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China and U.S. Allies Firewall Themselves from U.S. Dollar and Debt (UPDATED 11/24/2013)

October 18, 2013

Note: My blog post can be found below, after the Update Section.

UPDATE 11/24/2013: 

Since I wrote “China and U.S. Allies Firewall Themselves from U.S. Dollar and Debt” (see below), China has taken further steps to “Americanize” its banking system and to internationalize its currency in its effort to supplant the U.S. dollar as a world-reserve currency:

–On November 22, 2013,  the new Shanghai International Energy Trade Center announced plans to trade oil futures in yuan rather than in the U.S. dollar (see 8:57 at http://english.cntv.cn/program/bizasia/20131122/104089.shtml ). This is a “game changer,” and Chinese traders even “joked” that trading oil futures in yuan is “a sign of the collapse of USD empire,” according to Biz Asia reporter Vivi Lin (see 8:57 at http://english.cntv.cn/program/bizasia/20131122/104089.shtml ).

–On November 22, 2013, Biz Asia reported that China plans to expand its brokerage sector by 10 times over the next 10 years (see 8:43  http://english.cntv.cn/program/bizasia/20131122/104089.shtml

–On November 9-12, 2013, the Chinese government included financial and social reforms in its Third Plenary Session of the 18th CPC Central Committee that demonstrate China’s seriousness about preparing to become the world’s top superpower (see  http://english.cntv.cn/special/18thcpcsession/homepage/index.shtml ).

–On November 6, 2013, it was reported, “China has approved two domestic fund managers to offer [equity] products in the U.S. that for the first time would give investors there indirect access to shares traded in Shanghai and Shenzhen, a significant move to further open the country’s capital markets and globalize its currency” (see http://www.marketwatch.com/story/china-grants-us-investors-indirect-access-to-stocks-2013-11-06 ). 

–On October 25, 2013, China for the first time launched “a benchmark lending rate” that “will be controlled by the market rather than by the central government, which demonstrates how ‘serious’ Chinese leaders are ‘about fundamental economic policy reforms'” (see http://www.cnbc.com/id/101144241 ).

–On October 22, 2013, China increased the transparency of its financial system by having its banks use “mark to market” to write down bad loans (see http://www.businessweek.com/news/2013-10-22/biggest-china-banks-triple-debt-write-offs-to-brace-for-defaults ).  Interestingly, Western media tended to emphasize China banks’ bad-debt write downs ($3.65 billion US) while de-emphasizing the European Union banks’  ($1.7 trillion US year to date; see http://www.cnbc.com/id/101148313 ).

Also, since I wrote my post “China and U.S. Allies Firewall Themselves from U.S. Dollar and Debt” (see below), American economist Dr. Paul Craig Roberts has expressed his concerns about the dollar’s precarious situation in “Escape from the Dollar” by Mike Whitney in Global Research, November 5, 2013 (see http://www.globalresearch.ca/escape-from-the-dollar/5356972 ).

According to Dr. Roberts, “China could destabilize the US dollar by converting its holdings into dollar currency and dumping the dollars into the exchange markets. The Federal Reserve would not be able to arrange currency swaps with other countries large enough to buy up the dumped dollars, and the dollar’s exchange value would fall. Such an action could be a Chinese response to military encirclement by Washington.

Dr. Roberts further states, “In the absence of a confrontation, the Chinese government is more likely to gradually convert its dollars into gold, other currencies and real assets such as oil and mineral deposits and food businesses.

“Quantitative easing is rapidly increasing the supply of dollars, but as other countries move to other arrangements for settling their trade imbalances, the demand for dollars is not rising with the supply. Thus, the dollar’s price must fall. Whether the fall is slow over time or sudden due to an unanticipated Black Swan event remains to be seen.”

I hope, we little investors educate and prepare ourselves, so we don’t get burned again by the greed of the world’s wealthy class and our government’s easy-money policies, >$17 trillion debt, and >$100 trillion in unfunded entitlement programs that have put America’s future at risk.

I hope, our media and our politicians educate themselves in order to unite Americans in its most critical goal:  fix our financial mess before it’s too late. 

Frankly, I fear, we’ve already passed the tipping point:  Simply by using the threat of the U.S. dollar’s losing its “a world-reserve currency” status, China can get anything it wants from our President and our politicians.  (Note: The U.S. dollar lost its “the world’s reserve currency status” during the Obama presidency. Countries use a basket of currencies rather than solely relying on the U.S. dollar for trade and investments.)

Ask your senators, representatives, and President:  Why have they let China, Russia, and their long-time partners gain such a strong foothold into our critical assets, even our green energy, minerals, and food supply? 

Have our politicians already put America in the untenable position of relinquishing power (e.g., not supporting our closest allies, giving away defense technology and national security secrets to even non-allies, reducing our military capability, disarming our citizens and our nuclear facilities) and acquiescing to deals that harm America in exchange for our allies and non-allies’ allowing the U.S. dollar be a world-reserve currency for a few more years while our politicians and their rich cronies limit their downside risk and/or prepare to “cut and run.”?

For example, the U.S. shale revolution’s top 10 players now include only two American companies–Exxon Mobile and Chevron–and include eight foreign companies: Royal Dutch Shell (which is a >30-year partner of China’s), Russia’s Gazpromm, Norway’s Statoil (which is a >30-year partner of China’s), France’s Total, Russia’s Lukoil, China’s Petrochina, Russia’s Rosneft, and China’s Sinopec (see http://video.cnbc.com/gallery/?play=1&video=3000211198 ).

