World Has Had Enough Of U.S. Imperialism
Michael Hudson is President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City and is the author of "Super-Imperialism: The Economic Strategy of American Empire" (1968 & 2003), "Trade, Development and Foreign Debt" (1992 & 2009) and of "The Myth of Aid" (1971).
ISLET engages in research regarding domestic and international finance, national income and balance-sheet accounting with regard to real estate, and the economic history of the ancient Near East. Michael acts as an economic advisor to governments worldwide including Iceland, Latvia and China on finance and tax law.
Here Hudson talks with The Real News Networks' Paul Jay about the 800+ empire of military bases the U.S. has established around the globe, about how all of the money that the military spends abroad is spent on foreign economies and is then "siphon[ed] up into the central banks. And the central banks would have nothing to do with these dollars but to keep their currency stable by recycling the dollars into US Treasury bills." and about how "If it weren't for the military deficit, America would have had to finance its own domestic budget deficit. It's been foreigners that are financing the budget deficit."
Hudson concludes here with the observation that "Now that foreigners are essentially saying, we don't want any more dollars, we're not going to fund your deficit, all of a sudden they think: who's going to fund the deficit if not foreign central banks? The answer is: American labor, the American middle class and working families are going to fund it, not the military."
The rest of the world has had enough of financing it's own encirclement and subjugation by the U.S. military.
From here on in it is you who is going to be paying the bill...
So, how much is the bill, you ask?
Yes, the free market fanatics at The Daily Bell are delusional libertarians. The more than $200 Trillion dollar debt they are reacting to so delusionally in that article however, is real…
Kotlikoff’s numbers are based on the...
…Congressional Budget Office whose Long-Term Budget Outlook, released in June, shows an even larger problem.
Based on the CBO’s data, I calculate a fiscal gap of $202 trillion, which is more than 15 times the official debt. This gargantuan discrepancy between our “official” debt and our actual net indebtedness isn’t surprising. It reflects what economists call the labeling problem. Congress has been very careful over the years to label most of its liabilities “unofficial” to keep them off the books and far in the future.
How can the fiscal gap be so enormous?
Simple. We have 78 million baby boomers who, when fully retired, will collect benefits from Social Security, Medicare, and Medicaid that, on average, exceed per-capita GDP. The annual costs of these entitlements will total about $4 trillion in today’s dollars. Yes, our economy will be bigger in 20 years, but not big enough to handle this size load year after year.
This is what happens when you run a massive Ponzi scheme for six decades straight, taking ever larger resources from the young and giving them to the old while promising the young their eventual turn at passing the generational buck.
Herb Stein, chairman of the Council of Economic Advisers under U.S. President Richard Nixon, coined an oft-repeated phrase: “Something that can’t go on, will stop.” True enough. Uncle Sam’s Ponzi scheme will stop. But it will stop too late.
And it will stop in a very nasty manner. The first possibility is massive benefit cuts visited on the baby boomers in retirement. The second is astronomical tax increases that leave the young with little incentive to work and save. And the third is the government simply printing vast quantities of money to cover its bills.
Worse Than Greece
Most likely we will see a combination of all three responses with dramatic increases in poverty, tax, interest rates and consumer prices. This is an awful, downhill road to follow, but it’s the one we are on. And bond traders will kick us miles down our road once they wake up and realize the U.S. is in worse fiscal shape than Greece.
– U.S. Is Bankrupt and We Don’t Even Know It: Laurence Kotlikoff, Bloomberg, Aug. 10, 2010
The IMF and the US Government will use this as justification for drastic cuts in social services and heavy austerity programs. While the fed prints hundreds of billions of dollars in outright gifts to Wall Street bankers (calling it “quantitative easing“, causing high inflation that will raise food and other prices drastically while your taxes are increased at the same time.
On November 10, David DeGraw of AmpedStatus.com and author of The Economic Elite Have Engineered an Extraordinary Coup, Threatening the Very Existence of the Middle Class, at Alternet, February 15, 2010, produced the following video warning about the Federal Reserve’s latest Quantitative Easing scheme….
Dear America, Your Taxes Are Going Up 20%, Food and Gas Prices Will Skyrocket, Fed Drops Bomb On Us
And what is the U.S. business community’s response?
OilPrice.com: Invest In The USA? Why Bother?
Capital will flow to where there’s money to be made. It’s just that simple. America’s “accomodative” monetary policy has spurred a new wave of corporate borrowing. And where are these multinational entities deploying these new investments? Not in the United States. That money is flowing into emerging economies. Bloomberg reported on the trend in Bernanke’s ‘Cheap Money’ Stimulus Spurs Corporate Investment Outside U.S-
“You’re seeing leakage from quantitative easing,” said Stephen Wood, chief market strategist for Russell Investments in New York, which has $140 billion under management. “That leakage is going into emerging markets, commodity-based economies, commodities themselves and non-U.S. opportunities.”
U.S. corporations have issued more than $1.07 trillion in debt so far this year, according to data compiled by Bloomberg. Foreign companies also are tapping U.S. markets for cheap cash, selling $605.9 billion in debt through Nov. 15 compared with $371.8 billion for all of 2007, before the Fed cut the overnight bank-lending rate to a range of zero to 0.25 percent…
Corporate cash sloshing across U.S. borders is an unavoidable consequence of the Fed’s low-rate strategy, Wood said…
U.S. corporations’ overseas investment in the first half of 2010 exceeded the amount that foreign firms spent in the U.S. on factories and acquisitions at an annual rate of almost $220 billion, according to the Commerce Department.
In the first half of 2006, the last year before the financial crisis, the net flow favored the U.S. at an annual rate of about $30 billion.