The Entire World Is Held Hostage By US Quantitative Easing Or Money Printing. The Very Idea Of Tapering QE Has Caused The Emerging Economies To Deflate As A Result Of Capital Withdrawal Back To The US.
What Is The Root Cause For This Unsettled State In World Economy Beholden To The Money Printing Presses of the US?
For many years since the 2nd World War the US has been increasingly spending far beyond its means. The monstrous debts and deficits are caused by these reasons:
1) THE US IS THE NUMBER ONE POLICE STATE IN THE WORLD.
The USA Military Is The No. One Police Force In The World Today – Maintaining Law and Order Everywhere. Remember “Desert Storm” when Sadam Hussein invaded a sovereign nation like Kuwait? The US military liberated Kuwait and set Kuwait free.
The US also intervened in the Vietnam War & many other parts of the world by its army and marines. Its Fleet of Aircraft Carriers and Nuclear powered Submarines continue to patrol the high seas around the Globe. And All Funded Solely By The US Govt.
2) CAPITALISM WINNING THE WAR OVER COMMUNISM – Very Costly!
This Is Another Important Root Cause For The Increasing US Debt. Ronald Reagan in his race to build a “STAR WAR” like Missile Shield against Soviet Gorbachev, caused the spending of horrendous amount of money.
The Russians trying to counter the highly eloquent Ronald Reagan’s ambitious program, almost bankrupted the Soviet Economy. The Soviet finally gave up and lost “The Cold War”. But the US debt increased and spiralled out of control. The Collapse of Communism might someday cause the demise of Capitalism.
Capitalism by itself is the best form of economy. It is the abuse of Capitalism that is wrong. Communism stifles creativity, while Capitalism spurs creativity.
In Communist China under chairman Mao, almost every one wears the same drab coloured clothes. After Deng Xioping open door policy, China became A World Full Of Creative, colourful Industries – The World’s Factory.
3) US – WORLD’S NUMBER ONE BENEFACTOR – DONATING MONEY & RELIEF TO THE ENTIRE WORLD NATIONS. GIVING AIDS TO ALL RICH & POOR NATIONS ALIKE.
Unlike Communist Russia who seized East Germany, The US did not seize or occupy Okinawa.Instead the US offered aid to both Germany & Japan & many, many other countries for many years. These Charitable Acts of Mercy drained the US of its wealth.
The US was founded by the Pilgrim Fathers when they sailed to America in search of Religious Freedom. And in 1776 Founded USA – “THE LAND OF THE FREE AND THE HOME OF THE BRAVE”.
As the Song goes,
“In the beauty of the lilies Christ was born across the sea.
With a glory in his bosom that transfigures you and me:
As He died to make men holy let us live to make men free
While God is marching on…”
Indeed, when the Puritan Fathers left England for America, they were forbidden to bring with them the tools, the machines or the inventions of the times.
However, through sheer hard memory they recreated those tools and then excelled and exceeded the technology of England.
4) DISTORTED SOCIAL BENEFITS
Dr. Bob Jones of Bob Jones University has been preaching against the evil of the US Social Welfare System. It gives benefits to all US Citizens irrespective of race or religion.
Anyone not working is entitled to Welfare Payment and Food Stamps. And if you have more children you get more payout from Uncle Sam.
Seeing this loophole, the American Negro’s want to have as many children as possible. The more children equals more free money! They Are Rich Indeed! Getting Rich by doing nothing!
This distortion in Capitalistic US creates a bigger and bigger population of negroes and hispanics. More people means more votes for these colored people.
And so for the first time in US History they voted out the White Man & brought in Obama. Interestingly, President Obama’s hair is turning white due to the the immense burden of High Office!
And his hands are tied. Cut the Negro benefits? Of course not. They voted him into power. The alternate is to spend and spend. More and more negro children, then. And more welfare payouts. And more QE follows.
5) REVIVAL OF GERMAN & JAPANESE EXPORTS.
Resting on its laurels, the Industries of US fell into disrepair as German and Japanese Car Sales overtook US automobiles all over the world.
Same goes for TV, refrigerators, air conditioners & all all things desirable. Detroit fell victim as in many other US cities. US Trade Deficits Leap Upward.
