[Peace-discuss] How close is America's demise? - PCR

[E. Wayne Johnson]

Paul Craig Roberts renders harsh news for Americans.  Max Keiser says it 
is [OV3R], that America as we knew it is _D34D_ and there is No Hope 
Available.  PCR is calling for a R[3voJ]ution as the only hope.  I 
personally side with Max inasmuch as I view Americans as too much vested 
in the system and too complacent to notice the sense of unease in the 
air, and that Americans are generally weak and flimsy, and are more 
suited for complacency and submission than they are for massive strikes, 
public demonstration, bloodshed, and ill treatment as homegrown 
terrorists.  But I expect that things might not be quite as bad as might 
I expect that they are.

Says PCR in "Global Research":

    /Americans have no greater enemies than Wall Street and the
    corporations and their prostitutes in Congress and the White House.
    /
    /The neocons allied with Israel, who control both parties and much
    of the media, are strung out on the ecstasy of Empire. /
    /
    /
    /The United States and the welfare of its 300 million people cannot
    be restored unless the neocons, Wall Street, the corporations, and
    their servile slaves in Congress and the White House can be defeated./
    /
    /
    /Without a revolution, Americans are history.
    /


The Ecstasy of Empire: How Close Is America's Demise?
Without a revolution, Americans are history

by Paul Craig Roberts

http://www.globalresearch.ca/index.php?context=va&aid=20650 
<http://www.globalresearch.ca/index.php?context=va&aid=20650>

The United States is running out of time to get its budget and trade 
deficits under control.  Despite the urgency of the situation, 2010 has 
been wasted in hype about a non-existent recovery.  As recently as 
August 2 Treasury Secretary Timothy F. Geithner penned a New York Times 
Column, "Welcome to the Recovery."

As John Williams (shadowstats.com <http://shadowstats.com/>) has made 
clear on many occasions, an appearance of recovery was created by 
over-counting employment and undercounting inflation. Warnings by 
Williams, Gerald Celente, and myself have gone unheeded, but our 
warnings recently had echos from Boston University professor Laurence 
Kotlikoff and from David Stockman, who excoriated the Republican Party 
for becoming big spending Democrats.

It is encouraging to see a bit of realization that, this time, 
Washington cannot spend the economy out of recession. The deficits are 
already too large for the dollar to survive as reserve currency, and 
deficit spending cannot put Americans back to work in jobs that have 
been moved offshore.

However, the solutions offered by those who are beginning to recognize 
that there is a problem are discouraging. Kotlikoff thinks the solution 
is massive Social Security and Medicare cuts or massive tax increases or 
hyperinflation to destroy the massive debts.

Perhaps economists lack imagination, or perhaps they don't want to be 
cut off from Wall Street and corporate subsidies, but Social Security 
and Medicare are insufficient at their present levels, especially 
considering the erosion of private pensions by the dot com, derivative 
and real estate bubbles. Cuts in Social Security and Medicare, for which 
people have paid 15% of their earnings all their life, would result in 
starvation and deaths from curable diseases.

Tax increases make even less sense. It is widely acknowledged that the 
majority of households cannot survive on one job. Both husband and wife 
work and often one of the partners has two jobs in order to make ends 
meet. Raising taxes makes it harder to make ends meet--thus more 
foreclosures, more food stamps, more homelessness. What kind of 
economist or humane person thinks this is a solution?

Ah, but we will tax the rich. The usual idiocy. The rich have enough 
money. They will simply stop earning.

Let's get real.  Here is what the government is likely to do.  Once the 
Washington idiots realize that the dollar is at risk and that they can 
no longer finance their wars by borrowing abroad, the government will 
either levy a tax on private pensions on the grounds that the pensions 
have accumulated tax-deferred, or the government will require pension 
fund managers to purchase Treasury debt with our pensions. This will buy 
the government a bit more time while pension accounts are loaded up with 
worthless paper.

The last Bush budget deficit (2008) was in the $400-500 billion range, 
about the size of the Chinese, Japanese, and OPEC trade surpluses with 
the US. Traditionally, these trade surpluses have been recycled to the 
US and finance the federal budget deficit. In 2009 and 2010 the federal 
deficit jumped to $1,400 billion, a back-to-back trillion dollar 
increase. There are not sufficient trade surpluses to finance a deficit 
this large. From where comes the money?

The answer is from individuals fleeing the stock market into "safe" 
Treasury bonds and from the bankster bailout, not so much the TARP money 
as the Federal Reserve's exchange of bank reserves for questionable 
financial paper such as subprime derivatives. The banks used their 
excess reserves to purchase Treasury debt.

