The United States Is Its Own Worst Enemy!

We have a congressional con-job moving full speed ahead in Washington. Both Democrats and Republicans appear to have ganged up against China’s currency policy. Nancy Pelosi and others are suggesting that China needs to revalue their currency and curtail pegging the Renminbi to the dollar, and instead, float their currency based upon the open market value. Also, we are hearing the war drum beaten for a tariff policy.

Pelosi implied with little proof that if China does the currency readjustment, and tariffs are instituted, then the United States will, once again, resume its growth in jobs and America will become an industrial giant as it had been before trickle down and supply-side economics was brought to us by the neoliberals behind the Project for A New American Century.

What is going on in congress, and the White House is a complete avoidance of reality. They want to blame China instead of blaming the way the US has managed its monetary policies, and permitted the corporate sector predators to sell US jobs to the lowest bidder.

Just think about it.

Over the last 30 plus years, the corporate predatory multi-nationals have decided that the American worker was being paid too much, their benefits too high, and the unions, which raised all wages in the country due to their collective bargaining policies, were too powerful.

At the same time, the executive management decided that to invest in more efficient facilities would commit those companies to remain in the country when China, Vietnam, Indonesia, Micronesia, Taiwan and elsewhere looked better because of rock bottom wages, no unions, and no benefit demands.

By shipping jobs overseas, the American worker would have to settle for lower paying jobs, as a whole, and if they were to maintain their previous standard-of-living, they would have to join the heavily indebted culture borrowing from their homes, and using credit cards more often floating minimum balances sinking further into serfdom.

Because congress and the guard changing presidents all serving the corporate masters who dictated the rules were embedded in the neoliberal policy dictates of the corporate giant predators who built new industrial empires in Asia growing those foreign national GDPs and standards-of-living, while those two economic indicators began to shrink in America.

In order for China to sell their exports cheaply at the company store—Walmart—they pegged their currency to the US dollar. This made sense to any foreign country that was playing host to numerous US corporations. This policy served the economic export needs of the US corporations reaping the benefits of a massive and cheap labor force overseas. Many foreign government officials got rich over this relocation by the corporate elite creating a dislocation right here in the US.

As a result of the United States swamped with cheap Asian exports being shelved across the malls of America, shoppers bought their stuff with dollars, obviously. Those dollars were then sent back to Asia, especially China. Trillions of dollars piled up in pockets of the Chinese. With those dollars, China ended up coming back to the US by purchasing treasury bonds and bills. Thus far, China owns around $850 billion worth of treasuries down from around $2 trillion. They have become our lender, and we the borrower. They are the creditor, and we are the debtor. China sold off a big portion of US treasuries in order to purchase other investments, such as gold, and other precious metals, as well as commodities, foreign currencies, and securities, as well as brick and mortar companies, whenever possible. But when it is time to pay back China when they decide to  sell off more of our treasuries, we have to pay up the initial principal, as well as the interest due because it is very likely that Ben Bernanke will try and mop up whatever they decide to sell off. That process facilitates more Quantitative Easing.

When China buys interest bearing US investments, the issuer, the US treasury, must then pay the interest when the investment comes due, as well as the principal. And because the US manufacturing sector has slipped to 11% of GDP, the country no longer has a growing GDP in relation to its own debt. And because the unemployment rate continues to be a massive drag upon the economy (25+ million un-under employed, and no longer looking), the tax revenues shrink. The government has had to pay out huge payments in unemployment compensation, child health care programs, Food Stamps, and other benefits.

As a result of the loss of sustainable industrial jobs being replaced by the growth in jobs inside the financial crime syndicate network, which is really the ultimate cause of this economic collapse, we need to be concerned when we flex our muscles in regards to trade and currency battles. The Federal Reserve, the crime syndicate’s personal printing press facility, is where the process of Quantitative Easing all began. Essentially, this was Ben Bernanke printing money to be lent out to the banksta crowd, through the various Fed Fund programs, at near zero percent interest. As Bernanke prints money through his Quantitative Easing program, the value of the dollar typically shrinks. This reinforces dis-flation (the process of reaching deflation).

Just today (10-5-10) we saw Japan lower its currency value, and the stock market climb and hold nearly 200 points on the DOW, yet, at the same time, oil climbed and the dollar dropped in value. Good times for those in the market today, but bad for those sitting out or unable to play with the big boy’z high frequency computer trades, which make up most of the trades.

