June 4, 2014
New York City
In August 1939, just days before Hitler’s invasion into southern Poland, General Wilhelm List walked the lines of his German 14th Army making final checks and inspections.
He must have thought it strange– between Army Group North and Army Group South, there were over one million German troops hovered on the Polish border. And they weren’t exactly hiding under rocks.
Everyone knew that the invasion was coming. Especially civilians in Poland.
They were surrounded by German forces on three sides. And on 23 August 1939, the Soviet Union signed a non-aggression pact, effectively acquiescing the fourth side.
It was obvious that the entire country was about to be turned into a war zone.
Yet seemingly unfazed by this prospect, well-to-do locals were on holiday at the seaside, or keeping cool up in the Carpathian mountains.
Sixty miles to the north of List’s 14th Army, people in Krakow were a enjoying warm summer days in Blonia Park and on the banks of the Vistula River near Wawel Castle.
It was as if they were completely oblivious to the enormity of the consequences about to befall them.
After all, the government and local papers were telling them to not worry. Poland had prepared some basic defenses, and their military commander Edward Rydz-Śmigły was supposed to be a strong general.
They had been told to be confident. So they were confident.
On the first of September, 1939, Hitler’s armies invaded. And despite suffering massive military losses, the Polish government spread all sorts of misinformation on the radio, telling its people about phony victories against the invading German hordes.
None of this was true. And within hours, a multi-year military occupation began that would turn people’s lives upside down.
Looking back, it’s like watching a cheesy horror flick where some idiot character obliviously walks into the dark room where the killer is lurking.
Human beings have a natural tendency to ignore obvious warning signs and take the path of least resistance. It’s a much simpler prospect to stick our heads in the sand than to acknowledge uncomfortable truths and risks.
There are plenty of those today.
Last year, the United States government took in $2.6 trillion in total tax revenue. Yet they spent $2.5 trillion just to cover mandatory spending (like Social Security) and interest on the DEBT.
Bear in mind that 10,000 people per day become eligible for Social Security benefits… and the debt gets bigger every year. They are growing much faster than the government’s tax revenue.
And it is an arithmetic certainty that they will soon fail to collect enough tax revenue to even cover mandatory entitlements and interest on the debt.
US economic growth ground to a halt in the first quarter of this year, and was later revised to be negative. And governments across the West are now so desperate for growth they’re counting prostitution and cocaine sales in their GDP figures.
Meanwhile, the US Federal Reserve has expanded its balance sheet to the point that, after subtracting its unrealized losses, there’s just $3.1 billion in equity to back over $4.3 trillion in assets.
That gives the Fed a margin of safety of just 0.07%… meaning the most important central bank in the world that issues the most widely used currency in the world is practically insolvent.
Look… there might not be any army groups encroached on the border. But the warning signs are just as clear as they were back in Poland in 1939. This is not a consequence free environment.
Unfortunately, most people are just as oblivious.
It may be days, weeks, months, or years before anything happens. But intelligent people don’t ignore the obvious risks to their livelihoods and their families.
Intelligent people have a Plan B. Intelligent people put on their seat belts. More on this tomorrow.