Bernanke: We Must Raise Taxes and Cut Services • Sane People: No, We Need to Stop Endless Bail Outs, Imperial Adventures and Fraudulent Schemes

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This week, both Bernanke and Volcker called for tax increases. Bernanke has also raised
the possibility of reductions in entitlements such as Medicare and
Social Security.

As I pointed out last June:

When
the International Monetary Fund or World Bank offer to lend money to a
struggling third-world country (or "emerging market"), they demand "austerity measures".

As Wikipedia describes it:

In economics, austerity is when a national government reduces its spending in
order to pay back creditors. Austerity is usually required when a
government's fiscal deficit spending is felt to be unsustainable.

 

Development
projects, welfare programs and other social spending are common areas
of spending for cuts. In many countries, austerity measures have been
associated with short-term standard of living declines until economic
conditions improved once fiscal balance was achieved (such as in the
United Kingdom under Margaret Thatcher, Canada under Jean Chrétien, and
Spain under González).

 

Private banks, or institutions like the
International Monetary Fund (IMF), may require that a country pursues
an 'austerity policy' if it wants to re-finance loans that are about to
come due. The government may be asked to stop issuing subsidies or to
otherwise reduce public spending. When the IMF requires such a policy,
the terms are known as 'IMF conditionalities'.

Wikipedia goes on to point out:

Austerity
programs are frequently controversial, as they impact the poorest
segments of the population and often lead to a wider separation between
the rich and poor. In many situations, austerity programs are imposed
on countries that were previously under dictatorial regimes, leading to
criticism that populations are forced to repay the debts of their
oppressors.

***

The IMF has already performed a complete audit of the whole US financial system, something which they have only previously done to broke third world nations.

Al
Martin - former contributor to the Presidential Council of Economic
Advisors and retired naval intelligence officer - observed in an April
2005 newsletter that the ratio of total U.S. debt to gross domestic
product (GDP) rose from 78 percent in 2000 to 308 percent in April
2005. The International Monetary Fund considers a nation-state with a
total debt-to-GDP ratio of 200 percent or more to be a "de-constructed
Third World nation-state."

Martin explained:

What
"de-constructed" actually means is that a political regime in that
country, or series of political regimes, have, through a long period of
fraud, abuse, graft, corruption and mismanagement, effectively
collapsed the economy of that country.

***

Given that experts on third world banana republics from the IMF and the Federal Reserve have said the U.S. has become a third world banana republic (and see this and this), maybe the process of turning first world into the third world is already complete.

But
raising taxes and paring social services are necessary to dig us out of
the debt hole, right? And we needed to spend that money to stabilize
the economy, right?

Well, while the economy has admittedly stabilized for billionaires, it hasn't for anyone else. And see this, this and this.

And as I wrote last month:

House majority leader Steny Hoyer - a close ally to President Obama - says the U.S. needs to raise taxes and cut spending .

As Agence France-Presse reports:

The
United States must embrace a blend of tax increases and spending cuts
to rein in its deficit or face a potentially crippling debt crisis like
the one in Greece, a top US lawmaker warned Monday.

 

"It is enough
to look across the Atlantic at Greece's extreme economic crisis and
understand: It can happen here. If we don't change course, it will
happen here," said Democratic House Majority Leader Steny Hoyer...

 

"It
seems to me that the only solution that can win the support of both
parties is a balanced approach: one that cuts some spending and raises
some revenue while avoiding extremes in either direction," he said.

Of course, many others have warned of the massive debt overhang in the U.S. as well.

 

But why aren't our government "leaders" talking about slashing the military-industrial complex, which is ruining our economy with unnecessary imperial adventures?

 

And why aren't any of our leaders talking about stopping the permanent bailouts for the financial giants who got us into this mess? And see this.

 

And why aren't they taking away the power to create credit from the private banking giants - which is costing our economy trillions of dollars (and is leading to a decrease in loans to the little guy) - and give it back to the states?

If we did these things, we wouldn't have to raise taxes or cut core services to the American people.

And
if there's any shortfall, all we have to do is claw back the ill-gotten
gains from the fraudsters working for the too big to fails whose
unlawful actions got us into this mess in the first place. See this, this, this, this and this.