- At the close of World War II, the U.S. was home to 50%
of the world's productive power. That economic strength assured America's
dominant financial position for at least two decades. That strength included
the ability to issue the world's top-rated bonds.
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- Look at us now.
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- The financial cost to the U.S. of wars in Iraq and Afghanistan
is projected to top $3 trillion-all of it borrowed. The interest expense
alone could reach $700 billion.
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- The U.S. Congress is debating whether to authorize the
borrowing of $700 billion to extend Bush-era tax cuts for another decade.
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- At this pace, annual interest payments on the debt could
top $1 trillion by 2020. In 1980, the total federal debt was $900 billion.
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- The greater the debt, the greater the Wall Street skim.
Bond traders don't care whether markets rise or fall. So long as markets
move, they make money.
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- Thus the financial appeal of warfare, a proven debt creator.
Likewise the allure of crises and even perceived crises as either will
move financial markets. Thus too the tragic logic of warfare-from the creditor's
perspective.
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- Funds lent for war generate output that does not compete
with other goods and services. It was not the New Deal but WWII that put
America back to work and ended the Great Depression.
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- Thus the recent appeal by veteran Washington Post columnist
David Broder when he proposed war with Iran as a strategy for reviving
the U.S. economy.
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- Governed By Debt
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- As the strongest currency of the post-WWII era, the U.S.
dollar was destined to emerge as the dominant reserve currency for global
trade. That result was fully foreseeable by those sophisticated in trade
and finance.
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- America's productive might ensured that U.S. bonds would
set the standard for debt as a safe financial security. In 1971, our creation
of debt was unleashed from physical limits when we abandoned precious metals
as security for the dollar.
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- Within the decade, a purported fiscal conservative (Ronald
Reagan) championed an investment stimulus that was projected to expand
the federal debt by $872 billon at a time when total securitized debt was
$900 billion
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- Known as "supply-side" economics, this deficit-financed
subsidy set off a frenzy of debt that fueled leveraged buyouts (LBOs),
the leveraging of savings and loans, the overvaluation of dotcom companies
and, most recently, the subprime mortgage meltdown.
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- By 2008, combined private and public debt topped $50
trillion plus another $50 trillion in unfunded liabilities. While LBO artisans
leveraged private sector balance sheets, specialists in public debt turned
to politics to leverage the nation's fiscal balance sheet.
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- With trust by then the primary collateral for U.S. debt,
America's credibility became a strategic vulnerability. With our 'full
faith and credit' in the crosshairs of transnational financial sophisticates,
the U.S. soon became financially ungovernable.
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- With American IOUs now growing at $100 billion per month
secured by a sputtering economy growing at $50 billion per month, that
faith is faltering and our credit crumbling.
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- Self-Correcting Systems?
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- The source of this threat is difficult to see because
the weaponry deployed is the shared mindset with which we've been seduced
to do our seeing.
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- At the risk of over-simplification, the mindset is this:
money is smarter than people. Just let money to do what money does best
and stand aside.
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- No need to worry about trade deficits that the U.S. amassed
with China. According to Nobel Prize economist Milton Friedman, those imbalances
will "self correct."
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- The same mindset rationalized the sustained loosening
of credit by Federal Reserve chairman Alan Greenspan. While enabling and
praising what he called "financial creativity," he assured Americans
that capital markets would "self correct" any imbalances.
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- How did this deceit succeed? How was self-governance
displaced by a money-myopic mindset touted as self-correcting?
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- America was seduced by an education curriculum in which
this narrow viewpoint was imbedded. Then we were induced to comply by policies
granting this mindset the force of law. To financial sophisticates, the
results were foreseeable.
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- Finance: The One True Faith
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- China is now recycling U.S. purchasing power to build
a world-class navy, nurture allies and invest in commodities. Meanwhile
we Americans hold steadfast to our faith in financial securities.
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- This mindset is now branded globally as the U.S.-discrediting
"Washington" consensus as the World Bank Group (led by an American
since 1946) insisted that emerging economies embrace a worldview that has
served us poorly and them worse.
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- With deference granted the creditor, debtors must adjust-no
matter what the cost. The greater the debt, the greater the creditor's
influence-and the greater the skim.
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- The U.S. is slipping into a debt-induced recession from
which we're assured that more debt is the remedy. Only when Americans grasp
the internalized source of this subtle warfare can we prevail over this
enemy within.
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- Jeff Gates is author of Guilt By Association How
Deception and Self-Deceit Took America to War. See www.criminalstate.com
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