barry and Harry’s team shout “Look out you senior wrecks, come August there will be no checks!” The Boehner team’s cheerleaders tell the people “Listen not to Barack’s demagoguery, your check will come because of our choreography!”

And that’s how political football is played… with your money and mine, of course. It is shameful that the security of the elderly was a playing card in this disgusting deck.

There is a core problem causing our economic woes and everyone ignores it either out of insufficient insight into what is required to get us out of this mess, or because someone thinks it’s a good idea for the American economy to fail. It reminds me a bit of taking your car to a poor mechanic to make it run properly. He can fix the tires, the windshield wipers, change the oil, check the water and cooling fluids, and a myriad of other things – but he doesn’t know a damned thing about the engine. How much help will that mechanic be when your car has serious problems?

Washington is filled with economists and lawyers… they understand our problems from a theoretical perspective. If you move “Piece A,” it will impact “Pieces B and C” this way. They look at the economy like a chess board and understand investment banking in its relationship to the game. They know little or nothing about commercial banking – which is the engine of a capitalist economy. We can thus say the mechanics of our economy tinker, they don’t repair. They are the poor mechanics who got us into the mess – and it requires greater minds than those that caused the problems to solve them.

There are things that can be done to turn the economy around and none of them are even under consideration. For example:

The hardest hit middle class Americans have taken during the past four years is in primary residential real estate. Whether you realize it or not, the lost value of real estate impacts everything else. It is the way our economy is structured – and is largely responsible for credit drying up (which is largely responsible for no business growth – which is largely responsible for no job creation).

The economy is not going to turn around until a firm floor is put under the residential real estate market. It can be done – but elected officials and bureaucrats must understand how commercial banks work. And, they do not.

Most secured loans utilize as collateral a second trust deed on the borrower’s residence. I’m not just talking about mortgage loans; I’m talking about home improvement loans or vacation loans or college (non-federal student) loans, etc. In the early 1990s and while Alan Greenspan was Federal Reserve Chairman, the Fed kept lowering the cost of funds. It encouraged people to re-finance their mortgages. The first time you ever heard of a personal line of credit called a residential credit line was in the early 1990s. People were encouraged to take out a residential credit line, which placed a second trust deed on their primary residence as collateral. In fact, the only way to get this personal line of credit was by putting a lien on the property – usually a second mortgage behind the first lien holder.

Until recently – just before the Lehman Brothers bankruptcy, coincidentally – when you bought a home, you had to put 20 percent down. Lehman was keeping its head above water by using liar loans from mortgage companies it owned – lenders that specialized in making them. It did that so it could create mortgage-backed derivatives. It – along with Goldman Sachs, J.P. Morgan Chase, Morgan Stanley and others – almost bankrupted the world. In fact, the jury is still out on whether they succeeded.

Get ready, because here comes some banker lingo… it can’t be said any other way. When we used to buy a home and made a 20 percent down payment, it resulted in an 80 percent collateral margin on the loan. In other words, the collateral value of the home plus the down payment gave the bank a 100 percent collateral position. Here are some numbers that may help:

Home purchase price: $200,000
Down payment, 20%: 40,000
Balance/Mortgage: 160,000 — 80% of home value, 1996

Bank regulations used to require an 80 percent margin be maintained on home loans – whether it is evaluated against a first or second trust deed. Today, that regulation is used selectively.

In 2007, the housing market began its steady decline. By 2010, the above home was re-appraised at $150,000. OMG! You are out of margin! When the FDIC or Comptroller of the Currency auditors come to your bank, your loan will be graded, even though you haven’t missed or been late with a single payment! Regardless of your faithfulness in making payments, the collateral is out of margin. It is an unsafe loan. This is a legitimate claim, by the way.

Chances are, your bank has a large number of such loans because using a borrower’s home has always been the preferred form of loan collateral in the commercial banking industry. Residential real estate has increased in value annually for generations so the risk was minimized… until 2007. Suddenly your bank finds itself on the regulatory watch list because it has too many loans that are out of margin. An otherwise healthy bank is threatened with closure. Some more numbers:

Loan balance:
$150,000 (after ten years of mortgage payments)
2010 Home value:
150,000 (after the real estate market drop)

There is no margin. To be in margin, an additional $30,000 must be added to the bank’s collateral position.

For the bank to have enough personal collateral from you, $30,000 of good assets must be added to bank’s collateral basket. Most people don’t have that amount sitting around to give the bank as collateral. The bank will soon tell the borrower to bring $30,000 more in assets to put the loan back in margin or the bank will be forced to call the loan and foreclose on your property. The auditors are screaming at the bank because of the margin lapse. They have to do something.

“But I’m not behind in a single payment!” you say, certain the bank won’t foreclose on your home loan just because of some bank regulation. If you’ve been thinking that all of the home foreclosures in process are caused by people who bought a house that was too expensive for them, think again. If you think they’re all people who aren’t making their house payments, think again. If you think the banks aren’t lending money because they don’t have money to lend, thing again. What they don’t have is access to a reliable form of collateral… like your house. Since the residential real estate market is still in a downward spin (and no one in Washington is doing anything intelligent to stop it), what asset does the middle class have available to provide the bank for collateral? Answer: None. No collateral, no loan access.

That explains why your local bank may be in trouble even though most of its loans are not (and thus it is a great takeover target for banksters). This also explains why banks aren’t lending: Without a healthy real estate market, they don’t have a solid collateral base. Too, their personnel’s time is spent dealing with loan margin problems or foreclosures. Only so much can be done in a single day by the same number of people.

