Collapse of the US economy

[Mark Stapleton]

Anyone who doubts the dire predicament of the US economy should read this short but frightening piece from Robert Freeman.

http://www.commondreams.org/archive/2007/08/29/3490/

I was unaware that,

1. The US borrows $2.5 billion per day 'just to keep the lights on'.

2. The US has sixty five trillion dollars in 'unfunded liabilities'---debts it has committed to pay but for which there is no identified source of funding. According to a report written for the Federal Reserve, this makes the US 'actuarially bankrupt'.

Of course, the Bush Administration has done nothing to address the issue. Instead, it spends billions on foreign adventurism and now talks about war with Iran. The legacy for America's next generation is the furthest thing from their minds--assuming they have minds at all.

Edited August 30, 2007 by Mark Stapleton

[Guest David Guyatt]

The Us has been actuarially bankrupt for many years. You can't run a 9 trillion dollar debt (which is completely unrepayable, of course) and not be de facto bankrupt. But the secret of sailing in such waters is cash flow. So long as cash does flow the ship stays afloat. Since the vast proportion of foreign held US dollars are fed back into the US Fed system as "investments" -- by foreign central banks, then the ship can't sink. The dillemma faced by foreign central banks is how to pull their money out of the debt mountain without destroying it at the same time. Even China faces this problem.

Not to forget that back in 2000, Saddam became evil incarnate in the eyes of the US (he was anyway in my eyes, I have to say), because he began selling his oil for euros and not dollars. Others tried to copy this, Chavez in Venezuela (if memory serves) included. It was an exceedingly dangerous thing to do - although entirely understandable - because the US would never allow it.

And so the whole happy fairground ride continues to gounf round and round, up and down.

Of course, it helps to have over a trillion dollars a year in drug revenue to help things moving along. Asit also helps to have sudden price hikes in crude that generates a lot of extra bunce taxation - er, income - from around the world, namely Europe, Japan and the emerging economies of India and China. Then there are the illegal weapons sales, sometimes ripped off from military arsenal's that then need to be replaced at the taxpayers expense. And so on.

Back in the Seventies the US issued a strange and little known (unless you're in the right circles) Treasury CUSIP that was marketed mainly through overseas central banks. Dear old Blighty's Dirty Old Lady helped out on this. The purpose of this CUSIP was to hoover up all those so called "hot" dollars circulating around the world owned by, well, crooks. Nice people like Mafia boss Meyer Lansky. Imagine being a Mafia Don with bundles of illicit dollars and being approached via an arms length deniable intermediary who tells you that Uncle Sam wants your money in exchange for allocating you a bona fide Treasury Bond. Crooks jumped at the opportunity of "bleaching" their money at getting paid annual interest for the pleasure of doing so.

Did Uncle pay out on their obligation when it fell due? Did they hell...

Nice world, money.

David

[Guest Gary Loughran]

The Us has been actuarially bankrupt for many years. You can't run a 9 trillion dollar debt (which is completely unrepayable, of course) and not be de facto bankrupt. But the secret of sailing in such waters is cash flow. So long as cash does flow the ship stays afloat. Since the vast proportion of foreign held US dollars are fed back into the US Fed system as "investments" -- by foreign central banks, then the ship can't sink. The dillemma faced by foreign central banks is how to pull their money out of the debt mountain without destroying it at the same time. Even China faces this problem.

Not to forget that back in 2000, Saddam became evil incarnate in the eyes of the US (he was anyway in my eyes, I have to say), because he began selling his oil for euros and not dollars. Others tried to copy this, Chavez in Venezuela (if memory serves) included. It was an exceedingly dangerous thing to do - although entirely understandable - because the US would never allow it.

And so the whole happy fairground ride continues to gounf round and round, up and down.

Of course, it helps to have over a trillion dollars a year in drug revenue to help things moving along. Asit also helps to have sudden price hikes in crude that generates a lot of extra bunce taxation - er, income - from around the world, namely Europe, Japan and the emerging economies of India and China. Then there are the illegal weapons sales, sometimes ripped off from military arsenal's that then need to be replaced at the taxpayers expense. And so on.

