The "F" Word was said on CNBC this morning
FLIGHT OF CAPITAL.....the most dangerous economic event that can happen to a nation and its economy....it it continues, the nation's currency becomes worthless and anything the nation imports spirals out of reach of most of the citizens.....and in America's case, we import a lot...including a bunch of things that are the building blocks of our manufacturing.
In America.....you simply can't bail out Wall Street and NOT mainstreet and expect America as you know it to function. Over 2/3 of the country works in mainstreet and that is where most tax revenues are generated.
Since I started blogging and Benny The B pursued his Zombulation policy, Food Stamp and Unemployment recipients have skyrocketed from a combined about 20,000,000 to about 60,000,000 plus familiy members. Incomes to tens of millions of Americans have evaporated and so have tax receipts.
As a result of declining tax receipts and rising dependency on government.....deficits to cities, counties, states, and the Federal Government have skyrocketed out of control....and we are now at the point where our Federal Government can no longer borrow and is simply printing money by borrowing from itself to maintain functionality.
Such behavior is not persimissible....because if a nation could simply borrow from itself to grow its economy....every nation would do it and "growth" would spiral out of control. Borrowing from yourself is the last and most desperate measure a nation can do.....because when you start doing it.....NOBODY WANTS TO HOLD YOUR CURRENCY VERY LONG.
When that happens, the currency loses value.....and it can lose value much faster than many think....in some cases overnight. This is actually how Zimbabwe's currency started declining in value....as the government started confiscating farms from wealthy landowners and capital rapidly fled the country...once that happened, the money quickly declined in value and the government was forced to print ever increasing amounts until it essentially became worthless......today Zimbabwe has a 100 TRILLION dollar bill.
Ask yourself....why would anyone want to invest in a nation that simply borrows from itself to consume? Couple that with the fact that much of Asia and Australia is tightening up the interest rates and you have a pretty good idea where money is going.....and where money is leaving.
By bailing out Wall Street and not mainstreet....we are intentionally destroying the private sector economy America was built upon....now, well over half the nation's population is directly or indirectly dependent on a government check to live.....and a government check that is simply being borrowed from itself.
This is a very serious problem.....probably the most serious economic problem to ever face America......and how we face it going forward will affect every single one of us........
Good Luck To All.....the time to restructure is running out.