FacebookTwitterGoogle+RedditEmail

Republicans and "Free Market" Zealots Bring Disaster to America

by PAUL CRAIG ROBERTS

 

March 12.  Crude oil for April delivery hit $110 per barrel.  The US dollar fell to a new low against the Euro.  It now takes $1.55 to purchase one Euro.

These new highs against the dollar are the ongoing story of the collapse of the US dollar as world reserve currency and corresponding collapse of American power.

Each new decision from the insane Bush regime pushes the dollar a little further along to oblivion. The same Fed announcement that boosted the stock market on March 11 sent the dollar reeling and the price of oil up. The Fed’s announcement that it and other central banks are going to deal with the derivative crisis by monetizing $200 billion of the troubled instruments signaled more dollar inflation.

Of course, something needed to be done to forestall an implosion of the financial system, but a less costly alternative was at hand.  The mark-to-market rule could have been suspended in order to halt the forced sale and write down of assets and to provide time in which to sort out derivative values, which are higher than the fire sale prices.

More pressure on the dollar resulted from the decision to award the European company, Airbus, a $40  billion contract that could reach $100 billion to build US Air Force tankers.  In simple terms, that means another $40 to $100 billion added to the  US trade deficit, and a loss of $40 to $100 billion in US Gross Domestic Product and associated jobs.

Of course, the Bush regime had to award the contract to Europe as a payoff for Europe’s support of the Bush regime’s wars of aggression in the Middle East.  Europe is not going to provide Bush with diplomatic cover for his wars and NATO troops for his war in Afghanistan without a payoff.

Here is the picture:  The US economy, which has been kept alive by enormous debt expansion that has over-reached its limit, is falling into recession.  The traditional way out by expanding the supply of money and credit is blocked by the impaired banking system, the levels of consumer debt, the collapsing value of the US dollar, and rising inflation.

The Bush regime is attempting to bypass the stalled credit expansion by sending Americans $600 checks, money that will mainly be used to reduce existing credit card debt and not to fund new consumption.

The US is dependent on foreigners not only for energy but also for manufactured goods and advanced technology products.  The US is dependent on foreigners to finance our consumption of $800 billion annually more than the US produces.  The US is dependent on foreigners to finance its red ink wars, and the US government’s budget deficit is now expanding as tax revenues decline with the declining economy.

The bottom line:  US power is enfeebled.  US power depends on the willingness of foreigners to finance our wars and on the willingness of foreigners to continue to accumulate depreciating dollar assets.
The US cannot close its trade deficit. Oil prices are rising, and offshore production of goods and services for US markets results in a dollar-for-dollar increase in imports, while reducing the supply of domestic goods available for export.

The US cannot close its budget deficit while it is squandering vast sums on wars that serve no US purpose, handing out $150 billion in red ink rebates, and falling into recession.

US living standards, which have been stagnant for years, will plummet once dollar decline forces China off the dollar peg.  So far prices of the Chinese-made goods on Wal-Mart shelves have not risen, because the Chinese currency, pegged to the dollar, falls in value with the dollar.  In a word, tottering US living standards are being supported by China’s willingness to subsidize US consumption by keeping its currency grossly undervalued.

The US is overextended economically and militarily, just as was Great Britain with the fall of France in the opening days of World War II.  The British had the Americans to bail them out.  After the chewing gum and bailing wire patch-ups are exhausted, who is going to bail us out?

PAUL CRAIG ROBERTS was Assistant Secretary of the Treasury in the Reagan administration. He was Associate Editor of the Wall Street Journal editorial page and Contributing Editor of National Review. He is coauthor of The Tyranny of Good Intentions.He can be reached at: PaulCraigRoberts@yahoo.com

 

 

 

 

 

More articles by:

Paul Craig Roberts is a former Assistant Secretary of the US Treasury and Associate Editor of the Wall Street Journal. Roberts’ How the Economy Was Lost is now available from CounterPunch in electronic format. His latest book is The Neoconservative Threat to World Order.

February 21, 2018
Ajamu Baraka
Venezuela: Revenge of the Mad-Dog Empire
Edward Hunt
Treating North Korea Rough
Binoy Kampmark
Meddling for Empire: the CIA Comes Clean
Ron Jacobs
Stamping Out Hunger
Ammar Kourany – Martha Myers
So, You Think You Are My Partner? International NGOs and National NGOs, Costs of Asymmetrical Relationships
Michael Welton
1980s: From Star Wars to the End of the Cold War
Judith Deutsch
Finkelstein’s on Gaza: Who or What Has a Right to Exist? 
Kevin Zeese - Margaret Flowers
War Preparations on Venezuela as Election Nears
Wilfred Burchett
Vietnam Will Win: Military Realities
Steve Early
Refinery Safety Campaign Frays Blue-Green Alliance
Ali Mohsin
Muslims Face Increasing Discrimination, State Surveillance Under Trump
Julian Vigo
UK Mass Digital Surveillance Regime Ruled Illegal
Peter Crowley
Revisiting ‘Make America Great Again’
Andrew Stewart
Black Panther: Afrofuturism Gets a Superb Film, Marvel Grows Up and I Don’t Know How to Review It
CounterPunch News Service
A Call to Celebrate 2018 as the Year of William Edward Burghardt Du Bois by the Saturday Free School
February 20, 2018
Nick Pemberton
The Gun Violence the Media Shows Us and the State Violence They Don’t
John Eskow
Sympathy for the Drivel: On the Vocabulary of President Nitwit
John Steppling
Trump, Putin, and Nikolas Cruz Walk Into a Bar…
John W. Whitehead
America’s Cult of Violence Turns Deadly
Ishmael Reed
Charles F. Harris: He Popularized Black History
Will Podmore
Paying the Price: the TUC and Brexit
George Burchett
Plumpes Denken: Crude thinking
Binoy Kampmark
The Caring Profession: Peacekeeping, Blue Helmets and Sexual Abuse
Lawrence Wittner
The Trump Administration’s War on Workers
David Swanson
The Question of Sanctions: South Africa and Palestine
Walter Clemens
Murderers in High Places
Dean Baker
How Does the Washington Post Know that Trump’s Plan Really “Aims” to Pump $1.5 Trillion Into Infrastructure Projects?
February 19, 2018
Rob Urie
Mueller, Russia and Oil Politics
Richard Moser
Mueller the Politician
Robert Hunziker
There Is No Time Left
Nino Pagliccia
Venezuela Decides to Hold Presidential Elections, the Opposition Chooses to Boycott Democracy
Daniel Warner
Parkland Florida: Revisiting Michael Fields
Sheldon Richman
‘Peace Through Strength’ is a Racket
Wilfred Burchett
Vietnam Will Win: Taking on the Pentagon
Patrick Cockburn
People Care More About the OXFAM Scandal Than the Cholera Epidemic
Ted Rall
On Gun Violence and Control, a Political Gordian Knot
Binoy Kampmark
Making Mugs of Voters: Mueller’s Russia Indictments
Dave Lindorff
Mass Killers Abetted by Nutjobs
Myles Hoenig
A Response to David Axelrod
Colin Todhunter
The Royal Society and the GMO-Agrochemical Sector
Cesar Chelala
A Student’s Message to Politicians about the Florida Massacre
Weekend Edition
February 16, 2018
Friday - Sunday
Jeffrey St. Clair
American Carnage
Paul Street
Michael Wolff, Class Rule, and the Madness of King Don
Andrew Levine
Had Hillary Won: What Now?
David Rosen
Donald Trump’s Pathetic Sex Life
FacebookTwitterGoogle+RedditEmail