The list excludes China’s government-owned oil companies CNOC and CNOOC which, until recently, were allowed to only “buy into” the U.S. energy market; now, they’re allowed to outright own or own controlling interests in U.S. energy companies and foreign-owned companies operating in the United States.

November 2009 was the first time that the U.S. government allowed Chinese companies–much less China’s government–to purchase critical energy assets in the United States.

CHINA AND U.S. ALLIES FIREWALL THEMSELVES FROM U.S. DOLLAR AND DEBT

The week of October 13, 2013,  China, its trading partners, and our allies began the second stage of building a firewall between their economies and ours in order to limit the damage to themselves when the U.S. debt bubble bursts and the U.S. dollar collapses (footnotes 1-6):

Even Mad Money’s Jim Cramer on October 17, 2013on CNBC;s Squawk on the Street said that, if he were a country, he’d be getting out of the U.S. dollar and bonds immediately and into a safe haven such as gold, the euro, and even the yuan  ( http://www.cnbc.com/id/101121149  ).

The first stage of China et al.’s firewall against our economy was concluded on October 10, 2013, when the European Union was the last of our allies (excluding Israel) to sign a currency-swap agreement with China in order to limit their exposure to the U.S. dollar and debt ( http://money.cnn.com/2013/10/10/news/economy/ecb-china-currency/index.html ). For years, China has quietly signed currency-swap agreements with its allies and trading partners, then this year signed agreements with all of the United States’ closest allies (excluding Israel).

With the yuan internationalized, investors and countries can easily buy Chinese bonds and use yuan to invest and hoard ( http://www.bloomberg.com/news/2013-10-15/china-u-k-agree-on-yuan-pound-direct-trading-investment-quota.html ). In March 2013, before the UK deal with China, USBC Holdings had estimated that by 2015 China’s yuan would be in the top three trade-settlement currencies by volume ( http://www.bloomberg.com/news/2013-10-15/china-u-k-agree-on-yuan-pound-direct-trading-investment-quota.html ). In 2010, the yuan was in 17th place.

Yan Yuetong, Dean, Institute of Modern International Relations, Tsinghua University, has estimated that China’s GDP will surpass the United States’ by 2020 (see his recently published Inertia of History: China and the World in the Next 10 years). But on CCTV on October 12, 2013, Dr. Yan said motivation would play a role in the timeline as would whether the United States stumbled.

The day after Dr. Yan’s CCTV interview aired, China’s official news agency called for the world to be “de-Americanized” and for the U.S. dollar to no longer be the world’s reserve currency ( http://news.xinhuanet.com/english/indepth/2013-10/13/c_132794246.htm ).

Investors always flock to what is rising in value; investors flee from what is heading towards bankruptcy.

U.S. banks already have cut their exposure to short-term U.S. debt (e.g., http://www.seattlepi.com/news/article/JPMorgan-sells-off-short-term-US-government-debt-4885694.php ), Japanese investors have dumped U.S. debt at record levels, and the Hong Kong exchange recently devalued U.S. bonds that are used as collateral (  http://video.cnbc.com/gallery/?play=1&video=3000206400 ).

Like the United States, China wants the world to hoard its currency and buy its debt.

Unlike the United States, China has a massive property bubble looming (60 Minutes, August 11, 2013, http://www.cbsnews.com/8301-18560_162-57597600/chinas-real-estate-bubble/ ).

Therefore, China needs the yuan to become a world-reserve currency NOW.

Otherwise, China may have to wait many years before it’ll once again be positioned for the yuan to be the world’s top-reserve currency. (The yuan’s move towards reserve-currency status might actually help China avoid bursting that bubble.)

China will not stumble.

China will methodically continue its strategy of becoming the world’s top superpower with a little help from the United States and our allies (see footnote 1).

As China, its trading partners, and our allies unwind from U.S. debt and dollars, global jitters will turn into panic, more investors and countries will dump our currency and debt, and our interest rates will skyrocket.

Our creditors may demand hard assets or long-term concessions in exchange for the debt they hold. Our creditors won’t want to be repaid in worthless U.S. dollars or in rolled-over debt that we’ve been rolling over since World War II.

Our economy will be decimated–even before China makes its move to replace the U.S. dollar with yuan or another currency.

Among the rubble of ruined lives will be the celebration by non-allies and some Americans who for decades have diligently conducted ideological experiments in the dis-transformation of America in order to reduce consumption and redistribute her power and wealth to the world.

Investor confidence has already been severely damaged by the United States’ more than $17 trillion debt, more than $100 trillion in unfunded entitlement obligations, and U.S. politicians’ Blame Game that, for decades, has enabled them to create this economic mess and then avoid fixing it (e.g.,  have no vision that would strengthen America and unite Americans, enabled them to implement massive government programs that garnered votes but hurt our economy and crippled our ability to take care ourselves, enabled our leaders to make their good buddies rich and, in turn, enrich themselves and others).

Unlike the United States, China has wisely avoided bankrupting itself with pyramid-scheme entitlement programs and unfunded wars.

Unlike the United States, China has wisely loaned money to struggling companies and myriad countries in exchange for long-term energy and mineral contracts, which bypass the open marketplace and, over the longer term, have given China much cheaper prices and considerable influence (footnotes 1-3). (America’s foreign aid has usually been welfare, weaponry, and protection for corrupt tyrants and/or militarily weak allies, and corporate welfare for American companies that, once fully internationalized, have no loyalty to America or anyone else.)

Like Warren Buffett, I believe, the United States is unwise to export its oil and natural gas–much less allow our oil and natural gas to be exported by foreign companies operating in the United States.–because when production slows or when the majority of our energy assets is owned by foreign companies and governments (see footnote 3), we’ll once again be dependent on foreign oil, repeating our short-sighted behavior from >65 years ago.