Real estate is impacting jobs? Remember, 70 percent of all jobs in America come from independent business… middle class people who own homes and often use them as collateral for business loans are independent business owners.

And now you know why there are no new jobs: There are no homes with reliable dollar value available as loan collateral. Independent business owners can’t hire people. The economy, of course, has some impact on independent business growth because fewer people have money to spend on goods and services. And, there are banks that loaned too much money to contractors who were building new homes and got caught in the housing crunch… and bankers are notoriously bad at handling work-out loans in a way that benefits everyone.

I’m not an economist; just a commercial banker with God-given common sense. My common sense tells me the best way to put a floor under the falling real estate market has nothing to do with the $600 billion the Federal Reserve System plans to inject into the economy this fall. It will do about as much good as the TARP and TALF funds did (read: little to none – it’s the engine that needs help, not the windshield wipers or oil filter – and a limited number of people will have remarkable investment opportunities). If TARP funds had been used to stabilize the housing market rather than bailing out investment bankers who perpetrated fraud on the public, we would be in serious economic recovery by now. Our economy wouldn’t continue to waver between recession and depression.

Ben, rather than throw that $600 billion into greedy hands that do nothing to solve the nation’s economic problems, create a real estate stabilization fund. When a bank’s mortgage loan (either first or second trust deed) gets out of margin, guarantee that portion of the loan that is out of margin… in the example given above, $30,000. This gets the Comptroller of the Currency (or FDIC) auditors off of the banks’ back (which you could do anyway, if you so chose), and it gets the bank off of the backs of consumers who have sacrificed in many ways to repay their mortgage loans and who have a good repayment track record.

This would not apply to new loans… it’s not a something for nothing vote-getting kid of deal – which will automatically kill it before it gets started. It’s a program designed to put a floor under the housing market to prevent it from falling any further and to stabilize it. It’s not a loan. It’s a guarantee. Thus, the $600 billion you plan to throw into the greedy hands of the already rich will result in few loan losses. If you really want to save the economy, stabilize the real estate market.

To top that information off, here’s a press release from the Bureau of Economic Analysis, held for release until Friday morning, July 29, 2011:

“Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 1.3 percent in the second quarter of 2011, (that is, from the first quarter to the second quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.4 percent.”

In other words, the President of the United States has lied to us about recovery. He has been telling us that though the economy is slow to recover, it is recovering. How can an economy “recover” when 99.6 percent of the economy did not grow? It cannot!

Now, if a little old lady who lives at the base of a big mountain in the countryside can figure that out, why can’t all of those economists in Washington, D.C.?

Below are pictures – each red dot in each picture represents broken hearts, shattered dreams, broken homes, and Americans who have had their false sense of security ripped from their formerly unrealistic view of life. They used to think things like “This is America; we’ll recover.” Or, “Everything is in God’s hands; I just have to trust Him.” They have learned the lesson that taking no action to stop fraud when it occurs is accepting fraud as the standard. They now know that everything is in God’s hands, but we are expected to protect and defend what His hands have so graciously given us.

I apologize for ending an article with such an emotional display of heartbreak as those exhibited below in pictures from Google Mapping.

1. Boise, Idaho — 1 in 21 homes in foreclosure

2. Sarasota, FL — 1 in 21 homes in foreclosure

3. Tampa, FL — 1 in 20 homes in foreclosure

4. Sacramento, Calif. — 1 in 19 homes in foreclosure

5. Bakersfield, Calif. — 1 in 17 homes in foreclosure

6. Reno, Nevada — 1 in 16 homes in foreclosure (Home of Senator Harry Reid)

7. Miami, FL — 1 in 14 homes in foreclosure

8. Phoenix, AZ — 1 in 14 homes in foreclosure

9. Cape Coral, FL — 1 in 12 homes in foreclosure

10. Las Vegas — 1 in 9 homes in foreclosure

Tell them all – the President, the Vice President, the Chairman of the Federal Reserve System, the Secretary of the Treasury, your U.S. Senators and Representatives – tell them all to stop lying to the American people!


 There are many ways to improve the economy. Our Congress – people we elected – moan and groan saying they can’t do anything about national monetary policy or make the marketplace user friendly for job creation. That is untrue. They have control… what they don’t have is the cojones to exercise it. For example, many experts believe the Federal Reserve Act of 1913 is illegal.

On what is this argument about the legitimacy of the Federal Reserve System based?

Article I, Section 8 of the United States Constitution says that “The Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.” And here’s where it gets interesting. The Constitution says the Congress has the power “To borrow Money on the credit of the United States.” Oops. How did a private corporation called the Federal Reserve inherit that responsibility? Section 8 also says the Congress “shall have Power… to coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures.” Since the Federal Reserve, a private corporation, does these things… isn’t it unconstitutional?

Well, politicians and lawyers will argue and tell you that the Federal Reserve Act of 1913 makes it legal for the Congress to turn its monetary responsibilities as described in the Constitution over to the Federal Reserve.

Here’s an easier question for you to answer: In 1970, how old did an American citizen have to be to vote? Answer: 21. How did they lower the constitutional requirement that you had to be 21 to vote… how did 18 year olds get the vote? On June 22, 1970, then-President Richard Nixon signed a law making the voting age 18 in all federal, state and local elections. The States of Oregon and Texas challenged the law. The Supreme Court declared unconstitutional those parts of the law requiring states to register 18-year olds for state and local elections. Justice Hugo Black said: “I would hold that Congress has exceeded its power in attempting to lower the voting age in state and local elections.”

