Casino

The anger, frustration, bewilderment, and desperation that hangs in the record-breaking scorching summer air above Washington D.C. is so palpable I can taste it right through my netbook. Every day brings the same charade: One paper says a deal on deficit reduction and the debt ceiling is immanent, and another reports the two sides (because there are only two) have never been farther apart. Cantor screams, Obama laughs, Boehner cries – it's like a really bad tella novella. So what the hell is really going on in Washington? Are we going to default? If we do, will it really be as bad as many claim? What exactly is the deal with the debt ceiling?

We've raised the federal debt ceiling dozens and dozens of times throughout our history. We've raised it eight times in the last decade. It was raised 18 times just during the presidency of Ronald Reagan. It generally requires the passage of a one sentence bill, and given the vital importance of our government's ability to pay our bills, it generally glides through congress without incident. There have been a few times in the past where it's had some bumpy rides, but never anything like the political theater before us now. So what is so different this time?

For starters, we are. The American people are, like never before, demanding some real fiscal responsibility from our government. For the last two years we've watched as the Fed, the Treasury Department, and the TBTF banks have lived high on the hog while we have suffered immensely due to the financial boondoggle that they created in the housing market. People are sick of living under unmanageable levels of credit card debt, college debt, mortgage debt, and government debt – not being able to feed their families and pay the bills while the financial fat cats fly into Bohemian Grove in their private planes. So we are to some degree happy to see our leaders being made to sweat it out and address the nation's budget problems in the same way we've had to address our own.

Also, it is certainly lost on no one that we have a relatively young Republican congress who see an excellent opportunity to score some big electoral points heading into campaign season by setting the agenda and blackmailing the Democrats into following it.

However, these are just the factors that make the debt ceiling debacle good television. To understand where we are and how we got here, and why this time it really is different, you have to understand the following:

“Until you change the way money works, you change nothing.” -Michael C. Ruppert.

All money is created out of debt. If all the outstanding debts were paid back today, there would not be a single dollar in circulation. The modern monetary paradigm is designed to continually create new debt, not to allow for the paying off of old debt. If you do not understand this, you will never understand the fragility of our current predicament. If you need a refresher on how money works, click here and scroll down to Part Two: Money.

Over the last half decade we, human industrialized civilization, have hit a number of peaks. We saw peak oil back in 2005, followed by peak coal, peak manufacturing, peak food, etc. Of course, all of those stem from the first, because everything we do is so inextricably tied to oil that without it there can be no growth. However, since the crash of 2008 we've kept the infinite growth paradigm on life support, compensating for our energy shortfalls by continually expanding outlandish amounts of debt.

And now we've hit peak debt. As we see in Greece and Spain and Italy and Portugal and England and Ireland and India and China and Saudi Arabia and Egypt and Turkey and on and on...we have so overextended ourselves that faith in all fiat currencies is evaporating all over the world. We've reached the point where no matter how many times TPTB alter or recalculate sovereign debt, bond yields, treasury ratings, the CPI, the GDP, or any other traditional measurement of growth and prosperity, people simply aren't buying it anymore. We're circling the drain, and we know it. A recent CNN poll found that 48% of Americans think we will be in another Great Depression by this time next year, and unfortunately they're right, except that this depression will rewrite the definition of the word.

And this brings us back to the debt ceiling and what is really happening on The Hill and at The White House. The jig is up, and everyone now realizes it. There is no growth. There is no recovery. There are no jobs. There is no money. All that remains is debt. Piles and piles of debt.

Ask yourself this question: How is it possible for every nation in the world to be absolutely broke or in financial distress simultaneously? Where did all the money go?

The representatives of the people and the policy makers in Washington realize that they cannot reduce deficit spending in any meaningful way without massively cutting social entitlements, gouging defense spending, and increasing taxes across the board. Of course, it would be political suicide for any of them to even suggest enacting legislation to accomplish such in a run up to an election year, so they are doing what they do best – a whole bunch of not shit.

U.S. Treasuries have always been regarded as the safest investment on the planet, and for good reason: Given the petrodollar's reserve currency status, we have always been able to simply print whatever money we need to pay our bills. Through commodity speculation, complex derivatives, compound interest, asset securitization, fractional reserve banking, and the completely unconstitutional and amoral taxation of citizens' labor, the Fed, the Treasury Department, and the Wall Street banks have built the ultimate casino - a perfect perpetual debt machine - with the debt ceiling being the only barrier between them and infinite debt.

Unfortunately for them, anyone with an elementary understanding of economics can now see how untenable the situation is. The derivatives bubble alone is 900 trillion dollars. That is the equivalent of about 15 years worth of the gross domestic product of the entire world. That kind of money can never and will never be paid off.

So our leaders in Washington are simply going to continue this bullshit spectacle of partisan bickering until we do in fact default, which will force us to prioritize spending and both sides will get the cuts they want without ever having to publicly vote on them. They're attempting to create a Hegelian Dialectic in which the economy will experience a short term crash (problem) scaring the hell out of the populous, and to save ourselves we will demand that everything be put on the table (reaction) and a deal, whatever its requirements, be worked out (solution). Of course, this method has been used to accomplish a vast array of ends in the past, but there is a glaring miscalculation that dooms it to failure this time – the systemic weakness of the dollar in the world today. There will be no rally, no stemming of the tide or stoppage of the bleeding. The next time the dollar plunges it will not stop until it gets all the way to the basement, and every other currency in the world will ride down with it.

And as the dollar falls, impervious to all attempts to save it, the partisan rhetoric will go into overdrive as an endless barrage of fingers are pointed in an attempt to lay the blame of the collapse at the feet of this group or that. The talking heads on the news networks will emblazon us with their simple and easy fixes that would surely right the ship if only they were heeded. In the end it will all be boiled down to ten-word answers, with no regard for nuance or the complexity of the situation.

And of course, the obvious fact will remain that this collapse was always inevitable, was very accurately foretold by many, all of whom have been all but ignored, going back 70 years, and that the real blame for it lies at the feet of a scam 600 years old – loaning people money that does not exist and charging them interest on it.

Ignaz Semmelweis was a Hungarian physician in the early 19^th century who noticed an interesting phenomenon. He saw a correlation between deaths during childbirths and physicians not washing their hands after performing autopsies. He began to warn his colleagues that they should wash their hands before performing any medical procedure, and he was laughed at, ignored, discredited, and was eventually committed to an insane asylum where he died. Of course, many decades later Louis Pasteur published the Germ Theory of Disease, and the observations of Semmelweis were given their due credit.

All truth passes through three stages. First it is ridiculed. Next it is violently opposed. And finally it is accepted as self-evident. Just ask Galileo.

The global financial paradigm is, and has been for some time, run like a casino. But everyone knows that the axiom of casinos is “The house always wins.” And our planet is the house. The house cannot support a human population of seven billion people. It cannot tolerate a dominant species that demands more growth, more waste, and more destruction every single year. In nature, the only thing that continues to grow after the age of maturation is cancer, and the Earth can no longer sustain the proliferation of our human industrial cancer. Weather you ridicule it, violently oppose it, or accept it as self-evident, our modern way of life is dead, and these are but the initial stages of the greatest course correction in human history.

What happens when an unstoppable force meets an immovable object? Like it or not, we're all about to find out. May luck be on our side.

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