The New Slave State

• Tweet
• Pin It

In 1861, America fought a war with itself over the destiny and character of the nation.  One of principle areas of contention was, at its core, the institution of forced labor—slavery--upon the black population.

Black Americans—though as slaves, they did not have that status—had endured dehumanization under the yoke of slavery for 400 years…

And 600,000 Americans had to die to redirect the course of the country onto the path of liberty and justice for all…

The old ante bellum institution of slavery is dead…and has been for over 145 years.

But a new form of slavery is rapidly emerging around the world…

Yesterday, in our Macro Minute section, we noted the founder and CEO of bond trading giant, Pimco, announced at the Global Economic Summit in Davos, Switzerland that Pimco would have a fund to hold gold, “preferably physical.”

Why would the world’s largest and most successful bond trader shift into physical gold?

“Borning Austerity”

Because, in his words…

“We are witnessing the death of abundance and the borning of austerity, for what may be a long, long time."

What Bill Gross is saying is that things will be getting a lot worse for a long time to come.

Why?

Because built into the entire creditsystem for the past 50 years or so has been the assumption of economic growth and some inflation…

But today, credit rates—that is, US Treasury rates— are at or near zero…and as we know, the Federal Reserve has pledged to keep the rates there for the next 3 years…

But what about economic growth?

Well, as I have mentioned in The Gorrie Details before, there are many way to look at GDP numbers...

But the usual way is to skew them so they look as good as they possibly can for the political benefit of whatever Administration occupies the White House…

The truth is, however, is that the US economy is divided…

Corporate America is doing well…firms like Caterpillar, GM and Apple are all reporting record profits and huge amounts of cash untaxed in offshore banks…

Yeah, the corporate economy is doing alright.

It is the working middle class—the majority of Americans—whose quality of life is falling.

There is a reason that McDonald’s stock is way up…

Dollar hamburgers are where it’s at when you’re hard up for cash.

But as a whole, the truth is that the American economy is stagnant at best…

And on the verge of further contraction, if it is not doing so already.

And that is why the Federal Reserve is keeping the interest rates “zero bound.”

The hope is that cheap money will stimulate the economy…

But of course, it hasn’t…and it won’t, because if it was working…

Home prices would be stable or rising, instead of continuing to fall…

And wage levels would be rising instead of falling.

In fact, Gross points out that zero bound rates have effectively “frozen” money…

Making it too risky and unprofitable to lend on the one hand, and crushing economic demand on the other.

Punishing Saving

So what do the powers that be plan to do next?

Well, in a recently released letter from the Treasury Borrowing Advisory Committee, Chaired and run by top execs from JP Morgan and Goldman Sachs, their demand is to apply “negative interest” on T-bills…

What’s negative interest?

Where bond holders actually pay to hold cash…

The happened briefly in the midst of the 2008 Credit Crisis…

But charging folks to loan their money to their own government doesn’t sound like a policy born of confidence, does it?

Seems more like a punishment for working hard and saving your money…

And a desperate ploy to shore up a debt situation that is only getting worse.

And soon to follow that will be negative rates on other accounts…

Which will literally steal Americans’ money directly from their savings accounts.

What will this lead to?

What will the future look like for Americans?

Rapid contraction of the economy and the “borning of austerity for what may be a long, long time,” as Bill Gross put it.

If things keep trending the way they are…

The American middle class will become rapidly poorer.

Wealth will shift to the banks and the corporations that support them…

Just as Thomas Jefferson said it would…

And Americans will wake up…homeless in their own country.

We will be working to pay off debts that can never be paid off, with our savings depleted but fees and negative interest and our way of life forever altered…

We will, in short, become like the Greeks.

Debt Slavery

Employment in Greece is shrinking rapidly…

And the prospects for paying off their debt burden are no better than ours…

They face a life of servitude in the form of debt slavery.

But once negative interest rates become a fact of life…

The reality will set in…

That the working man and woman will not be free, but will effectively be reduced to laboring serfs in the new feudalism…

For all intents and purposes, a new slavery will become the way of life…

Think this is alarmist?

That it can’t happen?

When you begin to pay for the right to save your own money, you will know that it has begun.

The only remaining question is how long the new institution of financial slavery will be tolerated…

Before Americans again decide to redirect the country on the path toward liberty and justice for all.

And those are…The Gorrie Details.

facebook   twitter   linkedin   reddit   email