If China is among the first countries to dump the U.S. dollar and debt, China will be the least hurt and therefore the best-positioned country to lead the world for the rest of this century and beyond.

The  Chinese believe that no country can remain great–much less achieve greatness–without a dream that unites and motivates its people and moves its country forward.

Americans don’t have such a dream–not even when saving America is the only dream that will save us all (see footnotes 7-8).

Ironically, the fall from grace by America–a country without a unified dream–will be used by Chinese leaders to unite and motivate their citizens to lean forward to secure their place as the world’s top superpower.

___________________

Footnote 1:

During the second stage of China et al.’s firewalling themselves from our economy . . .

  • I believe, we’ve already reached the tipping point:  If the U.S. government moves to alter the trajectory of China’s rise, China will press for the U.S. dollar to be officially removed as a reserve currency. China and our allies have already set the stage for this to happen. The more time that passes, the less damage there’ll be to their economies, and the greater the likelihood that the United States won’t be able to recover.
  • China, its allies, and our allies will quietly disentangle themselves from the U.S. dollar and debt until the rest of the world figures out what they’re doing, Then everyone will scramble to unload their U.S. bonds, stocks, and currency, and we Americans will learn that things can get far worse than in 2008.
  • China and its foreign partners will continue to buy into U.S. critical assets and position China to lock up our offshore drilling and to control our onshore critical assets, particularly in relation to pricing and availability.
  • China will make itself indispensable to our allies via buyouts, buy-ins, and other long-term contracts.
  • China and its trading partners will continue to acquire long-term contracts with our closest energy partners (e.g., Canada, Mexico, and Saudi Arabia)–with their assurances to put China’s interests above the United States’ if we should stumble and need our energy partners’ help.
  • China will continue to strengthen and reform its national security, financial, and social systems.
  • China will isolate Japan from India (according to Yan Yuetong, Dean, Institute of Modern International Relations, Tsinghua University, on CCTV on October 12, 2012), so that India will not help Japan when the United States no longer can. China could just simply crush Japan financially, but there is a bitter history between them as there is with Great Britain.
  • China will strengthen its  “hard” relationships (e.g., Russia) and its “soft” relationships (e.g., Great Britain, European Union, Vietnam, South Korea, Taiwan). “Hard” relationships are those allies China can go to war with; “soft” relationships are our allies, trading partners, and their militarily weaker allies, according to Yan Yuetong, Dean, Institute of Modern International Relations, Tsinghua University, in a CCTV interview on October 12, 2013, and in his recently published Inertia of History: China and the World in the Next 10 years. 
  • China may publicly embarrass its two non-allies in Asia (Japan and the Philippines) and the United States in order to make us appear weak in comparison to China and its more than 30 allies in Asia. For example, China might pressure or incentivize the Philippines to have  our military thrown off our bases in the Philippines, or have the United Nations side with China against Japan and the Philippines in their land disputes in the South China Sea.  (Recently, China publicly embarrassed the Philippines President:  China invited President Aquino to a trade fair that has the Philippines as the “honor country,” then when the President Aquino publicly accepted the invitation, China said that he hadn’t been invited, so he shouldn’t come  http://www.nytimes.com/2013/08/30/world/asia/philippines-and-china-dispute-visit.html?_r=0 .)
  • The United States may demonstrate to India that it is an unreliable ally–as we’ve done with Saudi Arabia, Egypt, Pakistan, Afghanistan, Iraq, the European Union, Great Britain, and Israel. As a result, India will become a “hard” ally of China’s, and President Obama will have “successfully” alienated us from all of our allies.
  • South Korea may ask the United States to remove its troops that are helping guard its border.
  • China may have its new, best-buddies–Taiwan, South Korea, and Vietnam–publicly side with China against the United States on an issue.
  • China has a long history of destabilizing countries’ marketplaces by using long-term contracts to buy up certain goods (e.g., Brazil’s soybeans) in order to inflate prices there while flooding the marketplace with other goods in order to collapse prices, crush companies or countries, and then buy into those countries or companies on the cheap.  China will continue this process in the United States as it’s been doing for a couple of decades.
  • China has a history of funding radical Muslims in order to destabilize governments in Africa and the Middle East, similar to how Russia sought to reacquire the “stan” countries after the collapse of the U.S.S.R.  China, Russia, and others may repeat this process in the United States, using radicalized foreigners and Americans led by power seekers who teach their followers to hate America and/or Americans who act, look, and/or think different from them.
  • After China uses our closest allies to destroy us economically, China will do worse to them once we are no longer strong enough to protect them.
  • China will stumble in its “top-superpower journey” if it repeats the failures of America’s leaders whose pyramid-scheme market and social systems require more and more jobs, workers, consumers, money, natural resources, etc., in order to sustain themselves.  This would be disastrous for not only “top-superpower China” but also the world, because (1) the world’s new work model requires fewer and fewer people as technology replaces workers; and (2) overpopulation is the primary cause of pollution, depletion of natural resources, and human misery.
  • If China is to truly lead the world in this century and the next, it must create new market and social models that the world will want to emulate. New market and social models should be based on quality, not quantity; i.e., countries are enhanced by having fewer citizens, fewer workers, and fewer consumers; needing less money; using  fewer natural resources; etc.  Otherwise, in the coming decades and century, there will be no freedom much less life, liberty, and pursuit of happiness for the 15 or 30 or 60 or 120 billion Earthans who will go from fighting each other for power and energy and minerals and land and water rights to slaughtering each other for a sip of water.

