Everything’s OK with Economy, Go Back to Sleep

By Greg Hunter’s USAWatchdog.com 

It appears economist Paul Krugman thinks the budget and the economy are not in that bad of shape because he thinks the dire warnings are overdone.  In his latest Op-Ed piece this week, he said, “When I listen to current discussions of the federal budget, the message I hear sounds like this: We’re in crisis! We must take drastic action immediately! And we must keep taxes low, if not actually cut them further!  You have to wonder: If things are that serious, shouldn’t we be raising taxes, not cutting them?”   (Click here for the complete Op-Ed post from the New York Times.)  Yes, that’s right, Mr. Krugman wants to raise taxes just as inflation in food and gasoline are heating up.  It is hard to understand why a Nobel Prize winner in economics wants to raise taxes in the middle of the worst economy since the Great Depression.  He doesn’t just want to raise taxes on the wealthy, but on the middle class as well.  He goes on to say the plan he backs, “. . . also calls for a rise in the Social Security cap, significantly raising taxes on around 6 percent of workers. And, by rescinding many of the Bush tax cuts, not just those affecting top incomes, it would modestly raise taxes even on middle-income families. . . .And the proposal achieves this without dismantling the legacy of the New Deal, which gave us Social Security, and the Great Society, which gave us Medicare and Medicaid.”  So, in Krugman’s eyes, we should continue going broke over the funding of Medicare and Medicaid?

Mr. Krugman also points out that taxes in the U.S., “. . . are much lower as a percentage of national income than taxes in most other wealthy nations.”  Who are those “other wealthy nations?”  Japan, France, Spain, the UK?  What Krugman conveniently leaves out is there is a sovereign debt crisis going on with many “wealthy” western countries.  Many are broke and are in severe budget crisis because of their cradle to grave nanny states.  Right now, the economy is in such bad shape that a record number of people require government handouts to survive.  A USA Today article said yesterday, “A record 18.3% of the nation’s total personal income was a payment from the government for Social Security, Medicare, food stamps, unemployment benefits and other programs in 2010. Wages accounted for the lowest share of income — 51.0% — since the government began keeping track in 1929.”  (Click here to read the complete USA Today article.)  I don’t see how we can be in a recovery if record numbers of people require government handouts.  The last thing these people need are tax increases, on top of crushing inflation that will only get worse.

Inflation goes hand in hand with money printing, and America is printing dollars at an alarming pace.  Recently on his website, Congressman Ron Paul said, “Even the most conservative budget that has been proposed by Republican leadership requires raising the debt ceiling by an additional $9 trillion by 2021.  This demonstrates absolutely that no one in power right now has any real intention of addressing our spending problems or paying down the debt.  They simply expect to continue to borrow and run up more debt forever, without limit.  Yet they always imagine our dollar will have value no matter how many we print.    This expectation is foolish and naïve.  I guarantee that those buying our debt are not foolish and naïve enough to go along with this charade forever.”  (Click here for the complete Ron Paul post.) 

Other countries are not happy with the money printing by the U.S. which is currently the world’s reserve currency.  BRIC countries (Brazil, Russia, India and China) held a summit recently, and according to financial writer JR Nyquist, the BRIC countries would like nothing better than to crush the U.S. dollar and change the balance of power.  Nyquist writes, “The sequence of unraveling is easy to follow. If you dump U.S. Treasuries, how will the U.S. dollar remain the global reserve currency? In that event, how will the United States finance its deficit spending? Interest rates would skyrocket, with predictable consequences.”  (Click here for the complete Nyquist post.)  The U.S. would be forced to print even more money to finance its debt, and the dollar would hyper-inflate.  This is not some farfetched scenario, but a definite possibility.  Nyquist goes on to say, “The BRIC summit testifies to the desire of Russia and China to undermine the dollar. However crazy you think such a scheme, they are nonetheless pursuing it. You might say it makes no sense, but you are not a “former” KGB officer or a member of the Chinese Communist Party. Do you really imagine that KGB officers and Communists are bourgeois, like you? No, they are not. They are the declared enemies of the bourgeoisie.” 

The U.S. is in a very serious economic and budget quagmire with no easy road out.  The Paul Krugmans of the world would like you to think that everything is okay with the economy–go back to sleep.  But if you do that, you will surely wake up in a nightmare.

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  1. Glenn

    Hey Greg, I guess Mr. Krugman is blind to Gold and Silver’s record prices of late. And, raise taxes!? That’s preposterous. How will corporations and the wealthy create jobs? Afterall, everyone knows that lower taxes help stimulate employment. Ya, right.

    • Greg

      Thank you Glenn for the comment.