That Supreme Court ruling, then, meant states had to provide separate voting rolls for people between ages 18 and 21. It basically determined the Congress had the right to tell 18 year olds they could vote in federal elections, but states had the right to determine how old someone must be to vote in state elections.Special ballots created for those between the ages of 18 – 21 would create an election nightmare; so, on March 10, 1971, the Senate voted 94-0 in favor of passing a Constitutional amendment to guarantee the voting age would be no higher than 18 in all elections. On March 23, 1971, the House voted 401-19 in favor of the proposed amendment. The amendment was sent to each of the states and the minimum number of states ratified the proposed legislation – and the Constitution of the United States added Amendment XXVI, allowing 18 year olds to vote. Since I don’t know anyone (other than bankers who profit from the policies of the Federal Reserve System) who wouldn’t vote to do away with the Federal Reserve System, this alternative is available to the Congress. All they need is for a state legislature or two to challenge the Federal Reserve Act of 1913 and get the challenge to the Supreme Court. It would be interesting to see what today’s “living document” Supreme Court would do when faced with a 1970’s Court decision that comes down on the side of states’ rights.

A Supreme Court decision exists that says the Congress overstepped its bounds – or, as Justice Black said, “has exceeded its power” – by passing a law that applied to state and local elections. Many people suggest (myself included) the Congress “exceeded its power” by passing the Federal Reserve Act of 1913 because that law extends beyond the federal to the state level. How does it extend beyond the states to the federal level? Just one example: To be a “national bank” in Oregon or Texas (or in any state), a bank is required to be a member of the Federal Reserve System. Any state, at any time, can challenge the power base of the Federal Reserve System as it is exercised at the state level. So state legislators could change things too – if they wanted – just as Oregon and Texas successfully challenged the 1970 law signed by President Nixon giving 18 year olds the right to vote. Just because a President signs a Congressional Act doesn’t make it lawful. If it violates the Constitution of this country, it is not lawful and becomes what is called “fruit of the poisoned tree.”

As I have said in my columns many times, the Federal Reserve System is not part of the federal government. It is a private corporation (a cartel – like OPEC)… the only one in America that is exempt from both federal and state taxes. Well, General Electric (GE) doesn’t pay much in taxes, but that’s not because of an exemption. That’s because of loopholes – and that makes one scratch one’s head when one thinks about Obama’s key economic advisor, Jeffrey Imelt, Chairman and CEO of GE. When one rewards bad behavior (by honoring one guilty of it with a Presidential appointment), one should expect more bad behavior.

The point is, if the Congress or State Legislatures want to get rid of the Federal Reserve, they can… just like Texas and Oregon got rid of the 18 year old voting rights bill that was imposed on them by the United States Congress. I don’t know anyone who would vote to support keeping the Federal Reserve System… maybe Alan Greenspan and Ben Bernanke. The states forced the issue with Congress, they won, and an Amendment to the U.S. Constitution was required to legalize the 18-year old vote at state and local elections. The same charge of Congress exceeding its power when it transferred constitutional authority to the Federal Reserve System can be made by any state legislature… and a Supreme Court precedent exists.

A lot of people think the Congress is being dominated by the banksters… especially the investment banks on Wall Street. If that’s true, the Congress can regain control. Do away with the Riegel-Neal Interstate Banking and Branching Efficiency Act of 1994. Bring back the old McFadden Act which prohibited interstate branch banking. Give the too big to jail guys time to divest themselves of the interstate branches and decentralize all of that misbegotten banking power. McFadden protected us for many years from banks becoming too big to jail. The point is there are things that can be done to eliminate the power abuses of the Federal Reserve System —if the Congress wants to do them. There are things that can be done to put the Congress back in control of our banking system and our monetary policy. States can implement a state-owned system of banking… the best possible example I can think of to decentralize the power of the Federal Reserve.

Until 1980 when the Monetary Control Act was passed, the Glass Steagall Act protected Americans by preventing commercial banks from giving investment advice or selling stocks and bonds. Glass Steagall prevented investment banks – Wall Street brokers, not commercial bankers – from making loans or taking deposits. These two key financial transactions credit and investments (especially relative to new product development on the investment side), like oil and water, do not mix. When they are mixed, it creates a moral hazard that can result in economic meltdown. We had a perfect example of that in 2007-08 and are still trying to find our way out of the economic abyss that was created – some say intentionally (me among them) – for us. There are too many potential conflicts of interest for a compatible marriage bed between these two functions.

In a NWV article April 25, 2010, titled Moral Hazard Ahead: Beware, I defined “moral hazard” as the mingling of commercial and investment banking. I stand by what I said in that article – and in over a year since its publication, those words have proven themselves true.

If Washington really wanted to force the too big to jail banks to return to serving the people rather than servicing them, they would eliminate the Monetary Control Act of 1980 and re-implement Glass Steagall. It would repeal Gramm, Leach Bliley, a/k/a the Financial Services Modernization Act of 1999 which was the death thrust to Glass Steagall. Congress has the power to change things… if it wants.

Congress likes to play like it’s not in control… it absolves them from the problems they create (they think). But Congress holds the reins of power. There are only two possible reasons why the Congress has passed such utterly stupid regulations and allowed such weak regulatory oversight of the investment banking industry – the industry which caused most of America’s economic trauma: 1) They want to bring the economy of the United States to its knees and move forward with George Herbert Walker Bush’s “New World Order;” or, 2) Those who were stupid enough to get us into this mess aren’t smart enough to understand their complicity in causing this mess and have no idea how to get us out of it.

