Are You Ready For 3rd World America?

The US economy is literally on the ledge of a cliff.

Today, the Federal Government accounts for 35% of incomes and salaries in the US. That's over one third of all income in the US coming from the Government's ability to dole out funds.

What supports this largesse?

Money printing and our ongoing debt-orgy. And today, these are one and the same. The US Federal Reserve and Treasury have enacted policies so insane that the US Federal Reserve is now the single largest holder of US Debt with a balance sheet of $2.8 trillion.

Let's give that number some perspective. Germany, the world's FOURTH largest economy is only $3.3 trillion in size. At $2.8 trillion the Fed's balance sheet is larger than the economies of France, the UK, and Brazil.

Why is the Fed's balance sheet so huge? Because US Treasuries are so unattractive to foreign Governments that the Fed has had to pick up the slack and buy our debt (usually within a week or two of it being issued).

Let me rephrase that: the US Fed is now printing money so it can buy US Debt because other investors are no longer interested in buying it.

This is just one of the various schemes Washington is employing to maintain its fiscal insanity. Another is the active raiding of pension funds to buy new US Debt (YES, the Treasury is doing this).

So... the US Government is now paying over 1/3rd of US incomes... and it's financing this by having the Fed buy new debt from the Treasury.

Do you think this entire system might end up collapsing in a horrific manner?

And this is just ONE ASPECT of the nightmare that is the US Financial system. I'm not even detailing the $600 TRILLION in derivatives, the clear insolvency of the big banks (you know who I'm talking about), the FDIC running a deficit (are our deposits REALLY insured?), erupting inflation in food and energy prices, (Fed data CLAIMS prices FELL in the last four months) and the hundred other issues all of which will end very, VERY badly.

Regardless of how we look at the US's current situation, it is clear that 2008 will NOT go down in history as THE Financial Crisis for the US. No, 2008 will be considered the "warm-up."

The reason for this is simple. 2008 was primarily the collapse of the private banking system in the US. The Fed's response to this was to transfer the garbage debts that nearly took down the banks ONTO the US's balance sheet.

Put another way, the Fed allowed the systemic risk to spread from private bank balance sheets ONTO the US's public balance sheet... which means the next Crisis will involve not only Wall Street and the banks but the US as a whole.

I'm talking about a sovereign debt Crisis. The kind of collapse we're now seeing in Greece... only for the single largest economy in the world as well as its reserve currency.

So what happens when this Crisis hits and a partial if not complete Government shutdown occurs? What happens when that 35% of incomes and salaries stops being paid? What happens when prisons and other Government paid services run out of money? What happens when the next major banking run reveals that there is no WAY on earth the FDIC can truly insure all the deposits in the US (other than more money printing from the Fed)? What happens when the US defaults on its debts?

I know the mainstream media isn't talking about this... but these are the same folks that didn't see 2008 coming.

Consider the following:

The US Federal Reserve which has been the primary buyer of US debt since 2008 is about to stop buying...

At the same time, the US Treasury is now raiding pension funds to meet new debt issuance (China and other foreign governments are no longer buying enough to meet supply)...

With the US Government now accounting for 35% of incomes in the US. If we default on the debt and can't keep funding the economy, we'll see about more than one third of the money Americans take home disappearing overnight.

And that's just the start...

Across the pond, Greece is imploding with riots. Germany doesn't want to dole out more bailout funds. Italy is thinking of opting out of the Euro completely. Spain's banks are insolvent and teetering on the brink of collapse.

Small wonder then that interbank liquidity is drying up. European banks are no longer willing to lend to each other bringing interbank liquidity close to 2008 levels.

The Euro continues to rally despite the clear fact that the Eurozone is a disaster. It's strange than grown adults can actually be discussing another Greek bailout when the first one was just one year ago and accomplished nothing. Of course, if the world traded based on fundamentals or common sense, the Euro wouldn't even exist at this point.

At the heart of this entire situation is the key relationship that determines all economic policy: the relationship between banks and politicians. Most voters in developed countries continue to believe that their vote has some kind of influence in politicians' decisions. They believe that they somehow can effect change at the ballot box.

