March 23, 2020
A letter to my elected officials
Senators & Congressman,
“When,
in the course of human events, it becomes necessary for one people to dissolve
the political bonds which have connected them with another, and to assume among
the powers of the earth, the separate and equal station to which the laws of
nature and of nature’s God entitle them, a decent respect to the opinions of
mankind requires that they should declare the causes which impel them to the
separation…That to secure these rights, governments are instituted among men,
deriving their just powers from the consent of the governed. That whenever any
form of government becomes destructive to these ends, it is the right of the
people to alter or to abolish it, and to institute new government, laying its
foundation on such principles and organizing its powers in such form, as to
them shall seem most likely to effect their safety and happiness.”
These are the words and just some of the wisdom from our Founding Fathers that they embedded into our Declaration of Independence. Hopefully, you recognized the above passages. More importantly, I hope that you understand their meaning and their place in the context of history. I say this, because we are witnessing an historic global phenomenon – the pandemic of COVID19, financial and economic collapse, and attempts by central banks and federal governments to expand their ever-increasing reach for power.
I have written to you in the past, as well as to The White House, warning of the economic and financial stresses that lie ahead and that which we are in the midst of. These warnings were written well before the onset of COVID19 and were largely ignored. However, I am now gravely concerned that this pandemic will be used as a convenient excuse among politicians and central bankers to justify actions, which are unjustifiable. While COVID19 may be of serious concern, it is not the cause of the economic and financial hardship that is surely to ensue. Rather, it has been the generational policies that have been adopted and implemented by our government, the Federal Reserve, and those of other countries the world over. Outrageous and inexcusable national deficits and debts occurred well before the onset of the pandemic. Trillions of dollars’ worth of unfunded liabilities and broken promises with respect to pensions, occurred well before the onset of the pandemic. Cheap and easy money and credit from financial institutions and central banks occurred well before the onset of the pandemic. Seemingly endless wars that have contributed greatly to our financial and societal ruin occurred well before the onset of the pandemic. A merger between some of the largest technology firms and our national security and defense apparatus, which monitors, and tracks US citizens, and infringes upon our Constitutional rights, occurred well before the onset of the pandemic. Deteriorating infrastructure, from roads, bridges, levees, dams, etc…have been in disrepair well before the onset of the pandemic. Over-leveraged corporations, drunk on their unquenchable thirst for easy credit has led to a record amount of corporate debt and at levels near 50% of GDP, occurred well before the onset of the pandemic. These same corporations then used this easy credit in addition to their operational cashflows to purchase significant quantities of their outstanding shares – share buybacks. This form of financial engineering served the purpose of artificially increasing their share price by making their earnings per share look better than it otherwise would have, had they not engaged in aggressive share buyback programs. As a result, many executives of these companies were paid handsomely due to the “great” performance in share price. All of this occurred well before the onset of the pandemic. And in addition, their “impressive” share price gains have been completely wiped out in a matter of weeks.
Now,
in light of the pandemic, many of these various companies that squandered their easy credit, their cashflows,
and even the reputation(s) of their respective companies, now come on bended
knee to ask Washington, meaning the US taxpayer, to bail them out. The total
sum of which is not likely to be known for some time. However, what is known is
that our government, including the President of the United States, appears
ready and willing to bailout one industry after the next. The President recently
noted that the current situation is not the fault of the airlines – one of the
many industries now in distress and seeking aid. While true, that the pandemic
is not the fault of the airlines, their management or lack thereof of the
cashflows and operational plans is their fault and responsibility. Had they not
squandered their cashflows and debt on financial engineering then perhaps they
would have the cash on hand to sustain themselves during these uncertain times.
Asking the taxpayers to bail them out is ridiculous on its face and should not
even be considered. When will these bailouts end? Boeing is lining up for $60
billion and I suggest you investigate their share buyback program as well. The
cruise line industry in lining up. The hotel industry is surely to make the
list. As is the restaurant and bar industry, among others. What about the
energy sector? We also currently find ourselves in the midst of an oil price
war. Well take a look at the indebtedness of our energy companies, many of
which are rated junk, and ask yourself how long they can sustain themselves
with their debt loads, operational costs, and commodity prices at multi-decade
lows. Their indebtedness also occurred well before the onset of the pandemic.
Expand
this further to the consumer/household balance sheet and what are we
witnessing. We are seeing delinquencies on auto loans that are surpassing those
during the Great Financial Crisis (GFC). Survey after survey indicates that
some 40% of the country could not come up with $400 in the event of an
emergency. Furthermore, and in agreement with the previous sentence, a
significant portion of the population lives paycheck to paycheck and requires
the use of credit cards to make ends meet. And despite record low interest
rates, once again, the rates charged on credit cards stand at record highs and
are more akin to loan sharks as opposed to some kind of reputable financial
company. All of this too occurred well before the onset of the pandemic.