We can only assume that if the Congress isn’t taking action, it’s for one of three reasons: 1) They don’t understand America’s monetary system and how financial institutions function sufficiently to cast votes that impact or change the system; 2) They are more focused on their political careers than on the economic health of the nation they have taken an Oath to serve; or, 3) They want the system to fail. The number three choice would certainly explain the ongoing over-spending that has brought the United States very, very close to total economic collapse.

The tribal wisdom of the Dakota Indians, passed on from generation to generation, says that, “When you discover that you are riding a dead horse, the best strategy is to dismount.”

Instead of listening to the wisdom of that voice from the past, we have a political administration that prefers appointing a committee to study the horse. It wants to provide more funding to help increase the dead horse’s performance.

We need to clean the House (and the Senate) in 2012. For part one click below.

© 2011 Marilyn M. Barnewall – All Rights Reserved


In a speech I give about state banks, I begin by showing 20 slides. Each displays an overhead view of a city. Each city is covered with little red dots. Each dot represents a home in foreclosure… a broken dream for an American brother and/or sister.

Some of those slides were used in a recent article I did about home foreclosures and why so many people who have never missed a house payment are being told to either cough up more collateral for their mortgage loan or the bank will “call the loan” (require payment in full).

In my speech, I use the slides to emphasize the incompetence of the Federal Reserve System and as evidence of why the monetary policies of this private corporation (owned by and for bankers) has failed and why responsibility for monetary policy needs to be returned to the Congress of the United States of America where the Constitution firmly placed it.

Do I trust the Congress more than I trust Ben Bernanke? No. But I do trust the Constitution and respect the structure it put in place for our monetary policies and currency… for our Republic.

My slide presentation begins with Boise, Idaho. One in every 21 homes is in foreclosure in Boise. Several slides of cities in Florida are shown – Tampa, Port St. Lucie, Deltona, Naples – and some California cities like Sacramento, Bakersfield, Riverside and others. All of these cities have more homes in foreclosure than Boise does. There are two slides from Senator Harry Reid’s home state of Nevada – Reno (1 out of every 16 homes is in foreclosure) and Las Vegas (one out of every 9 homes is in foreclosure). Nevadans just re-elected Reid to his Senate seat. As the old saying goes, we get the government we deserve.

The Constitution (Article I, Section 8) quite clearly gives the right to borrow money on the credit of the United States to the Congress, not to a private corporation called the Federal Reserve. It gives to the Congress, not a cartel of bankers called the Federal Reserve, the right to coin money, regulate its value and that of foreign coins, and fix the standard of weights and measures.

The Federal Reserve Act was passed by the Congress in 1913. Thus, it took that private corporation (which, in reality, is nothing more than a middleman… a wholesaler of taxpayer currency) – 98 years to cause all of those little red dots, each representing a foreclosed home in an American city. The Fed has, unlawfully in my view, been in charge of our monetary policy for almost 100 years.

I suggest that this is one hundred year birthday we should not celebrate. It is a celebration we should abort… and I mean that in the worst kind of way.

The United States is $15 trillion in debt. We are spending $1.50 for every $1 in revenue we take in. That is unsustainable. Since every dollar that is printed is 46 cents in debt, it should be called a half-dollar, not a dollar. Printing a dollar bill that is almost 50 percent in debt before the ink dries may provide a new definition of counterfeiting.

The Federal Reserve recently underwent a partial audit that shows it made $16 trillion zero interest secret loans to American and foreign banks and businesses. You’d recognize the usual Wall Street bankster names… e.g., Goldman Sachs, J.P. Morgan Chase, Citigroup, etc. The foreign banks included some of the biggest in the world… Deutsche Bank, Royal Bank of Scotland, and others. While the Fed was making these zero interest loans (for which U.S. taxpayers are on the line), 6.5 million American homeowners were suffering through delinquent and foreclosed mortgages mostly caused by lost jobs resulting from a rotten economy – created by Federal Reserve policies.

The disastrous policies that have caused these personal nightmares give the American people all the necessary reasons required to demand we take back control of our banking system. We must tell this wholesaler of debt and money that whatever services it provides (other than screwing the people) are no longer needed.

Give authority over our banking system to individual states so the people have more control over their financial futures. When state banks are properly run, both the people and the government prosper… which is the way it’s supposed to be.

If a state implements a new, state-owned financial system, do we need to pay attention and make sure the state doesn’t turn state banks into political toys… follow in the Fed’s footsteps? You’re darned right we do! Had citizens been doing their job this past 98 years, the Federal Reserve wouldn’t have become the biggest financial abuser in world history! We need to watch anything that’s political to keep it from servings its own interests rather than those of the people!

What is a state bank?

There is only one state-owned system of banking in the country and it’s in North Dakota. That state has owned and operated its own system of banking for the past 93 years. So, when I write and talk of the benefits we can expect from implementing a state bank, it’s based on the experience of North Dakota’s bank, not on guess work or estimates.

As of July 2011, the unemployment rate in North Dakota is 3.3 percent. With a population of between 650,000 and 700,000, the North Dakota State Bank has, during the past ten years, paid the State Treasurer more than $325 million from bank profits. These funds keep the tax burden low which, in turn, encourages… what? Business and job growth! That’s one reason unemployment is so low in North Dakota. Think what states with larger populations and very high rates of unemployment – like Michigan – could do!