These financing maneuvers are one-time tricks. Once people have fled 
stocks, that movement into Treasuries is over. The opposition to the 
bankster bailout likely precludes another. So where does the money come 
from the next time?

The Treasury was able to unload a lot of debt thanks to "the Greek 
crisis," which the New York banksters and hedge funds multiplied into 
"the euro crisis." The financial press served as a financing arm for the 
US Treasury by creating panic about European debt and the euro. Central 
banks and individuals who had taken refuge from the dollar in euros were 
panicked out of their euros, and they rushed into dollars by purchasing 
US Treasury debt.

This movement from euros to dollars weakened the alternative reserve 
currency to the dollar, halted the dollar's decline, and financed the 
massive US budget deficit a while longer.

Possibly the game can be replayed with Spanish debt, Irish debt, and 
whatever unlucky country swept in by the thoughtless expansion of the 
European Union.

But when no countries remain that can be destabilized by Wall Street 
investment banksters and hedge funds, what then finances the US budget 
deficit?

The only remaining financier is the Federal Reserve. When Treasury bonds 
brought to auction do not sell, the Federal Reserve must purchase them. 
The Federal Reserve purchases the bonds by creating new demand deposits, 
or checking accounts, for the Treasury. As the Treasury spends the 
proceeds of the new debt sales, the US money supply expands by the 
amount of the Federal Reserve's purchase of Treasury debt.

Do goods and services expand by the same amount?  Imports will increase 
as US jobs have been offshored and given to foreigners, thus worsening 
the trade deficit.  When the Federal Reserve purchases the Treasury's 
new debt issues, the money supply will increase by more than the supply 
of domestically produced goods and services. Prices are likely to rise.

How high will they rise? The longer money is created in order that 
government can pay its bills, the more likely hyperinflation will be the 
result.

The economy has not recovered. By the end of this year it will be 
obvious that the collapsing economy means a larger than $1.4 trillion 
budget deficit to finance. Will it be $2 trillion? Higher?

Whatever the size, the rest of the world will see that the dollar is 
being printed in such quantities that it cannot serve as reserve 
currency. At that point wholesale dumping of dollars will result as 
foreign central banks try to unload a worthless currency.

The collapse of the dollar will drive up the prices of imports and 
offshored goods on which Americans are dependent. Wal-Mart shoppers will 
think they have mistakenly gone into Neiman Marcus.

Domestic prices will also explode as a growing money supply chases the 
supply of goods and services still made in America by Americans.

The dollar as reserve currency cannot survive the conflagration. When 
the dollar goes the US cannot finance its trade deficit. Therefore, 
imports will fall sharply, thus adding to domestic inflation and, as the 
US is energy import-dependent, there will be transportation disruptions 
that will disrupt work and grocery store deliveries.

Panic will be the order of the day.

Will farms will be raided? Will those trapped in cities resort to riots 
and looting?

Is this the likely future that "our" government and "our patriotic" 
corporations have created for us?

To borrow from Lenin, "What can be done?"

Here is what can be done. The wars, which benefit no one but the 
military-security complex and Israel's territorial expansion, can be 
immediately ended. This would reduce the US budget deficit by hundreds 
of billions of dollars per year.  More hundreds of billions of dollars 
could be saved by cutting the rest of the military budget, which in its 
present size, exceeds the budgets of all the serious military powers on 
earth combined.

US military spending reflects the unaffordable and unattainable crazed 
neoconservative  goal of US Empire and world hegemony. What fool in 
Washington thinks that China is going to finance US hegemony over China?

The only way that the US will again have an economy is by bringing back 
the offshored jobs. The loss of these jobs impoverished Americans while 
producing over-sized gains for Wall Street, shareholders, and corporate 
executives. These jobs can be brought home where they belong by taxing 
corporations according to where value is added to their product. If 
value is added to their goods and services in China, corporations would 
have a high tax rate. If value is added to their goods and services in 
the US, corporations would have a low tax rate.

This change in corporate taxation would offset the cheap foreign labor 
that has sucked jobs out of America, and it would rebuild the ladders of 
upward mobility that made America an opportunity society.

If the wars are not immediately stopped and the jobs brought back to 
America, the US is relegated to the trash bin of history.

Obviously, the corporations and Wall Street would use their financial 
power and campaign contributions to block any legislation that would 
reduce short-term earnings and bonuses by bringing jobs back to 
Americans. Americans have no greater enemies than Wall Street and the 
corporations and their prostitutes in Congress and the White House.

The neocons allied with Israel, who control both parties and much of the 
media, are strung out on the ecstasy of Empire.

The United States and the welfare of its 300 million people cannot be 
restored unless the neocons, Wall Street, the corporations, and their 
servile slaves in Congress and the White House can be defeated.

Without a revolution, Americans are history.




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