Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Bitcoin Price 2019 Trend Current State - 18th Sep 19
No More Realtors… These Start-ups Will Buy Your House in Less than 20 Days - 18th Sep 19
Gold Bugs And Manipulation Theorists Unite – Another “Manipulation” Indictment - 18th Sep 19
Central Bankers' Desperate Grab for Power - 18th Sep 19
Oil Shock! Will War Drums, Inflation Fears Ignite Gold and Silver Markets? - 18th Sep 19
Importance Of Internal Rate Of Return For A Business - 18th Sep 19
Gold Bull Market Ultimate Upside Target - 17th Sep 19
Gold Spikes on the Saudi Oil Attacks: Can It Last? - 17th Sep 19
Stock Market VIX To Begin A New Uptrend and What it Means - 17th Sep 19
Philippines, China and US: Joint Exploration Vs Rearmament and Nuclear Weapons - 17th Sep 19
What Are The Real Upside Targets For Crude Oil Price Post Drone Attack? - 17th Sep 19
Curse of Technology Weapons - 17th Sep 19
Media Hypes Recession Whilst Trump Proposes a Tax on Savings - 17th Sep 19
Understanding Ways To Stretch Your Investments Further - 17th Sep 19
Trading Natural Gas As The Season Changes - 16th Sep 19
Cameco Crash, Uranium Sector Won’t Catch a break - 16th Sep 19
These Indicators Point to an Early 2020 Economic Downturn - 16th Sep 19
Gold When Global Insanity Prevails - 16th Sep 19
Stock Market Looking Toppy - 16th Sep 19
Is the Stocks Bull Market Nearing an End? - 16th Sep 19
US Stock Market Indexes Continue to Rally Within A Defined Range - 16th Sep 19
What If Gold Is NOT In A New Bull Market? - 16th Sep 19
A History Lesson For Pundits Who Don’t Believe Stocks Are Overvalued - 16th Sep 19
The Disconnect Between Millennials and Real Estate - 16th Sep 19
Tech Giants Will Crash in the Next Stock Market Downturn - 15th Sep 19
Will Draghi’s Swan Song Revive the Eurozone? And Gold? - 15th Sep 19
The Race to Depreciate Fiat Currencies Is Accelerating - 15th Sep 19
Can Crypto casino beat Hybrid casino - 15th Sep 19
British Pound GBP vs Brexit Chaos Timeline - 14th Sep 19
Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - 14th Sep 19
War Gaming the US-China Trade War - 14th Sep 19
Buying a Budgie, Parakeet for the First Time from a Pet Shop - Jollyes UK - 14th Sep 19
Crude Oil Price Setting Up For A Downside Price Rotation - 13th Sep 19
A “Looming” Recession Is a Gold Golden Opportunity - 13th Sep 19
Is 2019 Similar to 2007? What Does It Mean For Gold? - 13th Sep 19
How Did the Philippines Establish Itself as a World Leader in Call Centre Outsourcing? - 13th Sep 19
UK General Election Forecast 2019 - Betting Market Odds - 13th Sep 19
Energy Sector Reaches Key Low Point – Start Looking For The Next Move - 13th Sep 19
Weakening Shale Productivity "VERY Bullish" For Oil Prices - 13th Sep 19
Stock Market Dow to 38,000 by 2022 - 13th Sep 19 - readtheticker
Gold under NIRP? | Negative Interest Rates vs Bullion - 12th Sep 19
Land Rover Discovery Sport Brake Pads and Discs's Replace, Dealer Check and Cost - 12th Sep 19
Stock Market Crash Black Swan Event Set Up Sept 12th? - 12th Sep 19
Increased Pension Liabilities During the Coming Stock Market Crash - 12th Sep 19
Gold at Support: the Upcoming Move - 12th Sep 19
Precious Metals, US Dollar, Stocks – How It All Relates – Part II - 12th Sep 19
Boris Johnson's "Do or Die, Dead in a Ditch" Brexit Strategy - 11th Sep 19
Precious Metals, US Dollar: How It All Relates – Part I - 11th Sep 19
Bank of England’s Carney Delivers Dollar Shocker at Jackson Hole meeting - 11th Sep 19
Gold and Silver Wounded Animals, Indeed - 11th Sep 19
Boris Johnson a Crippled Prime Minister - 11th Sep 19
Gold Significant Correction Has Started - 11th Sep 19
Reasons To Follow Experienced Traders In Automated Trading - 11th Sep 19
Silver's Sharp Reaction Back - 11th Sep 19
2020 Will Be the Most Volatile Market Year in History - 11th Sep 19
Westminister BrExit Extreme Chaos Puts Britain into a Pre-Civil War State - 10th Sep 19
Gold to Correct as Stocks Rally - 10th Sep 19
Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - 10th Sep 19
Stock Market Sector Rotation Giving Mixed Signals About The Future - 10th Sep 19
The Online Gaming Industry is Going Up - 10th Sep 19

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

US Economy Living in Perilous Times Due to the Financial Bubble

Economics / Liquidity Bubble Oct 11, 2007 - 11:17 AM GMT

By: Richard_C_Cook

Economics Best Financial Markets Analysis ArticleThe U.S., as the only so-called superpower, exerts a decisive influence on the fate of the world. Today peace and stability are threatened by three giant problems whose outcome depends a great deal on U.S. decisions. These problems are linked to each other synergistically in ways that increase the overall danger.


