The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
The Forum - On Line Opinion's article discussion area



Syndicate
RSS/XML


RSS 2.0

Main Articles General

Sign In      Register

The Forum > Article Comments > The US Federal Government is sabotaging a genuine recovery > Comments

The US Federal Government is sabotaging a genuine recovery : Comments

By Bill Bonner, published 14/10/2009

The United States is a capitalist economy in which the capitalists have no capital.

  1. Pages:
  2. 1
  3. 2
  4. All
While the US government looks like a bunch of radical lefty loonies that only know how to spend on big social programs there is a wee bit of logic to their madness.

Much as Rude and co. timed their cash splashes to coincide with the annual Christmas and Easter spendups (to befuddle those that would try to separate out the normal spend from the effects of the splash), Obama and his minions have targeted the main emphases of their "stimulus package" to have effect just before the next round of congressional elections in Nov 2010.

It is all political gamesmanship to buy the votes of those less able to distinguish the games from what is really happening. And it usually works.

Half the population has an IQ below normal. Sometimes I think it is greater.
Posted by Bruce, Wednesday, 14 October 2009 11:01:32 AM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Good article. About time Greenspan and the other money printers were put in their place. It is easy to be an irresponsible lender/spender if you don't stick around to face the music. Clearly pyramid schemes (fractional reserve lending is exactly that) must eventually come to an end.
Although we seemed to have dodged the US financial crisis, in fact we have just delayed it by borrowing a bit more and propping up the banks with taxpayer funds. Losers are taxpayers, winners are "profitable" banks and insurance companies.
Private profits, public losses. What a disgusting way to run an economy!
It will be interesting to see which political party is in power when the bubble bursts. Each will blame the other: Truth is Keating set us up for growth. Howard squandered it. Rudd tried to extend the squandering and pretend the Howard decade didn't occur...this makes him as complicit as Howard economically. At least he isn't trashing our culture and bringing us into international disrepute though...
Anyone who thinks 30% of an economy should be "financial services" and allow unlimited profiteering is an idiot.
Posted by Ozandy, Wednesday, 14 October 2009 1:12:26 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
It is the US Federal Reserve a private group of 12 banks who own the US cuuency and control the US economy.This is why Dr Ron Paul the congressman for Texas has now a Bill HR 1207 to audit the Fed.Over 66% of congress support it. $1.2 trillion of public money is unaccounted for by the Fed,and presently Congress have no right to investigate.

I think the author should have researched his topic a bit better, since the US Govt has very little power over the economy.
Posted by Arjay, Thursday, 15 October 2009 6:37:41 AM
Find out more about this user Visit this user's webpage Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
The author's ignorance of the actual basic functioning of modern monetary economies is starkly apparent.

The private sector cannot net save unless the government sector (federal budget) is in deficit. This is why historically, deficits not surpluses tend to be the norm.

He obviously believes that US citizens are able to get US denominated financial assets from elsewhere even if the government is causing a net drain of them from the system by attempting to return to surplus. Surpluses in the private sector (net savings) are the result of deficits in the government sector (putting in more through their spending than they remove in taxation).

As long as the US government is the monopoly issuer of US dollars, this remains a basic fact of national accounting. Denying it will not by itself alter the reality.
Posted by Fozz, Thursday, 15 October 2009 8:57:23 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
its sad that the experts all got it wrong...im talking about them pretent experts on tv/etc...there were those who warned of this bust..industry insiders knew was inevitable

the world has effectivly been looted by the banking cartels/who run everything from the solid base of being able to make fiat at whim...that they use to buy assets/resource/inmdustry/govts..

name anything money cant buy
they had total control over money..yet still took ours via undue threats to govt...recall it was to be a finantial meltdown...great..

it would be the best thing...an overnight collapse..and govt nationalisng the banks back under elected supervision...over night industry stop consuming fossil fuels...and no carbontax needed...

yet now their resque plan is carbon trading to attempt to suck up the last assets they havnt plundered...but it gets worse...recall the debate about a u shape or a w...

well guess what

http://blogs.ft.com/economistsforum/2009/10/a-second-great-depression-is-still-possible/
Posted by one under god, Thursday, 15 October 2009 11:49:56 PM
Find out more about this user Visit this user's webpage Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Sadly I think that Thomas Palley is right.They have tried to solve a debt probelm by creating more debt and inflation.

They see the monetary system being more important than the real economy.Nothing has changed.They are pursuing solutions that created the problems in the first place.The real indicator of the health of an economy is not the share market,but the rate of unemployment.Employment in a free market means real productivity.
Posted by Arjay, Friday, 16 October 2009 7:34:23 AM
Find out more about this user Visit this user's webpage Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Arjay,

your equating of sovereign government debt with private debt reveals that you share the author's misunderstanding.

Sovereign government deficit funds the private sector surplus. The aggregate private sector cannot reduce it's debt unless the sovereign government is in deficit.

Have a good hard think about the genesis of this thing we call "money".
Posted by Fozz, Friday, 16 October 2009 12:41:55 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
This article is both luminescent and timely, specially after the Rudd stimulus package.Despite the bland rhetoric of Treasury boffins Steven's and Ken Henry, we are far from the road to recovery, and those seemingly convenient " green shoots " and recession-proof novelties are just disingenuous chicanery. In truth, we are still a long way off.

The Stock Market revival, surge in the Aussie Dollar; the heavily subsidised Housing Market ( Swan's $8 B injection) the orchestrated consumer confidence etc is NO proof-positives there are no more fiscal calamities around the corner. Moody's Economics are urging caution and predicting another collaplse waiting in the wings. The downfall of the US greenback.

