America's Keynesian perpetual motion machine....
Fastest Rise in Federal Spending since FDR/Growth dismays some within the GOP. Richard Wolf/USA Today Monday, April 3, 2006.
Federal Spending is outstripping economic growth at a rate unseen in more then half a century….The Federal Government is currently spending 20.8 cents for every $1 the economy generates, up from 18.5 cents in 2001, White House Budget Documents show. That's the most rapid growth during one administration since Franklin Roosevelt, who served during 1933-45, during the Depression and World War II.
The costs of maintaining US military dominance of Mideast Oil is outstripping the economic growth and the tax revenue that it is supposed to generate. US military spending combined with interest on the existing debt consists of so large a proportion of the US budget, that even massive cuts in domestic spending are not going to resolve the deficits, even if the political support for domestic spending cuts existed. So the Federal Government is financing the costs of the US oil empire by slowly selling off our assets to our enemies.
If Alan Greenspan every believed in the free market fundamentalism he used to peddle back when he was a member of the inner circle of the Cult of Ayn Rand, you'd never know from the monetary house of cards that he's saddled the US economy with. The so-called "prosperity" is dependent on the ability of the Fed to continue exporting our inflation to the rest of the world. Under Greenspan, the US economy has become a Keynesian perpetual motion machine, piling up massive deficits whose interest payments now constitute the largest expenditure in the Federal budget. The US prints US dollars to pay the interest, and the flood of US dollars are absorped by the the growth of the World Economy.
The basis of the House of Cards is the petro-dollar. If Europe and Asia wants to buy Mideast oil, it has to do it with US dollars, instead of Euros or Yen. As long as the Mideast oil producers remain client states of the US military machine, the world will continue to accept US dollars. And Alan Greenspan's perpetual motion machine continues to chug along.
But this system creates problems that are coming back to haunt us...for instance, national sovereignty! While the public got all upset for the Dubai Ports deal (selling the Port Management firm to the UAE), they forget that the Chinese are running the biggest port in the US at Long Beach, as well as the management of the Panama Canal! But all the dollars we've been selling to foreigners has been coming back as purchases of American companies for years. As the deficit spending accelerates, the rate of purchase of American companies will keep pace. In 2004, foreign investment was $1.53 trillion, an increase of 8.2 percent more than in 2003. It provides jobs for Americans. As a result, foreign investors own and operate U.S. power plants, chemical facilities, and many of our oil refineries and natural gas facilities. Foreign investors own American companies as diverse as Smith Kline Beecham and Pillsbury.
Of course, all you hear in the corporate media is how wonderful this "New World Order" is, how all this co-dependence is supposed to make the world a richer or safer place. But the evidence is that the third world hasn't benefited from this system; and if the decline in wages in the USA are any measure, neither is the American Middle Class.
But look at the mess that the "New World Order" has created. The Iraq quaqmire is costing us $2 Billion a week, so the increase in the deficit the war is creating increases US reliance on debt financing. The US seems to have no choice but to continue to militarily dominate the Mideast, lest our economic perpetual motion machine collapse of it's own weight.
Most nations---including most of our allies-- resent our economic prosperity, and are slowly, passively participating in our undoing. They all know that the more that the US is forced to spend on the military budget to maintain our dominance of the oil, the more parts of America's infrastructure will have to be sold to pay for it. Europe and Asia are encouraging Iran to abandon the dollar, and deal in the Euro. Our client states in the mideast continually raise the price of their oil and natural gas we need to function as high as the market will bear. Our "allies" in the war on Terror in Afghanistan and Latin America are harboring a drug trade that fuels the Drug War that is tearing our social fabric apart.
The public knows that our financial system is a house of cards, but what can they do? All the polls show that the public wants fair trade, not free trade, our borders secure, and immigration restricted. But the politicans don't care and nothing is done. The only choice the public has is to try to sustain the purchasing power of their declining wages by abandoning American made products in favor of Walmart, Ikea, Target and Rite-Aid's Chinese slave labor-made consumer goods. Forced to borrow regularly from the equity in their homes, they hardly have enough left from their salaries to buy medical insurance, or pay for their kid's education, much less save for their retirement. So each succeeding generation of babyboomers enters retirement without savings or investments sufficient to maintain themselves during retirement.
Ivory Tower economists at all the "conservative" think tanks and Wall Street bankers tell us that the economy is great. Stocks prices are high, even though American companies are trading at 20 times earnings instead of the traditionally prudent 12 times earnings. The Ivory Towers tell us that the US is outperforming Europe in a 'full employment' economy, but millions of middle aged and young workers have run out their unemployment benefits, and aren’t being counted by the system. Wages are falling, and practically no middle class family can afford to have a parent to stay home with the kids, and 50-60 hour weeks, and 2 jobs among heads of households are common.
Contrary to the insistence by the Left-wingers that Marx and Lenin originated the theory of imperialism, the first critic of imperialism was actually Adam Smith. His Wealth of Nations was a critic of British Imperialism, and he was the first to state what has become obvious to everyone---that the costs of protecting markets and resources abroad never generates enough tax revenue to pay for it. All imperial systems fail.
American needs to abandon this free market utopianism about globalization and interdependence, come home, and take care of our own. What we have now isn't working, and eventually it's going to collapse.
