December 16, 2023
What’s Going on with America Today?

by Denis Kleinfeld

Denis Kleinfeld, in his own inimitable style, assesses what went wrong in the US to result in the loss of AAA status and charts American influence on global finance.

The United States is at war on many fronts. The battles are not going well. It is involved in military hostilities the world over, bitter economic combat primarily between the American people and their own government, and social struggles with political correctness and discriminatory entitlements becoming institutionalized.

The military wars are bewildering. Since World War II, no conflict has actually been designated as a ‘war’ and voted on by Congress. The constitutional requirement of a Declaration of War by Congress is ignored by the President with the Supreme Court’s support. The Congress doesn’t seem to care.

What I don’t really understand is the basis for using the US military. The idea that the United States must bring democracy to the rest of the world is certainly false notion. It reflects that America’s political leadership has not and does not understand the role of the United States in the world. America should not be committed to promoting democracy as its global purpose, but should focus on promoting capitalism and a free market economy regardless of the existing form of government. Democracy in some form will peaceably occur in any country which adopts capitalism and a free market as its economic system.

The war on ‘terror’ is used by Congress and the President (and so-called ‘War Hawks’) to justify the endless conflicts, trillions of wasted dollars, and thousands of casualties. Terror is a tactic of military or political strategy, not an enemy. The United States is, unfortunately, involved in this war on terror for which victory can neither be defined nor ascertained.

As Sun Tzu stated in his book, The Art of War: “There is no instance of a country having benefitted from prolonged war…” “Property of the State exchequer causes an army to be maintained by contributions from a distance. Contributing to maintain an army at a distance causes the people to be impoverished.

That is exactly what is happening in the United States because it has constantly been at war since World War II. These last wars in Iraq, Afghanistan and now Libya are a primary reason why the United States is in economic difficulties. If the United States continues to engage in military operations, fighting the endless war on ‘terror’, the United States’ position as leader of the free world will be lost.

What is not being accepted is the recognition of who is the actual threat. The United States is at war with an identifiable enemy. However, because of energy needs, political correctness, political considerations such as voting constituencies, and the now apparent pre-existing loyalties of the President of the United States, the actual enemy is being ignored. The result is that Americans and others are being uselessly killed and wounded, one of our closest allies is at risk of annihilation, while the United States is hemorrhaging dollars in conflicts that no one in political leadership can tell us what victory, if it should occur, looks like.

Politically, the United States is suffering from either poor leadership, or, otherwise, evil leadership. This is not something new. Starting with President Woodrow Wilson, the course of the United States has become one of larger government, more spending, with socialism as the acceptable, and perhaps more expedient, political philosophy.

The income tax of 1913 was a major step down this road. It gave politicians access to an endless source of other people’s money and a means to adopt politically advantageous social policies. Those who opposed it in the debates of 1911 and 1913 knew it would be failure. Income tax has been tried over the millennium by any numbers of rulers, kings and emperors. Even the Pharaohs tried an income tax system. It failed for them too. The income tax system in the US is neither administratable by the Treasury nor compliable by taxpayers. It is destroying the American economy and social harmony as well as its financial and social relationships all over the globe.

The Federal Reserve (otherwise known as the Creature From Jekyll Island) was also established in 1913. Its actual underlying ownership is unknown and its operations had been kept secret. Only this year, at the insistence of the only admitted Socialist in Congress, was an audit done by the Government Accountancy Office. To say that the report produced by the GAO is shocking is to understate the matter exponentially. The Federal Reserve is neither federal nor a reserve. It is a vehicle used by select private parties to manipulate monetary policy. The Constitution requires these duties be performed by the Treasury.

The fiscal integrity of the United States is, for the first time, being questioned from all quarters. Its credit rating has been downgraded. Politicians seek to defend their miserable performance by blaming the credit rating agency which downgraded the United States. Nonetheless, the message delivered is quite accurate. Except for the political establishment believing in delusional economics, the rest of us understand that the past and current performance of the government and its policies will not lead to a sustainable free economy. Quite the opposite. On the current course, the United States will fail economically. But it doesn’t have to be this way.

What is hard to accept is that the magnitude of the problem has been and is now totally ignored by Congress and whoever is President. Establishment politicians have not even realistically tried to solve the spending and debt problems. Remarkably they enact policies which are accelerating the economy and society in the wrong direction.