The reality is that elections are largely for show these days. Politicians openly sell out their constituents to corporate donors, particularly banks, whether it be by directly taking large donations/ bribes or by appointing ex-bankers and other financial stooges to key decision making positions.

After all, when was the last time some politician picked an engineer or doctor or someone who might actually know anything about... well anything to a position of power? Try never.

No, instead politicians surround themselves with run of the mill financial stooges. Take the US where we allow guys who have rendered entire institutions (and endowments) bankrupt to be key economic decision makers. Heck, we even allow these types to "regulate" their former employers.

The situation is no better in Europe. German Chancellor Angela Merkel tries to maintain the illusion that she somehow will do the right thing (tell Greek bond holders to shove it) but in the end she always buckles. Why? Because German banks are on the hook for $65 billion worth of Greece's debt. And whenever she comes close to telling them to take a hit, someone calls her up and tells her that if she does this the bank will implode.

It's a perfect circle of influence: banks back politicians who once in office dish out the goodies/ handouts. And if the banks screw up, they threaten to take down the financial system, thereby destroying the politician's chance at re-election.

All in all the banks have done leverage buyouts of Government. The leverage is political in nature ("screw us and we'll take you down"). The buyout is in the form of donations/ bribes.

However, the primary problem with this system (aside from the fact it's completely immoral) is that there are no consequences for bad decisions for the banks. Thus, they keep making bigger and bigger bets using more and more leverage thereby increasing systemic risk.

Consider the derivatives market which now stands north of $600 TRILLION in size. How do you think this was allowed to happen? The banks pushed the politicians into rolling back regulation, the banks then went nuts, and now the entire financial system is in jeopardy.

We've already had a taste of this in 2008 when the Credit Default Swap (CDS) market, which was $50-60 trillion in size, blew up. We're now rapidly heading towards an interest rate Crisis and the interest rate-based derivative market is four times as large roughly $200 TRILLION.

And underneath ALL of these disasters lurks the $600 TRILLION global derivatives market... which continues to be the #1 threat to taking down the financial system (why do you think Bernanke's terrified despite spending $ TRILLIONS?)

Then end may be closer than you think.

Comment:

Comrades, the above article was NOT written by a National Socialist, despite the fact that he is saying the same things that we have been saying for years. The author, Graham Summers is a well known stock analyst in Charlottesville, Virginia.

Now I have to ask our detractors who believe we are being nothing but alarmists a question. When a long time tool of Judeo-Capitalism like Mr. Summers has lost faith in the system, isn't it time we all became alarmed?

There are riots in Greece and Spain over the economic crisis. Now I admit these countries have never been leaders in European economics, but the fact is, they are falling apart, and according to Mr. Summers and other experts, the rest of Europe is not far behind. Then will come OUR turn.

Taking all this into consideration, I hope you are aware that yesterday, President Obama went before Congress to get funding extended for his wars in Iraq, Afghanistan, Libya, and anywhere else he deems necessary until at least the year 2014.

That's three more years! Billions, perhaps Trillions of dollars more! Where is the money coming from? The United States has more or less maxed out its credit cards. The only thing left to do is get the Federal Reserve Banksters to print more money. More pieces of paper that are becoming more worthless with each new bill that is printed.

This means inflation, and probably hyper-inflation for the people of this country. Comrades, THIS MADNESS MUST END! Under National Socialism, we could bring our troops home, and deploy them along the borders. We could repatriate (deport) all illegals, and stop legal immigration for a time, to allow the ratio of immigrants to native borns to return to a proper balance. We could put an end to criminal government waste. We could create a stable economy, and through the rebuilding of this broken nation and the manufacture of our own goods on American soil provide jobs for virtually everyone.

Our detractors say it couldn't work. But it can. It worked in Hitler's Germany, and it works today in the tiny island nation of Mauritius in the Indian Ocean. They will not call their system National Socialism, but it is patterned after it. They don't live in luxury, but they don't live in poverty either. I posted a story on Mauritius a few months ago. If you missed it, look it up. It's still among the older posts. If a tiny country that is smaller than Rhode Island can do it, so can we. Hail Victory!

