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Taibbi writes: "If the one thing preventing Washington from seizing up in fatal gridlock for even a brief spell is a surprise burst of good fortune from a bailed-out financial zombie like Fannie Mae, we're screwed."

Rolling Stone columnist Matt Taibbi. (photo: Current TV)
Rolling Stone columnist Matt Taibbi. (photo: Current TV)



The Mad Science of the National Debt

By Matt Taibbi, Rolling Stone

23 May 13

 

elcome back to the dumb season. It's debt-ceiling time again.

We've been at this two years now. It was back in 2011 when the Republican Party, seized by anti-government furor, first locked on the lifting of the federal debt ceiling - an utterly routine governmental mechanism that allows the Treasury to borrow to pay for spending already approved by the entire Congress, Republicans included - as a place to hold a showdown over … government spending. That first battle resulted in a "Mutually Assured Destruction"-type stalemate, in which both parties agreed that if they couldn't reach a deal by New Year's Day 2013, a series of brutal, automatic, across-the-board spending cuts would take effect. At the time, it seemed unthinkable Congress would let that happen. By the time we passed that date, the thing that seemed unthinkable was the idea that Congress would ever make a deal. The cuts took effect in March and we were headed for a full-on fiscal crash on May 19th, when fate intervened to stop this stupidest-in-history blue-red catfight in its tracks, if only temporarily.

In early May, Treasury Secretary Jacob Lew announced that the federal government suddenly had enough cash on hand to stay afloat until "at least Labor Day." We were saved by, of all things, a record quarterly profit from the notorious state-seized mortgage-finance company Fannie Mae, which is paying the state $59 billion, enough to keep us in the black through the summer.

But this reprieve is only for four months, and if anything, the latest stay of execution only underscores the utter randomness and imbecility of our political situation. If the one thing preventing Washington from seizing up in fatal gridlock for even a brief spell is a surprise burst of good fortune from a bailed-out financial zombie like Fannie Mae, we're screwed. The only thing that will rescue us from having to go through this over and over again from now until the end of time is for our increasingly polarized Congress to come to some broad agreement on tax hikes and spending cuts - the kind of routine deal that now seems politically impossible.

That leaves us in a state of permanent paralysis that is at once more dangerous and even more stupid than the time the business of our entire nation ground to a halt over a blow job. Americans at least know what a blow job is, and they understood how the white stuff got on the dress.

But the national debt? Nobody understands it, and anyone who tells you he or she does is almost certainly lying. In fact the supreme irony of this endless controversy over spending and austerity is that it has pushed the Federal Reserve as well as major European and Asian central banks, especially recently, to bypass the ignorant arguing public and take dramatic interventionist action on their own, tinkering with the world money supply in ways that are highly experimental and have no parallel in modern times. By all rights, this should be stimulating a profound debate around the industrialized world about who controls the process of money creation and about the role of government/central banks in the economy, but here in the U.S., that is exactly the debate we're mostly not having.

The debate we are having is childish, irrelevant and self-destructive, as has been proved by all the recent developments on the debt front, including:

THE MORONIC NEW HOUSE BILL

Here's a quick and easy rule: any time any politician, pundit, TV talking head or self-proclaimed financial expert starts comparing the U.S. federal budget to anything other than the U.S. federal budget, that person is automatically full of shit and should be instantly voted off the conversational island, if not outright beheaded.

This whole debt debate really began devolving in earnest into total mindlessness once people like Oklahoma Republican Sen. Tom Coburn started likening the government spending deficits to family budgets, pushing to "make Congress live under the same rules as families across the country and treat the federal budget like the family budget. Families have to live in their means and so should Congress." Not paying our government obligations, Coburn said recently - remember, this is a U.S. senator talking - might be a "wonderful experiment."

Comments like these led to Tea Party protesters descending upon Washington screaming about how not raising the debt ceiling is like giving your kids the bad news that they can't afford to go to the movies - difficult but necessary, a kind of homespun tough love, except that a global superpower intentionally defaulting on its sovereign debt is actually way closer to an act of apocalyptic suicidal madness than it is to good parenting. ("It would be the financial-market equivalent of that Hieronymus Bosch painting of hell," said JPMorgan Chase chief U.S. economist Michael Feroli.)

Still, the mere fact that the Republicans made such hay with the household analogy forced politicians and economists on the other side of the aisle to respond with similar oversimplifications, in what amounted to a desperate attempt to plant their own flags in the growing mountain of popular anti-knowledge. Even Fed chairman Ben Bernanke has reached for household analogies in his efforts to explain what a default would mean. "This is sort of like a family saying, 'Well, we're spending too much - let's stop paying our credit card bill,'" Bernanke said.

The next agonizing step was the Republican constituency's slow realization that "not paying our bills" is bad. This should have actually been a good thing. But it only led to this month's latest harebrained idea: the so-called Full Faith and Credit Act, a Republican bill passed in the House that would direct the U.S. Treasury, in the event that we hit the debt ceiling, to pay interest to bondholders before making any other payments. In other words, we'd pay people who loaned us money by buying treasuries - China's, for instance - before we'd pay, say, veteran benefits or Medicare.

