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Is America Broke?

Today we are seeing that government is not an abstraction. Rather, its services are a basic expression of the common good. They are things that affect the daily lives of most Americans.
As they are eliminated, we are being forced into an unpleasant realization: we are the ones being strangled in the tub. The beast being starved is us.
Starving Uncle Sam
Is the U.S. teetering on the edge of bankruptcy?

 http://www.newint.org/


By Mark Engler


America the destitute? It's easy to picture the United States as a Hummer packed full of shopping bags, with supersized sodas in the cup-holders and a plasma screen TV poking through the sunroof - a nation whose sins are those of excess. It feels stranger to depict the country as a pauper with its empty pockets pulled inside out.


Yet the idea that Uncle Sam has run out of cash now appears everywhere in public debate. The slogan, 'We're broke' is used to justify an historic shredding of our social safety net.


So, is it true? Is America teetering on the edge of bankruptcy?


The short answer is no. Yes, the cost of America's private healthcare system is spiralling out of control. The nation will have to address this in coming decades to remain solvent.


Yes, for the sake of the planet, we have to constrain our culture of wanton consumption. And, yes, in the long run, the US must curtail its domestic debts and armed overseas adventurism or it will risk having the dollar displaced as the world's reserve currency.


But, for the time being, there are few things that offer safer refuge for international investors in moments of distress than the American Greenback.


The biggest problem right now for the economy is not debt. It is that millions of people who want work cannot find jobs. This results both in mass despair and in a huge loss of economic output.


America's de facto jobs programme, the US military, is a highly inefficient one, with a devilish downside: the steady hiring of soldiers and endless production of arms eventually leads lawmakers to think that these should not be sitting idle.


That we're supposedly too poor to fund anything except the military is by design. Since the time of Ronald Reagan, the Right has followed a strategy of 'starving the beast'. Unlike in other countries, advocates of austerity cannot turn to the International Monetary Fund to mandate destruction of widely popular social programmes. Instead, by continually passing tax cuts, they have aimed to deprive the public sector of the funds to carry out initiatives they regard as noxiously redistributive.


No need to campaign against public programmes individually: they defeat them en masse by making it impossible for the state to foot the bill. (Extra bonus: perennial tax cuts disproportionately benefited their wealthy campaign donors.)


One of the radical Right's Washington Machiavellis, Grover Norquist, famously argued that he sought not merely to emaciate the state but 'to get it down to the size where we can drown it in the bathtub'.


In the abstract, the strategy might sound only slightly distasteful - and perhaps even a little clever. The reality is more ugly. Deliberate starvation is a cruel and violent act, and murder by bathwater a psychopathic one.


Starving the public means that after-school programmes for children who need them the most are being eliminated; and cities plagued with crime and joblessness add to both by sending police officers into unemployment. Nor is hunger only a metaphor: just when demand for state-supported food stamps reaches a record high, conservatives attack the budget for them.


If the rightwingers continue to have their way, the elderly will be given miserly healthcare vouchers and told that they must barter for medical services on the open market. And the task of finding a US public library with decent hours of operation will grow akin to spotting the elusive California condor.


Today we are seeing that government is not an abstraction. Rather, its services are a basic expression of the common good. They are things that affect the daily lives of most Americans.


As they are eliminated, we are being forced into an unpleasant realization: we are the ones being strangled in the tub. The beast being starved is us.



--Mark Engler is a senior analyst with Foreign Policy In Focus and author of How to Rule the World: The Coming Battle Over the Global Economy (Nation Books). He can be reached via the website  http://www.DemocracyUprising.com.

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You want to know when the shit really hits the fan? 08.Aug.2011 19:57

justsomedude

Currently the US Dollar is the reserve currency of the world. As an American that means when oil, wheat, corn, soybeans, Natural Gas, etc. Is bought or sold, it's sold in US Dollars.

This means that Australia, Peru, Great Britain, and every other country on the planet must take their own currency and purchase US Dollars first in order to buy Oil, Soybeans, etc.

When countries like Saudi Arabia decide they no longer want US Dollars for their goods, when decide they want Chinese RMB, or some other currency instead of US Dollars, then Americans will see price spikes like nothing they have seen before.
Because we will no longer be able to print some dollars to buy something, we will have purchase with US dollars the new reserve currency like Chinese RMB in order to buy Oil on the world market.

When this happens you probably will see a loaf of Bread cost $5 this year, and $15 the next year and so on. Gasoline $10 a gallon, a year later $18 a gallon or more.

We will see a similar economic problem that the former USSR when though in the early 1990s. Massive inflation. This will hit the poor and middle class the worse, because your wages will not go up at the same rate.

This is how governments inflate their way out of economic turmoil. The $70 TRILLON the US owes in Social Security, Medicare, and other unfunded entitlements won't be cut, they will be inflated so the check you get from the government will only buy 10 percent of what it originally would have.