** The Rotting Legacy of 43 to 44 **

Better-defined imperial borders.

Richer rich, poorer poor, dying middle.

Pox Americana harassed at every frontier supply line. Tyrannical social control at home erases living memory of a democratic republic.

Those wretched ephemeral babblers lusting after the purple in '08 notwithstanding, a slide into the abyss can only be slowed, not reversed.

No reforming political force yet exists which can not be enslaved or aborted by MIXR: the military-investor & xian-right.

Little Bush, our postmodern Caligula, merely catalyzes the rot of Empire. This is not necessarily a bad thing.

"Those whom the gods wish to destroy, they first make demented."

bipolar2
copyright asserted 2007

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The picture Stewert paints of an essentially weak economy full of pent-up inflation that will make the early 1970s look like nothing is both accurate and frightening. The impact this could have on the US Dollar could be devastating, just watch the price of gold. Eventually this could be our undoing because so much of the US economy's prosperity is predicated on foreign (and domestic) securities purchases, which are essentially loans, that tie up a great deal of capital for the long term in US Dollar denominated financial assets. When this becomes perceived as too risky, capital flight will begin. In Paul Krugman word's, there will be a great unraveling and a great depression.

Before we rush to blame the printing presses of the FED let's look at the reality. M1 has remained stable for years at under a trillion and a half dollars or less than 12% of the US GDP. The blame for the bubble should go less to the FED than US financial markets which create liquidity without FED expansion of the money supply or interest rate adjustments. One way is the growth of the "Repo" or Repurchase agreement. Here banks sell bundles of securities, usually T-Bonds, with an agreement to repurchase them at a later date at a fixed amount. This amounts to a loan. Overnight repurchases amount to circumventing the ban on checking account interest payments for very large depositors. In 2004, the US repurchase market totalled more than $5 trillion. All this causes banks to become flush with fresh loan capital much of which expands speculative financial activity rather than new productive investment and output.

US financial markets have greatly increased bank liquidity and hence the credit burden of US society in order to sustain profits and drive economic growth. The pent-up inflation that is building as we speak is the result of the growing public and private debt that is itself the consequence of ongoing financialization amidst overall economic stagnation. A sudden burst of inflation could cause a sudden rise in real interest rates that would fall like a crushing wieght on the economy causing a depression. Overall rates of non-residential fixed investment and industrial capacity utilization are historically very low. The current situation is quite dangerous. The only way out is to use finance to rebuild America's productive base and create jobs and a middle class and not for further debt driven growth and speculation.

Such a new strategy would require forming the appropriate underlying political coalition. Could the US working poor and middle class form a solid political coalition to push the Democrats forward and enact some of the necessary agenda of progressive social democrats like Denis Kucinich, Sherrod Brown, John Edwards, and Bernie Sanders? Perhaps but this assumes incredible shifts within the Democratic party toward social democracy and away from being a corporate alternative to the Republicans. How could such a shift be realized? This must form the basis of an entirely new discussion.

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ReaganBush cut spending on human aid programs, bestowing years of "tax relief" (a.k.a., welfare) on the rich, and left us with enormous debt. Enter the New Dem Party of ClintonGore, balancing the budget, but taking a machete to aid programs for our poor. Then comes more of the "fiscally responsible Republicans", the BushCheney admin. Surplus gone quick as a blink, massive "tax relief" for the richest, back to massive debt. (While state and federal government continues to use a paring knife on what remains of the New Deal humanitarian programs, like Social Security) Next, we'll have a Dem administration, having to find money to pay off another Repub administration's debts. But there's one catch that we all need to think about: Who will pay the bills this time? General Assistance and AFDC were already defunded, and vital anti-poverty programs have been slashed or eliminated. (Although complaining that the biggest of those programs, AFDC, was dragging the nation into debt, at its highest, AFDC used only 6% of the fed. budget, so all that money quickly disappeared when put back into the hands of our political leadership.)
My point is, there is very little left to take from the poor, gov. won't even put a moratorium on welfare for the rich. So, who will pay the bills this time around?

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