In 2009-2010, the worst American economy in recent history, North Dakota’s government had it largest surplus in history. The payroll growth in the private sector (not the public sector) during that time frame was 5.2 percent. The payroll growth of Texas placed it second at 2.6 percent. Maybe Governor Dalrymple should be running for President instead of Rick Perry?

When I speak publicly on this subject, people suggest that the North Dakota economy is so successful because of the Bakken oil project where an oil formation lies underground in a shale rock across western North Dakota, northeast Montana, and into Canada’s Saskatchewan Province. The barrels per day went from 3,000 in 2005 to 225,000 in 2010.

There’s no doubt Bakken has enhanced the North Dakota economy, but it’s not what causes the positive economic results. There are almost as many people in Alaska as North Dakota – and Alaska pumps about twice as much oil – unemployment in Alaska is 7.7 percent. Montana and Wyoming extracted far more gas than North Dakota, but neither maintained a continuous budget surplus since our economic crisis began in 2008. North Dakota has.

States with a lot of minerals weren’t initially hurt as badly as other states when the economy turned south. But other states haven’t reduced taxes. North Dakota has. It reduced income and property taxes by $400 million. Thinking of all of those little red dots on my speech slides… North Dakota also has the lowest foreclosure rate and lowest credit card default in the nation.

North Dakota has had no bank failures during the banking crisis, either. It has only one thing not available in other mineral rich states: a state bank.

From 2007 to 2009, the Bank of North Dakota added to the state’s coffers almost as much money as oil and gas tax revenues did.

So, that’s what you can expect from a state bank. Why does having a state bank make such a huge difference? Because the state’s money and banking reserves are maintained within the state and those funds are invested in local communities. And, in addition to a state bank providing needed administrative functions, it serves as a correspondent bank for the independent banks on North Dakota street corners.

There are two or three questions I get asked when I speak publicly about this subject. The most frequently asked question is “Does having a state bank mean that the state runs the banks people do business with?” No. It doesn’t. That would be a socialist system – and state banks are anything but that! The state runs the state bank; individual investors run the commercial banks on Main Street… just like they do now.

A state bank is an administrator which charters the banks that do business in the state (and by doing so, largely controls credit quality). It acts as a correspondent bank for the banks it charters. A “correspondent bank” provides credit services to small, independent banks which places them in a more competitive position with large banks. When a small bank gets a loan request too large for it to make, such a loan is referred to a correspondent bank and becomes a “shared” loan. Without a state bank, independent banks must refer their loans to the big banks – which is one reason they got too big to jail.

I mentioned earlier that North Dakota keeps all state revenues in the state. In other states, a large percentage of those funds are sent to the Federal Reserve – which places them in money center banks in New York. State banks keep those funds in the state and use them to benefit the people.

Some economists estimate that this one difference can turn a state’s economy around within one year.

I started writing about the issue of state banks about two years ago. Since then, numerous states are legislatively investigating how to implement one: Washington, Oregon, California, Montana, Illinois, Florida, Hawaii, Virginia, Maryland and Massachusetts are among them.

Another question audiences ask is: If we own a state bank, will we need to create our own state currency? The answer is no. However, a state bank does provide a needed distribution system for a state currency should a state decide it needs to create one. Why would a state need to create its own currency? If the federal system fails, so too will America’s currency (and with it, the national banking system). To distribute any currency, an organized system of banking is required. There are many questions about state currencies, but that is another article.

The other question asked regards state sovereignty.

Several states have legislatively declared their right to be sovereign states. They include: Alabama, Nebraska, Rhode Island, Wyoming, Washington, Indiana, Kentucky, Georgia, Kansas, Missouri, Mississippi and Maryland.

Remember this about sovereignty. It is impossible to have a sovereign state without having control of your state’s monetary system. To achieve that, you need a state bank. As to the arguments about the legality of sovereignty declarations, I leave that to the lawyers. I’m a banker and what I know is this: If a state declares sovereignty without first having a state bank in place, there will be economic chaos. The bank comes first; sovereignty, second.

We face difficult times ahead. I believe state banks are a key that makes it possible for Americans to maintain every possible lawful alternative to solve the problems headed our way.

© 2011 Marilyn M. Barnewall – All Rights Reserved  READ MARILYN’S ARCHIVES AT NEWS WITH VIEWS

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Marilyn MacGruder Barnewall began her career in 1956 as a journalist with the Wyoming Eagle in Cheyenne. During her 20 years (plus) as a banker and bank consultant, she wrote extensively for The American Banker, Bank Marketing Magazine, Trust Marketing Magazine, was U.S. Consulting Editor for Private Banker International (London/Dublin), and other major banking industry publications. She has written seven non-fiction books about banking and taught private banking at Colorado University for the American Bankers Association. She has authored seven banking books, one dog book, and two works of fiction (about banking, of course). She has served on numerous Boards in her community.

Barnewall is the former editor of The National Peace Officer Magazine and as a journalist has written guest editorials for the Denver Post, Rocky Mountain News and Newsweek, among others. On the Internet, she has written for News With Views, World Net Daily, Canada Free Press, Christian Business Daily, Business Reform, and others. She has been quoted in Time, Forbes, Wall Street Journal and other national and international publications. She can be found in Who’s Who in America, Who’s Who of American Women, Who’s Who in Finance and Business, and Who’s Who in the World. AND, WHO’S WHO AT A NATION BEGUILED

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Why Obama Cannot Be Impeached


By Devvy Kidd

Thursday, July 14, 2011

Obama Ineligibility – Devvy Kidd Say It Correctly – Pay Attention to Her!

