NO RECOVERY FOR ECONOMY OR U. S. A.
Classical economic analysis here has forecast, time after time after time, no recovery is near for the U. S. economy. Severe economic contraction is resulting from destructive federal policies which remain uncorrected. This is man-made depression, as was the Great Depression, with victims of all ages increasing by millions as political leaders diddle, distract and delay. Constitutional government, meanwhile, is stuffed in a sack and drowning in debt as we watch.
By Wayne Jett © August 25, 2010
No U. S. economic recovery is coming because none is planned. Every aspect of federal policy is designed to bring down the private economy, not to restore it. The private market economy, such as remains of it, is to be supplanted by monopoly mercantilism while government programs control and placate the populace.
The dominant elite aim to establish a two class society in America of the type which has existed throughout history in much of the world – nobility over peasants, masters over slaves, rulers over ruled. To achieve this, the middle class – meaning the private economy other than monopolies – is to be dismantled and destroyed. This is underway. Here we survey the status of these ongoing historic events.
Bankruptcy Imposed on Middle Class
Professor Kotlikoff of Boston University recently confirmed Congressional Budget Office numbers which show the federal debt, including off-budget liabilities, to be $202 trillion. This means, Kotlikoff agrees, the U. S. government is functionally bankrupt and cannot possibly avoid eventual default.
The ruling cabal is in position figuratively to file an involuntary petition in bankruptcy and take charge of the federal government, superseding the Constitution. No statutory or constitutional basis exists for a bankruptcy court of any nature to take charge of U. S. government, of course, but that formality simply means the U. S. is a bankrupt debtor without shelter from its creditors.
Some may not yet comprehend the ruling cabal’s motive or objective. By bankrupting the U. S. government, they ask, would the elite not be pulling civilization down around their ears, to their own detriment?
In their worldview, elitists see the answer as quite the contrary. The U. S. tax system already places the burden of federal debt squarely on the shoulders of the middle class – especially the most prosperous upper middle class – the most able adversary of the ruling cabal.
Most Americans mistakenly regard the upper middle class as “the rich” and “the wealthy,” as taxpayers who achieve the highest earned income are called this by elitist media. President Obama proposes to raise income tax rates on upper middle class couples who earn $250,000 or more annually. But these are, in fact, upper middle class who are taxed at the highest effective rates. They are most definitely not the ruling elite or they would not be goats of the federal tax system. The ruling elite own and accrue wealth in far greater proportions while finding advantages in the tax code which minimize “earned income.”
With political leadership in place which caters to the ruling elite, a debt default crisis almost certainly will result in restructuring debt and taxes to burden the middle class more heavily. Higher tax rates and more comprehensive coverage (think VAT) will take greater portions of middle class earning power. Economic growth will be extinguished. Expiration of the 2003 income tax cuts and reinstatement of death taxes at 55% scheduled for December 31 are giant steps towards this very destructive effect.
Debt Monetization Spurs Hyperinflation
In 2008 when naked short selling and other fraudulent trading practices threatened survival of major banks, bear raiders alleged the banks’ financial assets were “toxic” and worthless. The Federal Reserve rescued favored banks by buying their questionable assets – a move seen here at the time as evidence the assets were not “toxic” at all. In the process, the Fed created $1.2 trillion, increasing the monetary base by 140%.
This explosion in monetary base troubled those worrying about inflation, but Fed chairman Bernanke assured this new money would not be injected into the economy by the recipient banks. And Bernanke reassured he had a plan to remove and extinguish the $1.3 trillion before the dollar’s value could be debased by it.
Bernanke recently abandoned that path, citing changed circumstances: economic growth is failing. The Fed is receiving regular payments returning capital and interest on its mortgage-backed securities. Rather than extinguishing the dollars, as promised, Bernanke announced the repaid principal will be used to buy Treasury securities – precisely the monetization of exploding federal debt so destructive to dollar currency value.
This time the added monetary base will be spent into the economy by the federal government, rather than interdicted by the Fed and FDIC discouraging banks from lending to small business or consumers. Though it will add inflation and disguise economic contraction, the Fed’s monetary activism will not change the reality proven by chronic high unemployment, which pre-determines falling demand. Housing sales plummet, and depression is the prognosis of some financial sector economists. A British commentator mistakenly opines the U. S. temporarily does not need China to fund its increasing federal debt.
Note the pattern revealed by these events. The private mortgage industry was wiped out in 2007-2008 on grounds its product was toxic. Then major banks were attacked for the same reason, with some failing, some being merged, and certain favored banks becoming big winners in the sharpest federal-assisted “consolidation” of banking competition in history. Morgan Chase, Citigroup, Bank of America and Wells Fargo are wall-to-wall nationwide already, while FDIC continues to grab as many small banks week by week as its staff is capable of processing through to the consolidators.
Consolidation of Mortgage Banking
As this process of government-assisted monopolization of financial services advanced, bond investor PIMCO’s Bill Gross urged “full nationalization” of home financing, insisting that “to suggest that the private market come back in is simply impractical.” Treasury’s Timothy Geithner countered that federal involvement in the housing mortgage industry through Fannie Mae and Freddie Mac should be reformed by means of a carefully designed federal guarantee.
John Paulson, said by some to be the biggest winner when private mortgage banking was destroyed, now manages $31 billion and is investing in Goldman Sachs, Bank of America, Citigroup, private mortgage insurance and private residential land. These and other clues indicate re-emergence of private mortgage banking, but heavily consolidated in the big banks and hedge funds.
Fidel Castro, Investigative Reporter
An oddity of social commentary was Cuban dictator Fidel Castro’s recent publication of quotes from a book telling conduct of the American-European elitist Bilderberg Group. Customary deference to Castro by American press temporarily trumped the standard embargo on discussion of Bilderbergers and resulted in fairly widespread coverage of the topic. However, the New York Times, usually first-in-line among Fidel-admirers, remained silent based on its first priority to advance the agenda of the dominant elite. This small episode represents the zenith of the dictator’s service to common humanity. One pertinent insight gained from the Cuban publication is Castro's lack of knowledge of the global power structure in his younger years, but many others share the same shortcoming. ~