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02.20 Young climate strikers can win their fight. We must all help

02.20 Voyage to the Garbage Patch: the female sailors taking on plastic

02.19 Bees brought Bavarians together. And they have a lesson for us all

02.19 Florida is drowning. Condos are still being built. Can't humans see the writing on the wall? [Fear that Trump & Fox News incite makes us avoid unpleasant information we need to know]

02.18 Tesla big battery is holding its own in a burgeoning energy storage market

02.18 Trump administration condemned over delaying action on toxic drinking water

02.16 New experimental drug rapidly repairs age-related memory loss and improves mood

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 My generation trashed the planet. So I salute the children striking back

02.16 US coastal businesses hit by everyday impact of climate change, study shows

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]

02.12 Biggest offshore windfarm to start UK supply this week

02.12 Scientists Are Totally Rethinking Animal Cognition

02.12 Politicians are complicit in the killing of our insects – we will be next

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02.21 Bezos Says Amazon Drones Ready to Deliver Mueller Report to Every American Household

02.21 Devin Nunes Was Trump’s Mole Inside the Gang of Eight

02.21 Alec Baldwin fears for family's safety after Trump 'retribution' threats [0:40 video]

02.20 Intimidation, Pressure and Humiliation: Inside Trump’s Two-Year War on the Investigations Encircling Him

02.20 ‘Sustained and ongoing’ disinformation assault targets Dem presidential candidates [If you can sense them, block them!]

02.20 The 2020 U.S. Presidential Race: A Cheat Sheet

02.20 Why Bernie Sanders' radicalism can take out Trump

02.20 Why vote for Sanders when you can have Elizabeth Warren instead?

02.19 Democratic party elites silence Ilhan Omar at their peril [2:01 video]

02.19 The Political Revolution Is Back: Bernie Sanders Announces 2020 Run for President

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02.19 California Leads 16 States Suing to Block Trump Border Plan

02.19 Fighting pollution: Toledo residents want personhood status for Lake Erie [Hurrah!]

High Crimes?

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]

02.16 Elliott Abrams Defends War Crimes As Happening Back In The ’80s When Everyone Was Doing It

Economics & Corrupting-Capitalism

02.21 Historian who confronted Davos billionaires leaks Tucker Carlson rant

02.20 A Centuries-Old Idea Could Revolutionize Climate Policy

International & Futurism

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...]

02.20 My grandfather was a Nazi. I’ve seen why we need the EU

02.19 Centrism isn’t the solution to the mess we’re in

02.19 Renewables need urgent investment to ease Australia's transmission bottlenecks, experts warn

02.18 Hate-Fest in Warsaw

02.18 They Used To Hold Hands Through the Wall. Now, There’s Razor Wire.

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  Is the Recovery Real?

COMMENTARY:

Is the Recovery Real?

There are no jobs to which people can be called back to work. The jobs have been given to the Chinese and Indians.

by Paul Craig Roberts
Originally published on 4 March 2010

A desperate government, which has wasted $3 trillion invading countries that pose no danger to the U.S. and wasted more trillions of dollars combatting a crisis brought on by its failure to regulate the financial sector, is likely to steal people’s pensions as well as to gut Social Security and Medicare.

Happy news! The government has come up with a 5.9 percent GDP growth rate in the fourth quarter of 2009. The recession is over.

Or is it? Statistician John Williams has informed us that 69 percent of this growth, or 4.1 percentage points, is the result of inventory accumulation. That leaves a 1.8 percent growth rate, and the 1.8 percent is likely due to the underestimate of inflation and other statistical problems.

The Federal Reserve’s own monetary evidence contradicts the recovery assurances from Fed chairman Ben Bernanke. The Federal Reserve continues to pour massive reserves into the banks. The monetary base, which consists of currency in circulation and bank reserves (the basis for new loans), has surged from $850 billion in 2009 to $2.2 trillion on February 24.

Despite this potential for massive new money creation, the broadest measure of money growth is still contracting.The banks are too impaired and so are consumers for the banks to create new money by making loans.

The economy, in other words, is going nowhere.

As I have emphasized for years, an economy that moves its high productivity, high value-added jobs offshore is going nowhere but down. Except for the super-rich, there has been no growth in people’s incomes for a decade. To substitute for the missing income growth, consumers took on more debt. The growth in consumer debt kept the economy going. However, most consumers have now reached their maximum debt load, and millions went beyond their limit, resulting in foreclosures and lost homes.

There are no jobs to which people can be called back to work. The jobs have been given to the Chinese and Indians.

The economy is set for a “double-dip,” that is, renewed decline. This, of course, means larger federal, state, and local budget deficits. The U.S. federal deficit is now so large that it can no longer be financed by the trade surpluses of China, Japan, and OPEC.

Currently the deficit is being financed by deterioration in the Federal Reserve’s balance sheet. The Fed is creating new reserves for the banks (thus the surge in the monetary base) in exchange for the bank’s toxic financial instruments. The banks are using the reserves to purchase Treasury debt instead of making new loans. This makes money for the banks, but does not grow the economy or create jobs for the millions of unemployed.

According to reports, recent auctions of Treasury debt have not gone well. China, America’s biggest creditor, has reduced its participation and is even selling some of its existing holdings. Whenever all of a new Treasury debt offering is not taken, the Federal Reserve buys the remainder. This results in debt monetization. The Fed pays for the bonds by creating new checking accounts for the Treasury, in other words, by printing money.

On February 24, Fed chairman Ben Bernanke told Congress that the U.S. faced a serious debt crisis and that the Fed was not going to print money in order to pay the government’s bills. In fact, Bernanke would have no choice but to print money.

Bernanke’s warning to Congress is his way of adding Federal Reserve pressure to that of Wall Street and former Treasury Secretary Paulson for Congress to balance the budget by gutting Social Security and Medicare. In case you haven’t noticed, no one in Washington or New York talks about cutting trillion dollar wars or trillion dollar handouts to rich bankers. They only talk about taking things away from little people. It is not the Bush/Cheney, Obama, neocon wars that are in the cross hairs; it is Social Security and Medicare.

Other Obama economic officials, such as White House economist Larry Summers, a former Treasury secretary, have called for a middle class tax increase. The problem with this “solution” is that a good part of the middle class is now jobless and homeless.

Money will have to be found somewhere if the Fed is to avoid printing it. During the Clinton administration a Treasury official proposed a 15 percent capital levy on all private pensions to make up for their tax deferral status. This idea didn’t fly, but today a desperate government, which has wasted $3 trillion invading countries that pose no danger to the U.S. and wasted more trillions of dollars combatting a crisis brought on by the government’s failure to regulate the financial sector, is likely to steal people’s pensions as well as to gut Social Security and Medicare.

The reason is that the dollar’s role as reserve currency is at stake. If the Federal Reserve has to monetize the federal deficit, the world will turn its back on a rapidly depreciating dollar. The minute the dollar loses the reserve currency role, the U.S. can no longer pay its bills in its own currency, and its days as a superpower come to a sudden end. Wars can’t be financed, and Washington’s pursuit of world hegemony will hit a brick wall.

The power-mad denizens of DC will do anything to further the expansion of their world empire.


Paul Craig RobertsPaul 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.

And recently Roberts has written another book, How the Economy was Lost, just published by CounterPunch / AK Press.

This article is published in the Baltimore Chronicle with permission of the author.



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This story was published on March 5, 2010.

 

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