Footnote 2: 

The Xinhua editorial also calls for a one-world currency and a world that needs the United Nations’ permission to go to war or take punitive actions against another country ( http://news.xinhuanet.com/english/indepth/2013-10/13/c_132794246.htm ;  http://www.foxnews.com/world/2013/10/13/wall-st-elites-reason-it-time-for-de-americanized-world-china-news-agency-says/ ).

Xinhua is China’s official newspaper, so the editorial reflects the opinion of the Chinese government.

China’s call for a one-world currency and for elevating U.N. authority is propaganda to placate America’s business leaders and liberal politicians:

  • One-world currency means corporate profits would no longer be impacted by differences in currency exchange rates.
  • U.N. governing is what many Democrats have wanted for years.
  • For decades, the goal of most Democrats and mainstream media has been to reduce America’s consumption and power; i.e., “share the wealth” with the rest of the world. (This was a great idea in the 1960s, before the Democrats’ unsustainable entitlement programs and the Republicans’ unfunded wars put us $17 trillion in debt, plus $100 trillion in unfunded obligations as 10,000 Baby Boomers retire each and every day.)

China’s propaganda encourages U.S. government and business leaders to sit quietly by–or even help–China step into the position as top superpower.

I believe, President Obama, most Democrats, and the mainstream media have miscalculated the effect on the world once America is brought to her knees and her leadership role is replaced by China’s.

China has worked too hard and too long to give up the power and influence and vast wealth that goes with controlling the world’s reserve currency–whether that currency is the yuan or a new currency.

In any event, whether there is a one-world currency or whether the yuan replaces the U.S. dollar as a world-currency, the effect is the same:  All of the U.S. politicians who’ve arrogantly said that the United States will never default on our debt because we have a printing press and can just print more dollars–unlike Greece and Italy which use the European Union’s currency (i.e.,  euro)–will find themselves unable to print more U.S. dollars, because no one will take them.

That’s when we are worse off than Greece, because our savior will be China, not Germany’s Chancellor Angela Merkel.

Footnote 3:

China used to ask for 5- and 10-year contracts.  Now, the contracts are much longer.  For example, China has 25- and 30-year oil and oil services contracts with Iraq where “China is  already the top foreign oil player” ( http://www.reuters.com/article/2013/08/09/us-petrochina-iraq-idUSBRE9780D520130809 ).

Only since Obama’s presidency has China been allowed to buy critical assets in the United States. The first sale of U.S. energy assets to China was in November 2009.

Most Americans would be surprised to learn how much of America’s critical energy assets–even our green energy companies–minerals, and food assets are owned by China, Russia, Saudi Arabia, etc., and their energy partners.

A wise U.S. President and Congress would not have allowed this to happen–the caveat being that Saudi Arabia repeatedly has stood up to OPEC and increased oil production to help us have lower oil prices. However, Saudi Arabia now ships tankers of gasoline from its U.S.-located refineries when Saudi and Qatari refineries are shut down for repairs.

And in the past few years, Saudi Arabia has gotten quite chummy with China (e.g., signed cooperative agreements; Saudis increased oil shipments to China (see also http://www.cnbc.com/id/101179670?doc=101179670%7cDo%20Saudis%20have%20a%20new%20best&.tsrc=sun ).

As I stated earlier, the U.S. shale revolution’s top 10 players now include only two American companies–Exxon Mobile and Chevron–and include eight foreign companies: Royal Dutch Shell (which is a >30-year partner of China’s), Russia’s Gazpromm, Norway’s Statoil (which is a >30-year partner of China’s), France’s Total, Russia’s Lukoil, China’s Petrochina, Russia’s Rosneft, and China’s Sinopec (see http://video.cnbc.com/gallery/?play=1&video=3000211198 ).

The list of top U.S. shale players excludes China’s government-owned oil companies CNOC and CNOOC which, until recently, were allowed to only “buy into” the U.S. energy market; now, they’re allowed to outright own or own controlling interests in many U.S. energy companies and foreign-owned companies operating in the United States.

November 2009 was the first time that the U.S. government allowed Chinese companies–much less China’s government–to purchase critical energy assets in the United States.

Because of President Obama’s and Congress’ unwise decisions to allow even non-allies to gain a foothold in our critical assets, the United States has become a target for foreign intervention.  (Our government’s reckless debt and dysfunction also have made the United States the target for U.N intervention.)

Our government’s recklessness has put our cities and countryside at risk of being the battlefields for countries fighting over our critical assets.

The questions are worth repeating:

Is the unwise selloff of our critical energy, mineral, and food assets due to concessions our government has already made to our debt holders?

Have our politicians already put America in the untenable position of relinquishing power (e.g., not supporting our closest allies, giving away defense technology and national security secrets to even non-allies, reducing our military capability, disarming our citizens and our nuclear facilities) and acquiescing to deals that harm America in exchange for our allies’ and non-allies’ allowing the U.S. dollar be a world-reserve currency for a few more years while our politicians and their rich cronies limit their downside risk and/or prepare to “cut and run.”?

Footnote 4:

President Obama, Senator Harry Reid, and other Democrats were brilliant in laying the groundwork to win every election in 2014–(see footnotes 2-4):  They made an 83% government shutdown look like America’s Armageddon, so that now the world thinks we’re so broke that we can’t even bury our dead heroes who were killed on the battlefield (see footnote 6).

Unfortunately, their brilliant strategy to win elections in 2014 scared the bejesus out of world leaders and investors, giving them the motivation to dump U.S. dollars and debt.

