Tuesday, May 16, 2006

The dollar's evil twin: Exploring the Bush bureaucracy's private monetary system

I was happily hiking through Tilden Park on Mothers' Day when all the stuff I have been reading on the internet regarding the sorry state of the American economy suddenly coalesced inside of my head. "Aha!" I said to the tree next to me as suddenly everything started to make sense.

Here's what I had learned from the internet:

From Mike Whitney I learned that "Currently, the world is drowning in dollars, even a small movement could trigger a massive recession in the United States." I also learned that "There's no prospect of the US running a trade surplus anytime soon. Bush has savaged the manufacturing sector, outsourcing over 3 million jobs and shutting down plants across the country.... Currently, the national debt is a whopping $8.4 trillion with an equally harrowing $800 billion trade deficit."

Whitney also taught me that "the profligate spending, budget-busting tax cuts, and the shocking increase in the money supply (the Fed has doubled the money supply in one decade) has the greenback headed for the dumpster. Already, China and Japan (who hold an accumulated $1.7 trillion in US securities and currency) are gradually moving away from the dollar towards the euro."

From my friend Joe Thompson, I learned that "3.9 trillion dollars a day in wire transfers are going through the Federal Reserve of New York. No greenbacks, just digits." The Federal Reserve is apparently printing greenbacks like alchemists who have finally learned how to make gold out of air.

Joe also said that, "There's no way the stock market could continue to advance while buying inflated oil futures at the same time. Even with margin trading there is just so much money to go around. So the money had to come from really deep pockets -- which the oil companies have. They couldn't lose because they were feeding themselves with their own money."

Then of course Michael Rupert has taught us the critical lesson that drug money pouring in from Afghanistan and Columbia is what really keeps our economy afloat.

And I also got an interesting lesson from the Washington Post. "A $2.7 trillion budget plan pending before the House would raise the federal debt ceiling to nearly $10 trillion, less than two months after Congress last raised the federal government's borrowing limit." What lesson is this? That America's federal credit cards appear to be totally maxed out?

And economists are predicting another economic crash like the one in 1929. "The crisis won't come immediately," stated Paul Krugman back in 2003. "For a few years, America will still be able to borrow freely, simply because lenders assume that things will somehow work out. But at a certain point we'll have a Wile E. Coyote moment.... Mr. Coyote had a habit of running off cliffs and taking several steps on thin air before noticing that there was nothing underneath his feet. Only then would he plunge."

I put all these facts into my brain, stirred them up and added a few more facts that I stole off of Google. "America's total national income is approximately $2,100 billion a year but our debt is approximately $8 TRILLION." That means that we taxpayers are only making enough salary to pay off less than one percent of our debt. And yet our economy hasn't crashed?

What does THAT mean?

What IS keeping our economy together?

Is there some secret underground world of money that we average Americans know nothing about? Is there some private monetary system that really runs the economy -- and has nothing to do with the "dollar"?

Or does the U.S. dollar have an evil twin?

Still deep in thought, I walked over to the park's Little Farm and looked at the chickens, pigs, rabbits and cows. "No one is gonna believe this," I told a chicken that had just pecked at my shoe. "They are all gonna just think that I'm paranoid. But seriously. Look at the evidence...." The chicken looked.

"The American economy is in deep trouble but it hasn't crashed. That's against every law of economics since Adam Smith! The feds SHOULD be bankrupt. Yet they are not." The chicken nodded its head.

"There must be money pouring into the system from somewhere." The chicken agreed.

"But where?" No-bid contract money-pits, drug money, petro-dollars, money-laundering schemes, off-shore hidey-holes, safety-deposit boxes full of gold, numbered Swiss bank accounts, artificial money creation, the outrageous use of credit, Enron-style boondoggles.... If you add in all these shadow sources of revenue, NOW the booming U.S. economy makes sense." Holy sheep dookie. "That means that corruption and nepotism and crony-ism and bribes and embezzlement and money-laundering and drugs are holding our economy together!" The chicken nodded again.

"Since we stopped taxing the rich and 'offshore' corporations, the money hemorrhaging out of OUR wallets is only a drop in the bucket in staunching the flood of national debt. If the national economy was only financed by us measly taxpayers, this above-ground economy would be a train-wreck waiting to happen. Yet the underground economy of billionaires just keeps chugging happily along." The chicken agreed.

But wait. It gets worse. "If the dollar crashes tomorrow, none of the Bush bureaucrats will be effected. WE depend on the dollar. We would go belly-up. THEY depend on a shadow economy and the dollar's evil twin who they keep locked up somewhere in the Caymen Islands -- or in the new mega-embassy in Baghdad. They will be fine." The chicken squawked.

"But how did we Americans allow this to happen? How did we degenerate into a bunch of poor little match girls, standing in the snow and staring longingly through the window as the dollar's evil clones live high on the hog?" The chicken had no idea.

Then I thought of one of Whitney's other comments. "By collapsing the dollar, Bush can shift the wealth of the American middle class to corporate mandarins in the blink of an eye. Industry profits will soar while working class people drown in an ocean of red ink."

Then the chicken pooped on my foot.