The first problem is the peril to the world's economies from the massive worldwide pyramid of speculation and debt, a.k.a., the financial bubble. Moreover, we have not seen the end of the fallout from the deflation of the U.S. housing bubble of the mid-2000s. The Federal Reserve facilitated this bubble to fill the void left by the bursting of the dot.com bubble of the 1990s. That one followed on the heels of the 1980s buyout-merger-acquisition bubble.

Officials with a vested interest in the status quo claim that the global economy is still fundamentally sound. In the face of the financial crisis of July-August, 2007, the Federal Reserve seemed to succeed, at least temporarily, in using its available tools to reassure the financial markets. This included the interest rate cut that spurred the stock market back into record territory. But when dollars are used to float a bubble, it eventually means a lot of trouble.

The second problem is the U.S. march toward military conquest of the Middle East. Even while the takeover of Iraq seems to hang in the balance, an attack on Iran may be next. U.S. action is obviously connected with hunger for gasoline, oil company profits, and the central role of the petrodollar in international commerce. In a now-famous phrase, former Federal Reserve Chairman Alan Greenspan states in his new book, Age of Turbulence , that the Iraq War is “largely about oil.”

But is Greenspan's characterization a red herring? Are oil and dollars the full explanation? Would there have been no other way for the U.S. to secure its strategic interests in that part of the world, such as through multilateral cooperation with other powers like Russia and China? Isn't it a fact that the neocons who control foreign policy within the Bush administration have steered a program of preemptive warfare clearly aligned with the more radical elements of Israel?

The third problem is that global warming seems to be proceeding at a more rapid pace than anyone previously thought. Weather patterns are clearly being affected, with many areas of the continental U.S. now locked in severe drought. Much of the Midwest and West are running dangerously low on water. The possibility that sometime this century sea level could rise up to one meter could be devastating to a nation like the U.S. where fifty percent of GDP is produced along its coasts.

If we began now, major infrastructure investments might help us prepare. But we already have an infrastructure maintenance deficit in the trillions of dollars. New large-scale expenditures are inconceivable for a government whose budget has been trashed by tax cuts for the rich, a trillion dollars spent on “wars of choice,” commodity price inflation, and stagnant tax revenues in the face of a recovery which looks a lot like a recession.

Bad as these three problems are, they are the tip of the iceberg. What really controls the fate of nations is money. And what looms beneath the surface is that we have in the U.S. and elsewhere a monetary system which is fundamentally flawed. It is a system that creates money almost exclusively through debt, one that has the net effect over time of funneling much of the world's wealth from the hands of those who earn their living in the producing economy of goods and services into the bank accounts and investment funds of those who lend money at interest.

The recent actions of the Federal Reserve have been largely a refinancing of debt. The hope has been to realize the axiom of American billionaire Warren Buffett: “A rolling loan gathers no loss.” And government borrowing to wage war has always been good business for the banks as well.

But refinancing of debt does not change the overall purposes, operation, and outcome of the system. What we need to understand now is that the system itself can and must be changed. This should be done by establishing a more democratic and equitable world financial paradigm. Such a change can only be accomplished through fundamental monetary reform that would make credit-creation less the private property of financiers and more in the nature of a public utility. 

The U.S. should start by

1) calling off our military adventures and replacing them with new efforts at multilateral solutions, including a negotiated two-state solution for Israel and Palestine;

2) rebuilding our public and private infrastructure through low-cost government-provided credit. Individuals carrying unsustainable debt burdens or trapped in the collapsing housing bubble should be given relief. A basic income guarantee, not tied to employment, should be provided to all citizens as advocated by many economists going back to the 1960s. Infrastructure investment should include a massive program to deal with the present and future effects of global warming and climate change. Such a program would also help restore our tax base along with adding to consumer purchasing power.

To accomplish this program would require a shift in the control of monetary policy from the Federal Reserve, which only seems good at inflating and deflating bubbles, to a Congress and Executive Branch with the same degree of determination, vision, and authority we saw during the New Deal. The U.S. economy needs to be rebuilt from the bottom up. This means political leadership, not the monetarist games of technocrats who really work for the financiers. 

A change of this order of magnitude requires a revolution at the ballot box in 2008. The Republican Party has fatally compromised itself by playing host to the neocon Trojan horse. The Democratic Party, which has failed to act on the voter demand in the 2006 mid-term elections that we get out of Iraq, doesn't look much better. In just three months, in Iowa and New Hampshire, something profound and unprecedented must start to happen. If it doesn't, things figure to get much worse in four more years.

By Richard C. Cook
http:// www.richardccook.com

Copyright 2007 Richard C. Cook
Richard C. Cook is a former federal government analyst who was one of the key figures in the investigation of the space shuttle Challenger disaster. He is author of the book - Challenger Revealed: An Insider's Account of How the Reagan Administration Caused the Greatest Tragedy of the Space Age is Richard C. Cook's personal story of how he disrupted the cover-ups surrounding the Challenger disaster.

Richard C. Cook Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules