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Is the U.S. Becoming a Banana Republic
TMO ^ | 3-5-2013 | Michael Pento

Posted on 03/05/2013 12:07:16 PM PST by blam

Is the U.S. Becoming a Banana Republic

Politics / US Politics
March 05, 2013 - 02:40 PM GMT
By: Michael Pento

It is sad to say there are just two reasons why the U.S. is not yet a banana republic. The first reason is that the US dollar has not yet lost its world’s reserve currency status, which is helping to keep interest rates at record low levels. If the dollar, yen and euro were not involved in a currency war, the dollar’s intrinsic decline would become much more evident, causing domestic inflation to soar, and our bond market to immediately collapse.

However, the perpetual erosion of fiat currencies will eventually cause investors to eschew the sovereign debt issued by the over-indebted nations of America, Japan and Europe—even if the dollar’s decline does not manifest itself against the euro and the yen.

The other reason why we have not been declared a banana republic is because America is not located between the Tropics of Cancer and Capricorn.

The Definition of a banana republic is a nation that suffers from chronic inflation, high unemployment and low growth; primarily due to massive government debt and deficits that are purchased by its central bank. There is no doubt that the U.S. has suffered from structurally high unemployment, stubbornly high aggregate price levels, and low growth for the past five years, which is the direct result of our debt-saturated economy.

So let’s just assume there exists a country located 15 degrees north of the equator that had amassed $7.5 trillion of new debt in the last 5 years alone. This nation also has nearly $17 trillion in issued debt outstanding, a debt to GDP ratio above 106%, and has clearly shown it is incapable of preventing that ratio from rising.

The central bank of this tropical land artificially pegged interest rates at 0% for over 4 years, has pledged to keep them there for at least three more years, owns $1.8 trillion of government debt and has pledged to buy $1 trillion more during 2013. Let’s not forget that $1 trillion worth of central bank buying just happens to coincide perfectly with the projected annual deficits of $1 trillion for the foreseeable future. What adjective would you use to describe this country? Of course, any objective observer would designate it a bona fide banana republic!

This is the reality of the economic backdrop of the U.S. But, as mentioned previously, the legacy effects of having the world’s reserve currency postpones the most pernicious effects of such economic fundamentals that exist in our country. Nevertheless, even though the Japanese and European economies also suffer from debt and stagflation, this isn’t enough to purge the U.S. economy from its insolvency; nor will it save our bond market from that inevitable historic rise in yields.

The problem is now even the mere normalization of bond yields would send interest payments on our unprecedented amount of debt soaring. This could force the Fed to step up its dollar creation far in excess of what the BOJ or ECB would dare to create in order to stem that rise; and this could be the catalyst to send the dollar and bond market crashing even further.

While some love to speak about the return of “King Dollar,” the truth is any nation that seeks to remain viable through the life support provided by its central bank purchases of sovereign debt should be designated a banana republic--regardless of its geographic location. That is why the U.S. is headed down the road to serfdom…or fruitdom as it is in this case.


TOPICS: News/Current Events
KEYWORDS: bonds; currency; depression; economy

1 posted on 03/05/2013 12:07:27 PM PST by blam
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To: blam

Becoming?


2 posted on 03/05/2013 12:10:09 PM PST by brownsfan (Behold, the power of government cheese.)
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To: blam

No.

Even Banana Republics produce SOMETHING.

Under Barack Hussein Obama the US only produces chaos and government red tape.


3 posted on 03/05/2013 12:10:13 PM PST by ZULU (See: http://gatesofvienna.net/)
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To: blam

We’re past “becoming”


4 posted on 03/05/2013 12:12:09 PM PST by rockabyebaby (We are sooooooooooooooooooooooooooooooooo screwed!)
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To: blam
ROSENBERG: Gold Is Heading To $3,000
5 posted on 03/05/2013 12:12:50 PM PST by blam
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To: blam
You asked a question: "Is the U.S. Becoming a Banana Republic"?

The answer is : Yes!

6 posted on 03/05/2013 12:13:22 PM PST by An Old Man
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To: blam

Rush Limbaugh: New national anthem of the banana republic of the United States 7/2/09:
http://www.youtube.com/watch?v=jBxL5pzwGgA


7 posted on 03/05/2013 12:15:09 PM PST by Mozilla
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To: blam

No.