This policy allowed the bankstas to lend this cheap money at 2-3% interest to the corporate investors as they spent it overseas, in China, and elsewhere, building more factories, call centers, research facilities, laboratories, buildings and more, instead of spending it in the United States rebuilding the country, which they destroyed in the first place.

With the process of Quantitative Easing, compounded interest is always having to be paid out by the Fed and Treasury because the bankstas also lend money back to the government at the 2-3% interest rate allowing them to make money just by borrowing from the Fed and turning it around selling the government’s money back to the government. Now that is crazy!

My question is why is Pelosi, Obama and others in congress wetting their panties because China is trying to protect their economic surplus and industrial empire created by the US government?

When we have a government policy that was designed to solely enrich the richest people in the country by printing money so they can use it to make more money while destroying the very economic fabric of the nation sinking all of us into a national security crisis, then we have to tell them that it is THEIR fault, and not necessarily China’s fault, which is out to protect their own interests as we had done after World War II and beyond until the late 1970s and early 1980s, and continuing on to present day.

Pelosi, Obama, and Congress don’t seem to say that the small desired increase in value of the Renminbi would not really change a whole heck of a lot for most of us. It has been reported that the Renminbi is around 25% deflated, but they have raised its value around that same amount over the last few years. The United States will likely not find itself in a rapid GDP growth spurt if China floats its currency. What might actually happen is a continuation of a treasuries sell-off, whereby more principal and compounded interest will have to be paid out increasing our debt levels.

The US has done all it could, that is Ben Bernanke, President Obama, along with his economic advisors, and Congress, to keep the dollar’s value low in hopes to sell more exports, but the fact is that this now becomes a worldwide race to the currency-devaluation bottom. No country wants to be sitting on an inflated currency. When that happens, their exports begin to cost more. What a country will end up doing is to sell off more of its own currency to lower its value, and then a competing nation will do the same. As this happens, wages get dragged down, but other work place costs, more than likely, get inflated, such as medical insurance co-pays, insurance contributions, etc.

Tariffs could help, since China places tariffs on their imports. But there is a danger when a nation, such as the US, which makes and exports very little and has to import most of its raw materials, engages in a trade war. China realizes that they are a growing nation with lots of workers willing to do it on the cheap, and with lots of raw materials stockpiled, too. They understand that they have a population that might be able to absorb the products they make. China might just begin to further disengage from the US consumer, who has already tightened their spending belts. You might say this would be a protectionist policy battle. But, the US would be placing tariffs on US corporate interests, in China, selling their stuff back to the Walmart shopper.

Whatever ridiculous policy comes out of Washington, it will only resemble a Halloween gag gift.

Pelosi, Obama and the rest of the congressional clowns are not really talking REAL CHANGE, such as the mandatory creation of state banks, which would be able to borrow from the Fed directly capturing the near zero percent interest rates that could be turned into loans that could begin to rebuild the US manufacturing industry, while competing with private sector banks which are hoarding their Fed issued cash. Of course, since it has been damaged so badly over the last 30 plus years, it might take a few more to begin to show signs of a come back.

In addition, revamping the tax structure so industry and labor are no longer taxed, but insurance, finance and real estate “rentiers” (A term Professor Michael Hudson uses to identify someone whose income is from property rents or bond interest and other investments) would be at full value. By placing the taxing structure on real estate, Professor Hudson believes that property values would be kept at modest levels where they belong. It would control the speculator who inflates property values due to low interest rates. It would allow workers to spend a reasonable percentage of their pay on their mortgage not like today. Property values would no longer bubble up. Workers would be able to afford affordably priced homes.

We don’t hear lawmakers lifting the cap on Social Security contributions, either. If the cap were to be lifted, then all wages would have Social Security contributions taken out filling the pot back up.

There is so much that needs to be done to fix our economy, but little is actually making a significant difference. All we hear now from the regressive Republican party and their dimwitted offspring-the Tea Party candidates, is that minimum wages are no good, and tax cuts for the rich are required, and budget cuts across the board must occur, except in defense, Social Security, and Medicare. But all else is fair game.

It appears the party of NO will bring about stagnation for two more years, assisted by the cowardly Democrats not willing to stand up for the average American.

Thanks for reading, jerry

http://eye-on-washington.blogspot.com 

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