  2. Art Barnes

    Greg, increase taxes are just more of the same, condeming the middle class to a quicker doom than holding the dam back a little longer. In order to be a reserve currency you must act like one, meaning, the currency must have value and the reserve currency nation must know how to keep it. The US has done everything possible to undermine the value of the dollar ever since it became the reserve currency. You can’t have your cake and eat it too – you must be able to pay your debts as they come due or else under all definitions, including the U.S. Bankrutpcy Code, you are insolvent! I really can’t believe the US can stop a change in reserve status with the wasteful spending & economic policies it has demonstrated over the last 45 years or so. Clearly, such an approach was foreseen, many people for years have maintained the theory that such policies could not go on forever but everybody called them a doomsayer.

    I did some research lately and I have found out that “fiat” money in the end has always gone the way of the buffalo starting with the Roman Empire and on down to our day. The reason is simple: Governments just can’t stop printing more of it till it has no value and or any faith in it”. The Romans reduced the amount of silver in their coins which is a devaluation just as if you printed more paper. Our dollar, which is a fiat dollar, is experiencing the same as when the Romans devalued their coinage and, as such, is losing it value and the world’s faith in it.

    The simple truth is that if the US wants to contiue to be the reserve currency and keep it place in the world as a super power economically, it must stop printing more money and pay its debts, period! Failure to do anything but that is simply allowing the destruction of the economy to go forward.

    Frankly, I just don’t see any changes on the horizon that would lead a rational person of average intelligence to believe anything will be fixed in any meaningful way. The policy that I see it is “kick the can” further down the street and let the next generation worry about while the elite make the necessary arrangements to get their assets in a safe place off shore.

    P.S., with the devaluation of a fiat currency inflation follows in step.

    • Greg

      As usual, good stuff man!! Thank you for the comment.

  3. Edward Ulysses Cate

    Krugman is a perfect example of the power elite rewarding those who defend the “legal plundering,” and punish those who try to tell us the truth.

    This was well-expressed by Economist Jamie Galbraith in testimony to the Senate Crime subcommittee on May 4th, 2010:

    “I write to you from a disgraced profession. Economic theory, as widely taught since the 1980s, failed miserably to understand the forces behind the financial crisis.”

    Most economist aren’t stupid or ignorant.
    They were simply taught by others who didn’t understand the truth.
    That’s the reason for my commentary on 01/18/2008:
    “Understanding Gold IS Taking The Red Pill”

    • Greg

      Love this quote “Understanding Gold IS Taking The Red Pill.” Keepem coming!

  4. Richard

    Spot on! Great article!! Always read your informative and insightful publications. Nobel Prizes are apparently far more academic related than applicable to or useful for the real-world. Simple economics is screaming at all of us, but of course, the powers-that-be remain consistently ‘deaf’ and incompetent.

    On another note; I am all for paying for performance, as Obama wants, but not for our already outstanding teachers, but for him, his administration and the rest of the incompetents in our Congress. Performance based compensation for our Congress would be a nice start to fixing our financial nightmare. My God, Congress now doesn’t even pass budgets. They are just like my state, ‘California Dreaming’. All the experience in Washington is definitely not an asset, just an infinite liability.

    • Greg

      Richard and LD,
      Really good comments–thank you for adding to this post!

  5. LD

    “It’s our currency and your problem.” That’s what John B. Connally said when President Nixon ended the dollar’s convertibility to gold — much to the consternation of the European countries which at the time held very large quantities of U.S. dollar debt. What are the alternatives? When will the gold and silver bubble pop?

    We are told that Krugman et al. are employing lessons learned from the Great Depression. Other countries have their own set of problems and future challenges. Indeed, there is no easy way out. Americans have been living high off the hog. They allowed two wars to be fought “off the books” for several years, a bloated military staffed by “volunteers” and a woo-woo budget, bailouts of Wall Street casinos and their executives so that the country could return to “the way it was” as soon as possible, and the creation of lucrative insurance and other service sector and middle-man industries that add little value to the underlying service or bottom line. There’s also the funny money days of the real estate bubble. Maybe higher oil and gas prices will re-ignite our manufacturing sector and cause people to buy from sources that are closer to home. Wall Street seems to be doing well.

    My compassion goes to those looking for work. Remember when Ronald Reagan told Americans in the rust belt that they should get up and move if jobs move to another part of the country? I know someone who lost their job in CA and moved to TX and found work. They’re happy. What new jobs and businesses will emerge from the ingenuity and creativity of our unemployed population?

  6. Sam

    Dear Greg,

    First, just because someone has the Nobel prize means nothing. Look at the liar-in-chief, who was given one for being the first black president (couldn’t be for PEACE, could it?).

    Congressman Paul is an M.D., but he has taken pains to read what needs to be read, talk to the people who know more than he, and comes up with what should be done.

    There are others who look at history, recommend what should be done, but because they are not part of the establishment LSM, are ignored. This is really too bad, as those who have taken the steps to protect themselves will come out on top. The rest of the nation, so used to handouts, will expect a government that cannot provide to provide, and will turn violent when it cannot.

