By Jeff Thomas, Feature Writer for Doug Casey’s International Man,
Strategic Wealth Preservation and 321gold.com
Eidus Martiae is the Latin term for
15th March, from the traditional Roman calendar. Since 44 BC, the Ides of March
has held a dark reputation, as that was coincidentally the date of the
assassination of Julius Caesar.
In December of 2016, the Chairman
of the Federal Reserve announced that the Fed was likely to raise the interest
rate several times in 2017. The next such rise is anticipated to take place on
15th March.
This is also an interesting date,
as it’s the date upon which the US government reaches its debt ceiling. This
was cast in stone by the previous administration, back in 2015. Although they
put into place an automatic freeze on any increase in debt after that date,
they did nothing to either cut back on expenditure or prepare for further
funding. Therefore, the Ides of March once again has become ominous, as the US
government is set to come to a grinding halt as soon as the money presently in
the Treasury runs out.
On 15th March, the US
Treasury will hold roughly $200 billion and will be unable to borrow more. When
that $200 billion runs out, that’s it. Although this amount may sound sizeable,
the US government spends roughly $75
billion per month, which means that it is due to hit the wall around the first
of June.
As the date of the freeze is passed
in Law, it will be difficult to alter.
Many American voters became
concerned in recent years that their government was not behaving in a prudent
manner with regard to spending and, when Donald Trump ran for President, he
promised to “Make America Great Again,” and to “Drain the Swamp.” This was
encouragement enough for voters to elect him. However, he also promised to increase
spending on infrastructure, border controls, law enforcement, veterans’
benefits and the military. In addition, he assured America that he would not
cut back on benefits such as Social Security.
He promised to make these
spending expansions at the same time as he planned to make drastic cuts in revenue
in the form of taxation.
Dramatic cuts in taxation, added
to dramatic increases in expenditure, plus a mandatory freeze on the increase
in debt, amounts to an economic Bermuda Triangle. Looked at in this light, it’s
difficult to see the Ides of March as anything but an economic disaster waiting
to happen.
Mister Trump’s ascendancy was an
odd one. As an outsider, he was opposed by many Republicans who hold office. It’s
understandable that the more indebted any Republican office holder is to his
party, the more Mister Trump would appear to be a threat.
Although his candidacy was at first
treated as a joke by both parties and the media, he did the unthinkable,
beating out the pre-anointed Hillary Clinton. Democrats were horrified and
remain so.
Although any new President is
allowed a honeymoon period in which he has time to assemble his cabinet and get
his programmes underway, this has not been the case for this President. He’s
been attacked from all sides on a daily basis, before, during and after his
inauguration. If ever there was a President whose head the political class
wanted to see on a pike, it’s Mister Trump.
And that will most certainly
affect the degree to which they’re willing to come to his aid, should he find
himself in a pickle.
It should be stressed that he’s
in no way responsible for the setting of the debt limit; however, it does
appear as though he’s ignored it, focusing instead on “hitting the ground
running” with regard to his promised programmes. It’s also true that, whenever
economic disaster occurs, all and sundry tend to blame the political leader of
the day, regardless of whether he was the cause.
As they’re already pre-disposed
to relish the prospect of Mister Trump’s downfall, the Democratic party and
many in the Republican party will be unlikely to sympathise with the fact that
the debacle occurred on his watch inadvertently.
At present, those who voted for
Mister Trump are still in party-mode, celebrating what they hope will be the
saving of America. It’s unlikely, however, that they understand the gravity of
the events that are to occur on 15th March and will be blindsided
when the Treasury hits the wall.
They’ll turn on the news each
evening to learn what’s happened and will view one pundit after the other on a
variety of stations describe Mister Trump’s “utter failure.”
We cannot foresee whether the
Government will, at some point, attempt a solution. This may depend upon
whether or not they understand that the bubble cannot be inflated forever;
whether they realise that a crash in the system is overdue and inevitable.
If they do realise this fact, they’ll
recognize quickly that they have a golden opportunity to pass the buck for the
fiscal damage they’ve done. Then can use Mister Trump as the fall guy for the
debacle. If they use the media well, they’ll rise up in righteous indignation
at the damage caused by “the arrogant billionaire” and point to the mess that
they’re left to clear up as a result of his abject failure.
If they do so, they’ll be likely
to follow up with the institution of capital controls and the creation of a new
currency. In addition we’re likely to see the confiscation of deposits (as per
Cyprus) and rationing of withdrawals (as per Greece) by banks. They’ll
additionally institute travel controls and ramp up the police state.
All of this can presented as
“necessary” under “emergency conditions.” Of course, the period of the
emergency is likely to be lengthy, as there is, at present, no solution in
place to address an economic collapse.
If the Government, with the
assistance of the media, do go this route (as they would have everything to
gain and little to lose), they’d be likely to further take advantage of the
situation. They’d be in a position to insist that, had the election not been lost
to Mister Trump, the debacle would never have taken place. (Yes that would be a
lie of epic proportions, but, as Adolf Hitler correctly observed, if you make
the lie big enough and keep repeating it, people will believe it.)
This provides the opportunity to
assure that the next president will be an avowed collectivist. Voters will
support whoever promises the most security, regardless of whether that
candidate can actually deliver on the promise.
It’s important to note that my
observations as to how the events of the Ides of March will be handled are just that – my observations.
It’s possible that the path that’s ultimately taken could be a different one. (They
may pass emergency measures that will delay the inevitable once again, but
ultimately make the situation far worse.)
What we can say with absolute
certainly, however, is that the US government is about to face a deadline which
threatens to be devastating for the American people, who are in no way prepared
for its arrival on their doorstep.
In March, the Fed is likely to
raise rates at a time when debt levels are at an all-time high. They did this
in 1929 and, as history has shown, this did not turn out well. Worse, at that
same time, the debt ceiling will be reached.
If they can delay the inevitable
a bit longer, they most certainly will. But history may later show that this
was the point at which the house of cards began to fall. For those who have
seen it coming, this may be the moment that you check to see that your seat
belt is fastened.
Jeff Thomas
International Man / Strategic Wealth Preservation / 321gold.com
Reprinted with permission
