August 12, 2011

The American Aliyah . . . . and how it will happen

You heard it here first. By 2025 there will be over 1 million American Jews living in Israel.
Actually – you didn’t hear it here first. We read it in the Tanach, Hashem told us this would happen through His prophets over three thousand years ago.
The process of Kibbutz Galyout, the ingathering of the exiles, has been taking place for well over a century. Since the first Russian Jew had enough of the pogroms and headed eastward, there has been a mass movement to the Holy Land from three of the four corners of the earth. Israel today boasts millions of Jews who have roots in the Arab Lands, Asia, South America, Europe, and Africa.
The only part of the world that hasn’t come home en masse is North America.
That’s about to change.
It won’t change because of Zionism, persecution, or even, Hashem forgive me, religious observance. But Hashem is guiding His hand to help us. It will happen for the simplest of reasons – self preservation.
Here’s how millions of American Jews will find themselves in Israel by 2025:
Over the next 15 years, the economic fortunes of America and Israel will cross paths in opposite directions. For the first time since World War II, the U.S. government has amassed a debt load equal to its entire economy. During WWII, all of this money was used towards industrial production of the American war machine. When the war was over, the factories were already built. The capacity was in place for the greatest economic expansion mankind has ever seen. While the debt of the U.S. continued to rise in the post World War II period, the economy grew so much faster that the debt to GDP ratio fell dramatically.
Until now.
Today, more than any government department except defense, America spends $420 billion a year on interest for its debt. This is while interest rates at all-time lows. If interest rates were to “revert to the mean” and hit, say 5%, this amount will double. America owes five times as much debt as they report to the world in the form of future Social Security and Medicare payments. They have to come up with $100 trillion over the next 30 years. Over 60% of U.S. debt is in the form of two year notes. This means that if interest rates were to suddenly spike, America is very exposed. America does not have the luxury of having locked up low interest rates for decades in the form of 30 year treasury notes – they stopped issuing them a while back. If rates go up, within 24 months, the total interest charge to the $14 trillion debt will skyrocket exponentially.
The only way America can pay it’s credit card and keep growing is by printing money. The contemporary term is quantitative easing, or QE3. This is the death blow for any economy. This is what did Germany in during the 1920s. it’s already having an impact today.
As time wears on, less and less of that money will be readily available to the average American family. Taxes will have to go up to service debt, or at least to ensure that after the government pays the interest, there will be enough left to provide the American public the bare essentials. Taxes can go up to 50%. After taxes, the government will continue to print money to “make ends meet,” i.e., fill in the gaps. This causes inflation – which means that after your pay your taxes, the buying power of the money you have left will quickly erode. This is why printing money is often referred to as the “invisible tax.”
Until America fundamentally restructures itself, a process that will take many years of very painful rebuilding, it will continue its economic decline.
Compare that to Israel.
Israel has a debt that is, according to the CIA factbook, 77% of its economy. This ratio is concerning, but not critical. The difference is that Israel has just discovered $1 trillion in natural resources off its coast. The next 15 years will see massive development of these resources and its use domestically, as well as its export to the world. Yes, Israel will probably double its debt in the next one to two decades, but her economy will grow at twice that pace. By 2025, Bezrat Hashem, the ratio of debt to GDP could be 45-50%, a very healthy number.
The State of Israel will not have to print money to meet its financial obligations. It also will not have to raise taxes either. If the economy doubles, or triples in size and tax rates stay the same, then the government will see three times the money flow in to its coffers. If the government even lowers taxes say, 10-20%, in real terms, they will still see more money come in than ever before.
Look at this from a personal perspective.
If you are an American family, you are going to see your taxes go up, and the value of the money you have left go down.
If you are an Israeli family, you are going to see your taxes remain the same, your income go up, and the value of the money you keep after taxes become more valuable. Israel has vowed to invest the lion’s share of its oil and gas royalties into education, meaning that these resources are going to fuel even more growth. Israel may be on the cusp of an economic explosion not seen since America in the 1990s.
This means more universities and institutions of higher learning. More scholarships. More opportunities for scientists, engineers, doctors – which there is a shortage of in Israel, and the like. More government payouts to the citizens. Better health care for everyone. Business grants, subsidized food sales, more aid to the poor and needy, and so much more.
