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  1. #1
    Senior Member AirborneSapper7's Avatar
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    The Never-Ending Depression

    The Never-Ending Depression

    The Economy Can Only Recover If We Repudiate the Debt


    by Washington's Blog
    Global Research, July 20, 2011
    many links on this post

    Economics Professor: "[We’ll Have] a Never-Ending Depression Unless We Repudiate the Debt, Which Never Should Have Been Extended In The First Place"

    Economists: The Economy Can Only Recover If We Repudiate the Debt

    Leading Austrian-school economist Murray Rothbard - an American - wrote in 1992:

    I propose ... out-right debt repudiation. Consider this question: why should the poor, battered citizens of Russia or Poland or the other ex-Communist countries be bound by the debts contracted by their former Communist masters? In the Communist situation, the injustice is clear: that citizens struggling for freedom and for a free-market economy should be taxed to pay for debts contracted by the monstrous former ruling class. But this injustice only differs by degree from "normal" public debt. For, conversely, why should the Communist government of the Soviet Union have been bound by debts contracted by the Czarist government they hated and overthrew? And why should we, struggling American citizens of today, be bound by debts created by a ... ruling elite who contracted these debts at our expense?

    ***

    Although largely forgotten by historians and by the public, repudiation of public debt is a solid part of the American tradition. The first wave of repudiation of state debt came during the 1840's, after the panics of 1837 and 1839. Those panics were the consequence of a massive inflationary boom fueled by the Whig-run Second Bank of the United States. Riding the wave of inflationary credit, numerous state governments, largely those run by the Whigs, floated an enormous amount of debt, most of which went into wasteful public works (euphemistically called "internal improvements"), and into the creation of inflationary banks. Outstanding public debt by state governments rose from $26 million to $170 million during the decade of the 1830's. Most of these securities were financed by British and Dutch investors.

    During the deflationary 1840's succeeding the panics, state governments faced repayment of their debt in dollars that were now more valuable than the ones they had borrowed. Many states, now largely in Democratic hands, met the crisis by repudiating these debts, either totally or partially by scaling down the amount in "readjustments." Specifically, of the 28 American states in the 1840's, nine were in the glorious position of having no public debt, and one (Missouri's) was negligible; of the 18 remaining, nine paid the interest on their public debt without interruption, while another nine (Maryland, Pennsylvania, Indiana, Illinois, Michigan, Arkansas, Louisiana, Mississippi, and Florida) repudiated part or all of their liabilities. Of these states, four defaulted for several years in their interest payments, whereas the other five (Michigan, Mississippi, Arkansas, Louisiana, and Florida) totally and permanently repudiated their entire outstanding public debt. As in every debt repudiation, the result was to lift a great burden from the backs of the taxpayers in the defaulting and repudiating states.

    ***

    The next great wave of state debt repudiation came in the South after the blight of Northern occupation and Reconstruction had been lifted from them. Eight Southern states (Alabama, Arkansas, Florida, Louisiana, North Carolina, South Carolina, Tennessee, and Virginia) proceeded, during the late 1870's and early 1880's under Democratic regimes, to repudiate the debt foisted upon their taxpayers by the corrupt and wasteful carpetbag Radical Republican governments under Reconstruction.

    Economics professor Steve Keen is also calling for a debt jubilee, stating:

    We should write the debt off, bankrupt the banks, nationalize the financial system, and start all over again.

    We need a twenty-first century jubilee.

    [We’re going into] a never-ending depression unless we repudiate the debt, which never should have been extended in the first place.

    If we keep the parasitic banking sector alive, the economy dies. We have to kill the parasites and give a chance to the real economy to thrive once more and stop the financial [crooks] doing what they did this time around ever again.

    Video: On the Edge with . . . Steve Keen (2/2) http://www.youtube.com/watch?v=VoqaMzBK ... r_embedded

    Economics professor Michael Hudson - who also calls for a debt jubiliee - writes:

    The only way to resolve the [European debt crisis] is to negotiate a debt write-off.

    As I've noted for years, the entire strategy of the Bush and Obama economics teams have been to prevent the big banks, bondholders and other creditors from having to take haircuts by writing down the bad loans, phony instruments and bad debt. They have suspended any objective accounting requirements, allowed endless shell games to hide the debt and pretend all of the insolvent creditors are solvent, done everything under the sun to artificially prop up asset prices, turned a blind eye to the underlying fraud which caused the bubble, the toxic investment instruments and false representations, and then helped cover up the mess. See this, this, this and this.

