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Health Care & Environment
02.22 Report: Climate Denier to Lead White House Climate Panel [“Stupid is as stupid does.” –Forrest Gump]
02.22 The Uninhabitable Earth [Lots more important than all other problems put together]
02.16 Toxic black snow covers Siberian coalmining region [0:49 video; If its killing us, stop doing it]
02.16 Renewable energy will be world's main power source by 2040, says BP [But in America's capitalistic bubble, bribed-to-be-biased media and government defy reality]
02.16 What the pesticides in our urine tell us about organic food [What does inaction tell us about capitalism and our government?]
02.14 Exposure to Glyphosate-Based Herbicides and Risk for Non-Hodgkin Lymphoma: A Meta-Analysis and Supporting Evidence [If its killing us, make it illegal]
02.14 To avoid environmental catastrophe, everything must change [Consider why this headline is laughable or confusing to many, if not most, Americans...]02.13 Study Shows Toxic Pesticide Levels in Families Dropped by 60% After One-Week Organic Diet [2:10 video; Produce and canned vegetables laced with toxic chemicals—from fertilizers and herbicides, too—must be quickly phased out to use safe organic alternatives]
News Media Matters
US Politics, Policy & 'Culture'
02.20 ‘Sustained and ongoing’ disinformation assault targets Dem presidential candidates [If you can sense them, block them!]
02.20 Despite the slaughter in Yemen, Britain is still chasing arms sales [and the Great-Again-America is too...Capitalism without morality is horrible]
Economics & Corrupting-Capitalism
International & FuturismSanders Has an Advantage, and It’s Not [Just] About Economics
02.22 When multilateralism crumbles, so does our rules-based order [this enables easier corruption by banks and oligarchs and may result in complete societal breakdown, chaos and war]
02.22 Trump has turned foreign aid into shabby political theatre [Psychopaths are a sub-human species without empathy or morals.]
02.21 John Oliver Compares Brexit ‘Disaster’ to Will Smith’s Genie in Live-Action ‘Aladdin’ (Video) [21:26 video; we’re approaching an Idiocracy-type of society, where stupidity is “normal”]
02.20 House report lays bare White House feud over Saudi nuclear push [Its hard to keep up with all the criminal crap going on...]
When Things Fall Apart
Launching Life Dinghies in the Maelstrom
Friday, 20 March 2009
If the US government is forced to print money to cover the high costs of its wars and bailouts, things could fall apart very quickly.On March 19 the New York Times reported: “The Fed said it would purchase an additional $750 billion worth of government-guaranteed mortgage-backed securities, on top of the $500 billion that it is currently in the process of buying. In addition, the Fed said it would buy up to $300 billion worth of longer-term Treasury securities over the next six months.”
The Federal Reserve says that its purchase of $1 trillion in existing bonds is part of its plan to revive the economy. Another way to view the Fed’s announcement is to see it as a preemptive rescue. Is the Fed rescuing banks from their bond portfolios prior to the destruction of bond prices by inflation?
The answer to this question probably lies in the answer to the unanswered question of how the unprecedented sizes of the FY 2009 and FY 2010 federal budget deficits will be financed. Neither the US savings rate nor the trade surpluses of our major foreign lenders are sufficient.
I know of only two ways of financing the looming monster deficits. One, courtesy of Pam Martens, is that the federal deficits could be financed by further flight from equities and other investments.
This is a possibility. If the mortgage-back security problem is real and not contrived, the next shock should arise from commercial real estate. Stores are closing in shopping centers, and vacancies are rising in office buildings. Without rents, the mortgages can’t be paid.
Another scare and another big drop in the stock market will set off a second “flight to quality” and finance the budget deficits.
The other way is to print money. John Williams (shadowstats.com) thinks that the budget deficits will be financed by monetizing debt. The Federal Reserve will buy most of the new bonds and create demand deposits for the Treasury. In effect, the money supply will grow by the amount of Fed purchases of new Treasury debt. Printing money to finance the government’s budget normally leads to high inflation and high interest rates.
The initial impact of the announcement of the Fed’s plan to purchase existing debt was to drive up the bond prices. However, if the reserves poured into the banking system by the bond purchases result in new money growth, and if the Fed purchases the new debt issues to finance the governments’ budget deficits, the outlook for bond prices and the dollar becomes poor.
It will be interesting to see how the currency markets view the problem. The New York Times reported that “the dollar plunged about 3 percent against other major currencies” in response to the Fed’s announcement.
If the exchange value of the dollar works its way down, it will complicate the financing of the trade deficit and impact the decisions of foreigners who hold large stocks of US dollar debt. The premier of China recently expressed his concern about the safety of his country’s large investment in US dollar debt.
If the US government is forced to print money to cover the high costs of its wars and bailouts, things could fall apart very quickly.
Paul Craig Roberts is an economist who served as an Assistant Secretary of the Treasury in the Reagan Administration earning fame as the "Father of Reaganomics". He is a former editor and columnist for the Wall Street Journal, Business Week, and Scripps Howard News Service. He is the author of Supply-Side Revolution: An Insider's Account of Policymaking in Washington; Alienation and the Soviet Economy: The Collapse of the Socialist Era and Meltdown: Inside the Soviet Economy, and is the co-author with Lawrence M. Stratton of The Tyranny of Good Intentions: How Prosecutors and Law Enforcement Are Trampling the Constitution in the Name of Justice.
This article is published in the Baltimore Chronicle with permission of the author.
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This story was published on March 21, 2009.