Friday, June 19, 2009

The American Empire Is Bankrupt

And it gets even worse!

Chris Hedges at explains the ramifications of a meeting held this week in Yekaterinburg, Russia, by a new consortium called the Shanghai Cooperation Organization. Members include Russia, India, China, Pakistan, and Iran. The United States asked to attend the meeting, but was denied admittance.

The apparent purpose of this meeting is to strip the U.S. dollar of its status as a reserve currency. If they are successful, in the words of Mr. Hedges: “the dollar will dramatically plummet in value, the cost of imports, including oil, will skyrocket, interest rates will climb and jobs will hemorrhage at a rate that will make the last few months look like boom times. State and federal services will be reduced or shut down for lack of funds.”

China is beginning to unload its dollars to purchase factories and natural resources around the world, sometimes at fire-sale prices. This will also break us militarily, because the U.S. will be unable to borrow enough to finance a $623 billion military budget. (According to the CIA, the second largest military budget is China’s, at $65 billion).

I have been warning for some time that (1) China would lose its patience with the U.S. dollar, and (2) we are in for a hyperinflation (here and here). And then there is this quote from April 2008 in which Scott Ritter, a former head weapons inspector in Iraq stated that a war with Iran “would hasten the ongoing decline of American standing in the world,” enabling Russia and China to fill the void. However, it appears that the war with Iran will not be necessary (May still happen, but won’t be necessary to ensure our decline). In these predictions, I would rather be wrong.

Virtual buckeye to Ralph Meima at Vermont Commons.

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