- President Barack Obama showed a great deal of gumption
in standing before Congress last night delivering his first speech to the
joint assembly. All the trappings of power were on display as members of
the House and Senate, the Supreme Court, the Joint Chiefs, the Cabinet,
and the VIP guests hugged and waved at each other, radiant in their tailored
attire only two nights after the Hollywood stars put on their
own show on Oscar night.
- Too bad neither the president, nor Vice President Joe
Biden and Speaker of the House Nancy Pelosi applauding on the podium behind
him, nor the jubilant Democrats with their solid majorities, nor the grumpy
Republicans slouching in the minority across the aisle, know what they
are doing as economic extinction stares the United States of America in
- Yes, it's that bad. The day after the speech the Dow-Jones
dropped to 7,271, almost 50 percent off its October 2007 high, with no
bottom in sight. According to the Washington Post, the Big Three automakers
are now facing a "bottom-up" collapse of their component supply
lines if their vast network of suppliers doesn't receive new federal loans
within a week. Worldwide the situation is just as bad. The U.N.'s International
Labour Organization reports:
- "What began as a crisis in finance markets has rapidly
become a global jobs crisis. Unemployment is rising. The number of working
poor is increasing. Businesses are going under."
- President Obama's speech was long on resolve but short
on substance. He assured the nation:
- "We will rebuild, we will recover, and the United
States of America will emerge stronger than before."
- But accomplishing this depends entirely on one thing:
more federal deficit spending to serve as the economic engine in an economy
where bank lending has dried up because businesses and consumers can no
longer repay their loans.
- Unfortunately, the deficit is approaching the breaking
- During fiscal year 2009 the U.S. Treasury is on-track
to pay over $500 billion just in interest payments to finance the already-existing
debt. New debt this year will likely exceed a trillion dollars. The total
debt burden on the economy as a whole could reach $70 trillion by 2010,
with annual interest payments for individuals, households, businesses,
and all levels of government likely to reach $3 trillion out of a $14 trillion
GDP that is now in sharp decline.
- Financing the deficit continues to depend on whether China will
still purchase Treasury bonds. This is why Secretary of State Hillary Clinton
said frankly during last week's trip toChina: "We are relying on the
Chinese government to continue to buy our debt."
- But at least President Obama is trying. He knows the
economy can only recover if growth is rekindled. So he is focusing on the
creation of jobs that translate into real worker income. But can he reverse
a generation of job outsourcing and income stagnation? I don't know of
anyone who believes he can. Will the Republican nostrum of tax and spending
cuts do anything? You jest. Not when unemployment is approaching Great
- But neither President Obama, nor his Democratic supporters
or Republican antagonists, should feel badly about what is happening. This
is because the system they have been given to work with was designed to
fail. The U.S. was saddled long ago with a debt-based monetary
system, whereby the only way money can be introduced into circulation is
through bank lending. It was the system that was instituted in 1913 when
Congress gave away its constitutional power over money creation to the
private banking industry by passing the Federal Reserve Act.
- It was then that the catastrophe we are now facing became
inevitable. It took nearly a century to get here but it finally happened.
We should have known it was coming when Federal Reserve-created bubbles
replaced economic growth from our disappearing heavy industry, starting
with the recession of 1979-83. We could have seen it coming when the dot.com
bubble collapsed in 2000-2001, and Fed Chairman Alan Greenspan worked with
the George W. Bush administration to substitute the housing bubble for
a real recovery.
- The day of reckoning is here. So don't worry, Mr. President.
It's not your fault. When the collapse takes place the international bankers
who will take over might even let you keep your job.
- © 2009 by Richard C. Cook
- Richard C. Cook is a former U.S. federal government
analyst. His book on monetary reform, We Hold These Truths: The Hope
of Monetary Reform, is now available at<http://www.amazon.com/>www.amazon.com.
He is also the author of Challenger Revealed: An Insider's Account
of How the Reagan Administration Caused the Greatest Tragedy of the Space
Age. He can be contacted through his website at <http://www.richardccook.com/>www.richardccook.com.