    • Greg

      I love Ron Paul and this comment! Thank you

      • markm

        Hey Sam,

        I agree and you have brought up some good topics.

        Basic economics is not rocket science. Krugman, et allia, overthink economics and they don’t factor-in human nature.

        A rule-of-thumb to live by: When an activity is taxed, that activity will decrease in volume. It is human nature.

        Many consider our tax rate to be the 25% of GDP that the federal gubmint spends; however, we pay local fees, excise fees, building fees, sewer fees, city taxes, state taxes, gas taxes, sales taxes, property taxes, vehicle license fees, etc…

        The middle class have an effective tax rate of about 50%.

        If republicans raise taxes here in Kalifornia and/or Washington, economic activity will decrease.

        There is no utopia. Life will never be perfect or fair. The only people living the utopian lifestyle are gubmint workers with their defined benefit plans that are unsustainable. Life is about scratching, clawing, and eeking-out a nice exhistance.

        Cash, Grass, or Ass: Nobody rides for free!
        (1970’s bumper sticker for aimed at hitchikers).


  7. Jim in GA

    Further proof that “economist” in not a profession or a science but is really a belief system. Economists form opinions and then look for “facts” to support those opinions. I can’t think of one economist that predicted the collapse, because economists don’t have any skin in the game. The people that saw it coming actuall deal with assets, for themselves and clients. They make a living working, not talking.

    • Greg

      Jim in GA,
      Very good point! Thank you for making it here.

  8. Ray

    The cost of doing business in the US is so high, no entrepenuer in his right mind is willing to take the chance in starting a new business. Most are packing up and heading to more business friendly shores overseas, and I don’t blame them. My business crashed in 2009 and the red tape, taxes, rules and regulations were a nightmare. Now our Rulers and Elite in Washigton want to raise taxes even higher, and no doubt more strangling rules and regs to follow. No, we are preparing for great depression II, cause if you connect the dots on this economy it points to a crash of some magnitude. The producers are being taxed and regulated out of business, while the parasites feast on more government hand-outs and welfare programs.

    • Greg

      We need jobs and productive business to start getting out of this mess. This is a great comment from someone in the real world who knows first hand about the economy. Thank you for sharing your story and expertise with us!

      • Bob

        The wage in the real world is a couple bucks a day. We just need to inflate to compete in this free trade world and that’s how simple it is. This simple truth is why nobody can stop inflation. If we can make teachers work for less maybe a cook could be worth less next. It’s about less pay are inflation. Anyway that’s how this old fool see’s it. I pay 1300 bucks a month for my health ins. that’s more then some worker in China makes in a month, just a race to the bottom. PEACE

        • Greg

          Thank you for sharing your perspective.

  9. Larry W. Bryant

    == Please, Mr. Krugman, Learn SOMETHING from History! ==

    Instead of keeping his befuddled cranium buried deep in the sands of denial, Krugman should be (truthfully) crying “Fire!” in this crowded Theatre of the Economically Absurd.

    For his (and certain others’) smoke-and-mirrors response to this WORLDWIDE crisis in public confidence serves only to constrict our financial respiration to the point of total despair.

    Our first priority on the short list of EMERGENCY remedies should be the immediate closure of all the 700-plus U. S. military bases overseas. Without that action, all this talk about raising/lowering taxes and reducing/expanding government spending will remain academic at best.

    I wonder how much effort Krugman is making to survive in the coming Mad Max-style bleakness of our collapsing economy. — Larry W. Bryant (27 Apr 11)

    • Greg

      I am constantly amazed by Mr. Krugman comments, and how in the world he won a Nobel Prize in economics. Thank you for your comment.

  10. Vess

    The Nobel Prize is a recognition that the scientist, to whom it has been awarded is outstanding in his field. Krugman is an outstanding scientist in his field of economics.

    However, Krugman is a Keynesian. Keynesianism is a kooky economic school to begin with, so the Nobel Prize just recognizes him as being an outstanding kook among kooks. 😀

    He’s right, though, that you folks in the USA have relatively low taxes, compared to the rest of us. I’m no longer going to buy any books from amazon.com. The latest batch was stopped at the customs and they shook me down for 18% of their price. Not even customs duty, no. VAT tax. They told me that the guvmint is pressing them to collect VAT tax for any imported product more expensive than 15 euro, if it comes from outside the EU. So, I’m going to have to switch to amazon.co.uk.

    You folks think that $5 per gallon for gasoline is too much? We here pay about 1.5 euros per liter, which is almost twice that (more than $8.3 per gallon)…

    Anyway, my point was – you folks don’t pay VAT tax. Enjoy it while it lasts – which isn’t likely to be much longer…

    • Greg

      Thank you for your perspective and adding value to this post!! Nice to have a comment from you.

    • Aspen

      I recently read that gas in Saudi Arabia was 9 cents per gallon, and about the same in most the other “oil producing” countries. The US is supposed to have as much (or more) oil than most these “oil producing” countries. However our own Eco Nazis in Congress, from both parties, have continually discouraged both current and future domestic oil production. And more recently these insane policies of Obama have converted 1,000s of Gulf oil jobs into 1,000s of new welfare dependents.

      Gas was 25 cents a gallon under Nixon when he took us off the PM standards to “float” free of the encumbrences of fiscal realities that should have automatically balanced our checkbooks and kept us from overspending. Whoops! Can we get a Muligan on that? And, as today, a large part of that 25 cents went to various taxes. I understand our Federal Government STILL taxes us 5 cents per gallon to pay of the Spanish American war debt.

      Imagine the boost to our entire economy, our GDP, and our tax revenue base if we were all suddenly paying 25 cents per gallon again.

      BTW, some of us are actually paying HALF of that today; that Nixon 90% Silver Quarter will but more than TWO gallons today.

      Moral; Save your pre-Nixon (1964) 90% silver coins! America will rise from the ashes of paper currency federal fire pits and these coins will get your family thru some dark days ahead. IMHO, the sooner this “Night of the Living Progressive Dead” movie ends, and this all resets based in fiscal reality..the better for all of us.

  11. Christopher Warden

    Dear Greg,

    Keep shining light on the truth. Thank you for your hard work and insight!



    • Greg

      CIGA Christopher,
      Thank you for your kind words and comment. b (CIGA stands for Comrades in Golden Arms)

  12. M SMITH

    This shows the Bernanks Keynesian policy will never work under any party. All the so called economist have a common tie, they got schooled by the Carl Marx doctrine brought here by the Central Bankers of Europe. It’s like smart dummies with the same goal to teach more smart dummies to walk over the cliff & no one will be hurt,but the tax payers! They will learn soon the ground is unforgiving.

    There is a glimmer of light of hope for those that open their eyes to reality & realize they have a choice. Here a new web site I found, http://silverandgoldaremoney.com/, Mr Sanders(The-MoneyChanger.com) sends out daily reports which I enjoy to read, his southern slang makes me feel right at home.

    • Greg

      M Smith,
      You are right on target when you say, “This shows the Bernanks Keynesian policy will never work under any party.” Thank you for the comment and the link!

  13. g. johnson

    this economic implosion has absolutely nothing at all to do with taxes. especially income taxes.

    the federal government itself admits to income taxes being good for 15-18% of what the gov. spends every year. even this is a bald face lie
    when you understand who the income tax actually works. the irs, a private enforcement and collection (extortion) agency that is a defacto subsidiary of the federal reserve, a privately owed entity posing as a government agency, collects taxes (compulsory contributions) from the good working citizens of the u.s.a. and every dime of that money goes to the federal reserve. the u.s. government does not see a penny of it.
    now, depending on who’s numbers you subscribe to, the total intake from income tax is between 59 and 150 billion dollars per year. basically a drop in the bucket compared to annual government expenditures. furthermore, we have to remember that we are talking federal reserve fiat currency (funny money) which means that, while income tax is a defacto burden on the taxpayer, it is just numbers on a balance sheet to the fed which creates money out of thin air anyway.

    the fed, in turn “loans” this funny money to the government or buys government bonds (more worthless paper) in order to fund all the wonderful skullduggery which our esteemed gov. provides. the biggest government expense by far for the last several decades has been for hegemony (wars to bring renegade nations into the federal reserve system.) the second largest expenditure is for government contractors, google “iraq for sale” if you have not seen this film, you must, seriously must see it.

    ok, i see the elephant in the room, and yes, i did fail to mention bail outs of the “too big to fails”. only because this outrageous boondoggle (largest theft in the history of the world) actually fits under both of the above categories.

    tax, the basic definition of tax is “burden”. and that is exactly what the income tax was designed to do. not to enrich government coffers, but to insure that the notion of freedom remains nothing but rhetorical horse dookie. you can be a free country, you can have an income tax. but you can’t do both without lying about one or the other. you cannot live in a free country if your government is imposing compulsory burdens upon you. but, if you are going around talking about your free country while dutifully paying your income taxes, then you have become a bona fide useful idiot. i pay my taxes, not because i consider myself patriotic (although i do) or because it goes to such worthy cause (the looting of WE THE PEOPLE), but, frankly, because i am a coward and i fear the consequences of not paying them. the only difference between me and most useful idiot is that i am willing to admit that. and with no sense of pride i might add.

    i know i am getting a bit windy here, but i just can’t ignore that one paragraph from the above usa today aticle. this one:

    “A record 18.3% of the nation’s total personal income was a payment from the government for Social Security, Medicare, food stamps, unemployment benefits and other programs in 2010. Wages accounted for the lowest share of income — 51.0% — since the government began keeping track in 1929.

