he massive equity bubbles which arose from artificially low interest rates and the deliberate destruction of the dollar by reckless increases in the money supply have shifted trillions of dollars from working class Americans to the predatory aristocrats at the top of the economic food chain. The gulf between rich and poor has grown so wide that it now poses a direct threat to our increasingly fragile democracy.
“Whatever future developments may prove to be, my best guess is that the US will continue to maintain a façade of Constitutional government and drift along until financial bankruptcy overtakes it.” Chalmers Johnson, “Empire V. Democracy: Why Nemesis is at our Door”
02/06/07 “ICHBlog” — – Every time a US Dollar is traded, a check is issued on an account that is overdrawn by $8.6 trillion. (That is the present size of the national debt) It is, without question, the biggest swindle in history. Flimsy sheets of faded-green scrip are eagerly exchanged for costly goods and services without any regard for the real value of the currency.
And, the real value of the currency is absolutely nothing!
How is it that this scam persists when people appear to be aware of the massive debt and deficits which underwrite the dollar? Do they still believe in that puerile fairy tale about “the full faith and credit” of the United States backing up every greenback? Or are they pacified by the wizened graybeards, like Alan Greenspan and Hank Paulson, who soothingly bray about the “strong dollar policy”?
In truth, the dollar rests on the crumbling foundation of consumerism and oil. The American consumer’s gluttonous appetite for spending has kept the greenback flying high for decades. Economists marvel at America’s lust for electronic gadgetry, the latest fashions, and useless knick-knacks. They call our profligate spending “the engine for global growth”; and indeed it is. No other country in the world is nearly as addicted to binge-spending as the US consumer. As long as he can beg, borrow or steal his way into the shopping mall; the orgy of spending is bound to continue. (Consumer spending is 70% of GDP)
Regrettably, there are signs that the US consumer is beginning to buckle from the weight of personal debt. The Associated Press reported just this week that “people are saving at the slowest rate since the Great Depression… and the Commerce Dept stated that the nation’s personal savings rate for 2006 was a negative 1%, the worst showing in 73 years.”
Additionally, credit card debt has skyrocketed, which is an indication that homeowners are no longer able to siphon easy-money from their home-equity. The nose-diving real estate market has slowed refinancing to a dribble; cutting off the additional $825 billion of cash which was extracted from home-equity just last year.
Clearly, the well is running dry; the housing bubble is hang-gliding into the abyss and there’s nothing Fed-master Bernanke can do to save it from its inevitable crash-landing.
The central banks around the world are now watching for any sign that the American consumer is about to give up the ghost. As soon as that happens, bank managers everywhere will swing into action, ditch their U.S.Dollars and head for the exits. When the “global engine” sputters to a halt; it’ll be curtains for the greenback.
The Oil-extortion Racket
The dollar’s link to oil has helped to keep it afloat but, in truth, it’s just another dismal rip-off. More than 70% of the world’s oil is denominated in USD; a virtual monopoly for the USA. Until last year, even Russia was using dollars in its oil transactions with Germany. Imagine a comparable deal, like the US purchasing oil from Canada in rubles?!?
It’s lunacy; and yet this is the system the US hopes to preserve so it can maintain its unique status as the world’s “reserve currency” and keep expanding its debt into perpetuity. It explains why the Federal Reserve has been able to increase the money supply by a whopping 15% for the last 6 years! Trillions of dollars are now circulating in the oil trade keeping the value of the dollar high by creating artificial demand.
The other reason the dollar hasn’t succumbed to hyperinflation is because the current account deficit is running at roughly $800 billion per year. The Asian giants (China and Japan) and the oil exporting countries are mopping up more than $700 billion of our red ink every year!
The dollar’s link to oil forces central banks to maintain humongous stockpiles of USD to pay the steadily rising price of oil that keeps their industries and vehicles running. Otherwise they would have chucked the flaccid greenback years ago and converted to the more steadfast euro.
The so-called ‘global economic system’ has nothing to do with competition, free markets or private enterprise; that’s just public relations gobbledygook. In practice, it is the world’s biggest extortion racket, wherein, the “Godfather”– Uncle Sam– holds a gun to the heads of his subjects and forces them to use our fiat-paper to purchase the oil that lubricates their economies.
Why would anyone accept a personal check from a nation that owes the bank more than $8.6 trillion dollars?
It’s blackmail, pure and simple; and yet, the Chinese, Japanese etc. continue to play along knowing full-well that we neither have the inclination nor the resources to pay them back in kind?
Every so often, a rebel nation will try to break the shackle of greenback-tyranny and operate outside the US-run system?
For example, Saddam Hussein switched to euros 6 months before he was carpet-bombed in Shock and Awe. His defiance only hastened his ultimate downfall.
Now Iran and Venezuela are threatening to convert to euros. Is it any surprise that they are both on Bush’s axis-of-evil hit list? Mike Whitney