The Republican-controlled US House of Representatives has turned down a bill intended to raise the country's $14.3 trillion debt ceiling.
All Republicans flatly rejected the measure that would increase the US borrowing limit by $2.4 trillion, which is seen as yet another sign of growing division between Republicans and Democrats.
To learn more about the global financial market crisis and the role of the US economy in creating the chaos, Press TV conducted an interview with Max Keiser, a money markets analyst.
The following is the transcript of the interview:
Press TV: Please explain the difference between deficit versus debt, and is correct to say that, by accounting definition, the US is bankrupt since all they are doing is paying interest without having any money to spend?
Keiser: Yes, what we are witnessing is the US effectively committing financial suicide. You'd have to compare [it with] maybe a death cult like Jim Jones in Guyana who convinced the entire population of the cult to drink the cyanide-laced kool-aid and to kill themselves. This is a proposition that both the Republicans and Democrats have on offer. They simply want to continue invading countries, blow through trillions of dollars that they don't have, while simultaneously gutting all the manufacturing capacity in the country and destroying the food supplies with chemicals and genetically modified [GMO] products, guaranteeing that most of the Americans today will come down with cancer in the next 5 to five years from GMO foods, cell phones and anything else that America excels at.
Press TV: Do you think President Barack Obama, , Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner know what they are doing? All they are doing is paying the interest while there is no money left. How they are going to be able to sustain this mode?
Keiser: The objectives of these policies quite clearly is to enact a transfer of wealth so by keeping the country perpetually in a state of war and perpetually in a state of fear these can slip in these policies that are highly favorable to the entrenched oligarchy and kleptocrats that are in charge of the country and then making fabulous amounts of money. They are becoming richer than ever before. Not even during the period of Robber Barons in the US that have we seen such wealth disparity between the top one percent and what is becoming the bottom 99 percent.
The objective is to completely eviscerate the middle class, to steal that wealth from the middle class and Obama is enabling this wealth transfer. This is his [Obama's] legacy and this is really remarkable for a man like Obama to end up in the White House and being the foot soldier in the largest transfer of wealth in the history of the US, creating a permanent underclass with no jobs, living on foot stamps and really people on the verge of rioting in the streets. This is the Obama legacy.
Press TV: This is what a real time viewer says, “You guys got it all wrong. The most critical issue is NOT about CURRENT TREASURY BILLS, but about whether or not China is willing to continue its practice of shipping their hard worked resources (in the form of finished products) for MORE OF THE TREASURY BILLS." Is this viewer accurate in what he is saying?
Keiser: It is interesting to see how China plays this currency war in coming global collapse. Remember they have got over 3 trillion dollars in reserves, they have got a very large reserve of gold, they are aggressively buying gold and silver and they are making deals for oil all over the world peacefully, in continents like Africa and their modes operandi is to make deals with these people around the world to secure energy and they have got R&B which of course can appreciate in value versus dollar given their own population increase in power.
Press TV: In some respects some say the US is hemorrhaging. Looking at a scenario, what would the US look like a year's time?
Keiser: The trends are in place we have some evidence this week that Federal Reserve this week is going into a mode of Quantitative Easing part 3, which means that instead of allowing the natural forces of the capitalism to write some of the excesses, they are going to try to centrally command and control the economy through the ... of federal open market committee which means there is going to be a lot more forced injection liquidity, which means that the price of food and energy will go much higher and the poverty rates will go much higher in America and the food stamp usage will go much higher in America.
The only way you can rationalize what the American policy makers are doing is to see it in the context of a suicide cult and I am not using this hyperbolically, this is in fact the tell tale signs of a suicide cult and this is unfortunately going to succeed. America is committing suicide and in two or three years' time when the US dollar is no longer the world's reserve currency people will be talking about other countries they won't be talking about America anymore.
Press TV: The crisis in the US will affect the global market in various aspects. SNP is thinking of downgrading the triple rating the US does have. How is it going to impact different markets around the world and of course the way that the US has spread itself in those markets?
Keiser: Global economy is in dire straits and the global economy is entering into a period of massive contraction. The question is: what do we see at the other end of that contraction? We see China with a lot of reserves, a lot of assets and a lot of great deals that they have done with countries around the world. We see Brazil doing collateral deals with Russia, with Iran and China. These countries are doing deals, they are preparing themselves for this catastrophe, the US is not preparing itself at all for this catastrophe.
Obama administration has abandoned its citizens and really it is remarkable, he has really abandon has own citizens. He is like a captain who has left the ship and at the end of this crisis Americans will no longer have the current currency, the will have no manufacturing capacity, they will have no respect around the world, they will be known as torturing war profiteering leeches and nobody will want to talk to them. They will be the ugliest girl at the financial global ball.