    a couple things stand out in this carefully crafted paragraph that need to be addressed. the first thing is that social security is mixed in with all that other stuff as if it is some kind of problem. the actuality with social security is that it works. even after our esteemed congress looted it for everything paid in before (i believe it is) 1985, the social security fund remains flush. still taking in more than it is paying out and will continue, if left alone, to do so even after the last of the boomers has enrolled. the elephant in the room here is that someone is trying to demonize those who are on social security while somehow forgetting the fact that we all paid for it. and the boomers who are it’s biggest “burden” are also its biggest contributors. so, just leave ss out the above argument, ok?

    also, in the paragraph in question, the author has mixed in “and other programs”. hmmmmm! did that one slip by anyone? cuz it was sure meant to. what other programs?! how much of the problem percentagewise are these programs?! is the fed itself one of these unmentioned programs? halliburton? blackwater? how about self imposed congressional retirement funds and medical plans?

    when the mainstream media speaks, you have to listen with a critical ear to see that they are generally telling you way more than they want you to hear.

    sorry for the length. but i could seriously do this topic all day and into tomorrow.

    thanks for another great article greg.

    • Greg

      G. Johnson,
      Thank you for adding substantially to content of this post!!! Great stuff.

  14. brian

    Inflation is just sneaky tax, I think it goes all the way back to coin clipping.

    Like parasites our rulers come in and drain the value out of our holdings while letting us keep them…..if the governemnt had to fund its spending obligations right now with 100% up front tax dollars there would be rioting in the streets!

    • Greg

      Thank you Brian and Paul for your views and comments!!

  15. paul

    Hi greg,first time comentor. Krugman who is an economist for the left essentially was given a nobel prize just as obama was doing nothing to help the U.S. in this depression. The men are communists plain and simple..

  16. Donald

    As long as the banksters of Wall Street and owners of The Fed are allowed to occupy and control government nothing will change until end of game.

    They have already set the course for the dollar, index below 74 to date and falling, and hard times just around the corner. The monetary crash and federal defaults, worldwide, sets the stage for the new world order and the new world currency.
    The quickening is not far away.

    • Greg

      Thank you Donald for your perspective and comment.

  17. Martin

    Hello Greg,

    I just today filled out my online form to receive Social Security benefits. I almost felt as if I were applying for food stamps ,and that I was somehow a ward of the State and a ne’er do well for having participated in one of the World’s great Ponzi schemes. The Government should be given the Happy Days handle of “The Ponz”. The difference between the Madoff scheme and the Government’s is simply that I (all of us)were forced to participate. Can you imagine if they actually had invested the money? Maybe in Treasuries or by buying even one of Buffet’s shares when they were under $2,000 a share in the early 80’s?
    Instead — we the “investors” are made to feel guilty after they have squandered all the money that never was in the “lockbox”. I can imagine in the near future (NOW?) how the burden of guilt for the ruling Banking elites who created this unfathomable mess of illegally rated derivatives will be shifted over to the “stingy” taxpayers for not loving their Country enough to pay their “fair share”. All I can say is — “Who is John Galt?”.
    Thank you

    • Greg

      Thank you Martin for sharing your story and views with us here on the site.

  18. jeff - Western NY

    Krugman is usually found right next to the goverment printing press telling them to print………..MORE, MORE MORE! If Krugman had his way we will have QE3, QE4, QE5……….on and on. I think he would have fit in real good at the former USSR.

    Krugman like most Ivy League egg heads never saw the financial collapse coming . Now they don’t a workable and realistic clue on how to get us out of this mess. I guess thats why he wins all those journalism awards.

    • Greg

      ZING…… I like your flare, my friend, and comment.

  19. John

    Here is a good article by Charlie Reese & they do deserve the majority of the blame & shame.


    545 vs 300,000,000 People

    • Greg

      Thank you John for the link and content.

  20. Mark

    Hey Greg love your work! I own enough gold and I’m thinking about buying defense stocks because I think WW3 just around the corner! Keep up the great work!

    • Greg

      Thank you Mark for sharing your idea and comment.

  21. kenny wright

    My advice to all those of you that have a yard to start a garden so you can feed your families, because we are fast approaching a 3rd world environment…….as the sheeple sleep the printing press continues to run until we all become gardeners and then they will attempt to conrol the rain and the sun shine to place us totally in there control……..we love you Greg.

  22. Ben

    Hey Greg,
    The whole mentality of “go back to sleep” has been surfacing more and more in my conversations with people. I don’t know who’s better off… those who accept things and are blind to the fact that we are in deep doo doo, or those of us who see it and helplessly watch in slow motion as we try and shield ourselves from the other “majority” that have been aboard the USS Denial so long they’ve forgotten what solid ground actually is. I’m deeply discouraged with people in general and have just stopped talking to people about it because 1 + 1 cannot equal 2 to these people. I am filled with disappointment that my grandfather who has Alzheimer’s and worked very hard to get where he is only to possibly see it all come apart at the seams in his last days of lucidity. At the same time, I have immense hope that people will somehow pull their heads out of their collective sandboxes, and start talking about things and working towards fixing what is broken. Not speculation, but action. I enjoy everything you write and am glad you have discernment to wade through the seemingly endless sea of spin and smoke and mirrors that we all deal with on a daily basis. God Bless and keep them stories coming.