According to House Speaker John Boehner, fast becoming the pope of the blossoming new national Church of Budgetary Misunderstanding, this would solve the "not paying the bills" problem. "I think doing a debt-prioritization bill makes it clear to our bondholders that we're going to meet our obligations," he said. He added, ominously, "Listen. Those who have loaned us money, like in any other proceeding, if you will, court proceeding, the bondholders usually get paid first. Same thing here."

Boehner was now moving the ill-considered metaphor from the government being like a household needing to pay its bills to the government being, apparently, like a business in bankruptcy (the only kind of court proceeding where bondholders move to the front of the line).

Guaranteeing that Chinese bondholders would get paid off before veterans or elderly citizens waiting for medical care is politically a weird enough idea to begin with, but for the House speaker to think that getting Congress to prepare the government to behave like a bankrupt business would reassure the markets about the stability of U.S. sovereign debt is pure lunacy. Remember, Standard & Poor's has already downgraded the United States once, and we've paid more than a billion in increased borrowing costs, thanks to delays in raising the debt ceiling last time around, meaning the Boehner bill is dead on arrival - Wall Street is already not reassured by the behavior of our bozo Congress.

The national debt is totally unlike a family budget for about a gazillion reasons, not the least of which being that families cannot raise money by fiat or deflate the size of their debt unilaterally and that family members die instead of existing infinitely. Comparing your family budget to the sovereign debt of the United States is a little like comparing two kindergartners tossing a paper airplane to the Apollo 11 mission. It's an automatically bogus argument, which raises the question of why it's made so often, and not only by Republicans of the Coburn type, whom we expect to be clueless dopes. In fact, the overuse of this loony household analogy just proves that when it comes to debt, people may have ideas, but nobody knows exactly what he or she is talking about, a fact proved dramatically by another recent story:

THE HARVARD FACEPLANT

Do deficits matter or don't they? are we on the edge of collapse or aren't we? The only thing anyone can say with absolute certainty is anyone who claims to have the exact answer to that question is either lying, misguided, or both. We saw a graphic demonstration of this recently with the comeuppance of Harvard economists Carmen Reinhart and Kenneth Rogoff, whose May 2010 paper "Growth in a Time of Debt" was cited by austerity-lovers across the world as a prescient warning against the perils of government spending.

Reinhart and Rogoff posited that catastrophe would ensue if government debt exceeded 90 percent of gross domestic product. Wisconsin Congressman Paul Ryan, a political one-trick pony who's about 10 minutes from his next career modeling for the Gap in red states, cited that stat in his 2013 budget as proof that the United States (whose debt is near 104 percent of GDP, according to the St. Louis Fed) is on the track to stagflation. But then, in mid-April, a trio of University of Massachusetts economists reviewed the Harvard hotshots' work and found that they made a series of errors, including some ridiculous Excel spreadsheet gaffes, that essentially nullified their anti-stimulus thesis. That they had helped provide the intellectual justification for austerity policies around the world (Britain's loathsome Chancellor of the Exchequer George Osborne was a huge fan), and who knows how many thousands or millions of job cuts, was no matter. Two weeks later, in the Financial Times, the two Harvard windheads reversed course, arguing that they had been in favor of using debt to stimulate growth all along. "Borrowing to finance productive infrastructure raises long-run potential growth," they wrote. "We have argued this consistently since the beginning of the crisis."

Actually, they hadn't made anything like such an argument (at most, they allowed that existing government stimulus should be reversed slowly), but that's not the point. The point is that when it comes to whether or not deficits matter, economic arguments are always crafted to fit the politics. The party in power almost always unapologetically engages in deficit spending, while the other party argues passionately against the evils of debt and deficits.

This simple, once-cheerful law of politics is the reason why one can jump on the Internet anytime and find examples of Dick Cheney sounding like Paul Krugman ("Reagan proved deficits don't matter") and/or Barack Obama sounding like Paul Ryan (Candidate Obama in 2008: "The problem is, is that the way Bush has done it over the past eight years is to take out a credit card from the Bank of China in the name of our children . . ."). The reigning party spends, the opposition pisses and moans - until now, things have never been any different.

But today's Republicans have gamely spent the Obama years predicting the imminent arrival of a giant Earth-smashing debt asteroid. That this is transparently an effort to target social programs loathed for purely ideological reasons is obvious, but it's hard not to admire the balls: After spending much of the past decade borrowing from, among other places, the Social Security trust fund to pay for massive tax cuts and bank bailouts, America's wealthy are now turning around and demanding both $5.7 trillion in new tax breaks and significant cuts to things like Social Security, which incidentally is self-funding and running a huge surplus.

It's easy to claim that Social Security is driving the deficit, or that the U.S. will imminently become insolvent "like Greece" (it can't, for the simple reason that it has its own currency, while Greece's debts are in Euros) when the public's baseline knowledge level is zero. Almost nobody really understands high-level economics, but people have very concrete ideas about whom they don't want to spend taxpayer money on, and in this debate, that's usually enough. Politicians are so dense about this, they often argue both sides of the issue simultaneously without realizing it. "We have spent more than what we have brought into this government for 55 of the last 60 years," Pope Boehner said recently. "There's no business in America that could survive like this. No household in America that could do this."

