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 thatlubricates their economies.
Why would anyone accept a personal check from a nation that owes the bank more than $8.6 trillion dollars?
Why, indeed?
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?
It’s madness.
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?
Russia has already made the conversion to euros and rubles (and has
considerably depleted his supplies of USD) but, of course, regime
change is more difficult when a state has nuclear weapons. Instead, the
mainstream media is conducting an impressive “Swift Boat” campaign
against Putin, smearing him as a “Russian autocrat” who is “rolling
back democracy”. At the same time, the Bush administration is
threatening to deploy missile systems in Eastern Europe and ratcheting
up the pressure in the former Soviet republics.
Bush would rather restart the Cold War than abandon the supremacy of the greenback.
But, why? Is Dollar-primacy really that crucial to our economy?
The greenback is the baling wire that keeps the global economy in the
hands of the doddering old misers at the Federal Reserve. It’s the
cornerstone of the whole wretched system; a system which now includes
torture, extraordinary rendition, and myriad other war crimes.
The young Muslim men who are abducted off the streets of Europe and
Asia and taken to CIA Black Sites where they are waterboarded or
stacked in naked pyramids; are tortured in defense of the crumpled
piece of green paper we carry in our pants pockets.
Think I’m kidding?
Just look at Bush’s budget for 2007-2008; $700 billion for foreign
wars?!? There’s no way the US can pay off that debt through the normal
means of increasing exports. In fact, Bush has already said that he
plans to preserve his unfunded tax cuts whether they produce massive
deficits or not.
What Bush plans to do is force the foreign central banks to hold more
dollar-based assets, thus, thrusting our gigantic debt onto our trading
partners. According to Bob Chapman of The International Forecaster, “US
debt was up 10.1% to $4.085 trillion and accounts for 58.8% OF ALL THE
CREDIT ISSUED GLOBALLY LAST YEAR. The US is producing more debt than
the rest of the world combined.
As long as foreign lenders are willing to take our paper, Bush will
keep expanding our debt. As Chalmers Johnson opined, “We are dependent
on ‘the kindness of strangers’”. (The Blanche Dubois economy)
Of course, if the central banks grow tired of this pyramid-scheme and
dump the dollar; the world can get on with the business of addressing
global warming, poverty, AIDs, Peak Oil, nuclear proliferation etc.
That won’t happen as long as the dollar reigns supreme and a small
cadre of unelected racketeers at the Fed continue Gerry-rig the system.
Economic justice and equitable distribution of wealth begin with
greater parity among the currencies. That requires “regime change” for
the greenback and a loosening of its tyrannical grip on the system.
Sleepwalking in the Weimar U.S.A.
The good news is that the Bush administration is pushing the dollar
towards extinction anyway. Another few years of $800 billion trade
deficits, lavish unfunded tax cuts for the mega-rich, and a Pentagon
budget of $700 billion-plus; and the old greenback will be going the
way of the Dodo. Jim Willie of
GoldenJackass.com summarized it this way:
“Never in the history of central bankers has the hidden coordination,
influenced pressure, gargantuan money creation, doctored statistics,
and interference with financial markets been so broad, so deep, and so
profound. My allegation is clear, that we now live in Weimar times, as
has been warned for two years worth of scribbles. Collectively, they
have abused the privilege of printing money, and in doing so, have
guaranteed a gold bull market. … The more heavily the counterfeit press
dispenses electronic dollars, devoted to operations, to credit, to
consumer spending, to military adventures, to good old fashioned fraud,
the gold bull benefits from ample new oxygen and blood flow”.
Willie is right; the system is rotten to the core. Once the dollar
crashes, other currencies rush in to fill the void generating greater
competition between the energy and manufacturing giants. A new paradigm
will emerge distributing power more equitably among the states. It’s a
way to resuscitate a system that is currently held together through
force of arms.
Besides, how long will China and Japan continue to abet Washington’s
war-mongering adventurism? My guess is that the daggers have already
beensharpened in Beijing, Caracas, Delhi and Moscow. Everyone is just
waiting for Bush to cross that invisible line in the sand before they
fling their greenbacks into the jet-stream and wait for Goliath to
tumble.
That “invisible line in the sand” is Iran.
