It is great to see that we finally have some national unity on energy policy. Unfortunately, the unifying idea is so ridiculous, so unworthy of the people aspiring to lead our nation, it takes your breath away. Hillary Clinton has decided to line up with John McCain in pushing to suspend the federal excise tax on gasoline, 18.4 cents a gallon, for this summer’s travel season. This is not an energy policy. This is money laundering: we borrow money from China and ship it to Saudi Arabia and take a little cut for ourselves as it goes through our gas tanks. What a way to build our country.

When the summer is over, we will have increased our debt to China, increased our transfer of wealth to Saudi Arabia and increased our contribution to global warming for our kids to inherit.

No, no, no, we’ll just get the money by taxing Big Oil, says Mrs. Clinton. Even if you could do that, what a terrible way to spend precious tax dollars — burning it up on the way to the beach rather than on innovation?

The McCain-Clinton gas holiday proposal is a perfect example of what energy expert Peter Schwartz of Global Business Network describes as the true American energy policy today: “Maximize demand, minimize supply and buy the rest from the people who hate us the most.”

Good for Barack Obama for resisting this shameful pandering.

But here’s what’s scary: our problem is so much worse than you think. We have no energy strategy. If you are going to use tax policy to shape energy strategy then you want to raise taxes on the things you want to discourage — gasoline consumption and gas-guzzling cars — and you want to lower taxes on the things you want to encourage — new, renewable energy technologies. We are doing just the opposite.

Are you sitting down?

Few Americans know it, but for almost a year now, Congress has been bickering over whether and how to renew the investment tax credit to stimulate investment in solar energy and the production tax credit to encourage investment in wind energy. The bickering has been so poisonous that when Congress passed the 2007 energy bill last December, it failed to extend any stimulus for wind and solar energy production. Oil and gas kept all their credits, but those for wind and solar have been left to expire this December. I am not making this up. At a time when we should be throwing everything into clean power innovation, we are squabbling over pennies.

These credits are critical because they ensure that if oil prices slip back down again — which often happens — investments in wind and solar would still be profitable. That’s how you launch a new energy technology and help it achieve scale, so it can compete without subsidies.

The Democrats wanted the wind and solar credits to be paid for by taking away tax credits from the oil industry. President Bush said he would veto that. Neither side would back down, and Mr. Bush — showing not one iota of leadership — refused to get all the adults together in a room and work out a compromise. Stalemate. Meanwhile, Germany has a 20-year solar incentive program; Japan 12 years. Ours, at best, run two years.

“It’s a disaster,” says Michael Polsky, founder of Invenergy, one of the biggest wind-power developers in America. “Wind is a very capital-intensive industry, and financial institutions are not ready to take ‘Congressional risk.’ They say if you don’t get the [production tax credit] we will not lend you the money to buy more turbines and build projects.”

It is also alarming, says Rhone Resch, the president of the Solar Energy Industries Association, that the U.S. has reached a point “where the priorities of Congress could become so distorted by politics” that it would turn its back on the next great global industry — clean power — “but that’s exactly what is happening.” If the wind and solar credits expire, said Resch, the impact in just 2009 would be more than 100,000 jobs either lost or not created in these industries, and $20 billion worth of investments that won’t be made.

While all the presidential candidates were railing about lost manufacturing jobs in Ohio, no one noticed that America’s premier solar company, First Solar, from Toledo, Ohio, was opening its newest factory in the former East Germany — 540 high-paying engineering jobs — because Germany has created a booming solar market and America has not.

In 1997, said Resch, America was the leader in solar energy technology, with 40 percent of global solar production. “Last year, we were less than 8 percent, and even most of that was manufacturing for overseas markets.”

The McCain-Clinton proposal is a reminder to me that the biggest energy crisis we have in our country today is the energy to be serious — the energy to do big things in a sustained, focused and intelligent way. We are in the midst of a national political brownout.

Commentary
Choosing Recession
Lakshman Achuthan and Anirvan Banerji 04.21.08, 6:00 AM ET 

The 2008 recession guarantees many months of job losses that will boost foreclosures and feed the credit crisis. But if fiscal stimulus had reached consumers quickly, it would have forestalled a recession, helping to stabilize the housing market. Such a soft landing would have bought some breathing room in which to resolve the credit crisis until the lagged effect of monetary policy kicked in.