Dan 88!

Are You Ready For 3rd World America?

The US economy is literally on the ledge of a cliff.

Today, the Federal Government accounts for 35% of incomes and salaries in the US. That's over one third of all income in the US coming from the Government's ability to dole out funds.

What supports this largesse?

Money printing and our ongoing debt-orgy. And today, these are one and the same. The US Federal Reserve and Treasury have enacted policies so insane that the US Federal Reserve is now the single largest holder of US Debt with a balance sheet of $2.8 trillion.

Let's give that number some perspective. Germany, the world's FOURTH largest economy is only $3.3 trillion in size. At $2.8 trillion the Fed's balance sheet is larger than the economies of France, the UK, and Brazil.

Why is the Fed's balance sheet so huge? Because US Treasuries are so unattractive to foreign Governments that the Fed has had to pick up the slack and buy our debt (usually within a week or two of it being issued).

Let me rephrase that: the US Fed is now printing money so it can buy US Debt because other investors are no longer interested in buying it.

This is just one of the various schemes Washington is employing to maintain its fiscal insanity. Another is the active raiding of pension funds to buy new US Debt (YES, the Treasury is doing this).

So... the US Government is now paying over 1/3rd of US incomes... and it's financing this by having the Fed buy new debt from the Treasury.

Do you think this entire system might end up collapsing in a horrific manner?

And this is just ONE ASPECT of the nightmare that is the US Financial system. I'm not even detailing the $600 TRILLION in derivatives, the clear insolvency of the big banks (you know who I'm talking about), the FDIC running a deficit (are our deposits REALLY insured?), erupting inflation in food and energy prices, (Fed data CLAIMS prices FELL in the last four months) and the hundred other issues all of which will end very, VERY badly.

Regardless of how we look at the US's current situation, it is clear that 2008 will NOT go down in history as THE Financial Crisis for the US. No, 2008 will be considered the "warm-up."

The reason for this is simple. 2008 was primarily the collapse of the private banking system in the US. The Fed's response to this was to transfer the garbage debts that nearly took down the banks ONTO the US's balance sheet.

Put another way, the Fed allowed the systemic risk to spread from private bank balance sheets ONTO the US's public balance sheet... which means the next Crisis will involve not only Wall Street and the banks but the US as a whole.

I'm talking about a sovereign debt Crisis. The kind of collapse we're now seeing in Greece... only for the single largest economy in the world as well as its reserve currency.

So what happens when this Crisis hits and a partial if not complete Government shutdown occurs? What happens when that 35% of incomes and salaries stops being paid? What happens when prisons and other Government paid services run out of money? What happens when the next major banking run reveals that there is no WAY on earth the FDIC can truly insure all the deposits in the US (other than more money printing from the Fed)? What happens when the US defaults on its debts?

I know the mainstream media isn't talking about this... but these are the same folks that didn't see 2008 coming.

Consider the following:

The US Federal Reserve which has been the primary buyer of US debt since 2008 is about to stop buying...

At the same time, the US Treasury is now raiding pension funds to meet new debt issuance (China and other foreign governments are no longer buying enough to meet supply)...

With the US Government now accounting for 35% of incomes in the US. If we default on the debt and can't keep funding the economy, we'll see about more than one third of the money Americans take home disappearing overnight.

And that's just the start...

Across the pond, Greece is imploding with riots. Germany doesn't want to dole out more bailout funds. Italy is thinking of opting out of the Euro completely. Spain's banks are insolvent and teetering on the brink of collapse.

Small wonder then that interbank liquidity is drying up. European banks are no longer willing to lend to each other bringing interbank liquidity close to 2008 levels.

The Euro continues to rally despite the clear fact that the Eurozone is a disaster. It's strange than grown adults can actually be discussing another Greek bailout when the first one was just one year ago and accomplished nothing. Of course, if the world traded based on fundamentals or common sense, the Euro wouldn't even exist at this point.

