The first quarter contraction, especially our corrected number, implies a second quarter negative real GDP. In other words, the years of Quantitative Easing (money printing) by the Federal Reserve has not resulted in economic recovery from the 2008 downturn and has not prevented further contraction.
Massive money creation and huge fiscal deficits have protected the balance sheets of "banks too big to fail," but have harmed the American people. Retirees and pension funds have been deprived for years of interest income as the Federal Reserve engineered zero or negative interest rates for the sake of a handful of oversized banks.
The extraordinary creation of new dollars diluted the dollars held by peoples, companies, institutions, and central banks throughout the world, raising fears that the dollar would lose exchange value and its role as world reserve currency.
Washington's use of financial sanctions to force other countries to bend to Washington's will is causing countries to leave the dollar payments system. Russian President Vladimir Putin's advisor has said that the dollar must be crashed as the only way to prevent US aggression. The Chinese have called for "de-americanizing the world."
The imperialistic US Foreign Account Tax Compliance Act (FATCA), which comes into full force July 1, 2015, imposes such heavy reporting costs on foreign financial institutions that these institutions might opt out of dollar transactions. All together, the result could be a serious tumble in the value of the US dollar, more wealth contraction, higher inflation via import prices, and less US wealth available to support US debt.
In view of this reality, why is Washington pushing its puppet in Kiev toward war with Russia? Why is Washington pushing NATO to spend more money and build more bases on which to deploy more troops in the Baltics and Eastern Europe, especially when Washington's contribution will be the largest part of the cost? Why is Washington re-entering the Middle East conflict that Washington began by inciting Sunni and Shia against one another? Why is Washington constructing new naval and air bases from the Philippines to Vietnam in order to encircle China?
If Washington is this unaware of its budget constraints and its financial predicament, it cannot be long before Americans experience economic catastrophe.
*John Williams, an expert on government economic statistics, has been a private consulting economist for more than thirty years (www.shadowstats.com). Dave Kranzler (www.investmentresearchdynamics.com) has years of experience in financial markets.
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