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Is this the end of America?


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Terence Corcoran: Is this the end of America?

Posted: March 19, 2009, 7:38 PM by NP Editor

Terence Corcoran, Ben Bernanke, inflation

U.S. law-making is riddled with slapdash, incompetence and gamesmanship

By Terence Corcoran

Helicopter Ben Bernanke’s Federal Reserve is dropping trillions of fresh paper dollars on the world economy, the President of the United States is cracking jokes on late night comedy shows, his energy minister is threatening a trade war over carbon emissions, his treasury secretary is dithering over a banking reform program amid rising concerns over his competence and a monumentally dysfunctional U.S. Congress is launching another public jihad against corporations and bankers.

As an aghast world — from China to Chicago and Chihuahua — watches, the circus-like U.S. political system seems to be declining into near chaos. Through it all, stock and financial markets are paralyzed. The more the policy regime does, the worse the outlook gets. The multi-ringed spectacle raises a disturbing question in many minds: Is this the end of America?

Probably not, if only because there are good reasons for optimism. The U.S. economy has pulled out of self-destructive political spirals in the past, spurred on by its business class and corporate leaders, the profit-making and market-creating people who rose above the political turmoil to once again lift the world out of financial crisis. It’s happened many times before, except for once, when it took 20 years to rise out of the Great Depression.

Past success, however, is no guarantee of future recovery, especially now when there are daily disasters and new indicators of political breakdown. All developments are not disasters in themselves. The AIG bonus firestorm is a diversion from real issues , but it puts the ghastly political classes who make U.S. law on display for what they are: ageing self-serving demagogues who have spent decades warping the U.S. political system for their own ends. We see the system up close, law-making that is riddled with slapdash, incompetence and gamesmanship.

One test of whether we are witnessing the end of America is how many more times Americans put up with congressional show trials of individual business people and their employees, slandering and vilifying them for their actions and motives. And for how long will they tolerate a President who berates business and corporations as dens of crime and malfeasance? If the majority of Americans come to accept the caricatures of business as true, then America is closer to the end of its life as a global leader, as a champion of markets and individualism.

But America is at risk in other ways, especially in the technical business of setting and executing policy. The presidency of Barack Obama has set out on a course that has no precedent in U.S. history. Franklin D. Roosevelt, whose New Deal transformed the U.S. economy during the Great Depression, pushed America off on a sharply different political and ideological course. The Obama administration is different in many ways, not least in its supreme self-confidence in its methods and objectives.

Reform of health care, environmental policy, education, energy, banking, regulation — every nook and cranny of the U.S. economy has been put on alert for major change. Expansion of government spending, plunging the U.S. into unprecedented deficits, is without parallel. In economic policy, through regulation and control of energy output, financial services and monetary expansion, the U.S. government has embarked on a fundamental reshaping of America. It is designed, in short, to bring on the end of America.

The spillover effect of all this on the rest of the world promises to be dramatically disruptive. The greatest global risk is in monetary and currency policy. Below is a chart that graphically demonstrates the sharp deviation in monetary policy from past norms. Under the chairmanship of Ben Bernanke, the Federal Reserve is in the midst of a giant economic experiment, flooding the world with U.S. dollars, hoping that flood will stimulate economic activity.

The total monetary base, already at astronomical levels, is now expected to take another big hit with the new Fed policy of buying up U.S. longer-term treasury bills in a bid to drive down long-term interest rates.

Mr. Bernanke is sometimes known as “Helicopter Ben” because he once in an academic paper referred to the use of “helicopters” full of money to rescue an economy from deflation. In comments Wednesday to explain the Fed’s new policy of buying $300-billion in U.S. treasury bills, Mr. Bernanke noted that the Fed is now more worried about inflation being too low than about it getting too high in the future.

For the rest of the world, however, the worry is that America is at risk of becoming the fountainhead of a new inflationary outburst. The U.S. dollar is now in decline, gold is moving sharply higher, and new global currency turmoil is on the horizon.

It may not happen. A paper just published by the Federal Reserve Bank of St. Louis, source of the chart above, says that the Fed will have to be prepared to absorb all the excess money it has poured into the U.S. economy. It will be a technical and political challenge unlike any central bank has ever undertaken. The future of America is at stake.

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Is this the end of America? No

Is this the end of America as we know it? Yes

But that's what people voted for last November.

Many of the things mentioned in the article were set in motion well before last November. As Obama is fond of saying, we inherited this mess. And I doubt that anyone who was pulling a lever for Obama last November was voting for crippling inflation, which is the basis of the article.

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I truly believe the end of America as we know it started well before Obama... but I would say he is accelerating the process.

We can only hope right? That way Rush Limbaugh will be proven correct and the G.O.P. can reclaim power in 4 more years...

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I don't care for Rush Limbaugh or the G.O.P. either. Neither party is looking out for the people.

Sure you don't.

Lemme guess. Ron Paul supporter? Bobb Barr? Or someone else that has not, and will never have to be judged by their actual record or accomplishments?

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Sure you don't.

Lemme guess. Ron Paul supporter? Bobb Barr? Or someone else that has not, and will never have to be judged by their actual record or accomplishments?

Red herring.

But I will oblige you. Ron Paul has a larger record to be judged on than Barack Obama doesn't he? Because Mr. Obama doesn't have much of a record to be judged upon, but what he's got certainly isn't too good.

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Wow. You're full of assumptions. If you had ever read any of Cush's posts before then you would know that he puts no faith in just about any aspect of the federal government. Quit coming off as a jerk.

Yeah I know none of you guys do.. You taught yourself to read, write and count at home in your log cabins..Fetched your own drinking water from wells you dug yourself, and delivered all of your mail through pigeon carrier. I got it...You have no need or trust for government. No need to keep explaining it to us weaklings...

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Yeah I know none of you guys do.. You taught yourself to read, write and count at home in your log cabins..Fetched your own drinking water from wells you dug yourself, and delivered all of your mail through pigeon carrier. I got it...You have no need or trust for government. No need to keep explaining it to us weaklings...

Ad hominem and stereotype.

What we actually need the government for is not what the government is providing. A few things we do not "need" the govt. for: healthcare, education, social insecurity...

What we need the government for: protecting the rights of each individual. Are our representatives doing that? Nope.

Quick question? Why would you trust THIS government? Is it rational to do so? I think it's terribly irrational to do so and I can debate that from more than one perspective.

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Sure you don't.

Lemme guess. Ron Paul supporter? Bobb Barr? Or someone else that has not, and will never have to be judged by their actual record or accomplishments?

I'll take those winning Lotto numbers when you have them ready there, Madam Cleo.

As for the article, we made it through Carter--I'm sure we'll get through this. I expect a huge change in Congress in 2010 that balances things out quite a bit. I'd expect in 2012, we'll have a new President too, especially at the rate things are going now...

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Man, do we need another World War or what?

Come on China, blow something of ours up already!!! Take some hostages, you goat-blowing Iranians!! Chop off some more heads Al Qaeda! Uncle Sam needs to work off some testosterone!!!

wow. its not funny bro, since i am assuming you meant it as a joke.

It's funny how some of the same people who were saying "This country is fine. We are headed in the right direction." for the past few years have now turned a complete 180 simply because of the election. And the vice-versa for the other side. More party bullsh#t. :rolleyes:

party BS runs everything.

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It's funny how some of the same people who were saying "This country is fine. We are headed in the right direction." for the past few years have now turned a complete 180 simply because of the election. And the vice-versa for the other side. More party bullsh#t. :rolleyes:

Tax breaks are going in the right direction...

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