The Orwellian-Keynesian Path

Greece defaults. The Dow plummets 350 points in one day. Ugly, ominous DEBT builds up like a giant snow cliff hanging over the economic valleys of the West. Is this the end of the Great Keynesian Charade brought to us by the collectivists with the advent of 1913 and the Roosevelt revolution of 1933? Not quite, but the end is near. It sits just beyond the "fiscal can kicking" that our government banking oligarchs have fashioned for us from Milhouse Nixon to Hussein Obama. A few more years of such illusory "policy making" will be all that is needed. The DEBT avalanche that we have contained far longer than wise men ever thought possible will begin its descent and crash into our lives. It won't be a slow form of destruction, either; it will be a huge and horrific crash that will wipe out much of the quality of our way of life overnight.

It will begin as the marketplace reasserts its control in the bond market and interest rates begin to climb in defiance of the Fed's massive rate suppression over the past decade. China and the world's buyers of U.S. treasuries are not going to continue ponying up in the treasury auctions like they have been doing for so many decades. In fact, they are now beginning to get rid of U.S. treasuries, and this means they will surely be buying far less of them in future auctions. This will mean interest rates must go higher. The days of Washington borrowing its way to power and phony prosperity are numbered.

With higher interest rates will come more pressure for the Fed to simply print money in order to fund the egregious prodigality of the welfare state that FDR and LBJ gave to us. With such blatant printing will come price inflation and a fall of the dollar's value throughout the world, which will then spur further rises in interest rates. The Keynesian chickens of "pseudo prosperity" that we have been enjoying for 80 years will come home to roost in a devastating decline for America. The boom will be replaced by the bust, and it will be massive.

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