6) OPENING OF CHINA.
For 30 Years Now China has Flooded The World With Cheap Manufactured Goods. 10 years ago a Miniature Led Light Torch was sold for S$29 in Sim Lim Square, Singapore.
Today, a similar Miniature Led light could be found everywhere for RM4.00
(About Singapore $1.60). How can the US compete? S$29 against China’s $1.60.
Donald Trump has proposed that the US Govt should tax all imported Chinese manufactured Goods at 25%.
Trade Protectionism caused The Great Depression to lengthen from 1929 to
1939. And so the US Trade Deficit Must Continue to pile up’
7) CORPORATE PROFLIGACY.
Only in the US can a CEO be paid Millions of Dollars even if his Company cannot perform. Corrupt Govts, from Third World Nations siphon money from its citizens but those who hold powers in the US is doing the same thing.
In Japan disgraced officials commit harakiri. But in the US Wrong Doers are rewarded and Honest Savers are punished by the diminishing purchasing power of hard earned savings through endless QE.
Money Printing only benefits the Super Rich in Wall Street – not the man on the main street.
8) THE US HOUSING BUBBLE & SUB PRIME PROBLEMS.
Of all problems created this is perhaps the most dangerous and damnable!
In Year 1999 we paid a visit to the US – San Francisco, California, Los Angeles, Las Vegas, Hoover Dam, Lake Mead, Universal Studio, Nevada & Beverly Hills (Hollywood).
What a Great Nation is the US!
However, everywhere we went, we saw flyers & handbills in the bins provided. At every street corners you will see huge piles of free printed materials for the taking.
Let’s take one and see what is it? It says, “WANT TO BORROW MONEY?” So Easy. It went on to say, “No Job?” No Problem. “No Income?”. No Problem. “No Asset?” No Problem. “Are You Blacklisted?” No Problem. “Are You A Bankrupt?” Also No Problem! Come and See Us!!
You can find these handbills – yes, millions and millions of them in Los Angeles, Las Vegas & California & San Francisco. At that time we don’t know what’s going on in USA. We sensed that something must be wrong.
Now we know. The Housing Bubble had burst. The loans given out from Year 1999 to 2006 were called Liar Loans or also called “NINJA” Loans. The word “NINJA” stands for “No Income, No Job & No Asset” Loans.
And because under normal circumstances these people will never, ever qualify for a housing loan. Unless they are willing to Pay A Higher Interest Rate. You see, they don’t qualify as Prime Borrowers Who Have Jobs & Assets as collateral.
Since they don’t have proper jobs they are Classified as Sub prime – And so Pay Higher Interest for added risks. And they are risky indeed. Compounded by the following reasons Risk has spread Over the Entire World!
Since the US is no longer competitive, they fiddled with low interest rates to promote growth by cheap credit. Here, let us share our US Hired Car Experience. One Day we rented a US made car for a day trip to Hoover Dam & Lake Mead.
We found out to our amazement the low quality of the US made car. You see, the automatic window on the driver side cannot close properly. Even the Malaysian made Proton Saga is better than the US made car. And US put the first man on the moon?
As the US cannot compete externally, it turned inward and created the NASDAQ Bubble. When Internet Technology Shares Crashed in Year 2,000 – Attention Shifted To The Great US Housing Bubble.
Suddenly, everyone is caught up in The Housing Frenzy! Prices stared to rise and rise till Year 2006. And with Rising Equity In House Prices The Masses Started To Speculate,
Borrow and Spend, Borrow and Spend. The Great American Dream Is Here At Last! Your Home Is Your ATM Or Cash Cow.
Let’s Say, “House Prices Started in Year 2,000 at US$50,000. And jumped US$50,000 every year till 2006. In year 2001 Prices Have doubled to US$100,000. Year 2002 US$150,000. Year 2003 US$200,000. Year 2004 US$250,000.
You see, the Frenzy of Price Rise Year after Year has caught many by surprise. Suddenly, they feel very rich.
At every US$50,000 price gain they could refinance the house and take out another US$50,000 for consumption.
Buy that new car this year!