Unforgivable is the chicanery that passes for governmental accounting. There are a plethora of examples. The US Postal Service, for example, was taken off as a federal budget item and then consequently, the government claimed that they saved a couple of billion dollars. Similarly, the extra military budget for engaging in faraway undeclared wars is also an off budget item. War doesn’t count as a budget item as far as the government is concerned.

There is almost an endless list of spending that you and I would consider as budget items but from the United States government point of view, they are merely extraordinary one-time expenses and therefore they are not considered as part of the budget. So when the government talks about balancing the budget, one has to ask, what is the budget composed of and what is left out?

What is particularly gaulling are the ‘budgets’ that the President and Congress enact as part of the appropriation process. They are made up of fairy tales. The numbers used, in fact, are merely ‘estimates’ of ‘revenues’ and ‘expenses’. This allows politicians to adjust these estimates to suit their political purposes. A particularly egregious gambit is the use of an expense estimate and then later reducing the estimate amount spent. This allows Congress and the President to claim they are ‘saving’ which in turn justifies more spending.

Only recently, because of the pressure brought to bear by the Tea Party Movement, are previously unengaged taxpaying voters making their displeasure felt by the politicians. At least 40 million Americans support this movement or, at the very least, its principles.

Trickery accounting by the government is pervasive in all aspects where financial responsibility is expected. The Social Security trust fund, for example, is neither a trust nor a fund. What backs up Social Security is merely the federal government’s IOUs, which are payable out of future tax revenues. It’s your basic everyday Ponzi scheme.

What Congress does with the Social Security monies they also do to all the other federal trust funds. These include the military, postal workers, railroad, civil servants retirement, medical surplus, and highways and airport trust funds just to name a few. What aggravates the situation is that not only does the government use the money as fast as it is placed in ‘trust’ and replacing them with IOUs, but Congress then counts the trust money coming in as revenue. It ignores the future liabilities, essentially engaging in cooking the federal government’s books and records.

However, the problems of paying the debt obligations under these trust funds doesn’t go away, it just gets bigger year after year. The truth is that the ‘revenues’ are much smaller and the debt is significantly greater.

The actions of the Federal Reserve and the Treasury are also unconscionable. What happens is that the Treasury prints up little pieces of paper and calls them Treasury Notes or Bills. The Federal Reserve prints up little pieces of paper and calls them US dollars. Then the Federal Reserve and the Treasury exchange these little pieces of paper and claim that the money supply of the United States has been expanded. This is referred to as quantitative easing. All that is really happening economically is that the purchasing power of the dollar as a fiat currency is diminishing, inflation goes up as do interest rates, and government expands to spend more borrowed money to keep themselves in power.

The effect of monetizing the debt exacerbates the declining economic situation. Contrary to the President’s policy, all of the so-called stimulus referred to as QE1 and QE2, the diminishing value of the dollar, and the increasing amount of debt, puts the economy of the United States further in mortal danger.

There are some steps that can move the United States out of danger and towards maintaining economic, military, and social stability. Most important, the US can become energy independent. This is not a difficult problem given that the US likely has the greatest amount of readily available energy resources at hand of any country in the world. This allows both an immediate improvement of the US fiscal position but also a change in foreign policy involving the need to maintain the vast US military presence to protect our foreign oil and gas producing enemies.

The internal social policy must eliminate the bigotry and discriminatory governmental policies that are being justified by claims of politically correct diversity. The United States must become, in actual fact, a colour, racial, religious, ethnic and gender blind society. We are not multi-cultural, we are all Americans. America is, however, multi-ethnic. There are no hyphenated Americans, just Americans.

To be sure, there are other significant occurrences that impact the political, social, military and economic circumstances of the United States. These will be the topic of articles by me in the future. For now, it appears to me that the hope for the restoration of the United States to economic stability and global leadership rests on the growing political influence of the Tea Party Movement.

Clearly, the radicals and extremists who have worked diligently (and effectively) for years to ascend to positions of political, educational, and social power have created an environment which undermines the freedoms that are America. However, the battle to regain America has begun by the growing grassroots organizations of ordinary taxpaying voters. They, like Howard Beil in the movie ‘Network’ are letting Washington, DC know that, “I’m mad as hell and I am not going to take this anymore.” That is America today.