    • Greg

      God bless you Ben, and thank you for the kind words and comment.

  23. Dave

    I’m glad that the masses have yet to jump into the gold game, for when they do, it will shoot up, but will be accompanied by an inevitable crash…
    Let it rise slowly and inexorably, day by day.

    • Greg

      Good point Dave.

  24. Kevin

    They’ve pulled the boogeyman card and have cried terrorist (Paul O’Neill: People Who Refuse To Raise The Debt Ceiling Are “Our Version Of Al-Qaeda Terrorists” @ http://www.zerohedge.com/article/paul-oneill-people-who-refuse-raise-debt-ceiling-are-our-version-al-qaeda-terrorists). Oh no, scary! Yep, the ultimate scaremongering to cower the sheep back into the raise-the-debt-ceiling line. Shee-e-e-eesh….

    Thanks Greg.

    Vote LIBERTY, vote RON PAUL 2012!

    • Greg

      I hope they will not raise it but Congress is controlled by the banksters! Thank you for the comment.

  25. William Ripskull

    How does an idiot like Krugman get a degree from a prestigious university? The guy is literally beyond clueless. I think its testament to the fact that in many of today’s colleges, particularly ivy league, kids get more of an indoctrination than an education. Look at the absolute losers that Obama has associated himself with and used as advisors. Krugman, Summers, Romer… a bunch of liberal ivy league hacks who couldn’t think their ways out of a paper bag. Got a problem, any problem??? High unemployment? Tax, borrow, print, spend. Ridiculous levels of debt? Tax, borrow, print, spend. Banks in trouble? Tax, borrow, print, spend. City and state budgets running huge deficits? Tax, borrow, print, spend. “Don’t worry… everything’s cool. Trust us, we have it all under control. Nevermind that we and all our friends are getting rich in the process”.

    In their world, corporations are greedy evil-mongers, government is benevolent. Profits must be taken away and “shared” with the underprivileged. We must all “invest” in their pet projects. Obama and his gang are reminding me more and more of Hugo Chavez and company. Unless something changes soon, we’re screwed (it might be too late).

    Good article… keep up the good work.

    • Greg

      Thanks William, Rolf, Bill and Donald T for the comments.

  26. rolf

    why wont china just print more yaun to pay soviet oil , cheaper than buying us bonds

  27. Bill

    Greg, Love your site.

    FWIW, the recent summit in China added an S to BRIC and was the BRICS summit: Brazil, Russia, India China and South Africa.


  28. Donald T

    We should force anyone over the age of 65 without economic self sufficiency to work in labor camps to earn their government subsidies. There’s plenty of trash by the side of the roads that needs picking up, old people can type can’t they, do filing, clean dishes, make phone calls, paint houses, fences, and do dangerous work that might harm a young person with a long life ahead of them. We should send old people overseas to fight in Afghanistan and Iran, or any other dangerous place, its a great way to cut back on medicare if they catch a land mine. Lots of old people would rather die in a Humvee or from a sniper than in an old age home. Let them make the choice.

    I’d guess we could cut social security and medicare by over 30% with an aggressive draft the aging into military service policy. Besides, a lot of them already know the routines and most soldiering these days doesn’t require being in shape.

    As for all the foreclosed properties, just bull doze them into the ground. Get rid of them, just crush the 8,000,000 homes into dust and you’ll see housing sales start up immediately. Bring back all the overseas troops from SKorea, from Germany, from the middle east. Put them on the Mexican border, heck just invade the drug lord run areas and take them out. Shoot the drug lords, run a sweep of Latin America, aren’t we spending too much money putting our kids in jail? Make war on drug lords, on gangs, get some heavy weapons in there and do the job right. Put a bounty on those guys, they’re corrupting our kids minds. And while at it, hire some english teachers to put english back in the school systems and speaking it and knowing US history a condition of citizenship. I’m tired of dialing the phone and getting a question asking me to press 1 for english and dos for spanish. Get real, learn the friggin language, every other immigrant group has.

    Last, on economics, get rid of Walmart. Its just a Chinese spear in America’s back. They’ve done more to destroy the American working man than Russia ever did during the cold war. They, and a hundred other US companies, should have their ceo’s live in the closed down factories they displaced when shipping US jobs overseas.

    Krugman? Put him in a humvee and see if he can shoot, put Congress in a humvee too.

  29. Mitch Bupp

    It seems that there are few rational voices out there like yours Greg! I can not believe that the economists like Krugman can not see how out of touch the governments stacked economic numbers are so out of touch with reality. The real numbers are not even close.

    there is no chance in hell we are going to get out of this debt debacle and there is NO chance of paying off the deficit! It is clear that the FED is trying to destroy the dollar to force the dollar to join a NWO currency.