    I noted last month:

    America - like most nations around the world - decided to bail out their big banks instead of taking the necessary steps to stabilize their economies (see this, this and this). As such, they all transferred massive debts (from fraudulent and stupid gambling activities) from the balance sheets of the banks to the balance sheets of the country.

    Failing to acknowledge the bad debt is dooming the world economy. As leading independent banking analyst Chris Whalen points out:

    The invidious cowards who inhabit Washington are unwilling to restructure the largest banks and GSEs [government sponsored enterprises, like Fannie and Freddie]. The reluctance comes partly from what truths restructuring will reveal. As a result, these same large zombie banks and the U.S. economy will continue to shrink under the weight of bad debt, public and private. Remember that the Dodd-Frank legislation was not so much about financial reform as protecting the housing GSEs.

    Because President Barack Obama and the leaders of both political parties are unwilling to address the housing crisis and the wasting effects on the largest banks, there will be no growth and no net job creation in the U.S. for the next several years. And because the Obama White House is content to ignore the crisis facing millions of American homeowners, who are deep underwater and will eventually default on their loans, the efforts by the Fed to reflate the U.S. economy and particularly consumer spending will be futile. As Alan Meltzer noted to Tom Keene on Bloomberg Radio earlier this year: "This is not a monetary problem."

    ***
    The policy of the Fed and Treasury with respect to the large banks is state socialism writ large, without even the pretense of a greater public good.

    ***
    The fraud and obfuscation now underway in Washington to protect the TBTF banks and GSEs totals into the trillions of dollars and rises to the level of treason.

    ***
    And in the case of the zombie banks, the GSEs and the MIs, the fraud is being actively concealed by Congress, the White House and agencies of the U.S. government led by the Federal Reserve Board. Is this not tyranny?

    And Paul Mason - economics editor for BBC Newsnight - told Democracy Now on July 1:

    [Interviewer]: Is there a qualitative difference in our era where you have essentially financial institutions that are far more powerful than any governments? Where you had a situation where during the 2008 crisis the United States government was bailing out banks in Europe that had been involved in investments here as well as its own banks, that this concept of too-big-to-fail for banks, but not for countries, or not for populations that end up having to suffer?

    ***

    [Paul Mason]: You’re absolutely right that the situation we are in is unprecedented..... And we are entering a situation where the entire system seems incapable of recognizing bad debt. The bad debt has been flowing around the system since Lehman.

    Repudiating Debt is MORAL

    Religions were founded on the concept of debt forgiveness.

    For example, Matthew 6:12 says:

    And forgive us our debts, as we forgive our debtors.

    As I've previously noted, periodic times of debt forgiveness - or debt "jubilees" - were a normal part ancient Jewish and Christian religions.

    David Graeber, author of "Debt: The First 5,000 Years" told Democracy Now recently:

    Most revolutions, more revolts in human history have been about debt. It’s the most perennial tool that’s been used by people who are powerful to make the victims of structural inequalities feel that it’s somehow their fault. So I wanted to unveil that and show that we’re actually part of a very very long history. There’s also a lot of hope in it. Because the other thing I realized is that much of the world religions grew out of social movements, which were exactly about “problematizingâ€
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  2. #2
    Senior Member AirborneSapper7's Avatar
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    Americans Don't Believe Government Lies: "Forty-Eight Percent Say That Another Great Depression Is Likely To Occur In The Next Year ... More Than Eight In Ten Americans Say That The Economy Is In Poor Shape"

    Wednesday, June 8, 2011

    To many links / charts and graphs to post; go to the link if you wish to view them

    http://www.washingtonsblog.com/2011/06/ ... -lies.html
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  3. #3
    Senior Member AirborneSapper7's Avatar
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    Raging Inequality May Cause Unrest and Violence In America and the Rest of Western World

    Submitted by George Washington on 07/19/2011 13:12 -0430

    Video at the link:

    To many links / charts and graphs to post; go to the link if you wish to view them

    http://www.zerohedge.com/article/raging ... tern-world
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