There is a raging debate about how the economy got into recession, and who is to blame. Many have concluded that the housing and credit bubbles guaranteed recession. But because this debate will influence policy for the next economic cycle, the right lessons must be learned from this series of unfortunate events.

An essential point is being overlooked–that this recession was actually avoidable as recently as several weeks ago. How could that be?

The Fed has rightly been lauded for its bold actions this year, but they hardly make up for its initial delay in getting serious about averting recession. Because monetary policy affects the economy with a lag, the Fed must be preemptive, not reactive. But, as in the lead-up to the 2001 recession, inflation concerns based on backward-looking indicators needlessly inhibited the Fed’s actions for far too long. This implies a fundamentally flawed monetary policy approach because inflation typically keeps rising in the early months of recession. More importantly, forward-looking inflation indicators were already falling last summer. The Fed had a green light to slash rates that it failed to heed until January. The Fed cannot afford to act like a deer in the headlights frozen in the face of higher food and energy prices that it cannot control.

As the new year began, The Economist noted, “One of the most reliable gauges is [Economic Cycle Research Institute's] weekly leading index [which] is now showing its weakest performance since the 2001 recession.” But it also cited our view that “prompt policy stimulus could still avert a formal downturn.”

Shortly thereafter, Chairman Bernanke not only began aggressive monetary stimulus, but also endorsed quick fiscal stimulus, emphasizing that “it would not be window dressing.” Apparently realizing that the economy was on the cusp of recession, he may have understood that only timely fiscal stimulus could save the day. Given the history of fiscal stimulus arriving too late to head off recession, how was that even possible?

Prominent pundits have been predicting a U.S. recession since 2005, when Hurricane Katrina hit an economy under assault from Fed rate hikes and oil price spikes, a combination that had triggered many a past recession. With the advent of the home price downturn, the gloomy chorus grew throughout 2006.

In early 2007, Wall Street analysts were predicting up to 100 basis points of Fed rate cuts by year end. By June, faced with accelerating economic growth, they abruptly switched their call to zero rate cuts. The economy’s unexpected resilience actually triggered the credit crisis by invalidating expectations of modest resets to subprime adjustable rate mortgages.

U.S. growth plunged following the credit crisis, but the economy grew stubbornly through year end. Still, persistent pessimism made the dollar swoon further, cementing an export-driven boost to manufacturing.

The constant drumbeat of downbeat commentary compelled CEOs to aggressively reduce inventories, cutting the inventory/sales ratio to a record low by late 2007. For the first time, premature pessimism had created a unique opportunity for a self-correcting recession prophecy. At that juncture, even if consumers had spent only a fraction of the stimulus on consumption, in the absence of inventories it would have forced businesses to boost production and hiring, thereby stabilizing the job market.

Typically, business managers, surprised by recession, face a Wile E. Coyote moment when they realize that demand has plummeted. Stuck with soaring inventories, they slash production and jobs, thereby reducing consumer income and spending, which in turn feeds back into lower sales, triggering further production cutbacks, perpetuating the vicious cycle that is the hallmark of recession.

In every recession, the manufacturing sector accounts for more than half of the job losses, largely due to this inventory cycle dynamic. But this time, with inventories cut to the bone, this key recession driver was absent. Prompt stimulus would have been unusually potent, quickly reversing the recessionary vicious cycle.

Policy makers seemed to get the urgency. In January, Treasury Secretary Hank Paulson declared that “time is of the essence.” House Speaker Nancy Pelosi spoke of “timely, targeted and temporary” stimulus, and the administration and Congress enacted a tax rebate package with exemplary speed. The fatal flaw was their willingness to allow a delayed delivery of the stimulus. It was as if the medics had arrived and taken a quick decision to administer CPR–but in a few months rather than a few seconds.

Given the magnitude of the housing and credit bubbles, there was no way to avoid paying the piper once they had popped. But in this instance, resolving those excesses did not require a recession, which could have been forestalled by quick stimulus. Just as the Fed has demonstrated out-of-the-box thinking in recent weeks, so too fiscal policy makers needed to have found innovative ways to get money to the consumer in weeks, not months. That would have made all the difference.