Some Foreign Exchange analysts even say we may reach parity with the $US this year ! As if,overnight our currency has become the World's Reserve ! Some of our so called Economic pundits that write for our leading tabloids should do reality checks; take a cold shower, and cease inbibing in ecstasy..smoking pot !

Q. What does Allan Greenspan, Tim Geither, Bernanke, Paulson & Volkers share with citizen Joe Blow ?

A. Duh..they couldn't see the forest-for-the-trees, and didn't predict the collapse of the World's Economic system and a full blown depression.

Intriguingly,these guys are calling the shots now ?

Apart from the salient points Bill Bonner makes, there are parallels we can draw in Aust. The US gargantuan $ 30/50 trillion stimulus achieved pathetically little. Big Business, Bank of America, Auto Industry, AIG, Fannnie & Freddie Mac, Citicorp, TARB, Money Market Fund, Wall St etc mostly benefited. Fed and Treasury spent $ 30 B buying junk mortgages even though 30 % are underwater, and most major Banks are insolvent. Worst unemployment in 25 yrs, with more to follow. Strikingly, CEO's, Directors and Executives continued to draw mammoth salaries and ' proficiency ' bonuses ! The crash wiped out $ 30 trillion in household wealth. Fiscal rectitude ?

Enter the Dragon.

China, the US nemesis. The prolific buyer $ 700 B of US Treasury Bonds, F & F Mac, Resources unlimited. The largest holder, 48 % or $ 1.7 trillion
Posted by dalma, Saturday, 17 October 2009 4:36:08 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
of Foreign Reserve currency, followed by Japan, Korea. In 2008, $ 411 B in US Reserves and escaling by the second. Secretary Clinton emphatically urged China to keep buying Treasury Bonds to prop up it's US liquidity !

With the Greenback losing parity, and the printing presses working overtime, the inflationary spiral guarantees the loss of liquidity. No wonder the price of Gold has soared, as investors hedge their dwindling confidence in the Reserve.

RBA Steven's recent rise in interest rates, not shared by the Big 4, justified his position by comparing the US and UK, set at zero. Reason being the colossal rise in credit overtaking traditional monetory policy. The G20 are all suffering the same meltdown, with a current account deficit except Germany. A prolificacy for luxary goods, and cheaply made China imports. Woefully, manufacturing Business's have vacated offshore for quick returns, to the detriment of local labour skills. Importantly, these jobs are lost forever, and the reliance of more imported goods exacerbated the demise of countless manufacturers.

No wonder there is a skill shortage here and abroad. For short term expediency, and paltry dime & nickel gains, the outlook is despairingly alarming, unless a true patroit and visionary with Political clout emerges from this diaspora. Often overlooked is China's insatiable appetite for commodities, resources. Long term exploration in minerals and ores. Feb, 2009 buys Oz Minerals $ 1.7 B; Fortesque Mines 16 %. Gorgon $ 50 B gas fields in WA. Petrochina's bid for Gorgon in reality is Exxon Mobile (US) owned. $ 46 B for Aust Terramin Mines in Algeria. Fervid negotiations with Gina Rhinehart for more iron ore in Pilbara.WA. Coal mines in Qld, belonging to Billionaire soccer benefactor and legend, including a rail link, and new Port facilities $40 B. Bidding for a stake in giant Rio Tinto's Holdings $19.5 B, Gloomily, the quest goes on.

Since the end of WWII, the selling off of our National Heritage has progressed unabated, under Govts of both persuasions. Future Generations of Aussie bleeders will inevitably be the poorest losers. You can bet on it.
Posted by dalma, Saturday, 17 October 2009 5:17:49 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Fozz,just go to youtube and view "Money as Debt " by Paul Grignon.
Money is just the oil that facilates economic activity.We have turned into a pariah that comsumes the very essence of our traditional values.An economy runs on trust and honesty as well as organised /skilled workers.

How can 30% of an economy be made up of financial BS when it produces nothing? The present system has failed dismally.
Posted by Arjay, Sunday, 18 October 2009 8:54:27 PM
Find out more about this user Visit this user's webpage Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Arjay,

going on the title page, it is obvious that Paul makes the same assumption as the author of this article - that sovereign government debt and private sector debt are no different.

This assumption is logical but is also completely wrong.

I have no quibble with his veiw of bankers but the biggest problems arise because we the public do not undertand the fundamental mechanics of the thing we often refer to as money. We virtually never ask ourselves "what IS this stuff? Where does it come from? Where does it go?".

We believe (in more recent times) that federal budget surpluses must be good because they are good for individual households (savings). But it is a fact that if the private sector overall becomes determined to net save, the federal budget must be in deficit to accomodate this.

Surplus and deficit are simply two sides of a coin - you cannot have a surplus without a corresponding deficit and whenever the federal budget is in surplus, the private sector - in aggregate - must be in deficit. Individuals can still save but on average, the private sector must be running down savings, liquidating assets and racking up private debt if growth is to continue. It is an unsustainable situation.

If you check recent history, you will see that the previous governments huge and long running surpluses were mirrored by the biggest private sector debt run up in our history. This is not a coincidence - it is a fact of national accounting.

Federal budget deficits on the other hand, allow the private sector to repair their balance sheets by creating a private sector surplus. The Australian stimulus package has been much more effective than the US one in good part because of the way it was distributed.

Don't fear federal budget deficits. Historically, they are the norm.
Posted by Fozz, Monday, 19 October 2009 9:41:33 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
  1. Pages:
  2. 1
  3. 2
  4. All

About Us :: Search :: Discuss :: Feedback :: Legals :: Privacy