If you are a family in America, the best thing you could do for your future, and the future of your children is move to Israel.
If you are a Jewish family, that’s exactly what you will have to do.
Today more than ever, there is a free flow of human capital throughout the globe. A citizen from Ireland, England, or France can work anywhere in Europe. America boasts millions of workers from all over the world – many of which do not have American citizenship. The opportunity for an American to work in Israel for a better life will become more enticing as time moves on.
Already the Nation of Israel appointed as head of its central bank an American expatriate. Stanley Fischer, whether he knows it or not, is the archetypical 21st century Zionist Pioneer.
It will start with the doctors. 50% of doctors in the U.S. are Jewish. Israel will have a shortage of doctors this decade. For a Jewish state to have a shortage of doctors is pretty ironic – but the Hand of Hashem is moving His people home. Israel will have the financial ability to offer members of the medical profession more and more benefits to work here than ever. The easiest way to do this is to bring over Jewish doctors who are still trying to figure out how they will survive Obamacare.
It will continue with the pensioners. Currently the United States can continue to print all the money it likes without any consequences to its economy. The dollar is relatively solid, and interests rates are still low. The bond market hasn’t devalued the dollar enough yet for the U.S. Central Bank to cut off liquidity. This situation cannot go on forever. A day will come where investors will sell out of U.S. treasuries, driving down bond prices and pushing up interest rates.
The printing press will have to stop.
The U.S. will still have $100 trillion obligations, but they will no longer have the easy option to handle it.
One option is to just default on its debt. Another is to reneg on it.
America may have to come to the conclusion that it cannot feasibly pay out social security or medicare to its citizens. They will simply cancel it. They can either rewrite what benefits they are obligated for – which will be a shadow of what was originally promised, or just throw it out. Once Social Security and Medicare become true lies, America’s $100 trillion debt quickly becomes a $20 trillion debt. It’s the next “easy” solution to this colossal problem.
You don’t think a Congressman will have a problem getting elected on the platform of “Save entitlement or Save America!”
If you are an American family who paid into the Social Security system for decades, only to now realize that all the money you and your fellow citizens put into the Social Security trust fund were raided by Congress over the last 50 years and all that’s left is a big wad of IOUs that now won’t even be paid off – you are out of luck! If you are 75 years old, a retiree, and in need of medical care, you are in serious danger.
What are you going to do, go back to work? Who will hire you?
Israel has virtually free and universal health care. If you are Jewish, you are entitled to all of it by simply getting on a plane. The price of the ticket paid for by Israel.
That’s exactly what will happen in the near future.
Millions of American families will immigrate to Israel for the simple reality that Israel will have something to offer them that America no longer will.
It won’t start big – it will be a trickling at first.
Norman Moskowitz will move his family to Ra’nana. He will continue to skype all of his friends in Bay Ridge. He will tell his fellow officers at the Shul about the warm weather. He will tell his former boss about the exotic food. He will tell his friends about the cheap health care, and he will talk to a few people about opening up an import/export business. At first they will laugh at him. Then he will talk about the tax benefits. He will talk about how many incentives the government gives new immigrants to set up shop in the Holy Land. He will talk about all the social goodies the government showers upon its citizens with the new tax revenues while he still pays taxes equivalent, or even less than what he was paying back in the states.
In absentia, the new Israeli will be the buzz of Bay Ridge. “Norman has done so well for himself.” They will say.
All the families will be jealous. One or two of them, who were considering Israel for a while, will decide that if Norman can do it, so can they. Then these families will be skyping their friends confirming everything Norman said.
The first dominoes will fall and the chain reaction will begin. Pretty soon there will be a mass hysteria to come to Israel.
That’s how it will happen.
Just like the process of the ingathering, something that has been going on for a while and has now taken on a momentum of its own – the events that have been put in place which will complete this process are about to intensify.
Buckle up.
Dovber Halevi is the author of the financial book, How to Survive the Coming Decade of Anxiety. He writes for Breslov World and The Middle East Magazine. He lives with his wife and two children in Eretz Yisrael.

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