Arguably, in a market economy, recessions are cathartic. But choosing recession is causing unnecessary collateral damage to millions of innocent bystanders while making it politically expedient to throw far more money at the problem than was needed to avert recession in the first place. Moreover, recessionary job losses will worsen the housing downturn.

Alan Greenspan recently emphasized the abrupt shifts that occur at business cycle turning points, noting that “you don’t gradually fall into recession, you jump.” That is precisely why the timing of policy is so critical in the vicinity of turning points.

In February, ECRI’s leading index for the nonfinancial services sector, which accounts for five out of eight U.S. jobs, locked onto a recessionary trajectory. In effect, the 3 a.m. call on the economy had gone unanswered.

Lakshman Achuthan and Anirvan Banerji are the co-founders of the Economic Cycle Research Institute, and the co-authors of Beating the Business Cycle: How to Predict and Profit from Turning Points in the Economy, published by Currency Doubleday.

U.S. economy in ‘very difficult period,’ Bernanke says

By Greg Robb

Last update: 9:30 a.m. EDT April 2, 2008

WASHINGTON (MarketWatch) - The outlook for U.S. growth has worsened since January and the possibility of a recession can’t be ruled out, Federal Reserve Chairman Ben Bernanke said Wednesday. “It not appears likely that real gross domestic product will not grow much, if at all, over the first half of 2008 and could even contract slightly,” Bernanke said in testimony prepared for the Joint Economic Committee of Congress. “Clearly, the U.S. economy is going through a very difficult period.” His testimony supports the view that the Fed is not done cutting interest rates. The central bank has lowered its target overnight lending rate to 2.25% from 5.25% last fall, the largest percentage decline on record. Bernanke suggested the central bank is slowing down the pace of its rate cuts. “Much necessary economic and financial adjustment has already taken place, and monetary and fiscal policies are in train that should support a return to growth in the second half of this year and next year,” he said. Inflation remains a concern, he noted, and some signs indicate that the public expects prices to continue rising. 

EDITOR’S NOTE: State Department Overview of Global economic transactions needed, along with a department of trained, serious, non-political economists who can report the actual effects and trends of global commerce on our foreign relations.

1. According to the Secretary of State and the National Security Council, counterfeiting undermines currency and constitutes an ACT OF WAR if sanctioned or promoted by one government to the detriment of another. 
2. By promoting the expansion of “money” supply through the latest “funny money schemes” of Wall Street, the United States has been the source of counterfeiting “cash equivalents” which are currently only part of the way through the process of undermining the financial strength, viability, social services and credibility of local and federal governments around the world. 
3. These cash equivalents (derivatives) are the modern day equivalent of counterfeiting. 
4. While it is not likely that a military response is on the horizon, it IS likely that economic and political responses will be coming from countries that include our friends and allies. 
5. The effect on our foreign relations is immeasurable right now. 
6. The effect on our own economy is understated intentionally by government reporting agencies: food prices in Arizona are up 19% (demonstrating that the true rate of inflation of geometrically higher than what the government is reporting). 
7. Food and oil and other necessities are rising sharply in the U.S. because the dollar is sinking to new lows every month. Citizens must be made aware that the economic policies and choices we make, right down to individual purchases at the grocery store or other retail locations has a direct impact on the statement we are making in our foreign relations.
8. Paulson’s “sweeping” proposals do nothing except sweep the problems under a rug too small to hold the debris. 
9. What must be included in any plan for changes in how the government plays referee in in the marketplace (i.e., regulation), is a new division of the State department that assesses the impact of global economic commerce and recommends policy adjustments to heal and promote our relationships with sovereign nations. 

Swiss finance minister reportedly expects tax shortfall due to UBS

Switzerland’s finance minister Hans-Rudolf Merz expects the country to receive 1 billion Swiss francs, or $1 billion, less in taxes for 2007 as a result of the crisis at UBS AG (UBS: UBS Ag he told Swiss daily Tages-Anzeiger in an interview published Wednesday. See full story

By Polya Lesova MarketWatch 4/2/2008 9:06:00 AM Crude-oil futures rise modestly as traders look to data on U.S. petroleum inventories and eye strength in the dollar. See full story 

[EDITOR’S NOTE: Somehow people must be educated to understand the relationship between a weak dollar caused by excessive borrowing and flooding the marketplace with “funny money” and the price of gas at the pump. As the value of U.S. currency declines, more of it is required to purchase anything on the world market, including oil. If OPEC follows through on converting from dollars to Euros the effect will be magnified and the price of gas at the pump could easily exceed $10 per gallon same time next year. Wake up, America!]