At the heart of this entire situation is the key relationship that determines all economic policy: the relationship between banks and politicians. Most voters in developed countries continue to believe that their vote has some kind of influence in politicians' decisions. They believe that they somehow can effect change at the ballot box.

The reality is that elections are largely for show these days. Politicians openly sell out their constituents to corporate donors, particularly banks, whether it be by directly taking large donations/ bribes or by appointing ex-bankers and other financial stooges to key decision making positions.

After all, when was the last time some politician picked an engineer or doctor or someone who might actually know anything about... well anything to a position of power? Try never.

No, instead politicians surround themselves with run of the mill financial stooges. Take the US where we allow guys who have rendered entire institutions (and endowments) bankrupt to be key economic decision makers. Heck, we even allow these types to "regulate" their former employers.

The situation is no better in Europe. German Chancellor Angela Merkel tries to maintain the illusion that she somehow will do the right thing (tell Greek bond holders to shove it) but in the end she always buckles. Why? Because German banks are on the hook for $65 billion worth of Greece's debt. And whenever she comes close to telling them to take a hit, someone calls her up and tells her that if she does this the bank will implode.

It's a perfect circle of influence: banks back politicians who once in office dish out the goodies/ handouts. And if the banks screw up, they threaten to take down the financial system, thereby destroying the politician's chance at re-election.

All in all the banks have done leverage buyouts of Government. The leverage is political in nature ("screw us and we'll take you down"). The buyout is in the form of donations/ bribes.

However, the primary problem with this system (aside from the fact it's completely immoral) is that there are no consequences for bad decisions for the banks. Thus, they keep making bigger and bigger bets using more and more leverage thereby increasing systemic risk.

Consider the derivatives market which now stands north of $600 TRILLION in size. How do you think this was allowed to happen? The banks pushed the politicians into rolling back regulation, the banks then went nuts, and now the entire financial system is in jeopardy.

We've already had a taste of this in 2008 when the Credit Default Swap (CDS) market, which was $50-60 trillion in size, blew up. We're now rapidly heading towards an interest rate Crisis and the interest rate-based derivative market is four times as large roughly $200 TRILLION.

And underneath ALL of these disasters lurks the $600 TRILLION global derivatives market... which continues to be the #1 threat to taking down the financial system (why do you think Bernanke's terrified despite spending $ TRILLIONS?)

Then end may be closer than you think.

Comment:

Comrades, the above article was NOT written by a National Socialist, despite the fact that he is saying the same things that we have been saying for years. The author, Graham Summers is a well known stock analyst in Charlottesville, Virginia.

Now I have to ask our detractors who believe we are being nothing but alarmists a question. When a long time tool of Judeo-Capitalism like Mr. Summers has lost faith in the system, isn't it time we all became alarmed?

There are riots in Greece and Spain over the economic crisis. Now I admit these countries have never been leaders in European economics, but the fact is, they are falling apart, and according to Mr. Summers and other experts, the rest of Europe is not far behind. Then will come OUR turn.

Taking all this into consideration, I hope you are aware that yesterday, President Obama went before Congress to get funding extended for his wars in Iraq, Afghanistan, Libya, and anywhere else he deems necessary until at least the year 2014.

That's three more years! Billions, perhaps Trillions of dollars more! Where is the money coming from? The United States has more or less maxed out its credit cards. The only thing left to do is get the Federal Reserve Banksters to print more money. More pieces of paper that are becoming more worthless with each new bill that is printed.

This means inflation, and probably hyper-inflation for the people of this country. Comrades, THIS MADNESS MUST END! Under National Socialism, we could bring our troops home, and deploy them along the borders. We could repatriate (deport) all illegals, and stop legal immigration for a time, to allow the ratio of immigrants to native borns to return to a proper balance. We could put an end to criminal government waste. We could create a stable economy, and through the rebuilding of this broken nation and the manufacture of our own goods on American soil provide jobs for virtually everyone.

Our detractors say it couldn't work. But it can. It worked in Hitler's Germany, and it works today in the tiny island nation of Mauritius in the Indian Ocean. They will not call their system National Socialism, but it is patterned after it. They don't live in luxury, but they don't live in poverty either. I posted a story on Mauritius a few months ago. If you missed it, look it up. It's still among the older posts. If a tiny country that is smaller than Rhode Island can do it, so can we. Hail Victory!