Right. No household in America could, but America could - and did - ride deficits for decades into the world's biggest economy. Whether or not the U.S. deficits are too big is another question, but that they can go on more or less infinitely as long as the economy grows - or for at least 60 years - is something Boehner himself seems to be admitting, despite himself.

Even the economists who pretend to know where all this is going are only guessing. "As a general rule," quipped economist Dean Baker after the Reinhart-Rogoff fiasco, "economists are not very good at economics."

This is especially concerning, given that we're all entering uncharted waters, now that:

THE FED ANNOUNCES: MORE COWBELL

As is pretty much always the case with modern American politics, people seem to find hobgoblins and conspiracies everywhere in every place except where the real thing, or something close to it, actually exists. In the case of the debt issue, we have a raging national controversy over something as meaningless and routine as raising the debt ceiling, while a genuinely radical experiment in something vaguely like centrally planned economics is going on at the Fed and the other central banks around the world, and the public has mostly yawned in response.

Since the beginning of the crisis in 2008, the Federal Reserve, under chairman Ben Bernanke, has attacked our stagnating economy with an array of tools never before used by our central bank. Backing up for a moment, since 1977 - when Congress amended the Federal Reserve Act - the Fed's official mandate has been to promote maximum employment and low inflation. The Fed's traditional method of addressing these matters has been to increase or decrease the money supply by raising or lowering interest rates, i.e., by making money cheaper or more expensive to borrow. In other words, when the economy is stalled, the Fed cuts rates and waits for that to result in more lending and more employment. When the economy is growing too quickly, which can lead to inflation, the Fed backtracks to slow things down.

But in 2008, when the economy was not merely feeling a little unwell but was actually flatlined on the ER table, slashing interest rates all the way to zero wasn't enough to stimulate lending and investment. So Bernanke took a step further and started to inject new money into the financial bloodstream directly, willing trillions of dollars into existence and using that newly created money to buy things like mortgage-backed securities and treasuries. This vast central bank money-printing/stimulus program, which ought to have frightened conservatives every bit as much as the $800 billion stimulus Obama took out of the Treasury in 2009, was successfully camouflaged by its dull-sounding moniker, Quantitative Easing, a term that, in one of the genuine curiosities of recent financial history, has no known origin.

In any case, the original QE program, which began in November 2008, was supposed to last only a year and a half and add about $1.75 trillion to the economy. Almost two years later, with unemployment still hovering near 10 percent, Bernanke tried again with another $600 billion. QE2, as it was dubbed, didn't work either. So last year, the Fed announced a different tactic: It would simply pump $40 billion a month into the economy on an open-ended basis, including mass purchases of mortgage-backed securities, which would have the effect of artificially lowering mortgage rates and propping up the housing market.

That was dubbed QE3, and it lasted for a few months, until December of last year, when the Fed decided it had to be even more aggressive and more than doubled the size of the program to $85 billion a month. Wall Street refers to the open-ended program by the affectionate nickname QE-infinity.

And just a few weeks ago, when some thought Bernanke might signal an exit strategy for the program, the Fed cryptically announced that it "is prepared to increase or reduce the pace of its purchases," which made it clear that there was no immediate end of the program in sight and that the Fed's already outrageous bulge may grow even bigger before all is said and done.

Meanwhile, the Bank of Japan in April announced its own massive QE plan, which could reach $1.4 trillion by the end of next year. Japanese officials say they want to essentially double the Japanese money supply. The Bank of England also has been steadily increasing its own QE program for years; it sits at $581 billion now, but may increase again in July, when former Goldman Sachs banker Mark Carney arrives to head the Bank of England. And European Central Bank president Mario Draghi (another Goldmanite, by the way), who created a one-trillion-Euro-size QE-style program called Long Term Refinancing Operations (LTROs) in late 2011 and early 2012, has recently signaled that his bank was "ready to act" if it looked like a QE-ish program was needed to intervene to save the cratering European economy.

Essentially, all of these central banks are creating vast sums of money and thrusting themselves into the world economy as gigantic buyers of stuff, be they mortgages or treasury bonds. In theory, the banks will eventually "sterilize" or reverse the process by selling off all this stuff they've bought and draining the economy of its "excess liquidity," but no one knows when that will be, and for the time being, QE is pure financial steroids. It's stimulus on a much bigger scale than Obama's recovery program, it's open-ended, and it's not voted upon. In fact, apart from the fact that the Fed chairman is nominated by the president, the actions of the central bank are not merely undemocratic but intensely secret, with minutes of its Federal Open Markets Committee (which debates decisions like the raising of interest rates or QE) only released three weeks after decisions are made. The Fed therefore never has to engage the public in real time about its decisions. Instead, it hands down edicts, and Wall Street watches for clues into its mysterious behind-closed-doors deliberations the way Catholics watch the Apostolic Palace for smoke before papal elections.

