December 04, 2006

President Bush just returned from the Asia-Pacific Economic Cooperation conference in Vietnam where he failed to get support for his sanctions against North Korea from anyone, including South Korea. Except for a few snatches here and there in the news, you would hardly know that this had been a meeting about economics.

On Thanksgiving Day, Thursday, November 23, 2006, the New York Times published an article titled "Fed Chief's Help Enlisted for Trip to Press China" that covered how our new Secretary of the Treasury, Henry Paulson, will be traveling to Singapore in December with Federal Reserve Chairman Bernard Bernanke to meet with economic leaders at the next Group of 7 meeting and to "press for changes in Chinese economic policies long criticized by the (U.S.) administration and Congress."

This Times article reads like a Hollywood gossip columnist talking about the latest happenings and barely mentions the money we've borrowed from Asian countries while completely avoiding the fact that one of our closest allies, Australia, recently asked these economic giants to "telegraph" their intentions to come off the dollar. An appeal that was followed within days by both China and Japan announcing that they intended to diversify their holdings into different currencies and investment instruments, including emerging markets.

I published this news and its implications in an article called "Economic Disaster, getting closer and closer" that was on EtherZone more than a week ago and is yet to be covered by any of the loyal and normal news outlets.

Believe me, when the head of the independent Federal Reserve, America's central bank, is enlisted to accompany the Secretary of the Treasury to an economic conference there's something crucial afoot. Could it be the fact that either of these nations could bankrupt us overnight if they tire of our New World Odor policies and decide to cash-in their treasuries?

For years, bureaucrats in our government have been "pressing China" to do the equivalent of WalMart's happy face flying around the store flipping price cards the other way – raising prices – revaluing the yuan.

Can't you imagine Sam Walton saying; Gee, why didn't I think of that? We could be just like Marshall Fields, or is it Target now? No, today it's Macy's. Let's have a parade.

Get real.

Since we went off the gold standard, the federal government has been digging a debt hole that gets deeper and deeper with no signs of stopping. Down, down, down it goes like digging the proverbial hole to China, which may not be such a preposterous analogy after all. If we had paid two million dollars per foot to drill or dig such a hole, we would have burst through the other side of the world in February of this year, 2006.

As anyone can see, the George W. Bush years have put us in a more precipitous rate of free fall borrowing than any of his predecessors. We will reach the nine trillion debt point by April of next year, five months from now, and Bush has two more years to reign.

Despite the baloney you've been spoon fed by politicians and their supporters; this is all debt that can be redeemed only by taxpayers. The not-for-profit federal government has no meaningful revenue except what it receives from taxes and no savings except for their own Thrift Savings Plan, an investment retirement account that stood at $63.5 billion at the close of fiscal 2005 and is growing all the time with investments and your matching tax dollars.

If it wasn't for the warnings coming from some of our major creditors, the big guns in our financial network would probably be sending subordinates to Singapore and Bush would not have exposed himself to criticism and demonstrations about Iraq when bouncing around the Far East before and after attending the economic summit in Vietnam.

China and Japan each hold a huge pile of our promissory notes in the form of Treasury securities that are "cashable" at any time, plus another huge pile of dollars they've reaped from our phenomenal trade deficits.  

Do you really think that the Chinese and Japanese economists don't know that the American people have no way to pay them back or stand behind a dollar falling in value, that the typical American family has a negative savings rate for the first time since the Great Depression, that the American industries still in the country are increasingly dependent on cheap labor from illegal third-world aliens, or that there aren't better places than a form of welfare to risk the investment of their profits?

Do you really believe that Mr. Paulson and Mr. Bernanke will be able to cajole and intimidate these inscrutable Orientals into continually loaning us even more money when they themselves, our own guys, have called our national debt "unsustainable?"

Finally, what about the so-called "World Bank" headquartered in Washington, D.C. and headed by Paul Wolfowitz? Why isn't he attending these economic conferences?

Biting the bullet

We can't go on like this forever, passing the burden from one generation to another, going from one fly-by-night political cult to another, while we accumulate false hopes for fiscal responsibility. And we definitely need to stop dealing with symptoms when the disease is in our corrupt government. If we wait for other nations to point this out to us, we can be in big trouble.

This becomes even more important when about forty-three percent of our national debt is tied up in a financial scam that includes $2 trillion in money due our supplemental retirement system, Social Security, and where the problem could be resolved overnight with harm to no one but the politicians that caused it.

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