the real crash americas coming bankruptcy how to s

[...]... whatever they consider to be cutting-edge technology These subsidies create very narrow booms: some solar-panel maker gets rich, or some company that makes windows expands and adds another plant Politicians point to these successes as proof that their subsidies help the economy But these subsidy-induced booms actually hurt the economy The tax credits and handouts draw rational businessmen to invest in... industries—solar panels, banking, real estate, and government—will lose their jobs and need to find new ones This is not a painless process Most costly might be the loss of our role as the issuer of the reserve currency of the world Most people don’t understand the value of the United States being the reserve currency It s what allows us to buy something without really paying for it Once we lose that status,... of the Dog You probably see by now how the 2008–2009 crisis was merely the overture to a coming crash The collapse of housing prices, the downturn in the stock market, the tightening of credit, and rising unemployment all triggered a government reaction that caused a far worse sickness Why do the politicians do this? I think there are two reasons The first is that they mistake the cures I discussed... follow the advice of the bitter-end liquidationists and see the whole body of debtors of the United States brought to bankruptcy and the savings of our people brought to destruction.5 As Commerce Secretary, Hoover and his allies in industry pushed laws to keep wages high and work hours short They called for housing subsidies The main reason unemployment rose so high was Hoover s insistence that wages not... needs to stop fueling inflation and start sucking dollars back out of the economy It also needs to let interest rates rise When the Fed does these two things, Washington s free ride will end—it will no longer be able to borrow at near zero interest As a result, Congress will have to slash spending, fix our entitlements, and generally shrink government These are the right things to do today—they were the. .. Greenspan wrote: The reasoning of the authorities involved was as follows: if the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those in Great Britain; this would act to stop Britain s gold loss and avoid the political embarrassment of having to raise interest rates The “Fed” succeeded; it stopped the gold... prodigiously: debt The idealized story of international trade says we buy Chinese televisions with dollars, then the Chinese use those dollars to buy U .S cars Ultimately, it s a trade of goods-for-goods (TVs-for-cars), with currency merely smoothing out the transactions But, the real story of our international trade ends not with our selling physical goods overseas, but with our selling U .S Treasuries We... here The Fed: The Central Problem You cannot speak intelligently about the root causes of the 2008 crash or about our current instability—without speaking about the Federal Reserve System of the United States (the Fed) The Fed sets interest rates, it controls the money supply, it is effectively the main lender to the United States Government, and the lender of last resort to the banks, and it is the. .. politicians How has Washington responded to the budget crises in the states? Mostly by making things worse The 2009 stimulus bill included hundreds of billions of dollars in aid to states, allowing them to continue their spending binges Had federal money not been available, states would have been forced to do the right thing and cut their spending Congress even took up a bill in 2011, the Public Safety... gold loss, but it nearly destroyed the economies of the world, in the process The excess credit which the Fed pumped into the economy spilled over into the stock market—triggering a fantastic speculative boom From mid-1921 to mid-1929, the Fed increased the money supply by 55 percent.4 This extra money was the air that filled the stock and real estate bubbles In official versions of history, the Fed . calling the crash, it pains me to tell them that what they saw in 2008 and 2009 wasn’t the crash that was a tremor before the earthquake. The real crash is still coming. Just as the housing bubble. Washington responded to the budget crises in the states? Mostly by making things worse. The 2009 stimulus bill included hundreds of billions of dollars in aid to states, allowing them to continue their. off. The Fed needs to stop fueling inflation and start sucking dollars back out of the economy. It also needs to let interest rates rise. When the Fed does these two things, Washington s free