He who wishes to fight must first count the cost. When you engage in actual fighting, if victory is long in coming, then men's weapons will grow dull and their ardor will be dampened. If you lay siege to a town, you will exhaust your strength. Again, if the campaign is protracted, the resources of the State will not be equal to the strain. Now, when your weapons are dulled, your ardor dampened, your strength exhausted and your treasure spent, other chieftains will spring up to take advantage of your extremity. Then no man, however wise, will be able to avert the consequences that must ensue... In war, then, let your great object be victory, not lengthy campaigns.
Though we have heard of stupid haste in war, cleverness has never been seen associated with long delays
One of the media's greatest failings in its coverage of the U.S.'s deteriorating economy is in ignoring the economic devastation wrought by the wars in Iraq and Afghanistan. A dangerous displacement is occurring in the public mind as the media proclaims that the economy has replaced the war as voters' chief concern, as if neither media nor public can keep two thoughts in its head at the same time. In fact, the war is a prime contributor to our economic woes, but outside of a few voices in the alternative media, no one seems to have noticed. Between widespread propaganda about the success of the "surge" and a growing focus on the economy, the war can roll on without unduly discomfiting the president, Congress, or the tireless warriors of the campaign trail.
Estimates of the direct cost of the wars in Afghanistan and Iraq range from half a trillion to a trillion dollars, with no end in sight. Most of this money goes into a deep, black pit: to salaries for soldiers that represent far less than what they'd earn in a healthy economic setting; weapons that enrich a relatively few at the top of the defense, energy, and arms dealing pyramid; and contracts with the Halliburtons and Blackwaters of the world. These funds tend to collect and, from an economic standpoint, coagulate, in off-shore accounts, political campaign chests, and high-level investment. All of this, of course, is courtesy of the United States taxpayer, strapped into a system in which the poor and middle classes pay far more, proportionately, than the wealthy. In fact, we pay doubly, as much of the money we spend for energy is recycled from the Arab oil states back into the hands of U.S. defense contractors who supply the Arabs with high-tech weaponry and in-country military bases. (The Carlyle Group, for instance, comprising top ex-politicos like former President Bush, handles many of these contracts, making a fortune for all concerned, including the Bush family. Some conflict of interest there, one would think, but the same press that salivated over a stained blue dress somehow considers the web of interests spun by the Bush family and their allies too insignificant to write about).
The immediate economic factors behind the current crisis have been described in some depth in the mainstream media, although not all equally. For instance, Alan Greenspan's cash-pumping policies when he was Chairman of the Federal Reserve have gone largely unremarked. The coincidence of the 2005 Bankruptcy Act being passed just before tens of thousands of Americans were plunged into bankruptcy by the credit crisis seems to be a ripe subject for investigative reporting. But of course the media holds to the line that no one anticipated this crisis. Well, perhaps not some loan-crazed bank president, but the top economists who work for the elite financial groups, and who advise the government, had to have anticipated the problems. Meanwhile, the financial markets' "creative" pyramid schemes of bundling weak mortgage loans together, selling them, and then using the proceeds as the basis for new loans with values several times that of the original bundle, created enormous profits for hedge funds, mortgage companies, and banks – for a time. When the bubble burst, executives walked away with hundreds of millions while employees of the companies and mortgage holders were left high and dry. Sound familiar? Enron all over again? Savings and Loan scandal all over again? When will we ever learn?
The upshot is that major financial institutions, such as Citibank and Countrywide Mortgage, are being sold off to the new global money masters. In effect, the dollar is seemingly being rescued by the very interests holding it hostage. Simply put, America is being sold off to those nations and institutions that have collected huge pools of capital. This is bad for America but very good for those people at the very top of the nation's economic pyramid. It also follows the logic of economic policy since Ronald Reagan became president in 1981: engineer ever-greater shifts of capital from the lower and middle classes to the very wealthiest members of the national and global economies.
