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by Al Martin

What Hath Bushonomics Wrought? The Financial Exhaustion of the United States (And Planet Earth)

(2-23-09) There is a financial exhaustion of the United States and indeed of Planet Earth that has occurred during the first decade of the 21st century because of Bushonomics, a “school” of economic thought, which was adopted not only in the United States but globally. In short, Bushonomics is negative debt-financed consumption. So what hath Bushonomics wrought around the world?

      First let’s take a look at the United States. Simply put Bushonomics has left USA Inc. financially exhausted. In the first decade of the 21st century, there was $14 Trillion of depleted value in equities, bonds and other traded securities. There was also a $7 Trillion depletion of real estate value, a $1 Trillion depletion due to pension losses, and a $1 Trillion depletion in the national savings rate. That’s how it began. By the end of the decade on Dec. 31, 2009, we will see the planet earth financially exhausted.

      To illustrate this idea, by the end of the first decade of the 21st century, the cumulative net worth of the G-20 nation-states (the so-called First World industrialized nations) has been cut by 50%.

      Regarding equity value depletion, we must look at the accretion of debt that has occurred at all levels, including government, business and industry and the people. The people of the United States have increased their aggregate debt by $9 Trillion during the first decade of the 21st century, in order to maintain consumption.

      The Bushonian Regime increased the aggregate National Debt of the United States by some $7 Trillion. The governments of the 50 underlying states increased their indebtedness by $3.5 Trillion.

      In addition, 50 million Americans lost their health care, 3 million lost their pensions, 30 million Americans filed for bankruptcy, and 5 million corporations filed for bankruptcy -- with millions more to come.

      So how did Bushonomics wreak such havoc globally? It was done the same way it was done in the 1980s, which ended in the various collapses of the early 1990s. The premise of Bushonomics, i.e. debt financed consumption, is that the increased consumption that results in the increase in debt is greater than the cost of servicing that debt. That is the essence of Bushonomics. Indeed it is the very essence of Republican “economic thinking.” It is the only way that the USA and the rest of the industrialized nations on earth could maintain post-WWII economic growth -- through debt-financed consumption.

      The dramatic post-war economic growth could not be maintained by any other means due to the enormous increase in populations. This is all linked together in the secret agreements made that were an adjunct to Bretton Woods II in 1946, as we have written before. The problem was unrestrained population growth in the industrialized nation-states led by the United States. So why didn’t Bushonomics work? And why is the planet now close to collapse? Classically it should have worked. The reason it didn’t work is because of misspending by governments, principally the United States. There was in fact deliberate misspending.

      These are the fruits of Bushonomics, increased consumption on the back of increased debt. It’s true that there have been substantial increases in governmental revenues as it was meant to do. The problem is that government more specifically that government in power in the US for 1981 to 1992 and again from 2001 to 2009 spent more money than the aggregate increase in income that debt financing consumption was producing for government via increased tax revenue, thus leaving perpetual deficits.

      The main reason this was done was for wealth consolidation. Nothing consolidates wealth like debt-financed government spending. Nothing so moves wealth from the hands of the many into the hands of the few like government misspending. This includes enormous wasteful spending on “defense”. In fact “defense” was the key spending initiative throughout the first and second Bushonian Regimes. Why? Because it is essentially wasteful and fiscally imprudent. It directs an enormous amount of money into the hands of a small group of corporations who have public ownership in common.

      The defense industry is a good example of this. The wealthiest 30,000 people in the United States are in their aggregate the majority shareholders of our publicly traded defense industries and collaterally our publicly traded military industrial complex spending. Enormous amounts of wealth were funneled effectively from the hands of many (the taxpayers) or those who earn an average wage and pay 20% of that wage in tax, through a siphoning mechanism into ever “tighter and righter” hands. The increased revenue to the US Government under both Bushonian Regimes allowed them to further consolidate wealth. It’s almost like a hypothecation of governmental revenue stream that is based on debt.

      And how do you re-hypothecate a revenue stream based on debt in order to further consolidate wealth? The debt generated the consumption, which generated the tax revenue. You use it by proffering a series of disproportionate tax cuts, as was done in the 1980s and in the last decade, which dramatically reduced the tax liability of those earning more than $250,000 per annum through the subsidy of those who are earning less than $75,000.

      This isn’t so much about class warfare, as it is the creation of the ultimate elite. The Bushonian Cabal envisioned that it would be necessary to control the planet in a post-economically collapsed environment, a collapse, by the way, caused by Bushonomics.

      There was an understanding that the Bretton Woods II Agreement would eventually reach the point where it would be unworkable. So what blew it out of the water? There was the deep recession of 1981-82 which had a global impact. That sent a signal that the Bretton Woods II agreement could no longer be sustained and that it was time for Bretton Woods III. It also showed that wealth had to be deconcentrated, if non-debt-financed consumption were going to be maintained.

      The planet’s leadership at that time, led by the Bushonian Cabal and its 300 some members, made the decision that this wasn’t going to happen, and that instead there would be a so-called final push for wealth consolidation, a term used by George Bush Sr. himself. This was done by proffering policies that would increasingly cause money to flow from the hands of the many into the hands of the few, knowing that this policy would cause eventual global economic collapse. However, global economic collapse would have come anyway because Bretton Woods II was no longer sustainable.

      The Bushonian Cabal then was correct. If global economic collapse was inevitable anyway, wasn’t it better to begin in the 1980s with economic policies that would move wealth into the hands of the few to create a powerful educated right wing elite that could then be called upon to control the planet, when all governments begin to fail and when democracy is no more? In other words, at that point, you would need a strong-handed iron-fisted wealthy elite that is experienced in exercising power.