  30. Mark_BC

    “Japan, France, Spain, the UK? What Krugman conveniently leaves out is there is a sovereign debt crisis going on with many “wealthy” western countries. Many are broke and are in severe budget crisis because of their cradle to grave nanny states”

    Generally a good article but I think you are off the mark with this comment. The mature “Western” economies are drowning in debt because their ponzi scheme monetary systems require perpetual growth to function. However, due to increases in energy costs (ie, we are running out of energy to power our economies), plateauing populations that are not growing anymore, and the fact that most of these mature economies are already at the peak of technological innovations (two of three of these things are not problems for the “emerging” countries), then it becomes apparent that those mature economies cannot grow anymore.

    Furthermore, the rich are getting richer and the poor are getting poorer. This is happening because the traditional sources of wealth for the middle class, ie working in factories to share in the increasing corporate profits, is no longer producing increasing (real) profits, for reasons alluded to above. Therefore, the ponzi scheme is shifting wealth in favour of the wealthy. Taxes for the rich are dropping. Despite what Peter Schiff and others would like you to believe, the rich DO NOT drive an economy, and greed IS NOT GOOD.

    Ultimately though, things are falling apart because modern economic theory is a farce that violates the laws of thermodynamics. Nothing can violate the laws of thermodynamics. Economists live out of imaginary charts in textbooks and have virtually zero understanding of how the real world accommodates (or doesn’t) their imaginary, technologically illiterate theories, both Keynesian and Austrian.

    Nothing can be done to save the US. Please don’t even think about cutting support to the very neediest, or the environment (which, despite what most economists would tell you, is actually the base of our economies) — things and people that had nothing to do with causing this mess and yet are being expected to take the brunt of the burden for it while Wall Street walks away with billions in handouts. The blame for this crisis lies squarely with corrupt financial entities; and brainless economic theorists who don’t understand that if you design a monetary and economic system around a model of the world which can support perpetual exponential growth, then that model will inevitably come crashing down because the real world simply cannot support perpetual growth; and our pandering politicians who don’t have the guts to speak the truth — that the US is 100% doomed to eventual hyperinflation and complete chaos.

    • Greg

      Thank you for adding your perspective. You make valid points.

  31. Jan

    Sadly, the majority of people will go back to sleep. They have no point of reference to relate to the eonomic conditions. The US has had its’ ups and downs and always pulled through. Average citizens believe the government will figure it out and everything will get back to normal. The unemployed do nothing year in and year out waiting to be hired back to their old job or to get another one, no rush, everything will be fine.

    They do not understand how inter-connected the world is today. Their job is now being done in some Third World country and they spend their unemployment checks buying the goods they used to make. They cannot put two and two together. The news tells them the economy is fine and getting better, and so they believe because they want to believe.

    They do not understand they are living the new normal and it will get worse. Those living on government handouts will riot in the streets when the checks cease to come in the mail. What else can they do? They have done nothing to create value, start a business, find an alternative job and when the free cash dries up all hell will break loose.

    • Greg

      They will be waking up soon–they’ll have too to survive. Thank you buddy!!

  32. Trap

    It is an unpleasant fiscal truth that in the past half century a great deal of what Americans have been squandering is not their own wealth, but the fruits labor stolen from future generations.
    They’ve conspired to embezzle from those who can’t yet vote, most of whom haven’t even been born yet, arranging for their bondage as debt slaves to the government, with the usefull idiots providing the muscle for bankers, wall street traitors and foreign powers who profit from those selling their offspring into perpetual debt.

    It is time for this to end. I for one want to leave my children something to be proud of, not steal from them!!!
    “Be the Leader You Seek”!

  33. Art Barnes

    Greg, Ben B. news conference yesterday was a real joke. Hope you saw it. QE2 is alive and well, economy will be good by the second or third quarters, keep the current system and or policies in place as they are working, interest rates at zero, etc. etc. – the market rallied. More of the same O’ same O. What if they had a new conference and no one showed up? Now, wouldn’t that be a novel notion? Now my prediction: THERE WILL BE MORE “EASING” AFTER QU2 ENDS ON JUNE 30TH”, abeit, maybe without disclosure! Mr. B. did not rule out another “easing”, and that my friend is why the market rallied, not because interest rates will remain at zero as CNBC blabbled on about.

    • Greg

      Spot on QE goes from overt to covert but go on it will because it has too of we have a collapse. Thank you man!!