Rage continues to build across this country over the obvious forged birth certificate Barry Soetoro, aka Barack Obama, released April 27, 2011, as do calls for his impeachment. However, Obama cannot be impeached.

Let me quote Dr. Edwin Vieira, who wrote about this back in December 2008 before Obama was “sworn” into office:

If Obama is not “a natural born Citizen” or has renounced such citizenship, he is simply not eligible for “the Office of President” ( Article II, Section 1, Clause 4). That being so, he cannot be “elected” by the voters, by the Electoral College, or by the House of Representatives (see Amendment XII). For neither the voters, nor the Electors, nor members of the House can change the constitutional requirement, even by unanimous vote inter sese (see Article V). If, nonetheless, the voters, the Electors, or the members of the House purport to “elect” Obama, he will be nothing but a usurper, because the Constitution defines him as such. And he can never become anything else, because a usurper cannot gain legitimacy if even all of the country aid, abets, accedes to, or acquiesces in his usurpation.

If Obama dares to take the Presidential “Oath or Affirmation” of office, knowing that he is not “a natural born Citizen,” he will commit the crime of perjury or false swearing (see Article II, Section 1, Clause 7). For, being ineligible for “the Office of President,” he cannot “faithfully execute the Office of President of the United States,” or even execute it at all, to any degree. Thus, his very act of taking the “Oath or Affirmation” will be a violation thereof! So, even if the chief justice of the Supreme Court himself looks the other way and administers the “Oath or Affirmation,” Obama will derive no authority whatsoever from it.

Third, his purported “Oath or Affirmation” being perjured from the beginning, Obama’s every subsequent act in the usurped “Office of President” will be a criminal offense under Title 18, United States Code, Section 242.

If Obama does become an usurper posturing as “the President,” Congress cannot even impeach him because, not being the actual President, he cannot be “removed from Office on Impeachment for, and Conviction of, Treason, Bribery, or other high Crimes and Misdemeanors” (see Article II, Section 4).

For those who think Dr. Vieira Jr., Ph.D., J.D., is just some run-of-the-mill attorney, let me give you a very condensed bio: He holds four degrees from Harvard. For more than 30 years he has practiced law, with emphasis on constitutional issues. In the Supreme Court of the United States, he successfully argued or briefed the cases leading to the landmark decisions Abood v. Detroit Board of Education, Chicago Teachers Union v. Hudson and Communications Workers of America v. Beck. His two volume tome, “Pieces of Eight: The Monetary Powers and Disabilities of the United States Constitution,” is the most comprehensive study in existence of American monetary law and history viewed from a constitutional perspective.

Despite all the noise out there by Obama’s supporters, it is crystal clear the putative president was born with dual citizenship and is forever ineligible to be president.

Obama seized the office of president through fraud. As a usurper, he’s never held office. That’s what the word usurp means: to seize and hold (a position, office, power, etc.) by force or without legal right. Since he legally has never occupied the White House as president, he cannot be impeached.

Now, when I have pointed this out countless times to groups demanding impeachment, I get this response: I don’t care – we just have to get him out.

Those are people who proudly proclaim they only want to see the U.S. Constitution upheld. Those are people who state unequivocally that the usurper was never eligible to run because he’s not a natural born citizen under the U.S. Constitution.

You can’t have it both ways. In essence, what those folks are saying is we can do the same thing as Obama and his coconspirators: circumvent the Constitution.

But, the usurper has committed crimes while in office! Indeed, he has and continues to do so. Knowing he was not eligible to run, the putative president solicited campaign donations to the tune of about $700 million dollars. He can still be indicted for wire fraud.

Those who demand his impeachment are asking to set one of the worst legal precedents in our history: Any constitutionally ineligible thug can come along and buy his way into the White House. We’ll just impeach him later!

To impeach would also accomplish this: Every piece of legislation he’s signed into law would remain on the books. Let me quote Dr. Vieira one more time:

“Perhaps most importantly, Congress can pass no law while an usurper pretends to occupy “the Office of President.” The Constitution provides that “[e]very Bill which shall have passed the House of Representatives and the Senate, shall, before it become a Law, be presented to the President of the United States” (Article I, Section 7, Clause 2). Not to a usurper posturing as “the President of the United States,” but to the true and rightful President. If no such true and rightful President occupies the White House, no “Bill” will or can, “before it become a Law, be presented to [him].” If no “Bill” is so presented, no “Bill” will or can become a “Law.” And any purported “Law” that the usurper “approve[s]” and “sign[s],” or that Congress passes over the usurper’s “Objections,” will be a nullity. Thus, if Obama deceitfully “enters office” as an usurper, Congress will be rendered effectively impotent for as long as it acquiesces in his pretenses as “President.”

Besides removing a usurper from office, that should be our second-highest consideration and why the outlaw Congress hasn’t moved against him. All 535 of them allowed this to happen, and now it’s gone so far; they don’t have the courage to take on the mess they’ve made.

The usurper can be indicted once out of office, but how to get him out? Please read Devvy’s next article on this subject, posted below.

Follow up on Quo Warranto as it relates to removing Obama /Soetoro

Will he ever be indicted for his crimes? With enough public pressure, it can happen because his handlers would simply throw him under the bus as a liability.

