The US economy and its financial structures have never recovered from the great financial meltdown of 2008 despite the passage of ten years. Little discussion has been given to the fact that the Republican Congress last year abandoned the process of mandatory budget cuts or automatic sequestration that had been voted in a feeble attempt to rein in the dramatic rise in US government debt. That was merely an added factor in what soon will be recognized as a classic debt trap. What is now looming over not just the US economy but also the global financial system is a crisis that could spell the end of the post-1944 dollar system.
First some basic background. When President Nixon, on advice of Paul Volcker, then at US Treasury, announced on August 15, 1971 the unilateral end of the Bretton Woods gold-dollar system, to replace it with a floating dollar, Washington economists and Wall Street bankers realized that the unique role of the US dollar as leading reserve currency held by all central banks and the currency for world commodity and other trade, especially oil, gave them something that appeared to be a gift from monetary heaven.
So long as the world needed US dollars, Washington could run government deficits without end. Foreign central banks, especially the Bank of Japan in the 1980’s and since the turn of the century, the Peoples’ Bank of China, would have little choice but to reinvest their surplus trade dollar earnings in interest-bearing AAA-rated US Treasury securities. This perverse dollar system allowed Washington to finance its wars in faraway places like Afghanistan or Iraq with other peoples’ money. During the Administration of George W. Bush, when Washington’s annual budget deficit exceeded annually one trillion dollars, Vice President Dick Cheney cynically quipped, “debt doesn’t matter; Reagan proved that.” Up to a point that appeared so. Now we are getting dangerously near to that “point” where debt does matter.
Federal Debt Rise
There are generally speaking three major divisions of debt measured in the US economy: Federal debt of Washington, corporate debt and private household debt. Today, owing in large part to ten years of historic low interest rates following the largest financial crisis in history–the 2007-2008 sub-prime crisis that became a global systemic crisis after September 2008–all three sectors have borrowed as if there was no tomorrow because of the near-zero Federal Reserve interest rates and their various Quantitative Easings. . .
via USA in a Debt Trap Death Spiral | New Eastern Outlook — Apokalyps Nu!
The Most Revolutionary Act 
Reblogged this on necltr and commented:
It started fifty-five years ago.
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I know a lady from Puerto Rico. 4600 people have died unnecessarily, since hurricane Maria. She had to leave puerto rico. Her sons are early twenties. One son was in NYC.
She went to NYC, with the her other son. She left NYC and has to work 3 jobs at walmart, burger king, a sandwhich shop to pay rent. Little sleep. She had to go get her two sons from NYC, because they could not make it there. They worked hard, could not make rent. I feel so bad for her and her sons.
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Meanwhile, Gloria, the Trump administration and mainstream media are trumpeting that the economy is recovered and unemployment is down to 3 1/2 percent. What kind of new math is that?
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This is how the vampire squid compensate for sucking the life out of things. They doudle douwn on destroying an already ruined planet through extraction and pollution.
https://nuclear-news.net/2018/06/02/trump-about-to-massively-bail-out-polluting-industries-owned-by-his-special-donors/amp/?__twitter_impression=true
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Nick, I think this plan will share the fate of some of Trump’s other hare brained schemes. The reason Trump has to bail these industries out is because the banks won’t finance them any more – they have ceased to be economically viable with so much cheap renewable energy coming on board. Any money he spends on bailing these industries out simply adds to the debt pyramid – there’s no way it can be financed via taxes.
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The above picture says it all! We would not be in this mess if it were not for one group who claimed to be so religious and then went all around the world bringing destruction, chaos, calamity, capitalism, thievery and slavery and now that this system that those same folks of a certain complexion, put into play, has exploded to impact those who look like them, the moaning and wailing is now ear piercing.
What group has gone all around the world doing this? No one wants to point the finger at who is STILL responsible for why this planet and its people and animals are suffering and dying. Just take a good long look at that picture. Shits like that are why ALL the world’s people are also in deep shit! The mess that’s behind what we see today sure as hell don’t look like me, but I’m affected.
Black folks, Native Indians of AmeriKKKa, Native Hawaiians, the Natives of New Zealand, the Aborigines of Australia and the like ain’t sucking the life out of this planet, nor are they running around the world causing chaos, pandemonium and bedlam, disease and destruction, but that mess that’s depicted above sure as hell is!
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None of it is pretty, Shelby. The house of cards is collapsing and all we can do is try to huddle together and protect as many of our most vulnerable as we can.
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The US government, central banking, and the stock market were created together by the dynamic duo of Commander-in-Chief George Washington, his savvy Machiavellian Treasury Secretary Alexander Hamilton, and their stooges, whom we loving refer to as the “Founding Fathers.”
I know I sound like a broken record, but I can’t emphasize enough that the US was founded on debt and stock market speculation by empire builders who had commandeered a pristine continent and moved as fast as possible to exploit it and its resources for export. Slavery and cheap labor through immigration was the rule, not the exception, and perpetual war was built into the system.
The scenario above of unsustainable debt could not happen if the federal government lived within its means, but it doesn’t. There is no incentive for Congress to cut spending, so spending continues to grow like a cancer so that the federal government can buy love like the enabler it is.
Why don’t these genius honchoes ever suggest the federal government learn to live within its means, rather than assume taxpayers will foot the interest bill forever? When are taxpayers going to refuse to accept debt foisted until the sun burns out on their unborn progeny? What right does Congress have to indebt unborn taxpayers to obligations assumed in the present? “No taxation without representation” is as valid today as it ever was
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Great comment, Katharine… just great comment.
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I agree totally, Katherine, but am more inclined to focus on ending the ability of banks to create money (out of thin air when they issue loans). All private banks create money, not just the central bank – 97% of US dollars are created this way. The only way to eliminate excessive government (and private) debt is to reform the monetary system – either by nationalizing the Federal Reserve or by having the US Treasury itself issue all US money.
The practice of allowing private banks to issue currency first started in England in 1694 and now occurs everywhere, except in China. In China the government issues their money. Ironically the colonial governments in the 13 originally colonies issued their own money. This continued under the Articles of Confederation, but one of the purposes of the Constitution was to restore money creation to private banks. This ended briefly under Andrew Jackson, and both Lincoln and Kennedy authorized the Treasury to issue currency instead of borrowing it. And we know what happened to them.
Positive Money NZ, a group I work with, currently has a petition in the NZ parliament to allow the Reserve Bank of NZ (which was nationalized in 1935) to issue all New Zealand:
https://www.positivemoney.org.nz/pm/
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Thanks, Sha’Tara.
Stuart,
I absolutely agree with you about reforming the monetary system, and that is a big part of the picture. I’ve read not only your blogs on the subject but have read widely on how crooked the entire debt-backed financial system is.
Haven’t checked your link yet, but will.
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Stuart,
Just checked out the site. Good luck with that. More and more people seem to be waking up to the scandal privately owned central banking is.
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