From Volume 37, Issue 41 of EIR Online, Published Oct. 22, 2010

U.S. Economic/Financial News

Social Security COLA Denial: Obama's 'Screw the People' Policy

Oct. 11 (EIRNS)—For the second year in a row, almost 59 million senior citizens are being told that, since there is "no inflation," they will not be getting any cost-of-living allowance (COLA) increase in their Social Security checks next year. While the determination of the COLA is technically an independent function related to the Consumer Price Index, last year, the first year that increases were denied (ever, since 1975), the Congressional Budget Office and the Obama Administration were both "predicting" that there would be no COLA increase until 2013; that is when Obama's term would expire.

Some 59 million seniors and disabled rely on Social Security, over 34% of them as their primary source of income. Last year, seniors received a $250 check, from stimulus money, which some blog commentators said was Obama's finale to the practice of continual increases. Currently, as inflation in commodities is causing daily increases large enough to halt trading, Rep. Earl Pomeroy (D-N.D.), chairman of the House Ways and Means subcommittee on Social Security, has introduced a new bill to provide another $250 payment to seniors, if there is no COLA increase. "Costs of living are inevitably going up, regardless of what that the formula says," Pomeroy told AP. "Seniors in particular have items such as uncovered drug costs, medical costs, utility increases, and they're on fixed incomes."

Bernanke Fans the Flames of Inflation

Oct. 15 (EIRNS)—As the dollar reached its lowest value against the yen in 15 years, creating new tensions in the relationship between the currencies, Federal Reserve chairman Ben Bernanke, speaking at the Reserve Bank of Boston on Oct. 15, ignored the hyperinflationary pressure across the globe, and pushed the old policy of pumping more money to "stimulate" the economy.

It was evident from Bernanke's speech, that he is preparing to buy more worthless securities and pass on the debt to the American people. He said: "For example, a means of providing additional monetary stimulus, is warranted, would be to expand the Federal Reserve's holdings of longer-term securities."

Reports from across the world, however, show an underlying dynamic leading toward hyperinflation. Asian and African nations report increasingly high food prices and huge volumes of cash sloshing around. Gold prices reached a record high today.

The Commodities Research Board Index of 19 raw materials jumped 2.7% on Oct. 8 to 295.17, the highest since Oct. 15, 2008. That date, two years ago, followed a year of severe food price inflation. Every price in the CRB Index advanced. Wheat, soybeans, and corn led the gains, each jumping the most allowed by the Chicago Board of Trade. Copper climbed to a 27-month high, and crude oil topped $83 a barrel.

Economist John Williams, who runs the econometric website, wrote on Oct. 7, "The intensifying economic and solvency crises, and the responses both by the U.S. government and the Federal Reserve in the last two years, have exacerbated the government's solvency issues and moved forward my timing estimation for hyperinflation, to the next five years. Hyperinflation means extreme inflation, minimally in excess of four-digit annual percent change, where the involved currency becomes worthless."

Treasury Backs Off from Labeling China a 'Currency Manipulator'

Oct. 15 (EIRNS)—In spite of the recent announcement of an increase in the U.S. trade deficit, which would provide grist to the mill of the currency "warriors," Treasury decided again to refrain from labeling China a "currency manipulator," noting that the upcoming G20 summit in South Korea will be an occasion to deal with these matters.

In the last few days, the China's renminbi currency has actually risen against the dollar (as has every other currency in the world), simultaneously with a rise in the U.S. trade deficit, giving the lie to any direct connection between the two. Just prior to the Treasury statement, China's Ministry of Commerce spokesman said that it is wrong to blame the renminbi for the problems of the U.S. trade deficit. China's Foreign Ministry spokesman pointed out that the U.S. trade deficit will not be affected by any measures China might take with regard to the valuation of its currency.

Obama Administration Calls for 15% Ethanol in Gasoline for Newer Cars

Oct. 13 (EIRNS)—The Obama Administration today approved increasing the blend of ethanol in gasoline from 10% to 15%, for cars built since 2007, a move directly in line with British imperial blueprints, for how to destroy the U.S. economy. The E15 announcement by the Environmental Protection Agency (EPA) both criminal and insane: The heavily subsidized gas/ethanol-blending companies aren't rushing to implement E15, because they don't want to be liable for lawsuits when people ruin their engines!

Over 35% of the U.S. corn crop at present is going into ethanol. Since the United States accounts for 30% of the annual worldwide corn harvest, this is an automatic hit against the world food supply, whereas all corn grown should be going to the food chain.

Moreover, all the skills, land, machinery, water, agro-chemicals and transportation involved in corn-for-ethanol, could be re-deployed into producing many other needed food commodities. Over 17% of U.S. food consumption—across all categories (by volume)—is imported, while the U.S. farmbelt is degraded into a monoculture for inefficient, corrosive biofuel for cars, which anyway, should be rapidly phased out by rail systems.

A large part of the vast cornbelt capacity (trucking, equipment), can be re-deployed into construction on the North American Water and Power Alliance (NAWAPA), to upgrade the continent and the Biosphere.

The EPA cites the insanity that carbon dioxide is a toxic pollutant under the Clean Air Act, to justify the Oct. 13 E15 ruling.

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