Dan 88!

National Socialism In The Indian Ocean? Sort Of...

What the United States can learn from the tiny island nation of Mauritius.
By Joseph E. Stiglitz Posted Monday, March 7, 2011, at 3:58 PM ET

Suppose someone were to describe to you a small country that provided free education through university for all of its citizens, transportation for school children, and free health care—including heart surgery—for all. You might suspect that such a country is either phenomenally rich or on the fast track to fiscal crisis.

After all, rich countries in Europe have increasingly found that they cannot pay for university education and are asking young people and their families to bear the costs. For its part, the United States has never attempted to give free college for all, and it took a bitter battle just to ensure that America's poor get access to health care—a guarantee that the Republican Party is now working hard to repeal, claiming that the country cannot afford it.

But Mauritius, a tropical island nation of 1.3 million people off the east coast of Africa, is neither particularly rich nor on its way to budgetary ruin. Nonetheless, it has spent the last decades successfully building a diverse economy, a democratic political system, and a strong social safety net. Many countries, not least the United States, could learn from its experience.

In a recent visit I had a chance to see some of the leaps Mauritius has taken—accomplishments that can seem bewildering in light of the debate in the United States and elsewhere. Consider home ownership: While American conservatives say that the government's attempt to extend home ownership to 70 percent of the U.S. population was responsible for the financial meltdown, 87 percent of Mauritians own their own homes—without fueling a housing bubble.

Now comes the painful number: Mauritius's GDP has grown faster than 5 percent annually for almost 30 years. Surely, you think, this must be some "trick." Mauritius must be rich in diamonds, oil, or some other valuable commodity. But Mauritius has no exploitable natural resources. Indeed, so dismal were its prospects as it approached independence from Britain, which came in 1968, that the Nobel Prize-winning economist James Meade wrote in 1961: "It is going to be a great achievement if [the country] can find productive employment for its population without a serious reduction in the existing standard of living. … [T]he outlook for peaceful development is weak."

As if to prove Meade wrong, the Mauritians have increased per capita income from less than $400 around the time of independence to more than $6,700 today. The country has progressed from the sugar-based monoculture of 50 years ago to a diversified economy that includes tourism, finance, textiles, and, if current plans bear fruit, advanced technology.

During my visit, my interest was to understand better what had led to what some have called the Mauritius miracle and what others might learn from it. There are, in fact, many lessons, some of which should be borne in mind by American and European politicians as they fight their budget battles.

First, the question is not whether we can afford to provide health care or education for all or ensure widespread homeownership. If Mauritius can afford these things, America and Europe—which are several orders of magnitude richer—can, too. The question, rather, is how to organize society. Mauritians have chosen a path that leads to higher levels of social cohesion, welfare, and economic growth—and to a lower level of inequality.

Second, unlike many other small countries, Mauritius has decided that most military spending is a waste. The United States need not go as far. If the United States reduced by just a fraction its defense spending, much of which goes toward weapons that don't work against enemies that don't exist, it would go a long way toward creating a more humane society, including the provision of health care and education to those who cannot afford them.

Third, Mauritius recognized that without natural resources, its people were its only asset. Maybe that appreciation for its human resources is also what led Mauritius to realize that, particularly given the country's potential religious, ethnic, and political differences—which some tried to exploit in order to induce it to remain a British colony—education for all was crucial to social unity. So was a strong commitment to democratic institutions and cooperation between workers, government, and employers—precisely the opposite of the kind of dissension and division being engendered by conservatives in the United States today.

This is not to say that Mauritius is without problems. Like many other successful emerging-market countries, Mauritius is confronting a loss of exchange-rate competitiveness. And as more and more countries intervene to weaken their exchange rates in response to America's attempt at competitive devaluation through quantitative easing, the problem is becoming worse. Almost surely, Mauritius, too, will have to intervene.

