imc indymedia

Los Angeles Indymedia : Activist News

white themeblack themered themetheme help
About Us Contact Us Calendar Publish RSS
latest news
best of news




A-Infos Radio

Indymedia On Air

Dope-X-Resistance-LA List


IMC Network:

Original Cities africa: ambazonia canarias estrecho / madiaq kenya nigeria south africa canada: hamilton london, ontario maritimes montreal ontario ottawa quebec thunder bay vancouver victoria windsor winnipeg east asia: burma jakarta japan korea manila qc europe: abruzzo alacant andorra antwerpen armenia athens austria barcelona belarus belgium belgrade bristol brussels bulgaria calabria croatia cyprus emilia-romagna estrecho / madiaq euskal herria galiza germany grenoble hungary ireland istanbul italy la plana liege liguria lille linksunten lombardia london madrid malta marseille nantes napoli netherlands nice northern england norway oost-vlaanderen paris/Île-de-france patras piemonte poland portugal roma romania russia saint-petersburg scotland sverige switzerland thessaloniki torun toscana toulouse ukraine united kingdom valencia latin america: argentina bolivia chiapas chile chile sur cmi brasil colombia ecuador mexico peru puerto rico qollasuyu rosario santiago tijuana uruguay valparaiso venezuela venezuela oceania: adelaide aotearoa brisbane burma darwin jakarta manila melbourne perth qc sydney south asia: india mumbai united states: arizona arkansas asheville atlanta austin baltimore big muddy binghamton boston buffalo charlottesville chicago cleveland colorado columbus dc hawaii houston hudson mohawk kansas city la madison maine miami michigan milwaukee minneapolis/st. paul new hampshire new jersey new mexico new orleans north carolina north texas nyc oklahoma philadelphia pittsburgh portland richmond rochester rogue valley saint louis san diego san francisco san francisco bay area santa barbara santa cruz, ca sarasota seattle tampa bay tennessee urbana-champaign vermont western mass worcester west asia: armenia beirut israel palestine process: fbi/legal updates mailing lists process & imc docs tech volunteer projects: print radio satellite tv video regions: oceania united states topics: biotech

Surviving Cities africa: canada: quebec east asia: japan europe: athens barcelona belgium bristol brussels cyprus germany grenoble ireland istanbul lille linksunten nantes netherlands norway portugal united kingdom latin america: argentina cmi brasil rosario oceania: aotearoa united states: austin big muddy binghamton boston chicago columbus la michigan nyc portland rochester saint louis san diego san francisco bay area santa cruz, ca tennessee urbana-champaign worcester west asia: palestine process: fbi/legal updates process & imc docs projects: radio satellite tv
printable version - js reader version - view hidden posts - tags and related articles

America's Glorious Empire of Debt

by Bill Bonner Friday, Mar. 03, 2006 at 2:24 PM

Economists have all become like rich notables in the time of Trajan, doing the emperor's work whether they are on his payroll or not.

The Daily Reckoning PRESENTS: Take a moment to admire America's

magnificent empire...the bubbles, the debt, the deficits, and the fraud.

Bill Bonner explores...


by Bill Bonner

Let us take a moment to stand back and gaze at America's great Empire of Debt. It is the largest edifice of debt ever put up. It sustains the most magnificent world economy ever assembled. It brings more wealth to more people than any system ever before devised.

Not only is it incomparably effective, it is also immeasurably

entertaining. For it has its burnished helmets and flying banners; its intellectuals and its gladiators; its Caesars, Antonys, Neros, and Caligulas. It has its temples, its forum, its Capitol, its senators; its praetorian guards; its via Appia; its proconsuls, centurions, and legions all over the world as well as its bread and its circuses in the homeland and its costly wars in periphery areas.

The Roman Empire rested on a classical model of imperial finance. Beneath a complex and nuanced pyramid of relationships was a foundation of tribute formed with the hard rock of brute force. America's empire of debt, on the other hand, stands not as a solid pyramid of trust, authority, and power relationships but as a rickety slum of delusion, fraud, and misapprehension.

"My tax guy has been bugging me...You know, real estate is where it is at." In June 2005, NBC quoted a young woman who had bought a second home at a Colorado resort. According to the report, more than a third of the houses sold in the previous 12 months were not primary residences, but second homes or investments.

Down at the bottom of the pyramid are petty agents spreading deceit and misinformation - such as the aforementioned "tax guy." You would think a young woman could trust her certified tax advisor to give her sound counsel. Instead, he urges her to get into the most bubbly property market in American history. Naturally, she went for it, aided no doubt by a whole industry of professional dissemblers. Press reports tell us that appraisers routinely stretch valuations to help close a deal. Mortgage lenders know perfectly well the appraisals are lies, but they wink at them with one eye while winking at the borrower's phony income declaration with the other. Again, according to the press reports, lenders no longer verify income claims. They have gone blind!

In California, house prices have raced so far ahead of incomes that barely one in ten buyers can afford the median house. Yet thanks to "creative finance," more houses are being sold than ever before. Thus the foundation of the debt pyramid is laid down in a bed of mutual deceit and cupidity, and covered with another level of fabrications. Lenders do not stick around to see how the loans work out. Instead, they pretend the credits are good, and package the mortgages into convenient units so that investors can buy them. The financiers know damned well that many buyers can't really afford to pay for the houses they buy, but they see no point in mentioning it. Nor do the investors want to know.

They're in on the scam, too. The smartest of them even have figured out how it works: The Fed holds down short-term rates below the inflation rate so that investors in long-term mortgage financing and buyers of U.S. Treasury obligations can make an easy profit.

Further up the steps of imperial debt are whole legions of analysts, economists, and full-time obfuscators whose role is to make us all believe six impossible things before breakfast and a dozen more before dinner. Quack economists at the Bureau of Labor Statistics do to numbers what guards at Guantanamo did to prisoners. They rough them up so badly, they are ready to say anything. This abuse of statistics is what allows Americans to deceive themselves about their own economy. It is healthy,

they say. It is growing. It is stable. All these so-called facts are little more than elaborate prevarications.

Economists, commentators, and policymakers take up these distortions and add their own twists. It is obvious to anyone who bothers to think about it that an economy that spends more than it earns is in decline. But try to find an economist willing to say so! They've all become like rich notables in the time of Trajan, doing the emperor's work whether they are on his payroll or not. They will tell you the economy is expanding, but it

is an expansion similar to what happens when a compulsive eater escapes from a fat farm. The longer he is on the loose, the worse off he becomes.

On the issue of the trade deficit, they will say what the senators and consuls want to hear, as Levey and Brown did in Foreign Affairs magazine: "The United States' current account deficit and foreign debt are not dire threats to its global position, as would-be Cassandras warn. U.S. power is firmly grounded on economic superiority and financial stability that will not end soon." In fact, the story of international trade, circa 2005, is the most preposterous tale economists have ever heard. One nation buys things that it cannot afford and doesn't need with money it doesn't have. Another sells on credit to people who already cannot pay and builds more factories to increase output.

Every level colludes with every other level to keep the flimflam going. On the banks of the Potomac, people of all classes, rank, and station are pleased to believe that all is well. And there, at the Federal Reserve headquarters, is another caste of loyal liars. Alan Greenspan and his fellow connivers not only urge citizens to mortgage their houses, buy SUVs, and commit other acts of wanton recklessness, they also control the nation's money and make sure that it plays along with the fraud. They do not even have to clip the precious metal out of the imperial coins; there is none in it.

> From the center to the furthest garrisons on the periphery, from the lowest rank to the highest - everyone, everywhere willingly, happily, and proudly participates in one of the greatest deceits of all time. At the bottom of the empire are wage slaves squandering borrowed money on imported doodads. The plebes gamble on adjustable rate mortgages (ARMs). The patricians gamble on hedge funds that speculate on huge swaths of mortgage debt. Near the top are Fed economists urging them to do it! And

at the very pinnacle is a chief executive, modeled after Augustus, who cut taxes while increasing spending on bread, circuses, and peripheral wars. (It might be added that some of the biggest lies in the history of warfare were told to the American lumpen public to stir up support for the war against Iraq, but it hardly seems worth mentioning it.)

The spectacle is breathtaking. And endlessly entertaining. We are humbled by the majesty of it. Everywhere we look, we see an exquisite but precarious balance between things that are equally and oppositely absurd. On the one side of the globe - in the Anglo-Saxon countries in general, but the United States in particular - are the consumers. On the other side - principally in Asia - are the producers. One side makes, the other takes. One saves, the other borrows. One produces, the other consumes. This is not the way it was meant to be. When America first stooped to

Empire, she was a rising, robust, energetic, innovative young economy. And for the first six decades of her imperium - roughly from 1913 until 1977 - she profited from her competitive position. Every country to which she was able to extend her pax dollarum became a customer. Her businesses made a profit.

But gradually, her commercial advantage faded and her industries aged. The very process of spreading the soft, warmth of her protection over the earth seemed to make it more fertile. Tough, weedy competitors sprouted all over the periphery of the empire - first in Europe, then in Japan, and later, throughout Asia, even are as she had never been able to dominate.

By the early 21st century, the costs of maintaining her role as the world's only superpower, and its only imperial power, had risen in excess of five percent of her GDP, or 8 billion per year. Not only had she never figured out a good way to charge for providing the world with order, now order was working against her. The periphery economies grew faster. They had newer and better industries. They had higher savings levels and much lower labor rates. They had few of the costs of bread or circuses and none of the costs of policing the empire. They were freer, lighter, faster. Every day, the competitors took more of America's business, assets, and money. If the empire were an operating business, accountants would say it was losing money.

The empire no longer pays because the entire Western world – including Japan - has lost its competitive edge. Globalization of the pax dollarum era served the United States well after World War II. The global economic system in the pax dollarium era was perfectly balanced. For every credit in Asia, there was an equal and opposite debit in the United States. And for every dollar's worth of demand from the United States, there was a dollar's worth of supply already waiting in a container in Hong Kong. But

while the imperial finance system was flawless, its perfections were devastating.

For the moment, Americans salute their imperial standards. They gratefully paste the flag to their car windows, their jackets, their hats, their beer mugs, their shirts and even their underwear. Americans are proud of their empire - and should be. Without it, they could never have gotten so far in debt. What central banker would fill his vault with Argentine pesos or

Zimbabwe dollars? What drug dealer or arms seller would want Polish zlotys in payment? What insurance company would want to buy Bolivian or Kyrgzstan bonds to cover its long-dated liabilities? The dollar has not been convertible into gold for 34 years.

Yet, people still take it as though it were as good as the yellow metal - only better. Ultimately, lending money to a foreign government is a bet that the government will put the squeeze on its own citizens to make sure you get paid. The United States doesn't even have to squeeze. When one foreign loan comes due, other foreigners practically line up to refinance it; it is as if they were bringing pastries to an extremely fat man, just to gawk and wonder when he might explode.

Bill Bonner

The Daily Reckoning

Editor's Note: Bill Bonner is the founder and editor of The Daily

Reckoning. He is also the author, with Addison Wiggin, of The Wall Street Journal best seller Financial Reckoning Day: Surviving the Soft Depression of the 21st Century (John Wiley & Sons).

In Bonner and Wiggin's follow-up book, Empire of Debt: The Rise of an Epic Financial Crisis, they wield their sardonic brand of humor to expose the nation for what it really is - an empire built on delusions. Daily Reckoning readers can buy their copy of Empire of Debt at a discount - just click on the link below:

"Now Perhaps Someone Will Listen!"

[Free email reports on the oil crisis and the housing bubble are available from The Daily Reckoning.]

Report this post as:

Local News


lausd whistle blower A10 11:58PM

Website Upgrade A10 3:02AM

Help KCET and UCLA identify 60s-70s Chicano images A04 1:02PM

UCLA Luskin: Casting Youth Justice in a Different Light A02 11:58AM

Change Links April 2018 A01 11:27AM

Nuclear Shutdown News March 2018 M31 6:57PM

Join The Protest Rally in Glendale on April 10, 2018! M29 7:00PM

Join The Protest Rally in Glendale on April 10, 2018! M29 6:38PM

Spring 2018 National Immigrant Solidarity Network News Alert! M19 2:02PM

Anti-Eviction Mapping Project Shows Shocking Eviction Trends in L.A. M16 5:40PM

Steve Mnuchin video at UCLA released M15 12:34AM

Actress and Philanthropist Tanna Frederick Hosts Project Save Our Surf Beach Clean Ups M06 12:10PM

After Being Told He's 'Full of Sh*t' at School Event, Mnuchin Demands UCLA Suppress Video M02 11:44AM

Resolution of the Rent Strike in Boyle Heights M01 6:28PM

What Big Brother Knows About You and What You Can Do About It M01 3:30PM

Step Up As LAPD Chief Charlie Beck Steps Down F14 2:44PM

Our House Grief Support Center Hosts 9th Annual Run For Hope, April 29 F13 12:51PM

Don’t let this LA County Probation Department overhaul proposal sit on the shelf F13 11:04AM

Echo Park Residents Sue LA Over Controversial Development F12 8:51AM

Former Signal Hill police officer pleads guilty in road-rage incident in Irvine F09 10:25PM

Calif. Police Accused of 'Collusion' With Neo-Nazis After Release of Court Documents F09 7:14PM

Center for the Study of Political Graphics exhibit on Police Abuse posters F07 9:50AM

City Agrees to Settle Lawsuit Claiming Pasadena Police Officer Had His Sister Falsely Arre F04 3:17PM

Professor's Study Highlights Health Risks of Urban Oil Drilling F04 12:42PM

Claims paid involving Pasadena Police Department 2014 to present F04 10:52AM

Pasadenans - get your license plate reader records from police F03 11:11PM

LA Times Homicide Report F03 1:57PM

More Local News...

Other/Breaking News

Xyloglossie attitudinale A23 8:07AM

Shadowgun Legends Hack and Cheats A23 7:24AM

What does the Quran Say About Islamic Dress?? A21 4:15PM

Biodiversité ou la nature privatisée A20 11:22AM

The Market is a Universal Totalitarian Religion A20 7:14AM

Book Available about Hispanics and US Civil War by National Park Service A19 5:52PM

The Shortwave Report 04/20/18 Listen Globally! A19 4:01PM

The Republican 'Prolife' Party Is the Party of War, Execution, and Bear Cub Murder A19 11:48AM

Neurogenèse involutive A18 9:21AM

Paraphysique de la dictature étatique A16 10:13AM

Book Review: "The New Bonapartists" A16 3:45AM

The West Must Take the First Steps to Russia A14 12:25PM

Théorie générale de la révolution ou hommage à feu Mikhaïl Bakounine A14 3:30AM

The Shortwave Report 04/13/18 Listen Globally! A12 3:50PM

“Lost in a Dream” Singing Competition Winner to Be Chosen on April 15 for ,000 Prize! A12 3:48PM

The World Dependent on Central Banks A12 4:43AM

Ohio Governor Race: Dennis Kucinich & Richard Cordray Run Against Mike DeWine A11 9:40PM

March 2018 Honduras Coup Again Update A10 10:52PM

Apologie du zadisme insurrectionnel A10 3:33PM

ICE contract with license plate reader company A10 1:14PM

Palimpseste sisyphéen A09 11:23PM

Black Portraiture(S) IV: The Color of Silence...Cuba No...Cambridge Yes A09 5:32AM

Prohibiting Micro-Second Betting on the Exchanges A09 4:18AM

Prosecutors treat Muslims harsher than non-Muslims for the same crimes A08 10:33PM

Amy Goodman interview on cell phone safety A08 10:29PM

Mesa, Arizona police officer kills unarmed white man A08 9:50PM

Israeli leaders should be prosecuted for war crimes A08 9:48PM

Paraphysique de l'autorité A08 12:11AM

More Breaking News...
© 2000-2018 Los Angeles Independent Media Center. Unless otherwise stated by the author, all content is free for non-commercial reuse, reprint, and rebroadcast, on the net and elsewhere. Opinions are those of the contributors and are not necessarily endorsed by the Los Angeles Independent Media Center. Running sf-active v0.9.4 Disclaimer | Privacy