      So things are still on course, as far as they’re concerned. And the Obama Regime is helping. The outgoing Bush-Cheney Regime knew that the Obama-Biden Regime only had one choice – and that was to dramatically ramp up government spending in order to proffer fiscal stimulus programs. The $700-800 Billion is still under discussion and that is going to be relatively meaningless. The Obama-Biden Regime knows this and they also know that government deficit spending for purposes of economic stimulation will have to reach into the trillions of dollars. The regimes of the other G-20 nations also know this as well. Now it just becomes a foot race. In other words, can the planet’s economy, which is insolvent and illiquid, be kept sufficiently solvent to prevent economic collapse?

      The Obama Regime is trying to stick a lot of fingers in a lot of dikes with holes that keep popping up, so to speak. Every couple of weeks there’s a lull, and they have only so many fingers. Last week there was the sharp and sudden deterioration of Eastern Europe’s financial institutions and capital marketplaces. That is another hot spot on the planet.

      Historically speaking Eastern Europe has always been a potential “tripwire” What is a tripwire? The current state of affairs is that the planet is financially exhausted. To tip the planet into utter and complete economic collapse would require that one of these tripwires around the world be activated.

      Some of these “tripwires” are Eastern Europe and Russia. Should Russia default on its sovereign debt this would force the Eastern Europeans down the tubes and would set off a chain of events, so that six months later the planet would be in utter economic collapse.

      Another tripwire is China. If China finally gets some balls and says to the United States – “We aren’t gong to finance your deficits anymore. We are going to stop buying US Treasury instruments. And we are going to begin to liquidate the enormous amount of US Treasury instruments in our inventories. Plus we are going to liquidate our multi-trillion dollars worth of holdings.”

      Central and South America, Southeast Asia, the Indian sub-continent and Africa are also mini-tripwires. Ecuador defaults on its sovereign debt as it recently did. Argentina does the same. Fortunately Argentina still has some IMF money left. Bolivia does the same. Pakistan is close to financial collapse. India then defaults. It sets off a domino effect at the end of which lies utter global economic collapse.

      What the Obama-Biden Regime is attempting to do, in concert with the Europeans, is to put a lot of fingers into all these leaking dikes.

      And what is the only thing they can do? They can increase government financed spending in order to try to increase solvency and liquidity of global capital marketplaces. It is the only way they can do it.

      So where is the cash going to come from, if the people are beat out and can’t give any more in taxes?

      It’s a shell game. In other words, what they’re doing is issuing ever larger amounts of US Treasury instruments. They can still raise trillions of borrowed capital. Why? Because short-term US Treasuries are still working. People believe they are like Teflon. Everybody wants them. When that line doesn’t work anymore, watch out.

      The greatest threat to the line that US Treasury instruments are Teflon is that those who are financing deficit spending of the US Government stop doing so -- namely China, Japan, and the oil producing nations in the Middle East, which are purchasing about 75% of all US Treasuries.

      Remember the United States can only finance about 25% of its debt internally. This means that the people of the United States are financially exhausted to the point that they are only able to purchase 25% of securities issued by the Treasury.

      China understands that if they pull the plug, the entire planet goes down. You may have heard the Chinese premier woefully commenting on what former Treasury Secretary James Baker said -- that the US debt isn’t a problem for the United States; it’s a problem for the rest of the world. And he’s absolutely right.

      China could make the decision to stop buying Treasuries because they feel isolated enough that they can insulate their economy from the impact of lost exports. China is effectively keeping the United States in business. By purchasing US Treasury instruments, China is effectively purchasing their principal export revenue. What happens when China reaches the point where for every one dollar of US Treasuries they are purchasing, in order to keep the USA Inc. in business, they are only receiving 70 cents or 50 cents back in export revenues because US GDP continues to decline? Eventually the economic equation for China, Japan and the oil-producing Middle East countries will come to that point, where they will question this policy.

      So, please do not believe that Japanization of the United States or even outright Socialization is going to prevent the planet from economic collapse. It isn’t. Utter economic collapse of the entire planet is still very much on the agenda. We’re just giving you the tripwires to look at and to be aware of.

      Why do you think the price of gold is rising as well as the dollar in an environment wherein deflation rules the day? Do you know how “unnatural” that is to occur? The only time it occurs, historically speaking, is immediately prior to a complete global economic collapse.

      This is the sobering conclusion. Forget about Cookie Cutter America because it’s gone. Americans’ Rose Colored Glasses have been smashed -- if you bought into the American Lie, also known as the American Dream. It’s like Rick Santelli said on CNBC that 90% of the American people are screwed because they bought into the Cookie Cutter Lie. That was the first time I ever heard anybody in Mainstream Media tell the truth. If you’re married, if you have kids, if you rely on a wage, you’re screwed.

      The Great American Lie Is Over. The best thing that young people can be taught is this: don’t try to live the Lie of Cookie Cutter America and learn how to “make money, make money.”



    * AL MARTIN is an independent economic-political analyst with 25 years of experience as a trader on NYMEX, CME, CBOT and CFTC. As a former contributor to the Presidential Council of Economic Advisors, Al Martin is considered to be a source of independent analysis for financially sophisticated and market savvy investors.

After working as a broker on Wall Street, Al Martin was involved in the so-called "Iran Contra" Affair as a fundraiser for the Bush Cabal from the covert side of government aka the US Shadow Government.

His memoir, "The Conspirators: Secrets of an Iran Contra Insider," ( provides an unprecedented look at the frauds of the Bush Cabal during the Iran Contra era. His weekly column, "Behind the Scenes in the Beltway," is published weekly on Al Martin, which also publishes a bimonthly newsletter called "Whistleblower Gazette."

Al Martin's new website "Insider Intelligence" ( will provide a long term macro-view of world markets and how they are affected by backroom realpolitik.


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