There will be a massive push to keep the putative president off the ballot in dozens of states. It will come from candidates who understand the process discussed in my column above. Mark my words, what’s coming will be a nightmare for the DNC and Obama’s handlers. Time is running out for them to find another viable candidate; something will have to give. One way or the other, Obama’s crimes are going to catch up with him, but please stop working toward setting the wrong legal precedent. It’s beyond frustrating, I know, but either we live our words in supporting the U.S. Constitution or we take the wrong road opening the door for another ineligible candidate with enough money and corrupt individuals behind him to seize the office of president.

Debt Reduction Delusions and the Menace of Big Government



by Richard Ebeling

In spite of the rhetoric in the media about a national debt crisis having been averted through a rise in the government’s debt limit on Tuesday, August 2nd, the fact is the United States remains very much in the midst of a fiscal disaster.

The Congress has approved and the president has signed a bill raising the debt limit by an additional $2.4 trillion over the next year and a half. In other words, at the end of 2012, the government’s debt will have reached a total of over $ 16.5 trillion from its current $14.3 trillion.

When a Spending Reduction Still Equals More Government Debt

The debt ceiling deal requires a matching $2.4 trillion to be cut from projected government spending over the next ten years. In other words, this is not an absolute cut in government spending, as if government would be spending less in the next year compared to the current year. Instead, the deficit reductions represent a decrease from the amount of increasing government spending that would have occurred if no reduction had been agreed to.

So instead of the government’s projected total debt over the next decade increasing by around $10 trillion, it will only go up by about $7 trillion. Ten years from now the U.S. government’s debt will reach a level, therefore, of nearly $22 trillion dollars, or almost 55 percent higher than it is today.

Understanding this more clearly has been confused by the emphasis given to the fact that the $2.4 trillion debt ceiling increase has been “matched” by that $2.4 trillion decrease in projected government spending. The impression has been easily created in people’s minds that these two amounts are in some way cancelling each other out.

The U.S. Treasury is being given the authority to borrow and spend an additional $2.4 trillion dollars over the next 18 months. But the $2.4 trillion spending reduction over ten years represents, on average, a “savings” of $240 billion a year. Another way of thinking about this is that the government now has the authority to spend, on average, an additional $133 billion per month of borrowed money over the next year and a half. “Matching” this, the government is supposed to spend $20 billion less every month over the next ten years.

So, assuming what has been agreed to by the Congress and the president is actually adhered to, it will take ten years of that mere decrease in the rate of increase in government spending to just equal the increase in the government’s debt between now and the end of 2012.

Clearly this entire process has been one of smoke and mirrors by both political parties. New Congressional fiscal committees to deal with the government’s debt; supposed “trigger mechanisms” to impose “automatic” across-the-board cuts in government spending if deficit reduction goals are not agreed to; and appeals for Washington’s swarm of spending frenzied politicians to act like responsible adults instead of immature children do not grapple with the fundamental problem facing America.

Taming the Fiscal Leviathan to Save America

The United States government is a fiscal leviathan with an insatiable appetite for the wealth and income of those working in the productive private sector. But the government is not a disembodied monster with a will of its own.

Government is made up of individual politicians desiring election and reelection to political office; the bureaucrats manning the departments, bureaus and agencies wanting larger budgets to justify more promotions, higher salaries, and greater authority over other people’s lives; and special interest groups wanting to use the taxing, spending, and regulating powers of government to redistribute wealth in their direction, acquire more revenues and higher profits on the basis of political connections than they could earn in the competitive marketplace, and impose their ideological desires and dreams on others who would prefer to live their own lives.

It is this “iron triangle” of politicians, bureaucrats, and special interest groups, as free market economist, Milton Friedman, call them, that make up what government does and for whose benefit, and at a cost to those remaining in society who make up the net taxpayers and burden-bearers of the modern interventionist-welfare state.

The problem we face is that those who benefit from some form of government largess make up a slight majority of the citizenry, according to the latest estimates. It now seems to be the case that the costs of government are born by a minority of the taxpayers of the country. A minority of the working population labors to support and pay for government-supplied incomes, transfers or related benefits enjoyed by a privileged majority.

And what Washington’s “iron triangle” wants to spend that it cannot collect in taxes it has been paying for with borrowed dollars that will push the government’s debt to $16.5 trillion by the end of next year – thanks to the Congressional and presidential “solution” to the debt ceiling crisis of August 2011.

The only real solution to our government’s debt dilemma is to challenge the rationales and justifications for the size and scope of Washington’s reach over the lives and the peaceful and productive market activities of the American people. We must work to persuade our fellow Americans not only that we can no longer afford the taxing, spending, and regulatory burdens of government without threatening the society’s productive capabilities, but also that it is inconsistent and opposite to the principles of liberty upon which the country was founded.

If we don’t succeed in this endeavor we run the risk of destroying the very political and economic foundations upon which America’s freedom and prosperity have been based.


Dear subscribers,

Thank you all for reading my selection of information you all need to know, but reading it is not enough. Every subscriber must begin like I did and find a way within your capabilities to inform others of these atrocities being forced on us.

It is more than apparent that our government is not interested in what the people want, but hell bent on destroying our future prosperity, and a self directed, self-responsible life. This is what freedom is all about, but we have let tyranny creep in and reign over us. Now is the time for all good men and women to come to the aid of America, and the principals on which this country was founded.