The world is at a crossroads and everyone who can fog a mirror knows
it. The superpower model of global governance has failed miserably. We
need more responsible stewardship of the planet and its resources.
How can we build our economies when a handful of western plutocrats
control the spigot for quickly dwindling oil reserves? How can we
attack climate change when those same blinkered reprobates employ
pseudo-scientists to dispute global warming? How can we address nuclear
proliferation when neocon militarists believe in “useable” low-yield,
bunker-busting warheads?
The model is hopelessly shattered. We’d be better off boarding-up the
White House and the Federal Reserve and starting from Square One.
The world needs a break from Washington’s wasteful spending and
unprovoked wars. At the same time, foreign creditors are increasingly
reluctant to keep financing America’s extravagant consumption. And, no
one is hoodwinked by Bush’s “war on terror” scam; a conflict that was
clearly concocted to assert control over the world’s remaining
resources.
The world is realigning according to mutual interests and a shared
vision of the future. The rise of energy alliances in Latin America and
Asia (particularly the Shanghai Cooperation Organization (SCO) which
now controls most new oil deposits and output) signals the waning of
western influence and the ascendancy of a new energy paradigm. Power is
progressively shifting away from Washington.
That’s bad news for the greenback which depends on its linkage to oil to sustain its enormous debt.
The dollar now faces challenges from all directions. Western elites
have savaged the country’s economic base by hollowing out our
manufacturing base in order to destroy the American labor movement.
Free trade has transformed the US into the biggest creditor nation in history. The country exports nothing but bombs and misery.
Also, as Congressman Ron Paul notes, “Most knowledgeable people assume
that inflation of the money supply is not only going to continue, but
accelerate. This anticipation, plus the fact that many new dollars have
been created over the past 15 years that have not been fully
discounted, guarantees the further depreciation of the dollar.”
Eventually, the markets will catch on, foreign lenders will stop buying
our Treasuries, and the dollar will fall through the floor.
The laws of gravity apply to economics as well as science.
Red flags are going up everywhere. China’s central bank issued a warning in December about the risks of the weakening dollar:
“If external capital stops flowing into the US, a significant drop in
the dollar may occur with consumption and investment shrinking,
interest rates rising, and financial markets experiencing turbulence,
endangering global financial and economic stability. There could be
adjustments to how European private capital, Asian foreign exchange
reserves and oil export proceeds are invested.”
Yes, of course, a complete economic meltdown with capital fleeing the
United States to foreign countries and the American economy collapsing
in a heap.
The Chinese central bank statement adds:
“If the US current account deficit continues to grow faster than GDP,
then the investment value of US assets may be subject to doubts and
challenges and the willingness of investors to continue holding and
buying US financial products may weaken. This could cause changes in
capital flows, the exchange rates of major currencies, and the value of
foreign exchange assets.”
The Chinese bank is giving the Bush Team a chapter out of Econ. 101:
“If you keep spending more than you are taking in; the stock market
will fall, the dollar will plummet, and the US economy will tank”.
What could be clearer than that?
The administration, however, chooses to ignore the basic laws of
economics and pursue a madcap plan to wage aggressive war across the
planet and pilfer the world’s oil reserves.
So far, the results have been less than reassuring.
The Decline of U.S. Sovereignty; blame it on the Fed
The United States set off on the road to perdition when it transferred
the power to create money to the privately-owned Federal Reserve. It’s
been downhill ever since.
The man who can set interest rates and create money is more powerful
than the man who can move armies and change laws. By conferring that
authority on the Federal Reserve we have assured that the policies that
govern our economy are decided by unelected members of the ruling elite
whose choices will naturally reflect the interests of their class.
The wealth gap that has opened up like a yawning chasm between rich and
poor in America originated with the class-based policies of the Fed.
The 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. That’s why Thomas Jefferson said:
“If the American people ever allow private banks to control the issue
of our currency, first by inflation, then by deflation, the banks and
the corporations that will grow up will deprive the people of all
property until their children wake up homeless on the continent their
fathers conquered. The issuing of power should be taken from the banks
and restored to the people, to whom it properly belongs.”
Free people cannot control their own destiny unless they control their own currency. The Federal Reserve must be abolished.
Writings 
“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” 
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