With a non-stop flow of propaganda from Western mainstream media outlets, today Michael Pento warned King World News about a developing situation that is the worst nightmare for the United States and the West. Pento also discussed how this horrific situation could deteriorate even further
We heard the “surprising”
news last week that the Japanese economy shrank at an alarming 6.8
percent annualized rate in the three months through June, its biggest
quarterly contraction since the 2011 earth quake and tsunami. This
proves that Japan’s greatest national disaster, Abenomics, has failed
and the Japanese economy has fallen victim to the scam called Keynesian
economics -- the belief that a country can tax, spend, devalue, and
inflate its way to prosperity....
Since the popping of the
BOJ- induced bubble in 1989, Japan has been the most faithful adherent
of Keynesian principles. At the onset of the crisis they immediately
began on their misguided path with large doses of deficit spending.
Instead of allowing the economy to rid itself of bad investments and
heal, they continued to prop up failed business models -- creating
zombie banks and an equally zombie-like economy.
As one lost decade turned
into two, in the year 2000 they coupled their fruitless spending efforts
with massive amounts of money printing. And despite two decades of low
growth, the nation stubbornly held on to the popular Keynesian excuse
of “if only”: If only our stimulus was larger, if only we weakened our
currency more, if only we kept interest rates lower for longer; economic
Nirvana would be achieved. Keynesians love to use this counterfactual
argument because they believe it cannot be proven wrong -- that is,
until now.
In 2012 Prime Minister Abe
had a master plan to pull the world's third-biggest economy out of its
stagnation. His plan was to deploy, in massive and unprecedented
fashion, the strategies of central bank credit creation, currency
destruction, and debt accumulation. The Japanese doubled down on the
great Keynesian experiment. As if Paul Krugman himself was running the
economy, they placed the economy on Keynesian steroids. Now we are
beginning to see what an economy looks like when the Keynesian playbook
is used to its fullest extent.
With a first-half economic
contraction in the books, many economists are now warning that Japan is
poised for yet another recession. Back In June I warned that the
reported 6.1 percent GDP growth in Q1 will prove to be temporary because
businesses frontloaded capital spending to avoid April’s
well-anticipated and substantial increase in the consumption tax from 5
percent to 8 percent. Ironically, Japan’s lethargic economy -- whose
inactivity had been blamed on falling prices -- slowed dramatically
right after prices went up.
Household consumption
plummeted at an annualized pace of 19.2 percent from the previous
quarter, while private investment sank 9.7 percent. And because of the
Japanese battle against deflation, real wages dropped 3.8 percent year
on year in May. Those mismanaging the Japanese economy believe that
consumption will surge if they can achieve a substantial increase in the
CPI. The misguided logic is that Japanese consumers will spend only if
they are running in perpetual fear of rising prices.
One of the cornerstones of
Abenomics was destroying your currency with the hopes of boosting
exports. Ironically, last week the central bank warned over a worsening
export and factory output picture. In fact, June showed the worst trade
deficit ever in Japan, and a 57 percent rise in the trade deficit for
the first half of the year.
And today with a near 250
percent debt-to-GDP ratio, it’s difficult to argue that Japan didn’t
engage in enough deficit spending. Over the past three years interest
rates on the Japanese government bond 10-year note went from 1.5 percent
to 0.52 percent. Under its own brand of quantitative easing policy put
in place last April, the Bank of Japan now buys 70 percent of all new
government bonds issued in markets, as well as other more risky assets.
With the JGB market on virtual life support courtesy of the BOJ, it is
impossible to argue that rates aren’t low enough or that the BOJ hasn’t
monetized enough. They spent, they printed, they taxed; but the Japanese
economy is out of gas, and the Keynesians who own this plan are now out
of excuses.
Japan is a perfect example
to the counterfactual argument that anemic U.S. growth is the result of a
Keynesian plan that was launched half-heartedly.
The United States should
heed Japan’s economic woes as a warning sign and a reason to change
course while we still have a chance. With U.S. debt to GDP at 105
percent and household debt at more than 80 percent, the aggregate amount
of our nation’s debt is at an all-time high. But unlike Japan we have
the overwhelming privilege and responsibility of holding the world’s
reserve currency.
Obliging other nations to
trade and hold U.S. dollars is not written anywhere in the Bible. For
the time being other nations decided to maintain a holding equal to 50
percent of our publicly traded Treasury debt. Losing their confidence in
our credit and currency would be devastating to our economy. Japan has
no such worries about keeping foreign investors happy because that
country finances 90 percent of its debt internally.
We have become a country
that over-consumes and under-produces. Debt levels have skyrocketed
while our demographic and labor force participation conditions are
quickly approaching critical mass.
We have to abandon these
failed Keynesian policies while there is still time. We must boost our
employment-to-population ratio, deregulate the economy, simplify the tax
code, balance the budget by cutting expenses, end the Fed’s runaway
printing press, and allow the free market to set interest rates and
asset prices. Only by doing this do we stand a chance of not falling
further into Japan’s stagflationary nightmare. But if we persist in
following the Keynesian counterfactual, our fate will be worse than that
of Japan, as the deluge of debt being dumped by our foreign creditors
causes the dollar to be dethroned, interest rates to soar, and inflation
to skyrocket.
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/8/17_This_Is_The_Worst_Nightmare_For_the_United_States_%26_The_West.html
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Here's what We The People can do here now:
2014: It's time to work to elect Constitutional Independent Representatives
not funded by special interests.
Regards,
Richard <Ricardo Carlos> Charles
Now voters may better appreciate why we are taking
on the responsibility of the Nevada Libertarian Party
nominated Common Sense Fresh Start Politics of
Prosperity Constitutional Campaign for
US Representative in Las Vegas District 1.
Join the campaign for Constitutional Government with more Justice, Life, Liberty, Peace and Prosperity for All.
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