United States To Become "Banana Republic," Says Senator Judd Gregg

[FrankRep]

United States To Become "Banana Republic," Says Senator Judd Gregg


Steven Yates | The New American
05 August 2009


According to Senator Judd Gregg (R-N.H.), the United States is on its way to becoming a “banana republic” within 10 years.

Wikipedia defines a banana republic as “a country that is politically unstable, dependent on limited agriculture (e.g., bananas), and ruled by a small, self-elected, wealthy and corrupt elite.” Such nations have “a small, leisurely class on the top, and a large, poorly educated and poorly paid working class of peons, though it might have the (fake) trappings of modernity (such as styling itself as a republic with a president, etc.).”

A banana republic “typically has large wealth inequities, poor infrastructure, poor schools, a ‘backward’ economy, low capital spending, reliance on foreign capital and money printing, budget deficits, and a weakening currency. Banana republics are typically also highly prone to revolutions and coups.”

Sen. Gregg used the term yesterday to warn about this country’s fiscal situation, singling out federal spending on the “cash for clunkers” program, which offers $4,500 in federal dollars to those who will trade in old cars for newer, fuel-efficient models. Gregg observed that this program just adds to the sum total of escalating federal spending. Gregg stated, “I just can’t understand why we would set up a program that says, ‘We’re going to give you $4,500,’ and then give the bill to your children.”

He is right, but unfortunately, “cash for clunkers” barely scratches the surface.

Jim Panyard, retired president and CEO of the Pennsylvania Manufacturers Association, recently collected the following data.

As of June 2009, 155 million people are laboring in a shrinking private sector, earning average annual per capita incomes of $39,751 and average household incomes of $50,740. Obviously, there are far more people below those averages than there are above them.

They are supporting themselves while also supporting 22.5 million local, state, and federal employees. The average federal employee will be paid $75,419 this year. Panyard observed that in his home state of Pennsylvania, the average state employee will make $68,000 this year.

Those working are also supporting: 3.9 million welfare recipients; 46.5 million Social Security recipients (a number that will rise steadily as baby boomers retire and begin collecting); 14.7 million Americans drawing unemployment benefits; 47 million Medicaid and 42 million Medicare recipients; the Afghanistan and Iraq Wars; and the other programs that federal, state, and local governments arrogate for themselves, even if the private sector could do it more efficiently.

These numbers suggest very strongly that we have a system that cannot take on much more without collapsing under the weight of its own commitments. Government has only three options: (1) raise taxes, which would be politically suicidal as it would amount to the biggest tax increase ever; (2) print more dollars and eventually risk a hyperinflationary spiral; or (3) borrow from overseas investors who are already uneasy with the falling value of our currency.

Currently, the United States is pursuing a combination of the second and third options. Neither is sustainable in the long run; any of these courses of actions risks precipitating a crisis situation that would prompt crisis measures from those pulling the levers of government and banking. The latter would indeed finish transforming our one-time constitutional republic into a banana republic, as what is left of our middle class is destroyed and the super-elite consolidates its power.


SOURCE:
http://www.thenewamerican.com/index....inmenu-43/1597

[StilesBC]

Well, it's one thing to be negative on how the United States is being run today. And it's another to be cynical and say it will continue to get worse, etc, etc.

But to suggest America will become a Banana Republic in 10 years is, frankly, ignorant of basic economics. Wealth comes from accumulated capital goods. Capital goods can be used to make consumer goods, and one's standard of living is dependent on how accessible consumer goods/services are.

The only way those capital goods cease to exist is through a destructive war on one's own turf. And even thereafter, there are many intangibles (ie. human capital) that are left remaining after the war (see: Germany post WWII) allowing for rapid rebuilding.

You don't become a banana republic by going into too much debt. The capital goods still remain. And Senator Gregg is also wrong in identifying the options. There is another option that is more typically used than any of those: default. With a snap of the fingers, all the debt and obligations of the US Treasury could be wiped off the face of the earth. They are mere entries on a computer screen.

[Sandman33]

Well, it's one thing to be negative on how the United States is being run today. And it's another to be cynical and say it will continue to get worse, etc, etc.

But to suggest America will become a Banana Republic in 10 years is, frankly, ignorant of basic economics. Wealth comes from accumulated capital goods. Capital goods can be used to make consumer goods, and one's standard of living is dependent on how accessible consumer goods/services are.

The only way those capital goods cease to exist is through a destructive war on one's own turf. And even thereafter, there are many intangibles (ie. human capital) that are left remaining after the war (see: Germany post WWII) allowing for rapid rebuilding.

You don't become a banana republic by going into too much debt. The capital goods still remain. And Senator Gregg is also wrong in identifying the options. There is another option that is more typically used than any of those: default. With a snap of the fingers, all the debt and obligations of the US Treasury could be wiped off the face of the earth. They are mere entries on a computer screen.