  34. slingshot

    Oh, come on now! It can’t be that bad. After all, it’s only money. You did know that taxes are a necessary evil that makes things happen. How could you decide to divide it all up, if you are not in a position to see the BIG PICTURE as those in Washington. You don’t even know how the system works, do you? This rob Peter to pay Paul has been going on for so long that we all actually like it. We might even get some of those Freebies ourselves. If I can only get my pets a social security number.
    Got your blood pressure up? It is very easy to roll over and go back to sleep but I think a few of us have hit the snooze alarm and with that extra minutes of sleep, we will finally wake up.
    I would like to think that we as a nation care about one another and our want to help others in the Big Picture, has somehow turned into entitlements and our BIG PICTURE has turned into a PIPE DREAM.
    We have created a fluid institutionalize welfare state where accountability is loosely in compliance and the elite enjoy the praises of the financially condemned.
    Those praises will turn to insults as more people become unemployed, then homeless, then hungry. As inflation rises, their choices to put food on the table or pay the bills. To go to the doctor and pay for prescriptions. Most of us have been oblivious to our surroundings only to notice when those who have reached the end of their rope. Not so in the future if things do not change. We will see it often.
    Just how in the hell did we get this way? The answers are infinite. That is why it is so hard to turn the problem around. We are a fractured nation with polarised veiws, soon to feel the heat in the crucible.

    • Greg

      Thanks Sling, I am happy you are wide awake!!

  35. Frank Brady

    Solzhenitsyn wrote of the former Soviet Union, “In our country, the lie has become not just a moral category but a pillar of the State.” This is no less true of the United States today.

    The Republican and Democrat Parties are united in a self-serving misinformation campaign to convince the American people that the debt and the deficit threaten imminent economic, political, and social collapse. The intent is to direct public attention away from the real threat: The completely unconstitutional exponential growth of Federal spending and power. The debt and the deficit resulting from that growth are merely symptoms, not the cause.

    Balancing the budget and eliminating the deficit will not resolve the existential threat to peace and freedom that the monstrous central governing apparatus has become. Both wings of the Welfare/Warfare State’s Washington Party are acting as though the solution can be obtained by acceding to the policy preferences of their respective constituencies. This is insanity. It is a mathematical and demographic certainty that the Welfare/Warfare State is going away. All that is uncertain is whether its passing will occur violently or peacefully.

    You are doing a great job of exposing people to the truth. Please keep it up, Greg.


    • Greg

      This is a wonderful quote “Solzhenitsyn wrote of the former Soviet Union, “In our country, the lie has become not just a moral category but a pillar of the State.” This is no less true of the United States today.” Spot on my friend, thank you.

  36. OTE

    There is an old saying, “Those who can do, those who can’t teach.” I would add to the “can’t” portion “legislate and regulate.”

    Couple this with the fact that every great advance in technology and manufacturing happened NOT from our bureaucratic efforts, but in spite of the efforts. Now with all the regressive efforts by the experts, entrepreneurial activities in the US don’t make sense.

    I find it amusing that the economic experts have declared each other as experts. Guess I didn’t go to the right school and consequently failed to accept the Keynesian belief system. I state “belief system” because the experts, oh let’s quit kidding ourselves, “Priests” refuse to accept any evidence contrary to thier belief system.

    Add in a healthy dose of voting ourselves money from the mandatory contribution plate and the “church of managed entitlements” becomes more impoverished.

    Without tangible products to sell, our economic system is reduced to just a redistribution of existing wealth. And at every transaction, there is the “church of managed entitlements” with their hand out demanding their cut.

    Over the last several decades I have heard the “Priests” proclaim that my contribution was investing in America. Hmm, the term investing implies a potential “return on investment (ROI).” But government never returns a profit for the tax-payer. Government is a consumer, plain and simple.

    Our “Priests” repeatedly chant a mantra of “for the children.” Yet using a simple metric, is becomes plain to see that children are NOT an investment for the parents. Though I love my off-spring completely, raising them was a costly hobby with NO ROI. Either the “Priests” are liars or their metrics of potential ROI are self-serving aka more forced contributions to the plate. Perhaps this is the reason there are deductions for dependants on the income tax forms. Odd that none of my employers ever gave me a raise for having additional children.

    Oh well, bills gotta be paid. As the world’s current reserve currency, we will just pay off our debts by borrowing aka pay one credit card bill with another credit card. Yah, this always works. Well until it doesn’t.

    The BRIC countries aren’t our enemies. We are our own enemy. The BRIC countries are only reacting in their best interests when faced with a “Priesthood” of our own making that devours what little productivity remains in our country and is making inroads into other countries. John Galt is alive and well; thank you very much for asking.

    • Greg

      Thank you OTE for taking the time to add your voice to this post!!

  37. Terranesia

    Take part in feel as if we should be slinging on loincloths made of dingo skin, any better then we have been capable to come up with. The time we realize it’s always price tag working out, you take in beneficial.

  38. Vannessa Marthe

    I am curious to find out what blog platform you are working with? I’m having some small security issues with my latest website and I would like to find something more risk-free. Do you have any suggestions?

    • Greg

      Sorry I do not. I hire a consultant that does this for me.

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