AMERICA: SOON TO BE A THIRD WORLD NATION

Submitted by DANIEL REDMOND (United States), Mar 14, 2008 at 22:47

Among the extensive list of irresponsible and/or corrupt follies committed by our elected government officials one of the most mind-boggling in its pure arrogance and caprice was the insane decision that the American taxpayer should bear the sole responsibility for 'rebuilding Iraq's infrastructure.' This decision took place without either of these two things happening: 1) questioning whether or not it was America's responsibility to rebuilt Iraq in the first place, and 2) asking the American people if they wanted to pay for it.

The answer to the first part of that two-part inquiry is: No, it was not our responsibility to pay for rebuilding Iraq because we were not responsible for destroying Iraq. The delapidated infrastructure of Iraq was the direct result of 24 years of neglect under the tyranny of Saddam Hussein, a dictator who the Iraqi people put up with for, well, 24 years, and had little to do with our invasion.

The answer to the second part of that two-part question is: No, of course we American taxpayers don't want to pay for rebuilding a foreign country in the Middle East, especially since our own government is FLAT BROKE and we have to do the rebuilding with MONEY BORROWED FROM ASIA.

Straight talk: we're broke. That's a fact. As a nation, we're broke. We have a national debt rapidly closing in on TEN TRILLION DOLLARS. We have consumer debt of an almost equal amount. Our government is currently borrowing more than one billion dollars a day just to service the interest on our debt and keep the house of cards from falling. Our money, the good old American greenback, is well on its way to becoming a junk currency like the Mexican peso. Don't think so? Just a few years ago the Euro was worth 89 cents. Now the Euro is worth around $1.65, the Candadian dollar is, for the first time, worth more than the American dollar, and our own government with the complicity of the Federal Reserve is doing everything it can to devalue it even further.

Dollars are like anything else, the more prevalent they are the less they are worth. Lowered interest rates make more dollars available, which in turn reduces the value of the dollar, which in turn causes 'inflation.' In addition to this, the Fed is having tens of billions of dollars literally printed and pumped into the economy to make matters even worse, although it's a minor problem compared to the interest rates and the trillions of borrowed bucks we collectively owe to foreign governments.

A little background infor here for those uninitiated in the arcane subject of monetary realities: First, most money is not in the form of physical dollars. Approximately 97% of all the dollars in the world today are in the form of electronic banking transactions of one kind or another. If the stock market on Wall Street rallies on any given day and goes "up" by five hundred billion dollars, this does not mean that the Federal Reserve suddenly printed another five hundred billion dollars that day. It means that Wall Street investors were buying more than they sold that day and the recorded result of those buys was a series of higher numbers appearing on somebody's computer somewhere. Also, of the 3% of actual physical dollars in existence, at any given moment two-thirds of them are outside the borders of the United States. Money, aside from the coffee and cigarettes money that you walk around with in your pocket, exists in the form of electronic banking records, that's all.

The one great conundrum faced by all capitalist economies is that they quickly reach a point where the capacity to produce 'things' greatly outstrips the realistic ability to consume all of the things being produced. Put simply, we can produce a lot more cars, washing machines, etc. than we can ever realistically need to use. This then requires a readjustment of our basic perception of the world. In order to maintain the belief in the value of the dollar while simultaneously realizing that there is no actual shortage of literally ANYTHING we must convince ourselves that there is an actualy shortage of dollars---an agreed upon symbol of a medium of exchange----in order to maintain the value of the currency. It requires a fundamental element of denial of reality to do this, but do it we must to keep the system afloat and we do it with all sorts of fantasies, such as the 'supply side economics' of the far-right, which has never worked before and never will.

Supply side economics is predicated upon the belief that increasing production is the answer to all economic woes and that lowering taxes, or any other thing that spurs increased production, is always a good thing. When you understand that we are over-productive to begin with you can see the folly of this concept pretty quickly.

So now we've put ourselves into a stangle-hold of sorts. In order to bail out banks saddled with billions of dollars in bad debt the Fed will lower interest rates again and again to loosen the money supply. This in turn devalues the dollar's value, as explained above. But a devalued dollar makes our products cheaper to buy, especially for foreigners; which spurs production. But we don't dare tighten the money supply and curtail production because that will create unemployment levels which will stall the economy all together. And our government keeps borrowing and spending in order to pump air into this hollow balloon, our debt-driven economy. And on and on it goes.....

When the time comes where all of these foreign creditors have lost faith in the dollar and demand to cash in their Treasury Bonds in order to invest in foreign currencies, gold, or whatever, at that time our own currency may simply collapse and go into a free-fall like the Mexican peso or the the German deutchmark of the 1930's.

In the mean time, I am dumping dollars and buying Euros, British Pounds and gold as a hedge against the insanity of my own nation's leaders. After all, when one thing goes down, the other goes up relative to it. I've given up on the dollar and will only use it to purchase what I need in this dollar driven society. That way when we become a northern version of a banana republic I'll have some assets left.

DANIEL REDMOND

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