Wider access to high-risk currency trading lures more investors

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By Gergana Koleva MarketWatch4/1/2008 7:33:00 PM

With over $3 trillion worth of foreign currencies changing hands every day, a growing number of retail investors who seek a boost to their portfolios and a hedge for the falling dollar are viewing the high liquidity of foreign exchange trading as a tonic for troubled times. See full story

National City mulling deal with KeyCorp: report

BOSTON (MarketWatch) — National City Corp. (NCC:

National City Corporation which has seen its stock battered due to its exposure to troubled loans and softening real estate markets, is contemplating a plan to sell itself to KeyCorp (KEY: KeyCorp (New) The Wall Street Journal reported Wednesday.

Fannie Mae revises standards for mortgages: report

Fannie Mae (FNM: Fannie Mae has told lenders it will require a credit score of at least 580 for most individual loans as part of the latest move to make its standards more stringent for mortgages it buys or guarantees, according to a report Wednesday in The Wall Street Journal. See full story 

[EDITOR’S NOTE: Talk about locking the barn door after all the horses are gone! What is needed besides changes in future regulation is a solution now, today, to the massive credit crisis which now extends to all new loans including auto loans. 

• The solution does NOT lie in piecemeal, patchwork of rule changes by different agencies that will conflict with each other, congressional legislation that will conflict with other federal and state legislation, or bailouts of certain players because they are either more important or less “culpable” in the eyes of the beholder. 
• What is needed is a fast consensus of ALL the players, agencies and leaders from across the spectrum from homeowners and borrowers, through lenders, appraisers, mortgage brokers, investment bankers, retail securities sales, and investors in derivatives to 
• STOP foreclosures and evictions, 
• KEEP homeowners in homes unless they can’t even afford to maintain them, 
• RESTORE the balance sheet of investment bankers and investors, and 
• HEAL the wounded dollar and staunch the bleeding --- by reducing payments on al forms of excessive debt (caused either by artificially --- i.e., manipulated --- higher housing prices during 2001-2006, or caused by the nearly $1 trillion drain on credit card revolving debt that was promoted in every conceivable way despite interest rates so high that any financial planner or economist could tell you that the average person would NEVER pay it all back]. 
• IMMUNIZE EVERYONE from civil and criminal action to get their cooperation (yes, Amnesty. It is more important to save our economy and standing in the world than to see a few “examples” in jail, or millions of people out on the street. We need no homeless people not a surge in their number. We need stable, rising house prices, not a view with “no end in sight.”).
• EDUCATE the American public that this crisis transcends ideology and politics. Whatever your feeling about “entitlements”, personal responsibility and suffering the consequences, we are all bearing the brunt of this crisis every time we go to buy food, gas or other necessities. We are all bearing the brunt of this every time we expect social services like education, fire, police or paramedical help — and they are diminished because the local treasury has been depleted by losses in CDOs/CMOs and by inflation. We are all putting the burden on our children, grandchildren and great-grandchildren for spending money we didn’t need to (like over paying for medical care and drugs compared to all other countries and going to wars to protect an interest in oil which should have been abandoned long ago as a fuel source)

Obama comes closest in his proposals. But even he has failed to grasp all the horns of the bull]

Manhattan apartment sales fall most in 18 years as buyers wait

Manhattan apartment sales plunged the most in 18 years last quarter as buyers faced the prospect of a recession and job cuts at Wall Street securities firms. See full story at Bloomberg.com

Paulson says Treasury `flexible’ on housing measures

Treasury Secretary Henry Paulson indicated the Bush administration is willing to consider congressional plans to stem foreclosures by expanding government guarantees for mortgages. “I think you will continue to see flexibility as we learn and go forward,” Paulson said in an interview with Bloomberg Television in Beijing. See full story at Bloomberg.com