You think everyone we owe money to is just going to be cool with having that debt erased?

China's cash reserves are mainly U.S. dollars.

You're talking about WW3.

[paulitics]

It seems like the average household income has remained stagnant for 10 years, while the cost of living had doubled. The government salaries continue to increase with inflation, and live off the productive private sector. It does not take an economics degree to see where we are headed.

[silverhandorder]

I agree with StilesBC. At the worst we going to become Russia 2.0 an oligarchy. I also think we will have a crash and an improvement.

[StilesBC]

You think everyone we owe money to is just going to be cool with having that debt erased?

China's cash reserves are mainly U.S. dollars.

You're talking about WW3.

And since when do the folks in Washington give a %^#& about China being "cool" with what's done? Hmm? And what exactly do you expect China to do about it? Say, "no more cheap goods for you"? The protectionists in Washington would see that as an added bonus, not a detriment.

Or do you mean to say China would do something militarily in retaliation? How exactly is that not also playing right in to the hands of Uncle Sam? Nice little distraction/excuse for the economy going to hell, no? Many would also argue that war will "stimulate" the economy. (edit: this is preposterous, of course, but the loonies in Washington will claim it as such - I guarantee it).

I've made these points before, but nobody cares to see them. Everyone likes to look at China's 1.4 Trillion US Treasury stash and go "oooooohhhh, aaaahhhhhh. Those commies are soooo powerful!" By lending China that money and making them dependent on purchaser financed exports to the US, China is the bitch of the US, NOT the other way around.

"If you owe the bank a 1000 dollars, the bank OWNS you. You owe the bank 1,000,000 dollars, you OWN the bank."

[Working Poor]

aw $#@! guys the volcano in Yellowstone will probably blow us all out of the water in a couple of years and none of us will be worried about a thing. Just go outside and breathe deep.

[paulitics]

And since when do the folks in Washington give a %^#& about China being "cool" with what's done? Hmm? And what exactly do you expect China to do about it? Say, "no more cheap goods for you"? The protectionists in Washington would see that as an added bonus, not a detriment.

Or do you mean to say China would do something militarily in retaliation? How exactly is that not also playing right in to the hands of Uncle Sam? Nice little distraction/excuse for the economy going to hell, no? Many would also argue that war will "stimulate" the economy. (edit: this is preposterous, of course, but the loonies in Washington will claim it as such - I guarantee it).

I've made these points before, but nobody cares to see them. Everyone likes to look at China's 1.4 Trillion US Treasury stash and go "oooooohhhh, aaaahhhhhh. Those commies are soooo powerful!" By lending China that money and making them dependent on purchaser financed exports to the US, China is the bitch of the US, NOT the other way around.

"If you owe the bank a 1000 dollars, the bank OWNS you. You owe the bank 1,000,000 dollars, you OWN the bank."

I believe they care more about China's best interest than America's best interest.
China will get their money one way or another, perhaps by buying up our assets at fire sale prices. Many 3rd world countries got that way by taking out excessive loans (imf), and the politicians taking bribes (treason) from bankers, and corporations. That can happen here too you know.

[Bossobass]

We can grow bananas?

He'd better check the latest FDA bill in the long list of passed-but-not-read BS legislation.

Bosso

[Rael]

You think everyone we owe money to is just going to be cool with having that debt erased?

China's cash reserves are mainly U.S. dollars.

You're talking about WW3.

China won't do $#@!. Getting into nuclear war won't get them any any money.

[FrankRep]

Gregg: U.S. could be on path to a 'banana republic' situation

CNN
October 18, 2009

http://politicalticker.blogs.cnn.com...lic-situation/

[tangent4ronpaul]

These numbers suggest very strongly that we have a system that cannot take on much more without collapsing under the weight of its own commitments. Government has only three options: (1) raise taxes, which would be politically suicidal as it would amount to the biggest tax increase ever; (2) print more dollars and eventually risk a hyperinflationary spiral; or (3) borrow from overseas investors who are already uneasy with the falling value of our currency.

Currently, the United States is pursuing a combination of the second and third options. Neither is sustainable in the long run; any of these courses of actions risks precipitating a crisis situation that would prompt crisis measures from those pulling the levers of government and banking. The latter would indeed finish transforming our one-time constitutional republic into a banana republic, as what is left of our middle class is destroyed and the super-elite consolidates its power.

We are getting hit with the first option and will be hit harder:

The inflation tax

The cap and trade tax being passed on through higher fees ("Fuel costs will skyrocket" - Obama)

The health care bill taxes, eithor directly for not having insurence or one of the about 86 new fees and taxes being passed onto us.

The states going into spasms of withdrawl from Uncle Sams teat - higher local taxes, property taxes, etc. 10% tax increase in California allready.

Sin Taxes - cigs, alcohol, soda pop and junk food, etc.


I'm sure there are others - but those are the big ones so far.

-t