Where does the United States get the financial resources it lacks to pay for all of this?
The answer to this question is quite simple: it raises this money by printing US Dollar Notes and US Treasury Bills and Bonds (5 and 30 year maturities, respectively), taking advantage of the high “export” factor the Dollar enjoys, which enables the US Government to issue money and immediately push it out of its domestic economy and primary industrialized country financial circuits, thus avoiding what would otherwise be severe inflation of the Dollar. If we look at the gigantic figures involved, we can quite properly see this whole phenomenon as covert (hyper)inflation which remains hidden from public view….for now.
Fed Chairman Alan Greenspan recently warned that the increase in the Budget Deficit could lead to an economic crisis. He also pointed out that the Deficit is unsustainable and warned that “this could lead to a stagnant economy or worse”. Only in February 2005 the Deficit reached a record monthly figure of u$s 113.940 millions.4
The US Dollar: that un-backed currency…
“Who needs Dollars?” – Juan Perón
In 1971, President Richard Nixon withdrew the legal foundations of the US Dollar’s convertibility into metallic gold or silver, or anything else for that matter. Since then, the Dollar is no longer convertible into anything having any intrinsic value whatsoever. Today, the cornerstone of the Dollar is US economic and industrial strength which, in turn, is based on the military might the US, consolidated after the Second World War which left Europe and Japan conveniently devastated. Additionally, military victory brought with it the looting of hundreds of thousands of German, Japanese and other national patents and inventions, and highly sensitive technological and military secrets were stolen outright. All of this enabled the US to consolidate its superpower status and global prestige5
Thanks to the fact that the Dollar has virtually become the world’s key currency – albeit, imposed by the combined actions of the Federal Reserve Bank (Fed), the International Monetary Fund (IMF), the World Bank (WB), the Bank of International Settlements (BIS) and, in our own region, the Inter-American Development Bank (IDB) – the United States has been able to finance its Budget Deficits by exporting US Dollars to the entire planet through various complex mechanisms and channels that guarantee that those Dollars and Dollar-denominated financial instruments will flow in an orderly and balanced manner, all in favour of US National Interests and that of its key allies. This process could be kept more or less in place until 2001 when the European Union launched its own currency bringing the Euro on the scene. The Euro is a far more solid and stable currency than the US Dollar and represents a major challenge to the Dollar which could very well unseat it as the preferred global currency.
Over the past two years, the US Treasury Dept. and the IMF have succeeded in suggesting/imposing on around thirty national central banks in different countries – Argentina’s Central Bank included – that they must “soak up” US dollars from their domestic economies and hoard these in their vaults as “reserves” for their own local currencies and for foreign debt payment. In other words, these countries invest in US Dollars which implicitly means that they are financing for free a chunk of (uncontrolled) US public spending which is done by printing Dollar bills. This process is headed by Japan which today has Dollar denominated instruments in its central bank reserves to the tune of over u$s 670.000.000.000; strangely, followed by the “Marxist” Peoples Republic of China with u$s 470 billion, then by South Korea with u$s 220 billion plus a long list of other countries which suddenly awoke to the “need” to “soak up” US Dollars and hoard them silently in their central banks whilst they issue, as a counterpart, their own local currencies to fuel their respective domestic economies (something, by the way, which China has been doing fiercely, maintaining an undervalued Yuan much to the displeasure of the Bush Administration).
http://www.globalresearch.ca/index.php?context=viewArticle&code=SAL20061015&articleId=3490
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