We have no Bananas.

https://www.youtube.com/watch?v=HygopC4S5W0


8 posted on 03/05/2013 12:15:44 PM PST by Little Ray (Waiting for the return of the Gods of the Copybook Headings.)
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To: blam

Becoming, become, became-- what is the difference? In any case, surely this is wonderful news!

9 posted on 03/05/2013 12:20:40 PM PST by SteveH (First they ignore you. Then they laugh at you. Then they fight you. Then you win.)
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To: blam

Just because Barack Museveni Obama was lected president twice? Now, go ahead, and Google Museveni. Read this guy’s biography and tell me if you don’t see parallels.


10 posted on 03/05/2013 12:21:17 PM PST by veritas2002
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To: blam

Well... dictatorial regime, CHECK. Class division bordering on warfare, CHECK. Corrupt “electoral” process, CHECK.

If we’re not there... we’re getting there.


11 posted on 03/05/2013 12:24:11 PM PST by ScottinVA (Gun control: Steady firm grip, target within sights, squeeze the trigger slowly...)
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To: blam

Without the bananas


12 posted on 03/05/2013 12:24:48 PM PST by PGR88
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To: blam

Can it work with no bananas?

That’s the question.


13 posted on 03/05/2013 12:36:49 PM PST by headsonpikes (Mass murder and cannibalism are the twin sacraments of socialism - "Who-whom?"-Lenin)
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To: blam

It’s such a banana republic now, we’ll have to change the name of the country to Chiquita.


14 posted on 03/05/2013 12:59:49 PM PST by Old Yeller
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To: blam
Anyone who's been to Detroit recently knows the answer to *that* question.
15 posted on 03/05/2013 1:01:48 PM PST by Gay State Conservative ("Progressives" toss the word "racist" around like chimps toss their feces)
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To: blam

16 posted on 03/05/2013 1:02:37 PM PST by TexasCajun
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To: blam

Hmmm...what is the next step below a banana republic?


17 posted on 03/05/2013 1:27:22 PM PST by ilovesarah2012
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To: blam; a fool in paradise; Slings and Arrows
Rispek the Flag!


18 posted on 03/05/2013 1:31:13 PM PST by Revolting cat! (Bad things are wrong! Ice cream is delicious!)
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To: Revolting cat!

19 posted on 03/05/2013 1:40:34 PM PST by Slings and Arrows (You can't have IngSoc without an Emmanuel Goldstein.)
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To: Revolting cat!

An outdated fashion store with an outlet in every mall? Leave that discussion to the talking heads on Sunday mornings.


20 posted on 03/05/2013 2:27:16 PM PST by a fool in paradise (America 2013 - STUCK ON STUPID)
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To: blam
What do you mean? The whole Congress is bananas!


21 posted on 03/05/2013 3:29:33 PM PST by Lady Jag (If you can't make them see the light, let them feel the heat. - Reagan)
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To: blam

New Jersey is already there; our roads are crap because we can’t pay to fix them (due to the costs of the guys who used to fix them who retired 15 years ago), the inflation mentioned in the article is already here (while wages are falling), and I’m guessing that by this summer the shore will still look like Haiti because there isn’t money to fix it or for people to spend there anyway.


22 posted on 03/05/2013 4:05:09 PM PST by kearnyirish2 (Affirmative action is economic war against white males (and therefore white families).)
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To: blam

Not a Banana Republic.

A Socialist Peoples Republic run by black socialist/racist overlords.


23 posted on 03/05/2013 4:08:07 PM PST by Iron Munro (I miss America, don't you?)
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To: blam

Yes.

Obviously.


24 posted on 03/05/2013 8:42:17 PM PST by Jack Hammer
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To: a fool in paradise
One time not long ago while travelling I met a Euro high tech exec who worked for a U.S. company there and tried to impress me by telling me that he shopped for casual clothes there whenever travelling Stateside.


25 posted on 03/05/2013 8:56:58 PM PST by Revolting cat! (Bad things are wrong! Ice cream is delicious!)
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