Their brilliant strategy also helped China move one step closer to being the world’s top superpower.

Our leaders’ game of economic chicken created an opportunity for China to have its yuan become the world’s reserve currency (“China, UK deal pushes London as next offshore yuan centre after HK,” October 15, 2013, http://www.reuters.com/article/2013/10/15/china-uk-rqfii-idUSL3N0I517U20131015?feedType=RSS&virtualBrandChannel=11563 ).

According to business reporter Eunice Yoon on CNBC’s Squawk Box, October 10, 2013 (see http://video.cnbc.com/gallery/?play=1&video=3000206400 ) :

  • On October 9, 2013, the Hong Kong exchange devalued U.S. Treasuries that are used as collateral.
  •  Japanese investors dumped foreign treasuries (i.e., U.S. debt) at record levels last week.
  • The Chinese people are upset with their government for holding so much U.S. debt ($1.3 trillion).

Unfortunately, rather than quelling global jitters about our debt crisis, for nearly three weeks,  President Obama and Senator Reid steadfastly refused to budge from their “raise the debt limit to $18 trillion, with no plan to cut spending” position, which is unacceptable to not only Republicans but also to most Americans and world leaders (footnotes 5-6).

In fact, Obama-Reid seemed hell-bent on scaring the bejesus out of world leaders, by repeatedly labeling Republicans as economic “terrorists” (and worse) who want to default on our debt–even though Republicans repeatedly have said that the United States should pay its bills and not default (footnote 4).

Exacerbating the situation, less than 48 hours before the Obama Administration’s manufactured default deadline of October 17th (see 2 minutes, 42 seconds location at  http://www.nbcnews.com/id/3032608/vp/53200915#53200915 ), Senate Democrats led by Senator Reid renewed their attempts to dismantle the Budge Control Act of 2011.

Fearing that uncontrolled spending would result in the U.S. dollar losing its “a reserve currency status,” the Tea Party Republicans dug in their heels, saying that the insanity of overspending and massive debt must stop.

No Democrats agreed, so budget negotiations stalled.

Then President Obama and his administration proceeded to try to make a 17% government shutdown seem like Armageddon, so that they could continue to successfully blame conservatives for all of their failures.

Footnote 5:

I’ve begun to believe that our fiscal crisis was completely manufactured by our politicians to win elections in 2014 and to create a panic that will enable our politicians to pull a Greece–quickly slash unaffordable entitlements by at least 70-80%–while being able to blame the Tea Party rather than old-guard Republicans, Democrats, and President Obama who ultimately held all of the power to keep government open.

President Obama and Congress had five months to avoid a fiscal crisis and negotiate the debt ceiling, which was hit in May–not October 17th–according to U.S. Treasury Secretary Jack Lew on Meet the Press, October 6, 2013 (see 2 minutes, 42 seconds location at  http://www.nbcnews.com/id/3032608/vp/53200915#53200915 ).

The Obama Administration juggled the books until the budget negotiations and the Obamacare rollout.

I also believe our politicians miscalculated (see my blog post “Tea Party Becomes Blame Game Patsy”):  China will not give them the time to fix our economy, even when our politicians finally  use creative destruction to quickly dump entitlement obligations and debt.

Besides, unlike some Democrats and most Republicans, President Obama is disinterested in reversing our escalating debt and reforming our broken entitlement system–as shown by his adding the massive Obamacare program rather than fixing Social Security, Medicare, and Medicaid which are bankrupting the United States.

As America burns, President Obama has pivoted to focusing on his legacy, which now includes reforming immigration, which ultimately will add tens of millions of low-wage earners (i.e., the “new” immigrants’ family members, who’re residing in foreign countries, can “jump to the front of  the immigration line”) who’ll compete with our young people and immigrants for jobs, education, and other dwindling resources.

Tens of millions of “old” and new immigrants would be eligible for our bankrupt entitlement programs:  Only legal status–not citizenship–is required for immigrants to be eligible for entitlements–as long as they meet the minimum requirements for each entitlement.

Only people who put their own self-interests first–before America’s economic survival and before our young people’s and our legal immigrants’ futures–would want to add millions of low-wage immigrants to our fragile economy, struggling job market, and our bankrupt entitlement programs.

The caveat is the children of illegal immigrants.  They did nothing wrong.  They should not be punished.  They deserve legal status and the opportunity of citizenship.

But whoever brought them here illegally should not be rewarded for breaking our laws, because history has shown that any perceived reward will result in tens of millions of immigrants illegally crossing our borders or overstaying their visas. (In particular, illegal immigrants who “cut and run” in 2008-09 should not be rewarded with legal status much less citizenship, because they’ve already demonstrated that they have no loyalty to America.  It’s inane that our politicians–including Senator Marco Rubio–want to reward illegal immigrants who’ve been here only since 2012.)

Illegal immigration is not a crime that hurts only the immigrants who risk their lives to come to the United States:  Illegal immigration costs us hundreds of billions of dollars annually to protect our borders, to repair or expand our infrastructure, educate the children of illegal immigrants, provide healthcare and other services, and prosecute, imprison, and/or extradite non-American criminals.  The cost of illegal immigrants’ crimes against other immigrants and Americans can’t be calculated in dollars.

Frankly, America’s situation is dire.

Our politicians must get our fiscal house in order.

And our politicians and media must unite Americans in one or more common goals.

If our politicians and media continue to divide Americans and enable politicians’ dishonesty and corruption, America will continue to fall deeper into debt and chaos, which will ultimately result in civil war, foreign invasion, or both.