Economists disagree, sometimes passionately, on the benefits of QE, but virtually all of them agree that nothing like this has ever been seen before. "These are quite unprecedented policies," says Michael Woodford, a professor at Columbia University, widely considered one of the world's leading experts on monetary issues. Woodford points out that the Fed would defend these actions by saying it is trying to avoid repeating the mistakes made after the Great Depression. "But certainly," he added, "they don't have prior experience on the basis of which to judge the effects of the policies being tried."

"We are living in a time of experiment," says Christian Menegatti at Roubini Global Economics, the independent research firm led by Nouriel Roubini, famous for predicting the housing crash.

If you don't work in the financial sector and you're wondering why you haven't seen $85 billion a month in stimulus show up on the job market or any other place where most ordinary people can see it - well, that's another serious issue with QE. The program is designed to stimulate employment, but after many years and trillions of dollars, there's been little growth in the economy. On the other hand, housing prices are up and the stock market has soared to an all-time high. "Anyone who has owned stocks in the past few years has fed at the trough of Bernanke," the financial website YCharts wrote. QE carries a natural risk for financial bubbles because it artificially depresses the values of the long-term "assets" the Fed buys, like treasuries, which forces banks and other investors that hold those instruments to move into other investments that yield more - like the counterintuitively giddy stock market.

What has the global financial community in a fever is widespread uncertainty over when QE will end. The central bank programs are a high-wire act of extraordinary difficulty. If you yank on the leash and stop them too abruptly or too soon, the economy might crater or plunge into a new recession or depression. If you keep the giant money hose on full blast for too long, you risk overheating the economy and creating financial bubbles. And everywhere in between, there's the twin risk that the policies won't work and the banks and businesses will become a little bit too used to central bank largesse. What if Bernanke miscalculated his ability to stimulate lending and job creation, and all of this intervention not only doesn't create jobs but just reheats a financial sector that exploded under the weight of its own stupidity and greed just a few years ago?

"It all works if it's followed by growth," says Menegatti. "If people buy [stocks] but banks are worried about lending, to small businesses, for instance … then you have QE1, and then QE2, and then QE3, and then you have to continue to do it because the markets are addicted to it. But if you don't have growth, you have another correction."

Ironically, by gumming up the federal budget with this moronic debate over the debt ceiling, anti-government stalwarts may have inadvertently helped trigger this unprecedented experiment. After all, part of the rationale behind programs like QE is that central banks say they have to stimulate the economy because our idiot politics have blocked the more traditional path of regular government stimulus.

"The only other solution is the fiscal solution," says economist Michael Klein, a professor at Tufts University's Fletcher School of international affairs. "And that's off the table now."

What a crazy time we live in. Domestic politics have devolved into an ongoing hostage crisis in which the opposition party threatens to blow up the financial universe every six months or so, and the leading political minds in the country can't figure out how to keep this from being a permanent feature of our budgetary process. Meanwhile, global monetary policy is drifting in the direction of semipermanent stimulus, and no one has any idea how it all ends. It's two different runaway-freight-train action movies going on at the same time. God help us.

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+22 # SMoonz 2013-05-23 11:44
We are headed into a scary abyss. Chances are we will end up in a financial implosion that will wreck the world economy in the worst Depression imaginable. I hope I'm wrong.

Look at a chart detailing how the dollar holds up against precious metals (gold and silver),commodi ties,and you will see their value skyrocketing and the dollar losing value. That screams hyperinflation to me. It all started kicking in back in 2001 when Bush was President and has been on a steep incline with Obama. Policies like QE thanks to the Federal Reserve have been disastrous yet Bernanke sits there without anyone flinching.

The only way to dig ourselves out of this mess is by reinstating Glass- Steagall, thereby stopping financial leaches from gambling with our money, cancel what is owed to the casinos/major banks and work on our infrastracture.

Ridiculous ideas like printing the Trillion dollar coin are absurd. The point is not to print more money, as this waters down the value of the dollar, but to strengthen the purchasing power of what we earn and hold in cash.

Until people truly get behind pushing for reinstating Glass-Steagall we won't see an end in sight. I know Obama has done everything possible to avoid this issue, most of Congress also avoids this and I am surprised Elizabeth Warren has not even spoken on the matter.

Sen. Tom Harkin introduced Senate Bill 985 and in the House of Reps, Rep. Marcy Kaptur has already introduced H.R. 129 to reinstate Glass Steagall.
 
 
+4 # ericlipps 2013-05-23 15:28
Quoting SMoonz:
We are headed into a scary abyss. Chances are we will end up in a financial implosion that will wreck the world economy in the worst Depression imaginable. I hope I'm wrong.

Look at a chart detailing how the dollar holds up against precious metals (gold and silver),commodities,and you will see their value skyrocketing and the dollar losing value. That screams hyperinflation to me.


The eecline in the value of the dollar against precious metals is worrisome but doesn't "scream hyperinflation" to me, when the proces of ordinary items remaion relatively unchanged.

If we were seeing the proce of a dozen eggs doubling every month, THAT would be hyperinflation. Those with knowledge of 1920s Germany understand what hyperinflation is.
 