Back in the Seventies the US issued a strange and little known (unless you're in the right circles) Treasury CUSIP that was marketed mainly through overseas central banks. Dear old Blighty's Dirty Old Lady helped out on this. The purpose of this CUSIP was to hoover up all those so called "hot" dollars circulating around the world owned by, well, crooks. Nice people like Mafia boss Meyer Lansky. Imagine being a Mafia Don with bundles of illicit dollars and being approached via an arms length deniable intermediary who tells you that Uncle Sam wants your money in exchange for allocating you a bona fide Treasury Bond. Crooks jumped at the opportunity of "bleaching" their money at getting paid annual interest for the pleasure of doing so.

Did Uncle pay out on their obligation when it fell due? Did they hell...

Nice world, money.

David

Very enlightening David, thanks. Is this first hand experience or working knowledge? I'm intrigued, and I've read before, about the drugs trade being required to keep US economy afloat. I always thought that drug profits were used to finance 'black bag' ops and such like by intelligence and other US linked paramilitary groups. I just don't believe you can go to the treasury or wherever one goes and ask for $1 billion to train and arm some middle east militia.

I've read John S's excellent piece on assassination, drugs and arms - great stuff.

Could you please provide a dummy's guide (even personally to me in PM, should no-one else need such a thing here) expanding on what you've written above. Recently, I believe, the fed injected $54billion into 'the economy' (I don't really understand where this actually goes or where it, in actuality, comes from for that matter) - then followed this up with a reduction in the rates they charge the US for the loan - all related to the stock market downturn due to unease about the subprime mortgage market. Similar things occurred in Europe and elsewhere, as other markets became nervous, if I recall correctly. How does this work, in reality, not theoretically.

I'd appreciate anything you can provide, I enjoy your writing, humour and respect your personal experiences in this world. I can only provide pure poteen distilled by the finest leprachauns in return.

Cheers

Gary

[Len Colby]

The Us has been actuarially bankrupt for many years. You can't run a 9 trillion dollar debt (which is completely unrepayable, of course) and not be de facto bankrupt. But the secret of sailing in such waters is cash flow. So long as cash does flow the ship stays afloat. Since the vast proportion of foreign held US dollars are fed back into the US Fed system as "investments" -- by foreign central banks, then the ship can't sink. The dillemma faced by foreign central banks is how to pull their money out of the debt mountain without destroying it at the same time. Even China faces this problem.

[...]

Did Uncle pay out on their obligation when it fell due? Did they hell...

Nice world, money.

David

Sounds like the world's greatest Ponzi scheme

[Guest Stephen Turner]

Whilst we are on the subject, I doubt that the underlying state of Britains economy is much healthier. One and a half trillion in personal debt, much of it unsecured, a completely decimated manufactoring sector, and a vastly overheated housing market means you dont have to be casandra to see big trouble ahead. No wonder they place so much stock in the next generation of mobile phones, plasma screens, ipods and DVD players, they are the only things keeping us afloat.

[Duane Daman]

Only in America , the land of opportunity !

37 million people now live below the poverty line -- 12.9 million of those are children.

The official poverty line is an income of $19,971/yr for a family of four.

A single parent working full-time for minimum wage makes $10,712/yr.

3.9 million families had at least one member go hungry because they couldn't afford enough food.

1,600,000 jobs lost in the private sector since Dubya took office.

46.6 million people lack health coverage.

1.7 million VETERANS -- including some Iraq War Veterans -- have no health insurance.

750,000 Americans are homeless, 250,000 of them are Veterans .

Are these the "Christian" moral values of the Republican Party?

[Mark Stapleton]

The Us has been actuarially bankrupt for many years. You can't run a 9 trillion dollar debt (which is completely unrepayable, of course) and not be de facto bankrupt. But the secret of sailing in such waters is cash flow. So long as cash does flow the ship stays afloat. Since the vast proportion of foreign held US dollars are fed back into the US Fed system as "investments" -- by foreign central banks, then the ship can't sink. The dillemma faced by foreign central banks is how to pull their money out of the debt mountain without destroying it at the same time. Even China faces this problem.

