American Pretension In Korea
From the desk of Johnny Fincioen on Tue, 2010-11-16 08:55
![letter-from-america.jpg](/sites/brusselsjournal.com/files/letter-from-america.jpg)
At the end of last week, during the G20 conference in Seoul, the world delivered Obama a stunning defeat. He had the arrogance to accuse China of currency manipulation, while he himself is engaged in a big devaluation of the US dollar. The world leaders told him flat out his policy of huge government debt while debasing the value of the dollar, will not work to strengthen the US economy. They called Obama’s policy also highly damaging to the economies of the other countries, and to world trade.
While he was now in Korea anyway, Obama wanted to dominate the Koreans. Three years ago President Bush negotiated a trade pact with South Korea. As a Senator Obama opposed this deal, and the Democratic Congress refused to ratify the treaty. Last week Obama counted on all his personal charms to sign a new trade deal. He had already sold in the US his big coming success. Hubristic as he is, he added a bunch of new conditions to the trade accord, without giving the Koreans ample time to evaluate his new demands. Obviously the Koreans sent Obama home empty handed.
The words of German, Brazilian, Chinese and other international politicians about the ongoing devaluation of the dollar confirm the anxieties of the Americans. They know the fast climbing prices of the basic commodities. Once, and rather earlier than later, these extra costs will be calculated in the cost of end products. The US populace understands Obama is sending them a huge inflation wave. A recent study in the Walmart stores (the largest retailer of the world) by the research company MKM Partners shows the prices for basic necessities, the kind of products people buy every day, to have advanced 0.6% over the last two months. This is an inflation of about 4% per year.
Bernanke, as Chairman of the Federal Reserve, doesn’t see any inflation. He thinks it is acceptable for him to ‘print’ another 600 billion dollars to create 2% inflation, a ratio he thinks ‘ideal’. During the recent two years he tripled already the supply of dollars in the world! (2008: 800 billion, now in 2010: over 2 trillion – Wall Street Journal 15 November 2010) Bernanke and Obama defend this policy as THE solution to create jobs and to grow the US economy. But, unemployment swells, or circles around double what it was before the financial crisis. The economy is only growing very slowly at an insignificant pace. Bernanke’s blindness for the coming consequences of the rise in the prices of basic commodities like coal, cotton, grain, copper, oil etc, not to mention gold and silver, prove his incompetence as Chairman of the US National Bank, the Federal Reserve.
Since, what is going on in the US?
Obama creates enormous budget deficits. Foreign money suppliers ask for more compensation. So, interest rates on long term US government debt jump. To be able to get his hands on cheap money, Obama ‘sells’ the debt to the Federal Reserve. Over there they just ‘print’ more money. They ‘create’ dollars out of nothing! Something a National Bank is able to do. This means Obama steals from all who own now dollars. The stealing happens by inflation.
It is as in the time of the kings, when they smelted their gold coins, just to make new gold coins with only half the grade of gold, but stamping the same value-number on them. As by miracle, the king had double the amount of money to pay his debts. An example of the consequences in the real world: if the price of one donkey was one old gold coin before the king’s action, very quickly the price for that same donkey was two new gold coins. People are not that stupid.
What is the alternative?
The government can immediately stop creating government debt. Balanced budgets are possible by raising the income, by cutting spending, or by a combination of the two.
Income can be boosted, or by raising taxes, or by growing the economy. Raising taxes tend to slow and hamper the growth of the economy. So, it is not really a good solution to grow income, and certainly not a good time now that the economy is limping forward. Lowering taxes seems to be a better way to stimulate the economy.
One other way to energize the economy is to abolish government control, or at least cut the government intrusion in a meaningful way. So: less administrative paperwork and ‘red tape’. This cuts government spending on its own merits. Complete government departments could be closed. Although important as a saving on its own, killing one such government department only means saving about 2% of the total budget. Real savings are realized when the social expenditures are cut, since they drag two thirds out of the government budget.
The counterattack is launched.
