U.S. Treasury Secretary Henry M. Paulson, Jr., (the younger brother of famed comedian Pat Paulson) announced to the press on Tuesday, that the Bush administration's "Starve the Beast" policy has finally come to successful fruition.
"Starve the Beast" describes a deliberate effort by right-wing extremists to bankrupt the US government, in order to force spending cuts.
The announcement came as Citigroup Inc, the nation's largest banking company, went into an emergency meeting of its board, following its announcement that its initially anticipated losses of $6.5 billion, due to the mortgage crisis, would actually be $17 billion.
This followed $7.9 billion of write downs by Merril Lynch, UBS (SFR 4 bn), and monoline insurer FSA ($200m) and an a report by the French "Societe Generale" expecting total industry losses from subprime mortgages will reach $200 billion.
Meanwhile, on Friday, the price of gold shot up by $20 in only 30 minutes, to the highest level in 27 years, as investors around the world expressed alarm at the plummeting value of the US dollar.
Economist Millard Freedman explained, that the 'Starve the Beast' policy was first implemented by Ronald Reagan, who, with his remarkable acting skills, convinced many Americans, that, what had always been discounted as "Vodoo Economics", was actually a valid economic philosphy. His followers jubilantly celebrated the fact that the stream of revenue, from economic growth, increased... but somehow they failed to notice that it didn't increase anywhere close to the amount lost by his tax cuts...and the net result...as plannned in this concerted effort to bankrupt the government,...was a quadrupling of the national debt"
"George Bush set out to complete what Reagan began...the total bankruptcy of the US government, through insanely reckless spending," Freedman continued.
"It has been one of the greatest spectacles in intellectual history," Freedman said "to hear rank and file Republicans, who for decades had been proclaiming there is 'No such thing as a Free Lunch', and who complained incessantly about deficit spending by the 'Big-spending Liberals'....to suddenly change their entire world view, and declare that 'debt' doesn't matter....and applaud when the Republicans...who were in charge of both Houses of Congress, as well as the presidency....went on the most reckless spending spree in the history of the world."
"Free Lunches for All" was written into the Republican Party platform...."Nobody has to pay Taxes and the Government can spend unlimited amounts of money....and we never have to pay back the debt", became the explicit creed of the Republican Party.
"The downside of this strategy of bankrupting the government," Freedman continued, "is that the health of the economy is held up by our interest rates."
"If we raise interest rates to make financing our debt more palatable...in the midst of this mortgage crisis, and credit crunch...our entire economy will collapse...and we're screwed" Freedman stated. "On the other hand, if we lower interest rates...to boost the economy...with faith in the US dollar at record lows...then our bonds will be worthless, and we won't be able to finance the inevitable interest on our debt...and we are screwed." Freedman added.
"The bitter irony," Freedman said, "is that these very same greedy Republican businessmen...who cared about nothing but their tax breaks....may now face bankruptcy, and the loss of their businesses...because they blindly supported Bush's 'Starve the Beast' policies which lead us unto this credit crunch nightmare."