Not to forget that back in 2000, Saddam became evil incarnate in the eyes of the US (he was anyway in my eyes, I have to say), because he began selling his oil for euros and not dollars. Others tried to copy this, Chavez in Venezuela (if memory serves) included. It was an exceedingly dangerous thing to do - although entirely understandable - because the US would never allow it.

And so the whole happy fairground ride continues to gounf round and round, up and down.

Of course, it helps to have over a trillion dollars a year in drug revenue to help things moving along. Asit also helps to have sudden price hikes in crude that generates a lot of extra bunce taxation - er, income - from around the world, namely Europe, Japan and the emerging economies of India and China. Then there are the illegal weapons sales, sometimes ripped off from military arsenal's that then need to be replaced at the taxpayers expense. And so on.

Back in the Seventies the US issued a strange and little known (unless you're in the right circles) Treasury CUSIP that was marketed mainly through overseas central banks. Dear old Blighty's Dirty Old Lady helped out on this. The purpose of this CUSIP was to hoover up all those so called "hot" dollars circulating around the world owned by, well, crooks. Nice people like Mafia boss Meyer Lansky. Imagine being a Mafia Don with bundles of illicit dollars and being approached via an arms length deniable intermediary who tells you that Uncle Sam wants your money in exchange for allocating you a bona fide Treasury Bond. Crooks jumped at the opportunity of "bleaching" their money at getting paid annual interest for the pleasure of doing so.

Did Uncle pay out on their obligation when it fell due? Did they hell...

Nice world, money.

David

Like they say, if someone owes you a little money, it's their problem. If someone owes you a lot of money, it becomes your problem.

Your post could explain the reckless behavior of the Bush Government. The US owes trillions but hey, it ain't our problem!

Cash flow might sustain the system but eventually the debt issue has to be addressed--or forgiven. Do you think the foreign banks will get tired of bailing out the US--or is that outweighed by the potential damage to the global economy should the US go under?

On the issue of illicit drugs and the fact that it props up the cash flow side of America's ongoing viability, I must adopt my sanctimonious voice and say 'think of the children'. Seriously. Think of them. If illicit drugs were decriminalised, the economic 'correction' would be severe indeed. I have read that a 10-20% increase in unemployment is not out of the ballpark. The stockmarket would bleed a deep red. Prohibition, ferociously overseen on a global scale by the US, has become an important substructure underpinning many economies throughout the world. How did the world allow itself to be bullied into signing these ridiculous conventions? How can the world still allow America to impose its will on sovereign nations for the financial gain of few at the expense of the vast majority? I guess our children will have to sort out these thorny issues.

Edited August 30, 2007 by Mark Stapleton

[Mark Stapleton]

Only in America , the land of opportunity !

37 million people now live below the poverty line -- 12.9 million of those are children.

The official poverty line is an income of $19,971/yr for a family of four.

A single parent working full-time for minimum wage makes $10,712/yr.

3.9 million families had at least one member go hungry because they couldn't afford enough food.

1,600,000 jobs lost in the private sector since Dubya took office.

46.6 million people lack health coverage.

1.7 million VETERANS -- including some Iraq War Veterans -- have no health insurance.

750,000 Americans are homeless, 250,000 of them are Veterans .

Are these the "Christian" moral values of the Republican Party?

I agree they're pretty bad numbers, Duane.

The wealth inequality which exists in the US is the world's worst kept secret.

So how can a country with such dire inequality issues justify unprecedented military spending and precipitous debt? I don't know. The priorities are all wrong. The US media, over a period of several decades, has conditioned the American public into believing that they are beset with threats and enemies and all rational thought should be set aside for the greater good of God and country. It's like a permanent seige mentality. The greater good of who is never explained, of course. But it's not you.

[Guest David Guyatt]

At least Len, you have it right about the Ponzi scheme. Ponzi scheme is, in fact, the only accurate definition of banking. A former chairman of a major British bank and former Deputy Governor of the Bank of England, once said on TV that banking is a “confidence trick” – and that is about as true as it gets.