The international reaction of recent weeks towards the American financial policy seems to be the drop causing the bucket to overflow. The opposition to Bernanke’s policy to keep printing more dollars, and by doing so enabling the Obama administration to go deeper into debt, is growing in the USA. Republican politicians, economists, and political strategists are trying to stop Bernanke in a concerted effort. Tea Party activists inform the public on what Obama and Bernanke are up to with the dollar. Sarah Palin was first as a well-known Republican to write an open letter about the subject, and harvested outspoken praise from the Wall Street Journal in an editorial article for her financial and economic insights. Ron Paul becomes Chairman of the House committee on Financial affairs once the new Republican majority is installed in January. He promises to grill Bernanke in hearings. Although he will not be able to force Bernanke to resign, the open discussions will bring the policies before a broader public.
The new elected Republicans in Congress give the impression to focus on severe spending cuts, as soon as they are installed in January. The chance exists Republicans will refuse to hike the debt ceiling next year. This would effectively stop Obama to run any more deficits. Paul Ryan, one of the young Republican leaders, has a detailed plan in his ‘Roadmap for America’ to reorganize and cut the outlays in social programs.
A video to help you understand the Fed's QE2
Submitted by debendevan on Fri, 2010-11-19 22:12.
Finally, a video to help you understand the Fed Quantitative Easing – and how it really works!
http://www.wallstreetwindow.com/content/node/18288
- de bende van
Perversion of English
Submitted by siegetower on Thu, 2010-11-18 01:47.
It still amazes me to hear experts call debts 'assets'. It's a perversion of English. To have another party owe you money may be an asset but if they can never pay it off, that responsibility becomes a liability for both parties as far as I'm concerned.
Once, 'capitalism' was about buying and selling goods, tangible items that could be used to generate future wealth. How we can trust a system of buying and selling of intangible items that only generates future debt?
Once, the financial markets involved purchasing shares in companies that produced things, actual things - demonstrated actual items. How has this evolved into the financial market becoming trillion dollar gambling houses, where the ownership of shares in companies themselves producing dividends through industrial production are not the goals, but gambling that the price of those shares will rise and fall according to speculation, is itself the goal? It's like a global casino and Bernanke is the guy selling the chips.
___
Defend Christendom. Defend Jewry. Oppose socialism in Europe.
It's like a global casino
Submitted by mpresley on Thu, 2010-11-18 03:18.
It's like a global casino and Bernanke is the guy selling the chips.
Not exactly. Bernanke is buying; Goldman Sachs is the seller. But people think the Fed buys from the Treasury, if they even think at all. What a convoluted mess. But you don't want to make it too simple, or people will start to figure it out. At the same time Goldman "defends" the Fed's move (wonder why?), while Bernanke vehemently denies any of this will stoke inflation.
http://tinyurl.com/32h3yha
You'd almost think this was a Twilight Zone episode, but that only lasted half an hour. You'd also think that by now the revolution would have already started, but who has time for revolution now that Sarah Palin's kid is on Dancing with the Stars. Now that's real news.
The planned asset purchases...
Submitted by mpresley on Wed, 2010-11-17 12:31.
The planned asset purchases risk currency debasement and inflation...
Leave it to the open borders crony capitalists at the WSJ to waffle and equivocate about a most certain future. I'm surprised they haven't moved their entire operation to China, to tell you the truth.
I give the new Congress a year or so. Then, if it's still business as usual, it'll probably be all over and we can move on to Plan 9.
Wall Street against Bernanke.
Submitted by Johnny Fincioen on Tue, 2010-11-16 23:16.
Yesterday the Wall Street Journal wrote an open letter to Bernanke. Here is an excerpt:
“We believe the Federal Reserve's large-scale asset purchase plan (so-called quantitative easing) should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed's objective of promoting employment.
We subscribe to your statement in the Washington Post on November 4 that "the Federal Reserve cannot solve all the economy's problems on its own." In this case, we think improvements in tax, spending and regulatory policies must take precedence in a national growth program, not further monetary stimulus.
We disagree with the view that inflation needs to be pushed higher, and worry that another round of asset purchases, with interest rates still near zero over a year into the recovery, will distort financial markets and greatly complicate future Fed efforts to normalize monetary policy.
The Fed's purchase program has also met broad opposition from other central banks and we share their concerns that quantitative easing by the Fed is neither warranted nor helpful in addressing either U.S. or global economic problems.”
Here is an example of how the opposition on Bernanke’s policy is spread via the new media, in a simple but to-the-point way. Watch the video.
https://www.youtube.com/watch?v=PTUY16CkS-k&feature=player_embedded