Footnote 6: 

The Obama Administration used its myriad lawyers to find a way to make the world think that the U.S. government is so broke, it can’t even bury its dead heroes:  It narrowly interpreted Congress’ intentionally broadly written military-funding bill–in order to deny paying for the death benefits and burial of our active-duty military who died during the shutdown. (No human being with an iota of decency or common sense would label our troops who’d died on the battlefield as no longer working and therefore inactive and not entitled to the benefits he or she had been promised while alive.)

Rather than firing those lawyers and our Defense Secretary who let grieving families think for days that their country had turned its back on them in their darkest hour, our Commander-in-Chief added insult to injury by refusing to sign an Executive Order to pay for death benefits and burial of our heroes–just as he’s signed Executive Orders for myriad issues related to the EPA, Obamacare, ICE, immigration, etc. Instead, President Obama let a charity, the Fisher House Foundation, pay for the burial and death benefits of our fallen heroes.

Only after considerable political pressure did President Obama rectify the deep wrong that he and his team of lawyers had inflicted on the grieving families. This incident reveals the true character of President Obama as well as Senator Harry Reid who didn’t want the House’s bill to go to the Senate floor.

Footnote 7:

Most Americans would be surprised to discover that they actually agree with what most Tea Party patriots want our government to do (see also my blog post “The Tea Party’s ‘Dangerous’ Agenda”):

Most Americans would be surprised to discover that they actually agree with what most Tea Party patriots want our government to do (from my blog post “The Tea Party’s ‘Dangerous’ Agenda”):

  • Quit overspending so that our dollar and economy don’t collapse (see footnote 1; the U.S. dollar already was damaged by Fed’s decision in September 2013 to not to begin scaling back its $85 billion/month bond-MBS buying program ( http://www.bloomberg.com/news/2013-10-14/dollar-downgraded-as-standard-life-predicts-damage-currencies.html ).
  • Stop promising entitlements that our fiscally insolvent country can’t afford and that dishonest leaders know will be cut. (Our government has reneged on many of its promises to our veterans and their spouses, so our government will renege on Obamacare and Social Security just as it’s been doing with Medicaid, Medicare, the Prescription Drug Program, etc.)
  • Cut existing entitlement obligations (e.g., means test current recipients, raise the retirement age, etc.). Ultimately, we need to phase out our pyramid-scheme entitlement programs and phase in a new system that promotes and rewards personal responsibility; e.g., individual retirement accounts, health savings accounts, etc.
  • Cut redundant government agencies and programs (footnote 2).
  • Let local and state governments keep most of their money to run their agencies, programs, and schools–rather than wasting hundreds of billions of dollars funneling money to redundant federal agencies and corrupt politicians who use that money for pet programs, special legislation, and tax cuts for their rich cronies. (Our leaders see how inefficient China is with too much centralized government control, yet they wear blinders about America having this same defect, which wastes hundreds of billions of dollars annually and hurts Americans and our economy.)
  • Fix our crumbling infrastructure.
  • Give our young people and our immigrants the opportunity to get educations and jobs and homes before our government adds millions of new low-wage immigrants who’ll compete with our young people and immigrants for resources and jobs. (When will our politicians realize that their +40-year plan to add tens of millions of low-wage immigrants to our tax and payroll systems can’t save our government’s pyramid-scheme entitlement programs, which have instead bankrupted our nation?)  Most Republicans want America to be so strong and successful that we can draw the world’s brightest and most innovative people and so that we can really help citizens in need and new immigrants who are fleeing oppression.
  • Get government’s deep pockets out of higher education and healthcare so that universities and hospitals have to charge what we can afford to pay rather than what our government can afford.  Before Medicaid and Medicare, even the working poor could afford to pay for their own healthcare.  Before government hiked student loan money every time universities lobbied for more, even the working poor could afford to pay our own way through school. I was a single parent who worked full time and put myself through college in the 1980s and grad school in the late 1980s and early 1990s–without needing student loans.  Today, college students must indebt themselves with student loans–unless their family is upper-middle class or rich.
  • Get unions out of our government and our schools so that pyramid-scheme pensions and retirement health plans can be replaced with 401 Ks and health savings accounts.  And so that lousy government workers and lousy teachers (and lousy administrators) can be easily fired, and good government workers and good teachers and good administrators can be well-paid and treated with the respect they’ve earned.
  • Use second-chance schools and online education for unruly children.  Give every child three chances per year to behave, then boot them out to the last-chance schools and, if necessary, then to online education.  Every year, give every student a fresh slate and three more chances to succeed. Failing to educate some of our unruly children is far better than failing to educate 30-60% of our children. (I would like to see us use Judge Judy Sheindlin’s idea of requiring parents to prove that their children are attending school regularly in order to claim them as dependents on income tax forms.)
  • Give our classrooms back to our teachers so that they can be creative, adapt to the needs of each classroom, write their own curriculum, set their own rules, and discipline unruly students.  Let new teachers and new administrators learn from good teachers and good administrators.
  • Get rid of tenure so that bad teachers (and bad administrators) can be easily fired. and good teachers and good administrators can be well-paid and treated with the respect they’ve earned.
  • Get politics and ideology out of grade schools and middle schools. Parents–not teachers–should be the first to influence our children’s beliefs. Those teachers who want to create more Democrats or Republicans or Libertarians or vegetarians should have more of their own children or, preferably, adopt.
  • Teach U.S. history and the U.S. Constitution and its amendments in all of our schools. America has no unifying dream that brings us together in a common goal, because most of us don’t even know America’s history much less its foundation.  (The rewriting of American history had a noble purpose:  It enabled historians to include or elevate voices that had been silenced or diminished throughout America’s history. But for the past 30 years, the rewriting of American history has devolved into the dis-teaching of American history in our schools, and into the Liberals’ and mainstream media’s intentionally elevating Liberal voices and silencing contemporary voices, particularly conservative voices of people of color, young adults, and working women–thereby aiding Liberals in their false narrative, “Conservatives are a bunch of old, irrelevant white men and middle-aged housewives.” I believe, silencing another’s voice is as vile today as when it was being done to women of all color, native Americans, African-American slaves, Irish immigrants, Italian immigrants, Asian immigrants, etc. Yet far-Left Democrats and mainstream media use this vile tactic every day in order to complete the dis-transformation of America; i.e., accomplish their agenda of reducing consumption and weakening America in order to redistribute her wealth and power in the world–a goal one would think they’ve accomplished by now).
  • Teach our children to be proud of America. For more than three decades, our schools have taught our children to be ashamed of America, because of awful wrongs committed by Americans who are dead. For almost 25 years, our universities and colleges have taught student teachers that all Caucasians are inherently racist (e.g., Critical Race Theory)–even though for more than three decades, the vast majority of American children of every race have emulated heroes who’re usually Black and, more recently, Hispanic. To right historical wrongs and to control the power structure in America in order to complete the dis-transformation of America, the far Left and the mainstream media have silenced and distorted the voices of the vast majority of Americans, who are not racists. Despicably, the far Left and the mainstream media have intentionally elevated the voices of racists or dredged up events that happened decades ago in order to prove that racism is rampant in America today. Over the past decade or so, Democrats and mainstream media have ridiculed and silenced the voices of conservatives, particularly conservatives of color, in order to redefine the Republican Party as a bunch of old, irrelevant white men; wacko, white anarchists; and middle-aged housewives.  How will Americans react when they finally realize that their country is on the brink of destruction because a relatively small group of elitist, arrogant Liberals chose to intentionally weaken our country in order to reduce consumption and redistribute America’s wealth and power to the world?
  • Teach our children how to compete.  When China is the world’s top superpower, it won’t be giving our children and future generations ribbons just for showing up. Our children and grandchildren and great-grandchildren will work hard and sacrifice much if they’re to save America from becoming China’s footstool.
  • First and foremost, follow the U.S. Constitution and its amendments.  Leaders who violate the U.S. Constitution and its amendments are lazy, ignorant, or corrupt in their belief that they are above the Law.  No one should be allowed to stomp on the very foundation of our country–not even a President who’s doing end runs around Congress in order to amend his signature legislation, which he didn’t help craft much less read before he signed it into law.