Moreover, like many other countries around the world, Mauritius worries today about imported food and energy inflation. To respond to inflation by increasing interest rates would simply compound the difficulties of high prices with high unemployment and an even less competitive exchange rate. Direct interventions, restrictions on short-term capital inflows, capital-gains taxes, and stabilizing prudential banking regulations will all have to be considered.

The "Mauritius miracle" dates to independence. But the country still struggles with some of its colonial legacies: inequality in land and wealth, as well as vulnerability to high-stakes global politics. The United States occupies one of Mauritius's offshore islands, Diego Garcia, as a naval base without compensation, officially leasing it from the United Kingdom, which not only retained the Chagos Islands in violation of international law but expelled its citizens and refuses to allow them to return.

The United States should now do right by this peaceful and democratic country: recognize Mauritius' rightful ownership of Diego Garcia, renegotiate the lease, and redeem past sins by paying a fair amount for land that it has illegally occupied for decades.

Comment:

It looks to me like National Socialism is alive and well on a tiny island in the Indian Ocean. No inflation, low unemployment, education and health care for all, they put THEIR people first. They do what's in the best interests of the people, not the wealthy.

True, there are some inequities between the rich and the poor, but I fear there shall always be inequities. The trick is to minmize these inequities.

For starters, to avoid inflation, the last thing you need to do is to print worthless money and and flood the economy with it. That accomplishes nothing but to drive prices up, make the poor poorer, and the rich richer.

Our American economists are not stupid, nor ignorant. They already know this, but they do it anyway. Why? Just like I said. The rich get richer, the poor get poorer. That's the plan. That's always been the plan as long as the Judeo-Capitalist system has existed.

Comrades, it's time this system went the way of the dinosaur. This rotten system has always been a stone around the neck of the worker. But not all workers. With all the affirmative action programs, and credits towards minorities, the burden is primarily borne by the White Working class.

The tiny island nation of Mauritius proves this does not have to be so. BTW, interesting how the Mauritians have had this system for over 40 years and we're just hearing about it. Could it be that there are some that don't want us to know? I'd say yes. They may be afraid the Mauritian example might give us ideas. Ideas that will be unprofitable. Unprofitable for the three percent that control 85% of the wealth, that is.

National Socialism In The Indian Ocean? Sort Of...

What the United States can learn from the tiny island nation of Mauritius.
By Joseph E. Stiglitz Posted Monday, March 7, 2011, at 3:58 PM ET

Suppose someone were to describe to you a small country that provided free education through university for all of its citizens, transportation for school children, and free health care—including heart surgery—for all. You might suspect that such a country is either phenomenally rich or on the fast track to fiscal crisis.

After all, rich countries in Europe have increasingly found that they cannot pay for university education and are asking young people and their families to bear the costs. For its part, the United States has never attempted to give free college for all, and it took a bitter battle just to ensure that America's poor get access to health care—a guarantee that the Republican Party is now working hard to repeal, claiming that the country cannot afford it.

But Mauritius, a tropical island nation of 1.3 million people off the east coast of Africa, is neither particularly rich nor on its way to budgetary ruin. Nonetheless, it has spent the last decades successfully building a diverse economy, a democratic political system, and a strong social safety net. Many countries, not least the United States, could learn from its experience.

In a recent visit I had a chance to see some of the leaps Mauritius has taken—accomplishments that can seem bewildering in light of the debate in the United States and elsewhere. Consider home ownership: While American conservatives say that the government's attempt to extend home ownership to 70 percent of the U.S. population was responsible for the financial meltdown, 87 percent of Mauritians own their own homes—without fueling a housing bubble.

Now comes the painful number: Mauritius's GDP has grown faster than 5 percent annually for almost 30 years. Surely, you think, this must be some "trick." Mauritius must be rich in diamonds, oil, or some other valuable commodity. But Mauritius has no exploitable natural resources. Indeed, so dismal were its prospects as it approached independence from Britain, which came in 1968, that the Nobel Prize-winning economist James Meade wrote in 1961: "It is going to be a great achievement if [the country] can find productive employment for its population without a serious reduction in the existing standard of living. … [T]he outlook for peaceful development is weak."