Next Year – Price gone up another US$50,000. Refinance again. And get that US$50K. Buy that New boat for fishing.
So they go from BANK A to BANK B,then to Bank C,and then to Bank D & E. They Change Banks like Changing clothes! Every year go to a different Bank for Refinancing and get another US$50K for consumption.
Consumption? Yes. The wastrel American spent as though there is no tomorrow. Prices will only go up. The sky is the limit.
But how come the Banks are so foolish? Don’t they know that there is great risk and money lent out will never be paid back? What if the bubble burst? Of course they do.
They have vested interests- these Bank officers. In cahoots with Housing Agents, Valuers & Credit Assessors they give out Liar Loans to borrowers.
Someone who is a road sweeper, is given a title called “President of Health Department”. Property value is overstated. Liar Loans are given out for kick backs & commissions. The Go-Go years Of US Housing Bubbles.
Prices Will Go Up Next Year. So easy. Just Refinance It For A Higher Price With Another Sucker Bank! Everyone is making money, who cares?
And So The Banks Gave Out Trillions and Trillions of Liar Loans. And something new and funny (fishy) happened.
These Banks Lumped & Bundled Together These Loans that were Given Out At High Interest Rates With Projected High Profits. Then They Sell Them Like Bonds Called “COLLATERALIZED DEBT OBLIGATIONS” Or CDO.
Collateralized by What? By These Houses At Bubble Prices, Of Course. And “Debt Obligations” by Who? By the road sweeper called “President of Health Department”. In Malaysia, we call them “Longkang” cleaner. And chances are they will never, ever be repaid – all these liar loans with so called “sub prime higher interests”.
And now these packaged millions and millions of CDOs are Sold All Around the World To Banks in USA, UK, Germany & Many Other Countries. Thank God that Malaysia Is Not One Of Them. According to the Economist Marc Faber, Malaysian Banking System Is Very Sound.
Some years ago, Singapore Newspapers Advertised “Mini Bonds” at 5% Interest rates. Many who bought got into trouble later. So were those in Hong Kong. Some have lost their entire life savings.
You see, By Selling these packaged CDOs, the Risk is transferred from the US Banks To Foreign Banks All Over The World. And if Your Local Banks Happen To Be The Unfortunate Ones, and If They Sell Them To You As Mini Bonds – Then You Are At Risk Yourself!
Those Banks That Swallowed These Toxic CDOs Have Gone Bankrupt Or Taken Over One By One – LEHMAN BROTHERS, BEAR STEARNS, MERRILL LYNCH, MORGAN STANLEY, GOLDMAN SACHS & MANY OTHERS…
To Prevent Further Insolvency Or Bankruptcy, The Federal Reserve Improvised QE & Pumped Trillions And Trillions Of Fiat Money Into The US Banking System.
Until today Many Banks In Many Countries On This Planet Earth Still Have Unresolved, Toxic and Poisonous CDOs in their Falsified Balance Sheets.
No one knows WHICH IS THE NEXT BANK or WHICH IS THE NEXT COUNTRY TO GO BURST! And many properties in the US Are Still Under Water. The Day of Reckoning is postponed indefinitely by Continual QE.
Can The Fed Pull Back QE? That’s A 100 Trillion Dollars Question?
NOTE: September 22nd, 2013.
“Septaper” a newly coined word is a non-event after all. With all the roar there is no bite. How can they pull back QE? US cannot ever service the interest on the debt alone.
And without QE & The Further raising of the Debt Limit (Over 16 Trillion US Dollars currently. See “US DEBT CLOCK”) – The Entire US Govt Will Shut Down!
The US Aircraft Carrier & Nuclear Powered Submarines Will Stop their patrolling. And the world will become a more dangerous place for all.
And No Money For Food Stamp means riot & looting in US Cities. Arab Spring will look like child’s play.
And The Next Great Depression Begins.
Helicopter Ben still throws money from his Vantage position (Helicopter Fed Reserve Bank of Fiat Money From The Sky.)
And Warren Buffet just came out to say he wanted Ben Bernanke to stay for a third term. By law he can only serve two terms , unless President Obama override it and ask him to stay another four more years.
Four more years of Money Printing means four more years of indirect money devaluation for all.