 
+5 # RLF 2013-05-24 06:17
If you haven't noticed, while it might not be hyperinflation, there is way more inflation than the government is admitting to. The petroleum products and food not being included in the calculations and being the source of quadrupling prices in just a few years is very close to hyperinflation.
 
 
-6 # edge 2013-05-24 06:53
Quoting SMoonz:


Look at a chart detailing how the dollar holds up against precious metals (gold and silver),commodities,and you will see their value skyrocketing and the dollar losing value.


Yep, Oil cheaper than last year, gold cheaper than last year, corn, soybeans all cheaper!

This HYPER INFLATION is crazy!

Now, when the Fed tries to unwind the Trillions they have bought that will be another story...and I hope that I don't own bonds when that happens!
 
 
+3 # dkonstruction 2013-05-24 08:22
Quoting edge:
Quoting SMoonz:


Look at a chart detailing how the dollar holds up against precious metals (gold and silver),commodities,and you will see their value skyrocketing and the dollar losing value.


Yep, Oil cheaper than last year, gold cheaper than last year, corn, soybeans all cheaper!

This HYPER INFLATION is crazy!

Now, when the Fed tries to unwind the Trillions they have bought that will be another story...and I hope that I don't own bonds when that happens!


Interesting that you point to commodities where (for at least 2 out of the 3 -- gold is a different and unique case in many ways) for which there is essentially no "free market" -- all are basically markets that are monopolized (and thus also manipulated) by a handful of giant players (including the financial speculators that drive up or down the prices for basic commodities including energy and foodstuffs).
 
 
0 # edge 2013-05-24 09:56
Quoting dkonstruction:
[quote name="edge"]

Interesting that you point to commodities where (for at least 2 out of the 3 -- gold is a different and unique case in many ways) for which there is essentially no "free market" -- all are basically markets that are monopolized (and thus also manipulated) by a handful of giant players (including the financial speculators that drive up or down the prices for basic commodities including energy and foodstuffs).


Commodities are trader in the open market!

The futures markets are Open Outcry except in the 24 hr electronic market, but fills in the actively traded months are virtually instantaneous. They are for the most part NOT controlled by monopolies.
Farmers look at futures prices and decide to either plant or not plant.
Oil companies decide if they can make money at the prevailing price and either pump or not pump. ( you want to stop Keystone XL, then hope Oil prices drop below $70 per barrel and it will be unprofitable!)
The law of unintended consequences, high Oil to push Green Tech also makes Tar Sand Oil profitable!!!
Coal competes with Oil and Natural Gas, ( want to stop fracking then...well it ain't gonna happen, but with cheap NG Coal starts to look too expensive! )

Gold deposits that are not profitable at 1000/ounce look attractive at 1900/ounce!

It is not all big bad boogeyman business that affect prices!
 
 
+7 # dkonstruction 2013-05-24 13:22
Quoting edge:
[quote name="dkonstruction"][quote name="edge"]

Commodities are trader in the open market!

They are for the most part NOT controlled by monopolies.

It is not all big bad boogeyman business that affect prices!


The vast majority of speculators at this point (those buying and selling commodity futures) do not own, have not interest in owning and will never own the underlying commodity. This is no longer the days of farmers (producers) and the buyers of their commodities buying futures contracts as a hedge against future price changes. That is fine. I have no problem with that kind of futures trading. But that is not what is going on now and anyone who believes that this is what the futures markets (particularly the commodities futures) is not talking about the real world.

Though I doubt you will read it but perhaps others will find it interesting see this much longer and much more in depth piece from Harpers in 2010 about speculation in the commodities futures markets.

And, by what stretch of the imagination does anyone at this point claim that commodities like oil or basic foodstuffs (grains in particular but also many others at this point) are not essentially monopoly industries where price is determined (including being manipulated just like the banks, to use a different example, manipulated key interest rates like LIBOR) by a few giant players?

The "free market" is now and has always been mythology and not reality.
 
 
+25 # policymaven 2013-05-23 12:17
Once again, Matt knocks it out of the park. We are indeed in uncharted territory, and the austerity being imposed on the American people by the right wing is comparable to what is happening in Europe. Clearly though, we have a crazier right wing it would appear. Unfortunately, there is a rise of neo-Nazi groups in Europe as would be expected during a time of severe economic crisis. It is high time here in the United States that all liberal/progres sive organizations and movements come together in a broad coalition to not only fight austerity, but to put forward a strategy that takes on corporations that are too big to fail (Wall Street), and the entire corporate class that is driving the middle class into mental and physical illness, and economic oblivion.

If you want to see how this all was orchestrated over the past 40 years, check out the movie Heist: Who Stole the American Dream? Yes, it is my film, but I think readers of Matt will appreciate the film and what it has to say and predict about where we are headed.
 
 
+16 # James Marcus 2013-05-23 12:32
Not "Science', by any means. Greed, and Folly, only. And, as also a threat to the Nation, TREASONOUS!
 