Personally, I believe our tax system needs to be overhauled in a manner that gets rid of most of the IRS and de-corrupts our leaders so that they can’t write tax loopholes for their good buddies:

  •  a low national sales tax or
  • a low, tiered, flat-tax system for individuals and businesses (with no tax deductions for anyone or anything; otherwise, within 10 years, we’ll have the same massive, corrupt tax code we have now).

I also believe, Americans need to create new market and social models that the world will want to emulate, because (1) the world’s new work model requires fewer and fewer people as technology replaces workers; and (2) overpopulation is the primary cause of pollution, depletion of natural resources, and human misery.

Current market and social models are unsustainable.  New market and social models should be based on quality, not quantity; i.e., enhance countries and quality of life when they have fewer citizens, fewer workers, and fewer consumers; need less money; use  fewer natural resources; etc.

Otherwise, in the coming decades and centuries, there will be no freedom much less life, liberty, and pursuit of happiness for the 15 or 30 or 60 or 120 billion Earthans who will go from fighting each other for power and energy and minerals and land and water rights to slaughtering each other for a sip of water.

Footnote 8:

CONSERVATIVES’ STRATEGY:

The Democrats, mainstream media, and liberal comedians speak with one voice, so no matter what message they’re delivering–even an intentionally false one–voters believe the message.

Conservatives haven’t even ensured that our poor and middle-class families have access to conservative voices on television.

Please phone your cable provider and your congressional leaders and demand that cable packages include FoxNews and all CSPAN channels because . . .

  •  FoxNews is the only television media that does not censor conservative voices, and
  • CSPAN channels are  taxpayer-funded–and yet the Republican-controlled House’s CSPAN channel is blocked in some cable packages.

Fiscal conservatives must speak in one loud, clear voice that cannot be misinterpreted, redefined, or silenced by others:

  • Give Americans a dream that will unite us, motivate us, and move us forward (e.g., saving America which is the only dream right now that can save us all.  America has little time left for politicians to fix our fiscal mess–before China begins to determine our destiny:  The week of October 14, 2013, marked the second stage of China, its trading partners, and our allies’ firewalling their economies against the U.S. dollar and debt (see “China and U.S. allies Firewall Themselves Against U.S. Dollar and Debt”).
  • To save our country and get its spending under control, politicians must cut waste, fraud, and abuse; get rid of obsolete, redundant, and wasteful programs and agencies; and cut or reform entitlement programs.
  • If Democrats continue to lie to Americans about America’s fiscal crisis, then educate Americans about the relatively small group of elitist, arrogant Liberals who’ve chosen to intentionally weaken our country in order to reduce our consumption and redistribute our power and wealth to the world.
  • Tell all voters to tell all of their representatives, senators, and President that the government’s reckless plan to devalue the U.S. dollar in order to inflate their way our of our massive debt will result in collapsing our dollar and our economy.  We will be just like Greece:  in massive debt, with massive entitlement obligations, and without a printing press.  Tell voters that this is an American issue–not a partisan issue.
  • Better explain that Republicans are for implementing spending cuts before allowing Democrats to raise everyone’s taxes.
  • Republicans are not against all revenue increases:  In fact, President Obama got $640 billion in new revenue in 2013, and despite sequestration cuts, he has added another $1 trillion to our debt since 2012 and he’ll add at least another $1 trillion of debt in 2014.  At the current rate of spending, President Obama will have added at least $10 trillion in debt by fiscal year end 2016.
  • Republicans oppose Democrats who want to spend, spend, spend and tax, tax, tax Americans and America into bankruptcy:  If Democrats succeed in their tax-and-spend plan that destroys state and local government and individual responsibility and independence, then all of our states, counties, cities, towns, and citizens will be as indebted as the U.S. government is now.
  • In order to transform how some politicians, such as Congresswoman Nancy Pelosi and Senator Harry Reid, perceive government spending (i.e., they currently think that even wasteful spending is good spending, because it can increase our GDP), we should change how the U.S. government calculates GDP; i.e., exclude government spending from GDP calculations–except for the interest and principal that we pay on the U.S. debt.  Including government spending as part of our GDP calculation only encourages math-challenged, commonsense-challenged politicians to spend more on pork and entitlements in order to raise our GDP–as well as to misplace billions, waste trillions, and suck more trillions from the private sector in order to grow Big Government.
  • Republicans should educate voters that, in order to increase tax revenues and to reduce America’s consumption, Democrats want a federal tax on all of our assets, similar to the  local governments’ property tax.
  • Short-sighted politicians who push for toll highways and mileage taxes in order to pay for roads (which are supposed to paid for via income taxes) are ultimately paving the way for a tyrant to isolate and control our states and their individuals.
  • President Obama’s, Attorney General Eric Holder’s, and governmental agencies have paved the way for tyranny via their end runs around Congress and the U.S. Constitution.
  • Government should provide financial aid to only those who can’t help themselves–rather than the U.S. government’s systematic crippling of all Americans, so that we limit our dreams to what our government will allow us to have. (More and more “government crippling” will happen as programs are means tested and the non-recipients must pay for services whose prices are set by government’s deep pockets rather than by supply, demand, and competition.)
  • We should let supply, demand, and competition set the market’s prices–rather than letting our government limit competition (e.g., the U.S. government should let insurance companies compete across state lines).
  • The U.S. government’s deep pockets have artificially raised prices for student tuition (due to student grants and loans) and healthcare (due to Medicare, Medicaid, and now Obamacare)–making them unaffordable to most Americans without government help. Because of decades of stagnant wages, our tuition and healthcare prices should be very low–not artificially high.
  • President Obama and the Democrats–not Republicans–shut down the government and made the 13% government shutdown look like Armageddon to the world, putting our economy and our national security at risk, so that Democrats can win more elections in 2014 and control both house of Congress in 2015-16, thereby fulfilling the Democratic dream of cutting consumption and redistributing America’s power and wealth to the world.

NOTE ON OBAMACARE:

Some Democrats cite statistics revealing that healthcare costs have dropped for since the passage of Obamacare. They’re lying.

Democrats ignore that the declines in healthcare costs are due to insurance companies hiking policy prices, deductibles, and co-pays so much over the past three years in anticipation of Obamacare’s new regulations that millions of insured Americans can’t afford to use their healthcare policies.  Instead, millions of Americans are delaying or not seeking treatment and are not filling prescriptions ( http://www.nytimes.com/2013/08/13/us/a-limit-on-consumer-costs-is-delayed-in-health-care-law.html?pagewanted=all&_r=0 ; http://money.cnn.com/2013/04/26/news/economy/health-care-cost/index.html ).

It’s critical that Americans understand that Obamacare . . .

  • redistributes healthcare so that only America’s elite will receive excellent or even good medical care–as indicated by the 36,000 jobs added by private hospitals and the 41,000 jobs cut by public hospitals so far this year ( http://www.usatoday.com/story/money/business/2013/10/13/hospital-job-cuts/2947929/ ), by the Obamacare insurance policies that don’t cover certain life-saving tests and treatments and have high deductibles  and co-pays,  and by the myriad doctors who are refusing to treat Obamacare, Medicaid, and Medicare patients;
  • is another form of corporate welfare program (i.e., enriches insurance companies, and corporations that dump most or all of their employees onto the healthcare exchanges);
  • is another pyramid-scheme entitlement program that’s bankrupting America; and
  • is another pyramid-scheme entitlement system that help re-elect Democrats who put their own self-interests before America’s.
  • What Americans like about Obamacare could have easily been included in a few simple laws that help some Americans–rather than the Obamacare behemoth that hurts all us except, of course, our elite, our government leaders and their employees, and Big Business.

Personally, I believe, Republicans should have raised the debt ceiling and done a continuing resolution to fund the entire government–immediately after Senator Ted Cruz’s filibuster which educated Americans about how Obamacare is damaging our economy, is turning us into a part-time nation, will be the tipping-point entitlement that will bankrupt  our nation; and ultimately will hurt the healthcare of millions of middle-class families.

Senators Cruz, Mike Lee, Rand Paul, and Mario Rubio were heroic messengers who elevated the conservative message.

Unfortunately, old-guard Republicans enabled President Obama and Democrats to shut down the government, trash the conservative heroes’ message, and then blame them for the shutdown–while diverting everyone’s attention from the disastrous Obamacare rollout.

But what’s done is done.  It’s time to speak with one voice and provide workable solutions to the most critical problems.

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