Gary, for a nip of the Leprachaun poteen I will do almost anything (not proud, me). Thus:

Personally, I wouldn’t spend any time on the Fed’s daily activities of providing or soaking up liquidity in the financial markets. It’s just a way of making money work for everyone (as an interest earning asset). What they call keeping an “orderly market”.

On drugs, the figures I quoted ($trillion) must be well out of date by, oh, ten or fifteen years. I’m quite sure that parts of the “skim” from the drug money haul are used to finance all sorts of unpleasant activities.

I would suggest that you acquire, if you can (and if you haven’t already got it), a copy of Nick Tosches book Power on Earth about Michel Sindona. Interviewed in prison in the US and just prior being suicided with a cup of poison laced coffee, one of the most artful money launders of his time had some very revealing things to say about the international banking system. If you get the hardback version (might be the same in paperback) by Arbor House, NY, then particularly read pages 85-101. Very revealing.

It helps to remember that hot money that once zipped offshore must ultimately be repatriated in order to earn interest. Well, that was the case before the introduction of the Eurodollar market, which catered to this hot money and which no end of US corporations “tapped” with bond issues and other borrowing. But basically, the money must always come back to the fold or else the economy will ultimately collapse… as the only alternative to continually disappearing vast sums of money (taken out of circulation) is printing more and more money – which is, of course, dangerously inflationary. It is more complex than this in reality but this is it in its simplest form.

On the CUSIP I mentioned, I spent years investigating it and discussing it with some of the people involved – following a tip from a disgruntled former spook (disgruntled with good reason, too) and have quite a bit of paperwork about it. However, I’ve never written about and have no plans to do so, although it informed me during the research phase of Project Hammer and Project Hammer Reloaded (my website is still down but I am planning to get it back up soon and both these long essays are freely available on it).

Both essays are, in my view anyway, important in tracing the ways and means the financial system is co-opted for nefarious purposes. Project Hammer published the complete affidavit of Brig. Gen. Erle Cocke Jr., who then promptly died of cancer. Cocke was the Washington man behind the whole Nugan Hand Bank fiasco as detailed in Jonathan Kwitny’s Crimes of Patriots. He worked for every president down from Eisenhower up to and including Bill Clinton. The CIA denied they had any records about him, which is one of the more hilarious lies foisted on the public at large. Hammer included the use of gold plundered during WWII by the Nazis and Japanese.

Probably more than drugs, these are the assets that are used and re-used for special political purposes and covert operations.

Meanwhile, it is well known in certain circles that the first oil price hike back in 1974 (the price increased four hundred percent) was a Kissinger deal that laid the blame on OPEC. Odd that OPEC, who certainly knew what was going on and why, didn’t publicly deny it was them.

As a brief aside, no one should be deceived that Muslim nations don’t earn interest. This is a myth that is circulated. Usury is forbidden in the Koran, certainly, but there are ways around earning interest while doing exactly that -- namely the discount/A’forfait market. Happens all the time.

Back to petrol. The Shah of Iran who was an American puppet caused the 400% price hike to happen and the Saudi’s, who were also an American puppet, also went right along with it (greased by a secret US Treasury agreement negotiated by someone I once worked with when I was a relative junior).

The then Saudi oil minister, Sheikh Yamani (known in the UK at the time as “Shake your money”) came out years later saying that it was a result of manipulations by the Bilderberg Group. I have a copy of their 1973 Conference minutes/notes and, yup, their was a discussion of the price increasing by roughly 400% -- although if you read the meeting notes, you’d be hard pressed to see a smoking gun -- so artful is it done.

There has been a suggestion that the proceeds were used to offset the cost of the Vietnam war. True or not, I don’t know, but it does make sense. Curiously the US Federal Budget deficit for 1974 was $6.1 billion, down from $14.9 in 1973; $23.4 in 72 and $23.0 in 71. What this translates to may be nothing, however as Ford took over and bumped the deficit back up to an astonishing $53.2 billion in 75. Yes folks, only 32 years ago it was pocket change compared to the $9 trillion today.

