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The Expiring Economy

By       Message Paul Craig Roberts       (Page 1 of 2 pages)     Permalink    (# of views)

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Tent cities springing up all over America are filling with the homeless
unemployed from the worst economy since the 1930s. While Americans live
in tents, the Obama government has embarked on a $1 billion crash
program to build a mega-embassy in Islamabad, Pakistan, to rival the
one the Bush government build in Baghdad, Iraq.

Hard times have now afflicted Americans for so long that even the
extension of unemployment benefits from 6 months to 18 months for 24
high unemployment states, and to 46 - 72 weeks in other states, is
beginning to run out. By Christmas 1.5 million Americans will have
exhausted unemployment benefits while unemployment rolls continue to

Amidst this worsening economic crisis, the House of Representatives just passed a $636 billion "defense" bill.

Who is the United States defending against? Americans have no enemies
except those that the US government goes out of its way to create by
bombing and invading countries that comprise no threat whatsoever to
the US and by encircling others--Russia for example--with threatening
military bases.

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America's wars are contrived affairs to serve the money laundering
machine: from the taxpayers and money borrowed from foreign creditors
to the armaments industry to the political contributions that ensure
$636 billion "defense" bills.

President George W. Bush gave us wars in Iraq and Afghanistan that are
entirely based on lies and misrepresentations. But Obama has done Bush
one better. Obama has started a war in Pakistan with no explanation

If the armaments industry and the neoconservative brownshirts have
their way, the US will also be at war with Iran, Russia, Sudan and
North Korea.

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Meanwhile, America continues to be overrun, as it has been for decades,
not by armed foreign enemies but by illegal immigrants across America's
porous and undefended borders.

It is more proof of the Orwellian time in which we live that $636
billion appropriated for wars of aggression is called a "defense bill."

Who is going to pay for all of this? When foreign countries have spent
their trade surpluses and have no more dollars to recycle into the
purchase of Treasury bonds, when US banks have used up their "bailout"
money by purchasing Treasury bonds, and when the Federal Reserve cannot
print any more money to keep the government going without pushing up
inflation and interest rates, the taxpayer will be all that is left.
Already Obama's two top economic advisors, Treasury Secretary Timothy
Geithner and director of the National Economic Council Larry Summers,
are floating the prospect of a middle class tax increase. Will Obama
be maneuvered away from his promise just as Bush Sr. was?

Will Americans see the disconnect between their interests and the
interests of "their" government? In the small town of Vassalboro,
Maine, a few topless waitress jobs in a coffee house drew 150
applicants. Women in this small town are so desperate for jobs that
they are reduced to undressing for their neighbors' amusement.

Meanwhile, the Obama government is going to straighten out Afghanistan
and Pakistan and build marble palaces to awe the locals half way around
the world.

The US government keeps hyping "recovery" the way Bush hyped "terrorist
threat" and "weapons of mass destruction." The recovery is no more
real than the threats. Indeed, it is possible that the economic
collapse has hardly begun. Let's look at what might await us here at
home while the US government pursues hegemony abroad.

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The real estate crisis is not over. More home foreclosures await as
unemployment rises and unemployment benefits are exhausted. The
commercial real estate crisis is yet to hit. More bailouts are coming,
and they will have to be financed by more debt or money creation. If
there are not sufficient purchasers for the Treasury bonds, the Federal
Reserve will have to purchase them by creating checking accounts for
the Treasury, that is, by debt monetization or the printing of money.

More debt and money creation will put more pressure on the US dollar's
exchange value. At some point import prices, which include offshored
goods and services of US corporations, will rise, adding to the
inflation fueled by domestic money creation. The Federal Reserve will
be unable to hold down interest rates by buying bonds.

No part of US economic policy addresses the systemic crisis in American
incomes. For most Americans real income ceased to grow some years ago.
Americans have substituted second jobs and debt accumulation for the
missing growth in real wages. With most households maxed out on debt
and jobs disappearing, these substitutes for real income growth no
longer exist.

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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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