“The Rubicon is a river in Italy that played a major role in the history of Rome and Western Civilization.  Prior to Julius Caesar, it was considered an inviolable boundary for a general commanding an army.  To cross it with your army was considered an act of treason against the State.

Caesar did just that in 49 B.C.  Caesar left Rome to be come the governor of Cisalpine Gaul (northern Italy), Illyricum (southeastern Europe) and Transalpine Gaul (southern France) in 58 B.C..  Actually, he unsuccessfully fled Rome to avoid his mounting debts (he liked to gamble and was a bon vivant).  He was only allowed to continue to Gaul after his wealthy friend Crassus paid and guaranteed the debts for him.  His conquest of all of Gaul and the details of his military genius are well known, particularly since he wrote it all down in the form of a partial autobiography.

Ambitious men were not welcome to the old Roman order.  The Romans had an unpleasant experience with a dictator that led to their founding, and it was in their DNA to despise such men.  Caesar was a major threat….

…..continue reading this Robert Fitzwilson piece HERE  

IMF Hypocrites Urge Permanent US Can Kicking, Fiscal Stimulus, and Enormous Deficits

One thing sure to raise my ire is a group of mindless hypocrites who say one thing and do another, while pretending they have a clue. In this case I am talking about the IMF. 

As part of the Troika, the IMF helped ruin Greece. The country is now in a never ending depression with the youth jobless rate at 58 percent, and overall unemployment at 25.4%. Every step of the way the IMF demanded more austerity measures, as did the ECB, EU, and Germany.

And every step of the way Greece spiraled further and further behind. It’s not that austerity was unneeded, rather austerity could only really work in conjunction with a eurozone exit and work rule reform. 

The IMF has lowered economic forecasts on Greece too many times to count. What was a €40 billion problem several years ago when I urged Greece to default is now a €240 billion problem.

Yes, the Troika threw €200 billion at a €40 billion problem. The reason is stubborn arrogance coupled with what amounts to religious fanaticism to save the euro project no matter who is destroyed in the process.

Eventually there is going to be a €240 billion haircut when Greece comes to its senses, tells the Troika to go to hell, and defaults on the entire mess.

IMF Hypocrites Urge Permanent US Can Kicking, Fiscal Stimulus, Enormous Deficits

……read much more HERE (including what the IMF urged the US to do). 

Now that Obama is set to preside for another four years, expect the Fed to keep monetary policy loose with the aim of spurring investing and hiring, when in reality, inflation rates are on the rise.

“It’s going to be more inflation, more money printing, more debt, more spending,” Rogers told CNBC just prior to Obama’s re-election.

Investors should avoid U.S. government debt and the dollar and stock up on gold.

“It’s not going to be good for you me or anybody else,” Rogers said.

“It looks to me like the money printing is going to run amok now, and spending is going to run amok now,” Rogers said. 

“I have to invest based on what’s happening and not what I would like.”

…….read more – Jim Rogers: Obama Re-election Will Spark Soaring Inflation or Click on the Image Below

In the aftermath of Hurricane Sandy, President Obama declared Washington, DC a “disaster area.” But I think we knew that already. Marc Faber provides the details below…In the aftermath of Hurricane Sandy, President Obama declared Washington, DC a “disaster area.” But I think we knew that already. Marc Faber provides the details below…..

Disaster Area

by Marc Faber

In order to exercise control over the population, governments throughout history have made people dependent on government largess. A government can make an increasing number of people dependent on its generosity by providing more and more benefits to a larger and larger share of the population.

Because of these “freebies,” people will go along with the government’s enlargement as a percent of the economy. The masses believe in their free lunch and because the business elite knows it can profit from the growth in government. 

However, there comes a point at which the “nanny state” becomes unviable. Raising taxes to pay for the freebies become problematic. Fortunately for the governments, they have a Treasury and/or a central bank that can print money and monetize the government’s debts.

As Ludwig von Mises observed in Human Action:

Credit expansion is the government’s foremost tool in their struggle against the market economy. In their hands is the magic wand designed to conjure away the scarcity of capital goods, to lower the rate of interest or to abolish it altogether, to finance lavish government spending, to expropriate the capitalists, to contrive everlasting booms, and to make everybody prosperous.

Therefore, the broad population, whose attention will be distracted by the media, won’t realize the negative consequences of large fiscal deficits. They will hardly notice their declining standard of living due to the loss of purchasing power of the currency. In the meantime, the media will bombard them with further immaterial news, such as which Hollywood star is divorcing whom, which team will win the Super Bowl, and abortion rights and gay marriage issues.

The government will also become involved in larger distractions, such as arguing for the need to eliminate continuously new (usually invented) threats or foes arising from ethnic or religious minorities, communists, socialists, terrorists, spies, or, as is now the case in the US, the “vicious” 1% of the population that lives well.

A political system controlled by an ignorant electorate that is manipulated by a dishonest and controlled media that dispenses propaganda on behalf of a corrupt political establishment can hardly be the path to lasting prosperity.

In fact, I am surprised that economists continue to discuss GDP growth (usually in real terms), when they should be focusing on sustainable growth. Let me explain. Since 2000, US government debt has increased from US$5 trillion to over US$16 trillion. Over the same period, nominal GDP is up from approximately US$9.5 trillion to US$15.5 trillion.

In my opinion, an adjustment to GDP should be made for the increase in government as well as household debt, because both inflate GDP figures, but are not sustainable in the long run, as we now know from some peripheral European countries. I mention this because Eric Fry, writing for The Daily Reckoning, points out the following:

During the last four years, the number of Americans on food stamps has soared by more than 17 million, while the number of employed Americans has dropped by more than 3 million. In percentage terms, the number of Americans on food stamps has soared 60% in four years!… In fact, according to the “Outreach” section of the USDA [US Department of Agriculture] website, the soaring number of food stamp recipients is an absolutely fantastic success story: “SNAP (i.e. food stamps) is the only public benefit program which also serves as an economic stimulus, creating an economic boost that ripples throughout the economy when new SNAP benefits are redeemed. By generating business at local grocery stores, new SNAP benefits trigger labor and production demand, ultimately increasing household income and triggering additional spending.”

There you have it. The government increases its borrowings (through fiscal deficits) in order to pay for, among other things, food stamps. In turn, the food stamp recipients go and spend the money in stores (mostly at Wal-Mart), which boosts GDP. But is this real, sustainable GDP growth?

So, not only do fiscal deficits allow the government to expand useless and unproductive programs and expenditures that artificially boost GDP, but they also increase the number of bureaucrats who implement the new regulations that stifle business. To the neo- Keynesians, I can only say: “Well done.” 

Regards,

Dr. Marc Faber
for The Daily Reckoning

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