Talking about the deficit, even twenty years ago, in 1986, it was still only $220.7 billion – less than a quarter of one trillion dollars, so the massive leap is comparatively recent.

As Steve has said, the UK also has a healthy deficit. In fact, I doubt you could find a creditor nation on the planet. I tried a few years ago and couldn’t find one. Every state owes money to someone else. Who is that someone else you ask? Well, I think it likely that it all matches out – by and large anyway. This illustrates how money binds everyone into debt bondage. It’s not just a third world phenomenon. All the first world nations are also heavily indebted.

Just who benefits would require someone a lot smarter than I to figure out – but I know it ain’t me!

David

PS. those who remember the disastrous and sudden collapse of the Asian tiger economies back in the mid-late 1990’s, are not generally aware that it was caused by the US hedge funds working with a nod and a wink from Uncle – and began with a bribe paid to a central bank official in Thailand. Which just goes to prove that covert warfare using finance is a very effective means of gaining ones ends.

[Mark Stapleton]

At least Len, you have it right about the Ponzi scheme. Ponzi scheme is, in fact, the only accurate definition of banking. A former chairman of a major British bank and former Deputy Governor of the Bank of England, once said on TV that banking is a “confidence trick” – and that is about as true as it gets.

Gary, for a nip of the Leprachaun poteen I will do almost anything (not proud, me). Thus:

Personally, I wouldn’t spend any time on the Fed’s daily activities of providing or soaking up liquidity in the financial markets. It’s just a way of making money work for everyone (as an interest earning asset). What they call keeping an “orderly market”.

On drugs, the figures I quoted ($trillion) must be well out of date by, oh, ten or fifteen years. I’m quite sure that parts of the “skim” from the drug money haul are used to finance all sorts of unpleasant activities.

I would suggest that you acquire, if you can (and if you haven’t already got it), a copy of Nick Tosches book Power on Earth about Michel Sindona. Interviewed in prison in the US and just prior being suicided with a cup of poison laced coffee, one of the most artful money launders of his time had some very revealing things to say about the international banking system. If you get the hardback version (might be the same in paperback) by Arbor House, NY, then particularly read pages 85-101. Very revealing.

It helps to remember that hot money that once zipped offshore must ultimately be repatriated in order to earn interest. Well, that was the case before the introduction of the Eurodollar market, which catered to this hot money and which no end of US corporations “tapped” with bond issues and other borrowing. But basically, the money must always come back to the fold or else the economy will ultimately collapse… as the only alternative to continually disappearing vast sums of money (taken out of circulation) is printing more and more money – which is, of course, dangerously inflationary. It is more complex than this in reality but this is it in its simplest form.

On the CUSIP I mentioned, I spent years investigating it and discussing it with some of the people involved – following a tip from a disgruntled former spook (disgruntled with good reason, too) and have quite a bit of paperwork about it. However, I’ve never written about and have no plans to do so, although it informed me during the research phase of Project Hammer and Project Hammer Reloaded (my website is still down but I am planning to get it back up soon and both these long essays are freely available on it).

Both essays are, in my view anyway, important in tracing the ways and means the financial system is co-opted for nefarious purposes. Project Hammer published the complete affidavit of Brig. Gen. Erle Cocke Jr., who then promptly died of cancer. Cocke was the Washington man behind the whole Nugan Hand Bank fiasco as detailed in Jonathan Kwitny’s Crimes of Patriots. He worked for every president down from Eisenhower up to and including Bill Clinton. The CIA denied they had any records about him, which is one of the more hilarious lies foisted on the public at large. Hammer included the use of gold plundered during WWII by the Nazis and Japanese.

Probably more than drugs, these are the assets that are used and re-used for special political purposes and covert operations.

Meanwhile, it is well known in certain circles that the first oil price hike back in 1974 (the price increased four hundred percent) was a Kissinger deal that laid the blame on OPEC. Odd that OPEC, who certainly knew what was going on and why, didn’t publicly deny it was them.

As a brief aside, no one should be deceived that Muslim nations don’t earn interest. This is a myth that is circulated. Usury is forbidden in the Koran, certainly, but there are ways around earning interest while doing exactly that -- namely the discount/A’forfait market. Happens all the time.

