July 19, 2022
Todd Mahaffey
THE UNITED STATES DOES NOT HAVE AN ECONOMY
written by Paul Craig Roberts
Monday, July 18, 2022
The US financial sector has long looted other countries. A number of participants have described the process. First a country is enticed with bribes to the leaders to take out loans that cannot be serviced or repaid. Then in comes the IMF. Austerity is imposed on the population. Public services and employment are cut to free resources for debt service, and public assets are sold to repay the loan. Living standards fall, and US corporations take over the country’s economy.
As foreign governments, having experienced or witnessed the economic carnage and fearing accountability,
Moreover, as I have previously explained, the inflation is not
monetary. The higher prices are the result of supply disruptions caused
by Washington’s Covid lockdowns and Russian sanctions. Production was
stopped and supply chains are broken.
The Federal Reserve’s rise
in interest rates is just a continuation of its policy of concentrating
income and wealth in the hands of the One Percent. Quantitative Easing
was the cloak for the Federal Reserve to print $8.2 trillion in new
money which was directed or found its way into the prices of stocks and
bonds, thus enriching the small number who own most of these financial
instruments. Having maxed out this avenue of wealth concentration, the
Federal Reserve is now raising interest rates in order to drive up
mortgage costs to aspiring home owners. The Federal Reserve is driving
individuals out of the housing market in order to free up properties
for "private equity†firms to purchase homes for their rental values.
That private equity firms see rental income from the existing stock of
houses as the best investment opportunity tells us that the US economy
has played out. When investment goes into existing assets, not into
producing new assets, the economy ceases to grow.
The Obama regimes
policy of bailing out the financial fraudsters responsible for the 2008
crash while foreclosing on their victims, reduced American
homeownership from 70% to 63 percent. The Urban Institute predicts
further declines. Today homeowners’ equity has declined from 85% after
World War II to one-third, leaving two-thirds of homeowner equity in
the hands of creditors. This makes it completely clear that a
financialized economy indebts the people for the sake of rentier income
to the One Percent. Indeed, the financialized economy created by the
Federal Reserve has reimposed a class system akin to the landed British
aristocracy that was overthrown. Indeed, we have an economically far
worst class system. The landed British aristocrats produced food that
fed the nation. The American class system produces interest and fees
for the financial system.
As Michael Hudson has shown us, a
no-growth economy is the end result of a financialized economy. A
financialized economy is one in which consumer income is diverted by
debt expansion away from the purchase of new goods and services into
debt service and fees–interest on mortgages, car loans, credit card
debt, student loan debt. With such a large share of household income
spent on debt service, little is left for driving the economy forward.
If American economists were capable of escaping from their neoliberal
junk economics, they would realize that "the world’s largest economyâ€
they attribute to the United States is total fiction. The fact is that
the United States does not have an economy. Corporations driven by Wall
Street located American manufacturing in Asia so that the One Percent
could benefit from higher profits from lower labor costs, while the
deserted city and states had to sell their income streams, such as
Chicago’s parking meter revenues for 75 years, to foreigners for one
lump sum payment to solve one year’s budget crisis.
The
offshoring of American production, carried out under the cloak of
"globalism,†destroyed the American economy and the tax bases of cities
and states. While the real economy declines, the Democrat Party,
seeking permanent power, has imposed a policy of open borders for
immigrant-invad
You will never hear it from the whores in the financial press, but the
United States is on the precipice of economic and social collapse. And
what are the fools in Washington doing? The idiots are ginning up wars
with Russia, China, and Iran.
Tim adds:
He lost me with this:
"Moreover, as I have previously explained, the inflation is not monetary. The higher prices are the result of supply disruptions caused by Washington’s Covid lockdowns and Russian sanctions."
Wrong as wrong can be. The Fed has ballooned up the M2 money supply by a whopping 40% according to some estimates over the last two years. https://www.washingtonpost.com/business/2022/02/06/federal-reserve-inflation-money-supply/ I think this estimate is high, but perhaps not exorbitantly. It grew 13.1% in 2021, for instance. https://schiffgold.com/exploring-finance/money-supply-grows-at-13-1-in-2021-is-it-enough-to-keep-the-bubble-going/ And while this was to pay for the spending by Congress, it doesn't change the fact that it's the increase in money supply at the root of the inflation - not some nebulous supply chain disruptions and Russian sanctions, as he claims. The inflation was rising well before Russian sanctions were imposed. That was WHY Biden wanted this war in the first place and took no steps to prevent it before it happened; he needed it as a scapegoat to blame his inflationary policies on when they were ramping up. Energy costs add to inflation, I'll admit. But whose fault was that? Biden's certainly. He did everything in his power to kill American oil and gas and drive prices up so as to force electric vehicles on the country. He killed Keystone XL and other American pipelines. He stopped all drilling on government lands, including in ANWAR. He pressured banks to defund oil companies by denying them loans. He encouraged "decarbonizing" by pension funds and investment groups. He promised to go carbon neutral and get rid of gas-powered vehicles. Investors saw, and stopped buying stock.
And it was the high price of oil and gas that gave Puting the money to invade Ukraine - and to stay in the fight.
Oh, and he angered the Saudis who cut production.
Yes, the Covid response was no small part of this, but in the end it's a coefficient of the expansion of the money supply to pay off bad debt by the government.
That said, his argument is correct; it's a way to funnel money to the wealthy, however you look at it. They are buying up stocks at bargain-basement rates.
Also, he says the Fed is now raising interest rates to fight inflation. He's wrong; they started raising interest rates during the Trump Presidency, well before the Covid pandemic struck. Before Trump they hadn't raised it since 2006, and they had kept it low since the '90's.
They started raising interest rates to damage the Trump economy.
I agree with his assessment about housing; they want us all in rentals, the dream of "imagine no possessions". And the Chinese are buying up housing hand-over-fist.
"As Michael Hudson has shown us, a no-growth economy is the end result of a financialized economy."
That's what they mean by "sustainability". It means no growth. It's what the environmentalists have always sought.
"How are these millions of peoples to support themselves in an economy whose manufacturing has been moved abroad? "
Why, you depopulate them, that's how. Which is the plan of the elites.
Posted by: Timothy Birdnow at
11:38 AM
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