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Economics Lesson 1

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The Federal Reserve under Alan Greenspan compensated for the absence of US consumer income growth with a policy of easy credit and a policy of driving up home prices with low interest rates. This policy allowed people to refinance their homes and to spend the inflated equity in their homes that Greenspan's policy created.

In other words, an increase in consumer indebtedness and dissavings drove the economy in the place of the missing growth in consumer incomes.

Today, consumers are too indebted to borrow, and banks are too insolvent to lend. Therefore, there is no possibility of further debt expansion as a substitute for real income growth. An offshored economy is a dead and exhausted economy.

The consequences of a dead economy when the government is wasting trillions of dollars in wars of naked aggression and in bailouts of fraudulent financial institutions is a government budget that can only be financed by printing money.

The consequence of printing money when jobs have been moved offshore is an inflationary depression. This catastrophe could begin to unfold this year or in 2013. If Europe's problems worsen, flight into dollars could delay sharp rises in US inflation until 2014.

The emperor has no clothes, and sooner or later this will be recognized.

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Dr. Roberts was Assistant Secretary of the US Treasury for Economic Policy in the Reagan Administration. He was associate editor and columnist with the Wall Street Journal, columnist for Business Week and the Scripps Howard News Service. He is a contributing editor to Gerald Celente's Trends Journal. He has had numerous university appointments. His books, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West is available (more...)

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The amazing thing is while all this is going on th... by mrk * on Tuesday, Jan 31, 2012 at 1:28:46 PM
Amen! It boggles the mind to contemplate an entire... by Mort Persky on Tuesday, Jan 31, 2012 at 3:15:13 PM
Thanks for the economics lesson, Paul. A governmen... by Ernie Messerschmidt on Tuesday, Jan 31, 2012 at 2:07:17 PM
I don't need government spin and fuzzy math to t... by Janet Loughrey on Tuesday, Jan 31, 2012 at 2:59:40 PM
The only way to fix this problem is to elect Ron P... by Alice Lillie on Tuesday, Jan 31, 2012 at 5:16:27 PM
The consequences of a dead economy when the gover... by Michael Dewey on Wednesday, Feb 1, 2012 at 1:57:34 AM
Will be writing in Ron Paul 2012.  We tell ev... by Michael Dewey on Wednesday, Feb 1, 2012 at 2:17:38 AM
If it takes Congress to declare war, what makes yo... by Vaikunthanath Kaviraj on Wednesday, Feb 1, 2012 at 3:37:23 AM
The people who get him in would kill him.  3 ... by Michael Dewey on Wednesday, Feb 1, 2012 at 5:12:51 AM
You are correct that Paul will need the support of... by June Genis on Saturday, Feb 4, 2012 at 11:58:33 AM
Just realized I hit the wrong reply button.  ... by June Genis on Saturday, Feb 4, 2012 at 12:04:02 PM
It is supposed to be their social security and not... by Mike Preston on Wednesday, Feb 1, 2012 at 5:26:33 PM
Some people call for a return to the Gold Standard... by William Huie on Wednesday, Feb 1, 2012 at 10:33:24 AM
Thanks for this informative, fact filled article.&... by June Genis on Saturday, Feb 4, 2012 at 11:49:31 AM
Mr. Roberts, Your observati... by Robert Bostick on Sunday, Feb 5, 2012 at 11:51:32 AM