Even if you are a proponent of diversity, consider how offensive it is going to be when the government tells you who god is and you must worship him or go to jail, and forbids you to have any possessions of your own. Every person must be satisfied with having nothing more than their neighbor and no say so in government. Friends, we are at war with our government because they are forcing their demands on us, and not conducting the responsibilities of the office, we elected them too. Time is running out as each day they are passing more and more restrictions on our God given rights and freedom. You simply must get involved whether you like it or not. Freedom cannot survive in an apathetic society; it takes education and participation.

It should be apparent to you by now that our government is non-responsive to the people, and replacing/repairing our system of government is our only choice. Pick up your burden and work with the rest of us by sending this letter to everyone you know, and check back with them for their comments, because that is how people get involved. Once freedom is lost completely, it is lost forever, as the new generations will have been acclimated to tyranny, and meekly accept being ruled by force.

Those of you still involved in the two party system need to get your head out of your butt, and smell the stench they cause. In the first place, there is only one party, and if you don’t understand that, you really need to pay attention to these articles and compare them to reality. May the Lord bless us, and lead us back to freedom.


Debt Deal Is a Blank Check



By Peter Schiff

By supposedly compromising to raise the debt ceiling, Congress and the President have now paved the way for ever higher levels of federal spending. Although, the nation was spared the trauma of borrowing restrictions, the actual risk of default existed solely in the minds of Washington politicians. But the real crisis is not, nor has it ever been, the debt ceiling. The crisis is the debt itself. Economic Armageddon would not have resulted from failure to raise the ceiling, but it will come because we succeeded in raising it. This outcome falls along the lines that I had forecast (See my commentary, “Don’t Be Fooled by Political Posturing” from July 9th).

Both parties are now pretending that the promised cuts in spending outweigh the increase in the debt limit. But the $900 billion in identified cuts are spread over a decade and are skewed toward the end of that period. There are an additional $1.4 trillion in cuts that the plan assumes will be identified by a bi-partisan budget committee. But similarly empowered panels in the past have almost never delivered on their mandates.

More importantly, none of these “cuts” are actually binding. There is plenty of time for future Congresses to reverse what was so laboriously agreed to over the past few weeks. My guess is renewed economic weakness will be used to justify ultimate suspension of the cuts. In addition, most of the spending reductions were already scheduled to take effect before this agreement. So what did we really get?

The Congressional Budget Office currently projects that $9.5 trillion in new debt will have to be issued over the next 10 years. Even if all of the reductions proposed in the deal were to come to pass, which is highly unlikely, that would still leave $7.1 trillion in new debt accumulation by 2021. Our problems have not been solved by a long shot.

Essentially, the structure announced today allows both political parties to talk about reform without actually changing anything. To underscore that point, the deal involves less than $25 billion in immediate cuts! This is less than a rounding error in a $3.8 trillion dollar budget. This is politics as usual.

Even these estimates are based on rosy economic assumptions that have no chance of coming to fruition. For example, for the current fiscal year, Washington estimates GDP growth at 4%. But actual growth for the first half of 2011 is below 1%! If our government is over-estimating our current year’s growth by a factor of 4, how accurate could their forecasts be ten years into the future? A more honest assessment of likely economic performance would reveal future budget deficits spiraling out of control.

Some might say that the primary goal of this deal was to avoid the dreaded credit rating downgrade. Unfortunately, the deal addresses none of the ratings agencies’ stated grievances. If they fail to follow through on their downgrade warnings, the rating agencies will lose whatever credibility they have left. For political reasons, the downgrades may not come right away, but they are inevitable. But as has happened so often in the past, by the time the tardy downgrades arrive, the market will have likely already rendered its verdict.

The debt ceiling itself merely represents a self-imposed limit on US borrowing. Since Congress can vote to raise the limit, its existence has been more of a political nuisance than an actual barrier. The operative factor is not how much we allow ourselves to borrow, but how much our creditors are willing to lend. That type of ceiling can’t be raised by an Act of Congress. Once our creditors come to the conclusion that they have lent beyond our capacity to repay, they will be very reluctant to lend more. As trillions in short-term Treasuries mature, the dwindling pool of buyers will demand higher rates of return to compensate them for the risk. But our government is in no condition to afford those higher rates without gutting the rest of the budget.

Last week, it was revealed that despite Obama‘s warnings that a default would immediately occur if the debt ceiling were not raised, the administration had already agreed to prioritize interest payments to avoid default. Such preferential treatment is only possible because current interest rates are so low and debt service represents only about 10% of total revenue. When the pool of willing lenders evaporates, net interest payments could quickly consume more than 50% of federal revenue. This is particularly true since rising rates will also plunge the economy into a recession that will substantially reduce revenues – even as debt payments surge.

At that point, prioritizing interest payments would mean deep sacrifices in the rest of the federal budget – including Social Security, Medicare, and the Armed Forces. The question then becomes: will US politicians really be willing to take the political heat that would emerge from prioritizing interest payments to foreign creditors over payments to American voters?

I expect that as soon as our creditors decide that they are no longer willing to lend to us at ultra-low rates of interest, we will refuse to repay what they have already lent.

Besides default or major cuts to domestic spending, inflation provides the only other means for the government to deal with this intractable crisis. Because of its political palatability, inflation is, in fact, the most likely outcome. Once we go down that path, we risk high inflation turning into hyperinflation, which would decimate the remainder of our economy. So, as our leaders congratulate themselves for saving the nation, the reality is that they may have just sold it down the river.


One of the most successful stock traders in history just made those comments above, and in comparison to the idiots in congress he should be our Nations economic adviser instead of the banking cartel intent on destroying America. You go Peter may be a little too suggestive for some of you, but that’s tough shit. YOU GO PETER!