 
-5 # RobertMStahl 2013-05-23 12:41
All civilizations end in stereotype. That is what becomes more important than thought or being a step in time, particularly with relationship to the context of application of real learning, or learning to learn depicted by Gregory Bateson. The basis for the underlying interest rate manipulation comes from shifty paper manipulation of silver and gold, funded by racketeering involved in treasury manipulation. The rest just trickles down.
 
 
-3 # Billy Bob 2013-05-23 19:47
pizzicato hamburger stand rhinocerous
 
 
+15 # mdhome 2013-05-23 12:44
Remember, Standard & Poor's has already downgraded the United States once, and we've paid more than a billion in increased borrowing costs, thanks to delays in raising the debt ceiling last time around, meaning the Boehner bill is dead on arrival - Wall Street is already not reassured by the behavior of our bozo Congress

IF you want the US to become the next Greece, well, cut the budget and slash spending, austerity will get the country there, but probably you will have fond memories of how nice the recession was.
 
 
+3 # pfagereng 2013-05-23 13:54
Economic growth depends on cheap oil, and we are running out. Oil gets more expensive, growth stagnates and debts don't get paid. What then?

Maybe a national bank would help, with money being returned to the people.

Bottom line: Compound interest is not sustainable.
 
 
+5 # 666 2013-05-23 14:27
pfagereng, don't worry about the oil running out, nature has a long-term method of balancing the budget... global warming is gradually making this planet uninhabitable by the idiotic human race. it's not the value of the dollar, it's the value (quality) of life
 
 
+8 # pzykr 2013-05-23 14:24
remember naomi klein's description of the "shock doctrine." this monetary/fiscal tension is clearly unsustainable: it is intended to fail spectacularly! the shock will be overwhelming and the globalists will make their move. the united states of america will lose its sovereignty: say hello to the new world order.
 
 
+5 # pzykr 2013-05-23 14:57
i had a comment that was posted, apparently having been cleared by the moderation team, then disappeared: that seems odd... but that comment needed a little improvement anyway!

a tension exists between monetary policy, conducted by the fed, which under QE is very stimulative, and fiscal policy, conducted by congress [controlled by republicans], which is dominated by an austerity agenda and is very anti-stimulativ e. the result is as matt describes, a building, high-stakes crisis that seems must end in some type of major shock to our system. i would argue this is not a bug in the overall plan but rather a feature. we know the "high cabal" (winston churchill's term) uses the techniques naomi klein described in her book "the shock doctrine" to affect social and political change. the objective of the high cabal, also known as "globalists," is one world government, or a "new world order." to get there, the sovereignty of individual countries must go. europe is well on the way to surrendering individual states' sovereignty. the us of a has always been known to be a tougher nut to crack.
 
 
+1 # pzykr 2013-05-23 15:17
thank you
 
 
0 # pzykr 2013-05-27 12:20
a note about this "thank you"
i did not intend for this to be published. it was a message to the moderators. as per the comment immediately above this one, my first comment had been posted, then disappeared. then the comment of 12:57 was not showing up at all, even though other posts were being published that had come in after i had written mine, which were therefore obviously stuck in moderation. i had asked for a private message explaining what terms of service i had violated that justified not publishing my comments: the comments were then immediately posted. when i then sent "thank you" i had no idea they would post that as well... i just appreciated them giving me a voice -- still do!
 
 
+1 # Charles3000 2013-05-23 15:18
Sure, that was right .."Republican Sen. Tom Coburn started likening the government spending deficits to family budgets, pushing to "make Congress live under the same rules as families across the country and treat the federal budget like the family budget." ...as long as you give the family a machine that prints legal money like the government has.
 
 
+14 # Farafalla 2013-05-23 15:24
Elizabeth Warren and Matt Taibbi for president in 2016.
 
 
+6 # Charles3000 2013-05-23 15:25
For the government, money is one of the cheapest commodities around. The Treasure prints a $100 bill for 9.7 cents. It used to be less but the bill was made more sophisticated and more expensive to print. The Congress is responsible under the constitution for the monetary system and how it works. The problem is the congress saw fit to see those $100 bills to banks for just 9.7 cents and then borrow them back and tax citizens to pay interests to the banks too. The monetary system itself is idiotic. It needs fixing.
 
 
+2 # giraffee2012 2013-05-23 17:40
We are helpless under the "do nothing" idiots in Congress. Vote them ALL OUT. You must get off your couches and campaign for the unknowns that don't have "super pacs" of unknown big$ feeding the CongressHumans to give them what they want.
 
 
+5 # cordleycoit 2013-05-23 18:37
Here we are stuck with a Congress that is too stupid to find their backsides with their hands tied behind their backs. Each party has found employment for the truly stupid in Washington D.C. Why not have a massive vote for nobody or better yet mandate the all incumbent Congress persons shall enter grade school immediately.
 
 
+8 # PABLO DIABLO 2013-05-23 20:25
Keeping it simple. Never in history has "divide and conquer" been so effective. Repeal CITIZENS UNITED, vote the scumbags out, take back our government.
 
 
+4 # Milarepa 2013-05-24 00:24
Our problem has been and continues to be the Republican KKK on horseback looking for an uppity POTUS. As long as Mr. Obama is president that's all we're gonna get. Plus media babble. It's always and only about lynching a black man.
 
