A Brief Economics Lessen
I bet Shrub does not have a clue of what to do about the economy
Here is the picture: The U.S. economy, which has been kept alive by enormous debt expansion that has overreached its limit, is falling into recession. The traditional way out by expanding the supply of money and credit is blocked by the impaired banking system, the levels of consumer debt, the collapsing value of the U.S.
dollar and rising inflation.
The Bush regime is attempting to bypass the stalled credit expansion by sending Americans $600 checks, money that will mainly be used to reduce existing credit card debt and not to fund new consumption.
The United States is dependent on foreigners not only for energy but also for manufactured goods and advanced technology products. The United States is dependent on foreigners to finance our consumption of $800 billion annually more than the United States produces. The United States is dependent on foreigners to finance its red ink wars, and the U.S. government's budget deficit is now expanding, as tax revenues decline with the declining economy.
The bottom line: U.S. power is enfeebled. U.S. power depends on the willingness of foreigners to finance our wars and on the willingness of foreigners to continue to accumulate depreciating dollar assets.
The United States cannot close its trade deficit. Oil prices are rising, and offshore production of goods and services for U.S. markets results in a dollar-for-dollar increase in imports, while reducing the supply of domestic goods available for export.
The United States cannot close its budget deficit while it is squandering vast sums on wars that serve no U.S. purpose, handing out $150 billion in red-ink rebates and falling into recession.
U.S. living standards, which have been stagnant for years, will plummet once dollar decline forces China off the dollar peg. So far, prices of the Chinese-made goods on Wal-Mart shelves have not risen, because the Chinese currency, pegged to the dollar, falls in value with the dollar. In a word, tottering U.S. living standards are being supported by China's willingness to subsidize U.S. consumption by keeping its currency grossly undervalued.
The United States is overextended economically and militarily, just as was Great Britain with the fall of France in the opening days of World War II. The British had the Americans to bail them out. After the chewing gum and bailing wire patch-ups are exhausted, who is going to bail us out?
Here is the picture: The U.S. economy, which has been kept alive by enormous debt expansion that has overreached its limit, is falling into recession. The traditional way out by expanding the supply of money and credit is blocked by the impaired banking system, the levels of consumer debt, the collapsing value of the U.S.
dollar and rising inflation.
The Bush regime is attempting to bypass the stalled credit expansion by sending Americans $600 checks, money that will mainly be used to reduce existing credit card debt and not to fund new consumption.
The United States is dependent on foreigners not only for energy but also for manufactured goods and advanced technology products. The United States is dependent on foreigners to finance our consumption of $800 billion annually more than the United States produces. The United States is dependent on foreigners to finance its red ink wars, and the U.S. government's budget deficit is now expanding, as tax revenues decline with the declining economy.
The bottom line: U.S. power is enfeebled. U.S. power depends on the willingness of foreigners to finance our wars and on the willingness of foreigners to continue to accumulate depreciating dollar assets.
The United States cannot close its trade deficit. Oil prices are rising, and offshore production of goods and services for U.S. markets results in a dollar-for-dollar increase in imports, while reducing the supply of domestic goods available for export.
The United States cannot close its budget deficit while it is squandering vast sums on wars that serve no U.S. purpose, handing out $150 billion in red-ink rebates and falling into recession.
U.S. living standards, which have been stagnant for years, will plummet once dollar decline forces China off the dollar peg. So far, prices of the Chinese-made goods on Wal-Mart shelves have not risen, because the Chinese currency, pegged to the dollar, falls in value with the dollar. In a word, tottering U.S. living standards are being supported by China's willingness to subsidize U.S. consumption by keeping its currency grossly undervalued.
The United States is overextended economically and militarily, just as was Great Britain with the fall of France in the opening days of World War II. The British had the Americans to bail them out. After the chewing gum and bailing wire patch-ups are exhausted, who is going to bail us out?
posted by Curlydog - Bill at
3/15/2008 08:05:00 AM
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