Back to petrol. The Shah of Iran who was an American puppet caused the 400% price hike to happen and the Saudi’s, who were also an American puppet, also went right along with it (greased by a secret US Treasury agreement negotiated by someone I once worked with when I was a relative junior).

The then Saudi oil minister, Sheikh Yamani (known in the UK at the time as “Shake your money”) came out years later saying that it was a result of manipulations by the Bilderberg Group. I have a copy of their 1973 Conference minutes/notes and, yup, their was a discussion of the price increasing by roughly 400% -- although if you read the meeting notes, you’d be hard pressed to see a smoking gun -- so artful is it done.

There has been a suggestion that the proceeds were used to offset the cost of the Vietnam war. True or not, I don’t know, but it does make sense. Curiously the US Federal Budget deficit for 1974 was $6.1 billion, down from $14.9 in 1973; $23.4 in 72 and $23.0 in 71. What this translates to may be nothing, however as Ford took over and bumped the deficit back up to an astonishing $53.2 billion in 75. Yes folks, only 32 years ago it was pocket change compared to the $9 trillion today.

Talking about the deficit, even twenty years ago, in 1986, it was still only $220.7 billion – less than a quarter of one trillion dollars, so the massive leap is comparatively recent.

As Steve has said, the UK also has a healthy deficit. In fact, I doubt you could find a creditor nation on the planet. I tried a few years ago and couldn’t find one. Every state owes money to someone else. Who is that someone else you ask? Well, I think it likely that it all matches out – by and large anyway. This illustrates how money binds everyone into debt bondage. It’s not just a third world phenomenon. All the first world nations are also heavily indebted.

Just who benefits would require someone a lot smarter than I to figure out – but I know it ain’t me!

David

PS. those who remember the disastrous and sudden collapse of the Asian tiger economies back in the mid-late 1990’s, are not generally aware that it was caused by the US hedge funds working with a nod and a wink from Uncle – and began with a bribe paid to a central bank official in Thailand. Which just goes to prove that covert warfare using finance is a very effective means of gaining ones ends.

Fascinating stuff, David.

It all sounds about right to me. How did you manage to secure a copy of the minutes of the Bilderberg Group?

[Guest David Guyatt]

Mark, I got them from William Engdahl of the EIR mob. I wrote to him about his book, A Century of War in which he discusses one of the less well known American investment banks I worked for in London in the mid-late Sixties, who were at the spearpoint of the creation of petrodollars. I asked him for a copy and he sent them.

I have latterly been convinced by Michael Chapman that LaRouche and EIR are a false flag operation. That's probably why he let me have them - that and because he probably thought I was on-side. because of my City background Wrong! Anyway, I was always suspicious of LaRouche & co, but now I'm downright suspicious (Michael, you're very naughty don't you know! When are you going to post some more intriguing pieces??? On Woolmer and other bits and bobs we're all waiting for...)

David

[Evan Burton]

Maybe I should gloat as an Australian?

We (as a nation) have been "debt-free" since about mid-2006:

http://www.theage.com.au/news/Business/Gov...5344197792.html

[Guest David Guyatt]

Evan, sorry to be the harbinger of bad news, but Australia does have a larg-ish foreign debt -- although compared to many it is relatively small in monetary terms (but quite significant in GDP terms).

Between 1981 and 2002, the foreign debt grew from 13 to 74% of GDP (Gross Domestic Product) --- A$18 to A$527 billion.

Source: http://www.aph.gov.au/library/Pubs/RP/2002-03/03RP03.pdf

HTML version: http://66.102.9.104/search?q=cache:a7X-KqA...lient=firefox-a

Don't shoot the messenger, okay....

David

[Evan Burton]

No! Bugger that! Shoot the messenger!

(BANG! BANG!)

[Evan Burton]

Economics is beyond me. I'm happy to discuss science or military matters, but if you talk about economics I am lost.

All I know is I get paid, I have bills I pay, and then money to spend.

Time to flay me, David!