Lehman in market abuse claim

Lehman Brothers (LEH: Lehman Brothers Holdings Inc  on Tuesday said it had sent information to the Securities and Exchange Commission about possible abusive short-selling in its shares in recent days. Erin Callan, Lehman chief financial officer, said the SEC was examining whether hedge funds acted in concert to drive down the bank’s share price in the days following the near collapse of Bear Stearns. Such behavior could constitute market manipulation, subject to civil and criminal sanctions. See full story at FT.com

The answer to our unique American set of issues is not a single issue proposed solution, but a sea change in our premise: either we are a nation of people and laws to protect, defend and promote the health, safety and welfare of all our citizens or we are a vehicle for corporate interests that will do anything to maintain their positions of power and profit. Getting rid of the influence of lobbyists and the effect of campaign contributions on candidates is not some lofty ambition or ideal; it is an imperative that is the ONLY answer to having food on the table, gas in the tank and a roof over our heads.

A candidate for public office must (a) spend the time to learn about economics (b)  demonstrate their independence from special interests, (c) demonstrate their proficiency in understanding how economic trends impact the average voter and (d) educate the voter as to how economic policies are being used against them and what they can do about it. 

BEWARE OF PLATITUDES AND QUICK FIX PROPOSALS THAT WILL NOT WORK AND CANNOT DELIVER RELIEF TO THE HOME OR DINNER TABLE. 

Prospective voters who are considering support for candidates for public office or propositions and petitions having economic consequences are stuck between a rock and a hard place. The growing realization is that, in particularly in a global economy, some complex events are somehow having an effect on their daily lives. 

In the absence of any real information for each voter to make their own decision they are forced to rely on “mainstream” news, which is more fact based entertainment than informative, candidates who will say anything to get elected, and special interest advertising that mischaracterizes the choices.

Voters understand that food, fuel and medical costs are taking away more and more of their income with the same effect as if a new tax was enacted requiring them to fund the largest corporations in the world, whose losses are covered by taxpayers and whose windfall profits are closely guarded from consumers who don’t get the benefit of cost reductions, stockholders who don’t get the benefit of dividends, and merchants who don’t get the benefit of sales revenue from people who don’t have anymore money to spend. 

These “ private taxes” are reflective of the growing pattern of privatizing public finance. In short they are private taxes sanctioned by federal, state and local governments who themselves are victims of the pattern. In my opinion this represents “PRIVATE TAXATION” sanctioned by government.

Let’s look at some of the “proposals” for healthcare that are offered and watch how they work.

1. American citizens spend more (35%-250%) on drugs, medical protocols,, tests and treatment than any other country in the world. The same drugs that cost $20 per pill in the U.S. can be purchased for $2.00 elsewhere. Protocols that would prevent disease or would cure them are virtually banned or are allowed to be “not covered” by insurance — resulting in the average person my age (61) taking thousands of pills per year that people in other countries are not taking because they don’t need them and because the pills themselves present risks of side effects that include everything up to and including death. 
2. The financial excesses of the medical-pharmaceutical-insurance industry is supported by “laws” that protect the industry and which little or nothing to do with the health of any person. These excesses are present ONLY in the United States. 
3. At the same time that we are spending more, we are suffering more medical disasters in more families every day. Longevity (life-span) in the United States is declining. Infant mortality is rising. Even average adult height has decreased in the Untied States and is now lower than many other countries.
4. Protocols like chelation IV therapy, food supplements and vitamins, gene therapy, human stem cell therapy, and primitive cell therapy are being used all over the world, growing back diseased or missing organs, improving overall health, and improving vitality while at the same time vastly reducing the demands for medical treatment. Those other countries are spending less and delivering more. Several third world countries have now become centers for medical care of those Americans who have the money, time and physical ability to reach them. 
5. National programs for health and fitness are not only improving physical health, but the all important index of happiness and contentment.
6. Ideological arguments against these other systems are bogus arguments designed to distract American voters from the truth: the system is working here for those looking to earn a profit, whereas the system is working elsewhere in the world for those seeking to maintain a healthy population.
7. The ideological argument against a single payer that negotiates prices, seeks preventative national programs and pursues the best possible treatments and cures is merely a hammer to threaten and frighten people with the prospect of “socialism” which most people translate as a loss of freedom, constant fear of government, loss of privacy, and a lack of disposable income at the end of the month.
8. The truth is that all societies practice socialism as to those services that the government elects to provide. In the United States, taxes are used to pay for military, police, fire, education etc. In an ultimate irony, the heavy reliance on ideological argument over common sense has resulted in the the outcome most feared by those who are cajoled into voting against their interests: loss of freedom, constant fear of government, loss of privacy, and a lack of disposable income at the end of the month.
9. The surrender of our healthcare to profit motivated private interests, like the surrender of prison management to private interests, like the surrender of regulation of sales of securities, creation of credit, expansion of monetary supply to private interests has led to a corporatocracy that threatens to consume the last dollar of every “average” American leaving them not only with no disposable income at the end of the month, but rather in debt up to their ears.
10. Meanwhile the countries with “high” tax rates (which can simply be translated as honest transparency, as opposed to hiding the taxes in your utility bills, and covering up the private power of taxation given to corporate America) have satisfied, happy, free, contented populations who get along just fine and their citizens are not in debt and who are able to save up money and pay for things in cash.

