Good Morning Middle America, your King of Simple News is on the air.

We are living in historic times, ugly history, but history all the same. One of my readers asked me to simplify the complex cause and effect that is destroying our monetary and banking systems, to the more understandable form of Mikeronomics.

In the words of the King of Simple, Wall Street had legal gambling debts that were considered too large to cover. Our leadership said, “No problem, we’ll tax the public to pay your debts and you can get back to gambling and make all of us some additional ill gotten money before the party ends.”

I have written for years that Wall Street is nothing more than Las Vegas on steroids. I see the Wall Street Gang as the world’s largest parasites, undermining our lives while we sleep. The Orkin Man doesn’t have a chemical that would even stun them.

 They drain the life blood out of American companies by demanding growth and ever greater profits to a point of sending these companies into bankruptcy or necessitating moving off shore. Once most of the damage had been done here in the U.S., the Wall Street Gang began moving their money and investments to such places are Communist China, Korea, Brazil and India, stating that we must compete in a global world. Hogwash (that is an economic term).

Most writers have never taken a course in Mikeronomics, and therefore simply report the technical manner in which the thievery is committed. We must remember that what is destroying the U.S. is legal and sanctioned by our government, who by the way, is here to help. Shall we take a stroll down history lane and see what sort of help government has been in the past?

Around 1970, the U.S. reached the end of a balanced economy, in other words, the monetary system and matter-energy systems no longer balanced. At that point, our economy should have been called for what it was; a mathematically impossible Ponzi scheme. But rather than disrupt the wealthy, a new scheme was hatched that would serve as a charade of balance. I call it the Exponential-Debt-Capitalism scam.

Before I describe what happened, I need to make an important point. The matter-energy system (all that is real and tangible) must balance with the monetary system (the man-made creation of money). This was the case prior to 1970 as can be seen here, http://mikefolkerth.com/2008/09/04/growth-debt-and-demise/ 

It is absolutely imperative to our long term existence that our monetary system balance with our physical system of matter-energy.

While the growth of the matter-energy system is constrained by a finite-physical barrier, the monetary system, being man made, is not. To make matters worse, the monetary system grows exponentially or geometrically, due to the power of compounding interest. These facts make the two most important underpinnings of our economic system incompatible. A condition that cannot long exist; and it didn’t.

This balance of our two most important systems is a well known requirement. A requirement that has been acknowledged nearly since time began. To keep the man made monetary system from running amuck, it was kept in check by requiring a physical element to be provided prior to the printing of currency, that of silver or gold.

In this way, a semblance of balance was thus possible. Gold from the finite system was required to match that of the human population and the extraction of natural resources which is infinite. Good plan.

Around 1970, that balance was no longer possible. The necessity of creating an exponential growing supply of money to match that of compounding interest was no longer achievable when constrained by the waning supply (and cost) of the physical check and balance of gold.…unless that is, the rules could be changed. Bad plan coming up.

In 1971, America went off the gold standard forever. Now that the pesky constraint of a physical check and balance for the dollar was removed, money could be printed in ever increasing quantities and resource depletion and population growth were a non-issue; temporarily. The wisdom of centuries was thrown out the door in lieu of greed, power, false wealth and trying to fool Mother Nature. We would soon learn that Mother Nature is not to be trifled with.

The massive amounts of paper money that could be produced by simply “monetizing debt” opened the door for some of the most elaborate forms of gambling ever perpetrated on the American people (it was your money in the game). Clever inventions such as fractionalized banking, credit default swaps, derivative trading, short selling and a hundred other legalized scams brought forth the gamblers, fraudsters, and profiteers to shear the willing flock.

But these gamblers and fraudsters are not the low class shell game hustlers of the dingy city street corner; these shysters are America’s most elite and shall not be chastised as they have the full backing of the best government that money can buy. Don’t believe me? Who is paying the bad debts if not you and your children and your grandchildren?

However, physics trump human rule makers every time and in the most severe manner. The new system of debt accumulation, rather than balance, lasted a mere 38 years.

During those 38 years of our ill conceived imbalance with nature, the following has occurred: Our funded National Debt has increased from 371 Billion to the current need for a ceiling of $11.3 Trillion, an increase of 3045% (national debt increase for the 20 previous years was 69%). The U.S. went from the world’s largest creditor to the world’s largest debtor.

After 1970, oil production in the U.S. decreased by 40% and consumption increased by 40%. The total amount of dollars in circulation has risen from approximately $500 Billion to more than $10 Trillion. And backed by what? Taxes.

To this point, I have been speaking about the funded national debt. I have not included the unfunded debt or the private debt. America’s unfunded debt (promises made for government retirements, Social Security, Medicare etc.), run the number up to $75.1 Trillion.

And then there is the private debt of some $42 Trillion which rounds up America’s total debt to $117.1 Trillion. This is equal to $386,091 for every child in the U.S. After all, that is who we expect to pay for our exploits against balance is it not?

The U.S. has reached what I refer to as the “maximum debt level.” The monetary system of debt has become greater than all matter-energy collateral on earth from a balanced perspective. The imbalance has become so great, that just a few weeks ago; our entire monetary system nearly collapsed…and should have…and will!

Today, our president elect and our sitting Congress agree that new debt (of greater levels than any time in our history) must be accumulated in order to spur economic growth above post recession levels.

I stand by my past prediction that economic growth in the U.S., when measured by GDP and adjusted for inflation, has reached the physical and mathematical limits of our finite planet.

If I am correct, we have entered a long period of economic decline on a per-capita basis. There is precious little that we can do to avoid our predetermined meeting with natural physics. That is, other than to accept reality, step out of the lemming line, simplify our lives, and live a good life in America despite the best efforts of our leadership to the contrary.