 
-12 # Depressionborn 2013-05-24 03:10
Socialism is not in the least what it pretends to be. It is not the pioneer of a better and finer world, but the spoiler of what thousands of years of civilization have created. It does not build, it destroys. For destruction is the essence of it. It produces nothing, it only consumes what the social order based on private ownership in the means of production has created.
– Ludwig von Mises (1881-1973) Economist and social philosopher
 
 
+4 # dkonstruction 2013-05-24 08:15
Quoting Depressionborn:
Socialism is not in the least what it pretends to be. It is not the pioneer of a better and finer world, but the spoiler of what thousands of years of civilization have created. It does not build, it destroys. For destruction is the essence of it. It produces nothing, it only consumes what the social order based on private ownership in the means of production has created.
– Ludwig von Mises (1881-1973) Economist and social philosopher


Since socialism, at a minimum, is a society in which the workers own and control the means of production please tell where there has ever been socialism anywhere on the planet?
 
 
-5 # Depressionborn 2013-05-24 13:22
dkonstruction questioned:

Since socialism, at a minimum, is a society in which the workers own and control the means of production please tell where there has ever been socialism anywhere on the planet?


Mises may have been thinking of Russia.

Socialism—defined as a centrally planned economy in which the government controls all means of production—was the tragic failure of the twentieth century. Born of a commitment to remedy the economic and moral defects of capitalism, it has far surpassed capitalism in both economic malfunction and moral cruelty. Yet the idea and the ideal of socialism linger on. Whether socialism in some form will eventually return as a major organizing force in human affairs is unknown, but no one can accurately appraise its prospects who has not taken into account the dramatic story of its rise and fall.

Socialism must have many definitions?
 
 
-1 # Depressionborn 2013-05-26 01:03
dkonstruction asked for some data on socialism. He wrote:

"Since socialism, at a minimum, is a society in which the workers own and control the means of production please tell where there has ever been socialism anywhere on the planet?"

In 1621, the Pilgrims for one.

The leaders of Plymouth colony decided to scrap their socialistic agreement with the Adventurers and the philosophy of “from each according to his ability, to each according to his need.” Individuals were now able to own their own homes, property, and keep the fruit of their own efforts. What happened?

In 1621, the Pilgrims planted only 26 acres. Sixty acres were planted in 1622. But in 1623, spurred on by individual enterprise, 184 acres were planted! Somehow those who alleged weakness and inability became healthy and strong. It’s amazing what incentive will do to improve bad attitudes!

There are other examples of socialism failure. dkonstruction won't like them.
 
 
+3 # Billy Bob 2013-05-24 11:34
"It cannot be denied that Fascism and similar movements aiming at the establishment of dictatorships are full of the best intentions and that their intervention has, for the moment, saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history. But though its policy has brought salvation for the moment, it is not of the kind which could promise continued success. Fascism was an emergency makeshift. To view it as something more would be a fatal error."

- Ludwig von Mises (1881-1973)
 
 
+1 # barbaratodish 2013-05-24 07:50
Living on credit! But who IS really LIVING at all? We all might as well BE the federal, or for that matter, the WORLD DEFICIT, because most of us ARE "LIVING" on "FUMES" OF life,anyway. IMHO, even the 1% are hardly alive, emotionally. Look at any young child, (very young, thst is,Honey Boo Boo is old before her time) if you want to see what real life is, before spirit crushing ego and drama quality of life issues takes all, or most real life away.Capitalism CON SUMES our life in place of us having a life at all. All the resources in the world lack the ability to PURCHASE the spirit of ego and drama free play of the child, and until we all "become like little children" we will be un-alive, so it makes little difference if we are all unalive with or without debt.
 
 
+2 # pzykr 2013-05-24 11:21
that's one pole of the polarity - paradoxically, perhaps poetically, we have free choice (as holocaust survivor victor frankl says in "man's search for meaning") -- we have the choice how to respond. i choose to surrender ego and sacrifice drama, practice stillness and accept inner peace. i am content with what i have - feel no need to consume to avoid any feeling of loss and i embrace the void for therein i find all possibilities.. .
 
 
+1 # RobertMStahl 2013-05-24 11:31
All civilizations end in stereotype. That is what becomes more important than thought or being a step in time, particularly with relationship to the context of application of real learning, or learning to learn depicted by Gregory Bateson, a function of evolution and time. The basis for the underlying interest rate manipulation comes from shifty paper manipulation of silver and gold, funded by racketeering involved in treasury manipulation. See Paul Craig Roberts. The rest just trickles down.
 
 
0 # MidwestTom 2013-05-24 12:18
What this article does not address is the use of the US dollar as the world's currency for trade. After WWII literally all world trade was done in dollars. When American oil companies developed oil in Saudi Arabia we made a deal that the Saudi's would only sell their oil for dollars, this ensuring the use of the dollar as the medium of trade in oil.

When Iraq started selling oil for Euros we invaded. We are waging an indirect war with Iran because they are selling oil to China for Yuan. We are hesitating because both China and Iran are a lot stronger than Iraq.

