– US infrastructure on brink of thermodynamic breakdown (PressTV, Sep 14, 2012):
Federal Reserve Chairman Ben Bernanke has warned that the country’s unemployment situation “remains a grave concern” as the hiring process in the job market stays sluggish.
“Fewer than half of the eight million jobs lost in the recession have been restored and at 8.1 percent, the unemployment rate is nearly unchanged since the beginning of the year and is well above normal levels,” Bernanke told reporters on Thursday, AFP reported.
Bernanke also pointed out that the Federal Reserve does not have the means to offset the economic shock from the public spending cuts and tax hikes, scheduled for the end of 2012.
Press TV has conducted an interview with Webster Griffin Tarpley, author and historian from Washington, to further talk over the issue. the following is an approximate transcript of the interview.
Press TV: The Fed has announced that it will resume its policy of pumping more money into the economy. Will that be enough to stave off the unemployment?
Tarpley: No, it cannot. Right now we have an economic depression in the United States and around the world and the real unemployment in this country is much higher than the Federal Reserve seems to want to admit. It is about 30 million people minimum that are out of work which is significantly more than the government estimates.
The problem with the Federal Reserve is that they see their task as saving failed banks; we have to call them ‘zombie banks’ because they are bankrupt entities that sit there; they absorb government and Federal Reserve resources; they do not provide investment; they do not create jobs; there is no plan and equipment or capital goods investment going on.
But Bernanke thinks that his only job is to make sure that there is a constant flow of very cheap credit, zero percent credit practically, to these zombie banks. Now the zombie banks do not go out and invest with that money; they speculate. They drive up the price of gasoline; they buy derivatives; they invest in collateralized dead obligations or credit default swaps.
Mortgage-backed securities, by the way, are a kind of derivative. So it looks like the Fed thinks that the way you deal with an economic depression is to keep the price of mortgage-backed derivatives up by buying them at a rate of 40 billion dollars per month. This simply cannot work.
On the other hand, if they could take that 500 billion or so, they could use that to buy bonds from states that want to build railroads, roads, ports, water systems, public housing, canals. The entire infrastructure of the United States is approaching the point of thermodynamic breakdown.
If you invested your money into those things, you’d actually get a recovery. But that would mean going beyond the fiscal stimulus which the government, the treasury does, going beyond the monetary stimulus that the Federal Reserve is trying to do, that kind of a hot money stimulus to what we would call a credit stimulus. In other words, 500 billion or a trillion dollars at zero percent over a hundred years and put that into infrastructure, you would actually get a recovery. But that would mean not favoring the zombie banks in the way that Bernanke continues to do.