As if to prove Meade wrong, the Mauritians have increased per capita income from less than $400 around the time of independence to more than $6,700 today. The country has progressed from the sugar-based monoculture of 50 years ago to a diversified economy that includes tourism, finance, textiles, and, if current plans bear fruit, advanced technology.

During my visit, my interest was to understand better what had led to what some have called the Mauritius miracle and what others might learn from it. There are, in fact, many lessons, some of which should be borne in mind by American and European politicians as they fight their budget battles.

First, the question is not whether we can afford to provide health care or education for all or ensure widespread homeownership. If Mauritius can afford these things, America and Europe—which are several orders of magnitude richer—can, too. The question, rather, is how to organize society. Mauritians have chosen a path that leads to higher levels of social cohesion, welfare, and economic growth—and to a lower level of inequality.

Second, unlike many other small countries, Mauritius has decided that most military spending is a waste. The United States need not go as far. If the United States reduced by just a fraction its defense spending, much of which goes toward weapons that don't work against enemies that don't exist, it would go a long way toward creating a more humane society, including the provision of health care and education to those who cannot afford them.

Third, Mauritius recognized that without natural resources, its people were its only asset. Maybe that appreciation for its human resources is also what led Mauritius to realize that, particularly given the country's potential religious, ethnic, and political differences—which some tried to exploit in order to induce it to remain a British colony—education for all was crucial to social unity. So was a strong commitment to democratic institutions and cooperation between workers, government, and employers—precisely the opposite of the kind of dissension and division being engendered by conservatives in the United States today.

This is not to say that Mauritius is without problems. Like many other successful emerging-market countries, Mauritius is confronting a loss of exchange-rate competitiveness. And as more and more countries intervene to weaken their exchange rates in response to America's attempt at competitive devaluation through quantitative easing, the problem is becoming worse. Almost surely, Mauritius, too, will have to intervene.

Moreover, like many other countries around the world, Mauritius worries today about imported food and energy inflation. To respond to inflation by increasing interest rates would simply compound the difficulties of high prices with high unemployment and an even less competitive exchange rate. Direct interventions, restrictions on short-term capital inflows, capital-gains taxes, and stabilizing prudential banking regulations will all have to be considered.

The "Mauritius miracle" dates to independence. But the country still struggles with some of its colonial legacies: inequality in land and wealth, as well as vulnerability to high-stakes global politics. The United States occupies one of Mauritius's offshore islands, Diego Garcia, as a naval base without compensation, officially leasing it from the United Kingdom, which not only retained the Chagos Islands in violation of international law but expelled its citizens and refuses to allow them to return.

The United States should now do right by this peaceful and democratic country: recognize Mauritius' rightful ownership of Diego Garcia, renegotiate the lease, and redeem past sins by paying a fair amount for land that it has illegally occupied for decades.

Comment:

It looks to me like National Socialism is alive and well on a tiny island in the Indian Ocean. No inflation, low unemployment, education and health care for all, they put THEIR people first. They do what's in the best interests of the people, not the wealthy.

True, there are some inequities between the rich and the poor, but I fear there shall always be inequities. The trick is to minmize these inequities.

For starters, to avoid inflation, the last thing you need to do is to print worthless money and and flood the economy with it. That accomplishes nothing but to drive prices up, make the poor poorer, and the rich richer.

Our American economists are not stupid, nor ignorant. They already know this, but they do it anyway. Why? Just like I said. The rich get richer, the poor get poorer. That's the plan. That's always been the plan as long as the Judeo-Capitalist system has existed.

Comrades, it's time this system went the way of the dinosaur. This rotten system has always been a stone around the neck of the worker. But not all workers. With all the affirmative action programs, and credits towards minorities, the burden is primarily borne by the White Working class.

The tiny island nation of Mauritius proves this does not have to be so. BTW, interesting how the Mauritians have had this system for over 40 years and we're just hearing about it. Could it be that there are some that don't want us to know? I'd say yes. They may be afraid the Mauritian example might give us ideas. Ideas that will be unprofitable. Unprofitable for the three percent that control 85% of the wealth, that is.