In
addition, look at the disgrace and mismanagement of federal taxpayer dollars. In
the midst of the longest expansion in business cycle history in the United
States, somehow, our genius representatives thought it prudent to enact a monumental
tax cut that went mainly to the benefit of corporations and this is indicated
by the low amount of corporate taxes collected – which when at these levels,
typically indicates the country is in or nearing recession. Now tax cuts are
fine, granted that the other side of the ledger, meaning spending, is also cut.
This did not happen, and as such, we now face trillion-dollar deficits. During
a time, when we are told by our President and many others in our government and
business communities, that this is the “greatest economy of all time.” Which is
laughable and completely not true. A nation does not incur trillion-dollar
deficits in “booming” times. Nor would a President ask for emergency monetary
policies such as quantitative easing, lower interest rates, and even negative
interest rates, which would surely decimate the banking and financial sector(s).
Simply look to Japan and Europe as a case study. All this nonsense occurred
well before the onset of the pandemic. And now, in the environment in which we
find ourselves, likely headed into recession, if not already in one, perhaps
even a depression, and our deficit is going to explode. How is this to be paid
for? There will not be enough growth, especially during a recession/depression to
pay off these debts. Well if history is any guide, it will be done through
inflation and hyperinflation. Ensuring the destruction of capital. Guaranteeing
the loss of savings. And destroying any salvageable reputation the United
States of America has left. In short order, we will have gone from a Constitutional
Republic to a banana republic. And all of this is likely to occur without so
much an outcry, let alone a whimper from our representatives. Pelosi, Schumer,
McConnell, and Trump are nowhere near Washington, Jefferson, Adams, and Franklin.
Furthermore,
and getting to the real culprit of this insanity rests with the Federal Reserve
and other central banks. Expanding their balance sheets by trillions of
dollars. Injecting themselves into markets as buyers and sellers of government debts.
Providing daily liquidity to markets to the tune of billions if not trillions of
dollars, depending on the day. Negative interest rates, quantitative easing,
destroying capital formation and savings. Causing reckless and damaging
speculation in one market after the next. The formation of malinvestment across
the economic and financial spectrum. And now again, only a touch longer than a
decade ago, here we are at the abyss, and central banks stand at the ready to
bailout the very industries and companies that have led to such ruin – and I assure
you, this is only getting started. It is also being mentioned how the Federal
Reserve should step into the corporate bond market and buy the very bonds and
debt I described above, thus bailing out these corporations and their creditors.
As if this was not enough, there is also talk of bailing out the States, which
would presumably mean pension plan(s) as well. From free-market capitalism to
nationalization. From free nation to bailout nation. And from Constitutional
Republic to banana republic. And a side-note, free-market capitalism has been
abandoned in this country for generations, which is one of the main reasons we
find ourselves in such utter disrepair.
Yet
despite all of this, politician after politician, and central banker after
central banker, is going to use the pandemic as an excuse to justify bailout
after bailout, reckless “stimulus” spending, and asinine and fraudulent monetary
policy after monetary policy. And who gets to pay for all of this when the dust
settles? That’s right, the American taxpayer and with interest. I am an
American. I am a citizen of the United States of America. I am a taxpayer. I
did not vote or give my consent to any of this fraud, deceit, corruption,
mismanagement, and nonsense. So, what is my recourse? Where and what is my
representation? Did our Founders not tell us that it is our duty and obligation
as citizens to demand change when our government has failed us? Did President
Kennedy not tell us that, “those who make peaceful revolution impossible, make
violent revolution inevitable.” I am not paying for this out-of-control
government and central bank. I am not bailing out company after company and
industry after industry because they squandered their resources. I am not
bailing out students and their debt loads whom knew well in advance what they were
getting themselves into. I have paid mine off and I will be damned if I am
going to stand idly by and allow for any type of student debt forgiveness. For
if this comes to pass, I want my money back plus interest.
These
disastrous policies have led to so much future growth and wealth to have been stolen
from my generation (Millennial), and that of younger generations, and those
even yet to exist. Yet all these generations get to pay the bill. How is this ethical?
How is this moral? How is this American? I want you to stand in strong opposition
to any bailout for anybody. I want you to challenge the status quo. I want you
to call for a full restoration of free-market capitalism and that of our
Constitution. One would think, in the United States of America that this would
be an easy request of one’s elected officials. Yet, for some reason, something
tells me not to hold my breath. But what a pleasant surprise it would be. And saying
these things is not enough. You must make them happen. And if you cannot, then
resign and allow someone who can and will, to take your seat(s).
Allow
these companies to restructure. Allow new and better management to take the
helm. Allow debtor and creditor the ability to negotiate their terms. Let the
markets work. There is no easy solution. But I can assure you, that more of the
same with respect to fiscal “stimulus” and monetary policies will not work and expecting
it to work is the definition of insanity. This country and the world need leadership
right now and we need the truth and we are getting neither. What we are getting
are the same policies that have led us to this ruin and destruction of our economic,
financial, and social fabric. I pray you have the strength to lead and to tell
the truth. As an elected official to the Congress of the United States of
America – this is your duty and obligation. So, do it!
In Liberty,
Godspeed,
Alex Karidis