Meanwhile the BRIC countries are trying to create an alternative to the dollar, and China has signed agreements with most Asian nations and Brazil to pay for Chinese made goods in Yuan rather than dollars. All this has resulted in the US dollar being used in slightly less than 70% of world trade.

As that percentage continues to drop we edge ever closer to WWIII, our bankers way to reinforce the dollar as the currency of world trade. China owns less than 10% of our debt right now, and the Treasury has recently been unable to find real buyers. The bankers will risk everything and everyone in this country to maintain dollar superiority. If they fail we will be forced to operate with a balance budget.
 
 
0 # Depressionborn 2013-05-24 16:54
...careful Midwest, truth is not much welcome-you told an awful lot of it.

(Re: failure: It is possible Failure is inevitable, war then too, I fear.)
 
 
+2 # tonywicher 2013-05-25 11:05
Actually, Matt, there are people who do understand the situation, namely those who understand history and the significance of the Glass-Steagall banking act of 1933 that drew a sharp line between commercial and investment banking, and created the FDIC. That distinction was eroded and finally eliminated in 1999 with the Gramm-Leach-Bli ley "Financial Modernization Act" of 1999. Eliminating this distinction was the dream of Wall Street, and their agent was Alan "bubbles" Greenspan, who worked for this end starting in the early 80's. There is a bill to restore Glass-Steagall in its full, original, ironclad form. It is HR 129 in the House and S. 985 in the Senate. These are the bills you should be supporting.
 
 
0 # Depressionborn 2013-05-25 16:50
The issue which has swept down the centuries...and which will have to be fought sooner or later...is the people vs. the banks. - Lord Acton, Historian...183 4 - 1902


A question: are the greenie crowd-pleasers socialists? Good God help us, it doesn't work well you know.
 
 
0 # tomo 2013-05-27 12:17
At the very beginning, Hamilton said--much as Krugman, Stiglitz, and Taibbi say today--a national debt can be a good thing. Hamilton seems not to have taken debts lightly. He is thought to have spent his last night diligently trying to put his personal debts in order so that his probable death the next day would inconvenience his creditors as little as possible. Jefferson, who denounced Hamilton's championing of debts and of taxes to pay them, had immense debts from Monticello and the lifestyle he allowed himself there. His slaves were his collateral. It seems he never intended to pay his debts, and in fact that all but the Hemings family were sold off for the sake of creditors when he died.

Of late, the Republicans have opted for the Jeffersonian solution. Denounce all public debt while opposing all taxes that might intrude on their personal extravagance. The taxes might make debt honorable, but on good Jeffersonian principles, they oppose them, and call for a government they can drown in a bathtub--except , of course when government is performing its essential responsibility, which is to make them and their patrons richer still.
 
 
+1 # Roger Kotila 2013-05-27 13:26
I like Ellen Brown's campaign for publicly owned & regulated banking. We can end the secret manipulations by the private banking/financi al sectors by adopting Brown's proposals, and by adopting the Earth Federation Movement's Earth Constitution which provides a means to put private international banking and finance under public regulation & control. Money and credit would be issued through the Earth Federation's World Parliament ("we, the people"), not by private bankers. The same can be done at the local and state level as Brown has outlined. The problem of cascading debt when governments finance using private capital with interest -- becomes a thing of the past. The UN Charter has no provision for publicly owned and regulated banking. The Earth Constitution fixes that fatal flaw in our global political system, a flaw which has rigged the system in favor of the .1% and has left the 99% holding the financial bag with no recourse particularly when its national government has been taken over & corrupted by Big Money (like we now see with the US government).
 
 
0 # Collkito 2013-05-29 10:45
It has hyperinflation and currency devaluation write large over it, hapless politicians and shifty financiers, as Matt suggests are out of ideas. Bernanke keeps shuffling the deck continually “reflating” the economy in hope we create several miracle industries to raise some dough, it’s a mock up Keynes plans for the 30’s, would have worked then (probably) when we just about controlled all manufacturing industry in the west. America’s wealth was built on cheap Oil that is not going to help this time (nor will it happen).

The economy needs versatility and breadth, banks are nervous about lending and business is just as nervous about borrowing they have little confidence in recovery. We have the prospect of legions blue collar workers out of worked for the foreseeable future. Manufacturing industry has found a new home with labour cost we simply can’t match. It’s not that America isn’t wealthy, just that it’s confined to a small sector, Obama, The Drone Ranger sent over three hundred overseas last year and he rivals Bush, giddiness for war, the Countries enduring industry, war. Perhaps the defence budget needs serious austerity but it easier pick on piss poor “scroungers” the Republicans keep telling
 
 
0 # Lusy223 2013-06-03 06:58
Today, the economic system makes us apply for a debt. There are many bank services, which help us fall into debts. Here and there different services provide us with the information like how to take a loan and where people can do this. For more information about loans online go to http://www.cashloansonlinefast.com/. It is a good way to decide money problems fast and even without leaving home. And what about those, who have more than one pay day loan? I should recommend people to rule the situation – if you have no money to wipe off the credit, then do not borrow the money.
 

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