The catastrophic collapse of our Global Technological System (GTS) began in 2008. Now it's about to accelerate. William Edstrom (“Wall Street and the Military are Draining Americans High and Dry”), helps us to understand why.
The US government currently estimates that, by the end of 2016, its debt will be $19.3 trillion. That’s staggering enough. Using information from the Federal Reserve Bank and a variety of public and private organizations, William learned that, as of August 29, 2015, the US government actually owed $46.1 trillion (“bonds, unfunded pension costs, unfunded healthcare costs, credit card balances and loans”).
According to the Bank for International Settlements, there were about $630 trillion in outstanding derivatives worldwide in 2015. About half of those, or $315 trillion worth, were in the US. If even 15% of US derivatives went bad, or about $47 trillion worth (the same as the US government debt), they would be impossible to repay.
The point: no way exists for either the US government or corporations with derivatives to repay their debts. That which is not sustainable, collapses.
Just as government officials intentionally understate US debt, so they overstate US GDP. As of December 2014, they said GDP was $17.5 trillion. More accurate figures would be $14.4 trillion for December 2014 and $14.8 trillion for July 2015.
Historically, the economy of a country typically starts to collapse when that country’s government debt exceeds 100% of that same country’s GDP. Greek government debt, for example, grew to 100% of Greece’s GDP in 2008 when its economy began its irreversible collapse. Strangely enough, US government debt of $46.1 trillion was 311% of the US GDP of $14.8 trillion in August 2015. That’s how weak the economic foundation of the GTS really is and a measure of how foolish we are to think that it can last any longer.
In 2008, derivatives went bad for Bear Stearns, Lehman Brothers, and AIG. Their unexpected and substantial losses threw the GTS into an economic crisis.
Two responses were made to that crisis. One, the Federal Reserve dropped interest rates to zero so that it could loan an incomprehensibly huge amount of money to large banks—supposedly to enable those banks to loan that same money to businesses who would then use it to hire people and provide more goods and services. At the same time, the US Treasury created $4.5 trillion out of nothing--this practice of magic being called Quantitative Easing--between December 2008 and October 2014, to make that incomprehensively huge amount of money available to large banks at no interest.
While those two responses mitigated the economic crisis of 2008, they did nothing to fix the underlying flaws of the GTS. As it turns out, the crisis of 2008 was the beginning of the terminal collapse of the GTS.
When the next crisis hits, those two options won’t be available. Interest rates remain near zero. Magically creating too much money leads to hyper-inflation, a collapsed economy, and either an overthrow of the government or its takeover by extremists.
Already foreign governments are getting rid of their share of US debt by selling their US Treasury bonds. Between January 2015 and May 2016, foreign countries, especially China, have “dumped” almost $350 billion worth of US Treasury bonds (CNN). This likely indicates a growing unwillingness of foreign governments to loan money to the US government.
William believes that the GTS need not collapse, that a firm foundation can still be built beneath the US economy. He points out that almost half of the US government’s debt is due to excessive spending on warring and spying. He thinks that budget could be cut at least in half.
William also rightly asserts that significant money could be saved by reducing medical costs through single-payer health insurance, building enough medical schools and teaching hospitals to provide an adequate number of doctors, reducing the costs of drugs by shortening the length of patents on new drugs from 17 years to 3, raising the minimum Social Security payment, having Social Security provide the pension for all government pension plans to reduce the costs ($0.5 trillion annually) of administering so many different plans, freeing the first $90,000 in income from income tax, raising to 90% the income tax rate and capital gains rate, and taxing the sale of financial instruments like stocks and derivatives at a rate of 9%.
We created a catastrophic level of debt because the US government “borrowed too much money” and corporations “wrote too many derivatives.” To see the implementation of the necessary changes he recommends, William also points out we will need the public financing of elections and strict oversight of banks.
I think the changes William recommends are reasonable. I agree with him that making them might well save the GTS from the collapse that has already started. Unfortunately, there’s no chance at all that these reasonable and necessary changes will be made. Changes of that magnitude would require a large number of people to abandon their devotion to the Olympian gods and give it to Jesus instead. That magnitude of change has never happened before. Then devotion to Jesus would take decades, perhaps centuries, to create a new culture supportive of such changes. The GTS will have collapsed long before then. Our best option is instead to prepare for that inevitable collapse.
Copyright © 2016
by Steven Farsaci.
All rights reserved. Fair use encouraged.
All rights reserved. Fair use encouraged.
