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It helps to view us from a third party perspective, since our media do not give us the true picture. Following is compiled from an Indian Business Journal.
- Value of dollar compared to Euro depreciated 75% in real terms and 290% in terms of gold between 2002-2007
- By repeated interest cuts by Alan Greenspan, from 20 per cent
to just 1 per cent in 20 years from 1981 to 2001, the US Fed got US
households addicted to buying regardless of needs. Fed policies simply shifted economic power from families to corporates by promoting compulsive household buying
- The direct effect of the very policies forced the Federal government to take over household responsibilities by state-organised social security. It is a
fascinating story, even a frightening one, because the US Fed is, in
substance, today the central banker for the global financial system, whose
policies are adopted, or forced to be adopted, by many countries.
- The US savings rate to GDP, which was 18 per cent in 1970s, first
came down to 9 per cent in 1990, then to an average of 2.8 per cent in 10
years from 1996 to 2005 and finally to a negative figure of 0.6 per cent in
2006.
- US households have handed over all their money to the corporations and become indebted, like Indian farmers have. An average American is addicted to 13 credit obligations, 9 credit cards and 4 instalment loans! It is difficult to de-addict them today.
Wall Street obsession As Fed cut interest rates, more and more US households threw their money in stocks in search of higher returns. In 1981, when Fed rate was 20 per cent, some 5.7 per cent US households had held stocks. When, in 1990, the interest rate was cut to 8 per cent and less, some 25 per cent households frequented Wall Street, a five-fold increase in 10 years. When, in the year 2001, Fed rates were 1 per cent, some 52 per cent of the US households became obsessed with Wall Street, a ten-fold increase in 20 years. appreciation in house values, like appreciation in stock values, also
encouraged the households to borrow and spend. This has led to the sub-prime crisis in US.
Thus, the US Fed policy that intended to shift money from households to corporates and family responsibility from households to government seems to have worked to perfection. - US consumption drives global economy. But who funds the US
consumption? The very countries that sell goods to the US, like China and
Japan, Korea and Taiwan, Malaysia and Indonesia, Hong Kong and Singapore, and finally, India too. Their dollar reserves represent moneys lent to the US to help the US buy goods from them, like a shopkeeper lending money to his clients and asking them to buy his goods. It’s worse in fact. It is more like the shopkeeper selling his goods on credit against the client’s pro-notes.
After all, in the end, the $3.8 trillion securities held by other countries are
merely pro-notes of the US. Are they not just unpaid vendors? The pro-notes held by them are losing value by the day and hour against the euro, gold, oil and also against the rupee - Trade Liberalization: The Fed’s spend-beyond-incomes policy risked domestic inflation. To de-risk against it, the US government had to go for liberalised imports, cut the import tariffs and make import of foreign goods cheap in the US. So trade liberalisation became more a domestic compulsion of the US rather than, as it pretends, a global obligation.
Consequently, the US began buying more goods and services from the rest of the world, than it supplied to them. This led to in increasing deficit on the US current account with the rest of the world. Once this trend started, it intensified like virus. The numbers are startling. In five years from 2000 to 2004 alone, the deficit had aggregated to $2.5 trillion – more than eight times the aggregate for the previous 10 years ($300 billion between 1990-1999) ! Meaning that during the five years 2000-2004, the US has borrowed $2.5 trillion from other countries to settle its current account deficit.
Source: http://www.thehindubusinessline.com/2007/12/21/stories/2007122150250800.htm
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In my view this is what happens because of false perception of money and our financial systems and institutions of capitalism build to uphold and maintain that. Currency itself must not be privatized or monopolized in few hands in order for citizens to reamin debt-free and for them to create fair, equitable, transparent and sustainable market economy. thus the Vicious cycle of capital(dollar) issued as an instrument of all public/private Debt and circulated with usury (both inside and outside) leads us to dead-ends. And the time has come when no amount of financial innovation, shuffling or rearrangements is going to bail us out from this deluded and fraudulant system.
http://www.youtube.com/watch?v=_8pLpI5rzKI&feature=related
Question is how do we as conscious citizens mindfully build a fair, sustainable and secure currency system based on right view (as in nobel 8 fold path of Buddha) of currency, economy and free market that serves our true needs and aspirations, nurtures our human potentials, builds community, restores dignity instead of preying on our fears, delusions, greed and aversions?
“All things are preceded by the mind, led by the mind, created by the mind.” - Buddha
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