Depression On The Way

Global Research, January 20, 2008

" But if you dig a little deeper, it is easy to see that the U.S. never really got out of the recession of 2000-2002 which followed the bursting of the bubble at the end of the Bill Clinton presidency. This event was marked by the stock market crash starting in December 2000 that cost Americans over a trillion dollars in retirement savings and other forms of paper “wealth” over a period of a few months."

The first of these bubbles, of course, was the housing one, marked by officially-sanctioned fraudulent lending practices leading to the sub-prime mortgage collapse. By 2005, this bubble had been creating fifty percent of all economic growth in the U.S. But now that growth has reversed in a nationwide home price deflation. " The second was the explosion of leveraged debt in the areas of commercial real estate, mergers and buyouts by equity funds, and hedge/derivative fund speculation. This debt has also begun to unravel which is reflected in declining equity values in the stock market.
The third bubble has been the less conspicuous trillion dollars in off-budget spending for the Afghanistan and Iraq Wars which has kept the military-industrial complex in clover. Meanwhile government tax revenues have plummeted due to the Bush tax cuts for the rich and the continued erosion of the U.S. job base and our public and private infrastructures."
" An immediate infusion of purchasing power is a very good idea. Of course the amounts under consideration are a drop in the bucket and will do little good for people threatened with unemployment or suffering from stagnant incomes, inflation of food and fuel prices, and out-of-control debt. Also, the stimulus would probably be offset by more inflation and decline in the dollar due to the additional federal borrowing required to finance the rebates."
"Of course all these half-measures could be swept away if the crisis deepens into a full-blown depression, which is a real possibility. And like the Great Depression of the 1930s, this one could manifest not due to any failure of the producing economy to be able to manufacture just about anything wanted or needed for daily living, but because of a wholesale failure of what British economist John Maynard Keynes called “aggregate demand.” That is, the money in the form of purchasing power simply is not there to float a full-employment economy. "

The first thing is to realize once and for all that the underlying cause of the looming disaster is the debt-based monetary system .
Under this system, credit is brought into existence through bank lending and cancelled when the loans are repaid. The economic activity that results is “taxed” at an unsustainable level not only by the government but by the compound interest accruing to the banks. This is why the banks are the most powerful institutions in the nation, by the way.
But it’s a sick, rotten, unjust, and essentially medieval system, no different in principle from how the bankers of the old European cities drove their kings and princes into bankruptcy by financing their foolish wars. Eventually it’s a system that results in the drastic shortage of purchasing power as today Bush, Congress, and the rest are waking up to the obvious solution of simply giving people more money to spend.
" In reality, the government should give people much more money to spend than has been proposed or even conceived of—but not through more government borrowing from the Federal Reserve.
As this writer has argued, the first thing that should be done—today—is to pay each individual in the nation an average stipend of $12,600 as a National Dividend, based on the overall appreciation of the economy due to harnessing the forces of nature and technology."
"The trouble is, Keynes’s solution—government deficit spending—is not available anymore. Deficit spending is just another form of debt. The use of debt today as a stimulus goes way beyond federal borrowing. It’s become a way of life for the entire economy. Today our total societal debt is not just the $9 trillion federal deficit but an additional $35-40 trillion for individuals, businesses, and state and local governments. Nixon had it right when he said, “We are all Keynesians now.” But when he said this in the early 1970s, no one anticipated the catastrophic proportions that debt of all types would eventually assume under more than a generation of Federal Reserve monetarist policies."

(We are being lied to by the main stream media every day, there is no chance of recovery from the present recession and the economy will likely crash into depression, read the article by a prominent conservative who knows.) authored by Richard C Cook
Not to worry, eventually the Democrats will return to power and get the whole thing turned around. Peace will prevail, people will get back to work and America will start to gain a little respect back in the International community.

Sadly this will again be followed by some rightwing, nimrod who will again start a war, provide a huge banquet of tax dollars for his rich friends and screw the economy up yet again. The good times will be attributed to the work Bush has done by the rightwingnuts and all that is wrong will again be the Dems fault. The same as it ever was.

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