American citizens have the exclusive right to vote in what should be a free society, but instead they are confronted with a corporate-government set of rules where the opportunities and choices are closing in on the the average guy or girl who is just trying to get through the month. 

Our incomes are being used to fund corporate losses, corporate abandonment of our own population for employment and training, military adventures that are funded by borrowing (which is future taxation), and huge windfall profits of oil companies, agricultural companies receiving “subsidies”, pharmaceutical companies, and insurance companies.

The answer to our problems is not a single issue proposed solution, but a sea change in our premise: either we are a nation of people and laws to protect, defend and promote the health, safety and welfare of our citizens or we are a vehicle for corporate interests that will do anything to maintain their positions of power and profit. Getting rid of the influence of lobbyists and the effect of campaign contributions on candidates is not some lofty ambition or ideal; it is an imperative that is the ONLY answer to having food on the table, gas in the tank and a roof over our heads. 

Boom and Bust Cycles: Predictions on American Life — PART I MONEY

The best predictor of future behavior is past behavior. It’s all we have really. Of course the problem with using past behavior is that we relying on defective memories or reports from people who had their own agenda in relating “facts” that tend to enhance their own future. Thus it is with something of a grain of salt that we take what is reported and convert it in our minds as something we know. 

Accordingly, our predictions are sometimes right and sometimes wrong depending upon the quality of the information we used, our ability to process that information and of course the ever-present probability of intervention of unforeseen acts, events, or plain bad intent. 

This is why when news was news, reporters would seek corroboration from multiple reliable sources before reporting it as fact. Now they report things that are unsubstantiated, partial and misleading, or mere statements of opinion in a hash that is known within their industry as fact based entertainment. It follows that anyone forming opinions on “mainstream” reporting is more likely to arrive at miscalculations and wrong conclusions than before.

Nevertheless, there are some things we know from American HIstory and World History that appear to be true, except for those instances where “revisionists” undertake to change public opinion by denying the painfully obvious with such fervor and passion and persistence that at least some portion of the population comes to doubt their own senses. It is clear that central policies of the United States are increasing resulting in failure to affect outcomes in economics, politics, war, or world society. we can argue over why, but the facts are inescapable as are the conclusions regarding our presents status.

Boom and Bust seems to be a fact if not an inherent part of human nature. We bunch up a group of ideas and theories, right or wrong, and act as if they were not only true but absolute. After a while, with the passage of time, the idea or theory becomes obviously true because “that’s the way it works.” The concept of a theory “proving” true because of people validating it with their behavior (despite obvious flaws in the idea or theory) usually does not occur to anyone — except for old texts, rarely read, by people who started with more basic questions and arrived at reality is which is far more ambiguous and ambivalent than prevailing political and economic theory, slogans or sound bites. 

In the context of this ambivalence and ambiguity we attach our perceptions of American Boom and Bust here for your entertainment or edification. Here are some thoughts on past, present and future which we believe have a high degree of integrity and reliability, based upon our reading, measurements, and interviews with those “in the know” (i.e., people who espouse a theory or slogan that gains currency and  thus, for a while, becomes a self-fulfilling prophecy which is “true” — at least long enough for book royalties and trading of securities to fill their own pocketbook).

MONEY: BOTTOM LINE: After years of enjoying the benefits of being the currency of choice, the U.S. dollar is declining in value and status and will continue to diminish tot he point where our wealth and fortunes depend upon the decisions of foreign sovereign nations and private companies rather than the U.S. treasury or the Federal Reserve. 

The United States will be called on to pay is debts and a series of deep recessions and possibly depression will ensue as a result of our obligation and attempts to pay off the debts created by our borrowing and the free ride that ends when those holding U.S. currency convert to other currencies or other forms of “money.”. This will cause tension in our foreign relations and could lead to war rather than payment.  

Within the last 250 years of American history, 

• the Colony of Massachusetts declared wampum, the currency of native Americans to be the official currency of the colony. 
• Virginia used tobacco as currency, 
• there was no Federal Reserve or central bank at all, on and off, in our history, and 
• at times the Fed was only as strong or directed as its leader (like Strong who died 18 months before the 1929 crash), 
• our coin currency came from Spain (the origination of the “dollar”), 
• paper currency came alternatively from 
  • individual banks where a central exchange was used to publish their relative values, or 
  • paper currency came from the King of England, or 
  • paper currency came from the Federal government or 
  • paper currency came from states or groups of states, and 
  • even now the money supply comes from multiple sources and issuers 
  • only one of which is the Federal government through the Federal Reserve and the United States Bureau of Engraving and Printing. 
• The rest of our money supply basically comes from private systems of payments varying in media from paper, conversation, or digital representations on some accounting or reporting host located out in cyberspace. 

In ALL cases, the issuance of money led to boom and eventually bust of that currency, which means according to the paradigm we have adopted here, that our current money supply is in for some major changes. Wampum for example, went to zero in value because colonists figured out a way to mass produce it ( a scenario not unlike the current mortgage meltdown which derives from a Ponzi scheme using derivative securities to vastly increase the money supply and circumvent monetary policy). “Not worth a continental” was an expression of disgust with the issuance of currency from our new government during the war of independence. Greenbacks alternately received the same reception, only to come back in other forms. State Bank notes went out of favor only to come back as bank sponsored prepaid branded or co-branded plastic cards. The list is endless. The conclusion is inescapable: currencies come and go. Money changes because it is based upon confidence and trust in the issuer. 

Our prediction is that 

• private proprietary “money” which has already supplanted government efforts to control the money supply will continue to expand exponentially through issuance of private paper including derivative securities like collateralized debt obligations (which despite the current situation are not likely to go away anytime soon), 
• together with adoption and acceptance of some foreign currency in lieu of the U.S. dollar by private individuals and companies will lead to an “obvious” conversion (i.e.,  recognition long after the fact) to our money supply, and a deep erosion of the ability of both the Federal Reserve or the U.S. Treasury to have any significant impact on monetary supply. 
• Thus monetary policy of the United States will increasingly become irrelevant and be regarded as such. It is already happened. This is past and is not a prediction. 
  • Merchants in Manhattan and other places are asking for Euros instead of dollars. 
  • Electronic payment systems go through the Federal Reserve not in its position of authority but rather as a logistical clearing operation between member banks. 
  • “Prepaid” debit and ATM cards, some with “overdraft” (i.e., loan privileges) including payroll, loyalty, wire transfer emulation and other electronic accounts that the Federal Reserve never sees, except indirectly through total balances at member banks, are rapidly taking the place of paper currency or even traditional electronic payments. 

In succeeding installments we will cover the rise and fall of mass transportation, healthcare, war, oil, pharmaceutical companies, education, technology and innovation. In brief we believe the relevant historical cycles point to a severe continued downdraft for current dominant players in oil, healthcare, prisons, pharmaceutical companies (because of innovation in stem cell applications and innovation in protocols that currently result in each aging consumer to ingest hundreds if not thousands of expensive pills per year), insurance, and financial services, while an updraft of great significance is in the works for new companies, transportation, energy, education, medical protocols and procedures and personnel. The big new industry might be the protection of your identity and personal information from everyone including the agencies, companies and people who now pretend to do it for you.