The U.S. military invasions in the Middle East and the securing of a long-term military position throughout Central and Southwest Asia are part and parcel of this economic policy, intended to facilitate the seizing of more and more of the world's wealth. It is also propelled by a recognition that neither the U.S. population nor the global economy can withstand the rampant pillaging by the world's wealthiest individuals and institutions. The militarization of U.S. society; the "Bush Doctrine", which states that we can attack anyone we want for whatever reason we devise; the assault on civil liberties in the U.S.; and the replacement of the values of the republic with those of a runaway market economy, all grow out of an almost crazed attempt to impose a new post-capitalist economic order on the world. The causes are complex, perhaps psychological as much as political and social. Surely there is some connection as well to the truly stupid religious fundamentalism and creepy hyper-patriotism espoused by so many of the purveyors of this "new world order". But we'll put those questions aside for another time. For now, it is enough to recognize the close connections between the wars in Iraq and Afghanistan and America's economic deterioration.
If a Martian observed the economic behavior of the "world's wealthiest nation", what would she, he, or maybe even she-he, think? The Martian, like any smart galactic traveler, would figure: "Cui bono – who benefits? Follow the money." Then they might reflect, "Hmm, a huge amount of money is assigned to destroying other nations and building military complexes around the world. Weapons are being produced at a record pace. A select group of very wealthy people are dancing in fountains of cash while most of the population is increasingly strapped. The world's wealthiest nation ranks low in many indicators of quality of life: 32nd in longevity, 43rd in infant mortality, number one in public surveillance. Hey, they've even created an entire system for torturing people around the world!" The Martian wouldn't have any trouble deriving some economic principles from all she-he observed.
First off, forget about where all this money has gone, where has it come from? Perhaps the number Nine Trillion Dollars! (imagine the look of glee on Dr. Evil's face if he could say that number!) would reach the Martian's ears, however many ears she-he happens to have. That's the extent of our national debt. In simple terms, that means we must issue bonds to get the money we don't have and also print up dollars when we need them. Thus, the dollar is worth less. The only benefit to this is that books still cost more in Canadian dollars than U.S. dollars, even though the two are now virtually equal in value! So Canadians should flock across the border to buy their books, waving at Americans on their way to Canada to buy prescription drugs, which will at least have a salutary effect on literacy in Canada.
But that fringe benefit aside, the debt means several things. Other countries are beginning to find the dollar a less secure investment instrument. Thus they raise interest rates on their loans to the U.S. government, so more of our money goes to servicing debt, i.e., down the toilet. They also may switch their investments, say to Euros, which means we have to print more money to meet our obligations and the dollar goes from the toilet to the sewage treatment plant and finally, winds up floating worthlessly in the sea. China, Japan, Europe, Saudi Arabia, and the United Arab Emirates, as major creditors of the U.S., now wield a very big stick in terms of influencing the U.S. economy and U.S. investment and foreign policies. Which is fine for those Americans who operate at the highest levels of the global system, like the major banks, hedge funds, brokerage houses, Carlyle group, oil, energy, agribusiness, and mining conglomerates, etc., etc. Their interests are not just separate from those of most Americans, but actually opposed to them. And guess who's winning.
Meanwhile, the subprime crisis is in large part a response to the inflationary spiral that has been held in artificial check by Greenspan's interest rate policies, the housing bubble and its associated refinancing spree, and the easy money that the government has been pumping into war-based industries. The build-up of capital basically served as a continuous intravenous dose of 140 proof firewater that got the financial services industry so drunk they went out and squandered the food money. In the process, Americans have mortgaged their economic futures.
Now imagine that in 2001 the president had said, "We're going to need hundreds of billions, nay, trillions of dollars to wage war on Afghanistan and Iraq. You'll agree to this because of all the lying reasons I'm going to feed you, in cooperation with a lap-dog Congress, The New York Times and Washington Post, Fox News and CNN, the major networks, and Colin Powell. You're going to give me blank checks to bomb the crap out of these countries; test new weapons; irradiate the environment, its populace, and our own soliders with uranium tipped shells; get thousands of our own citizens killed and maimed and mentally shattered; gain control of Iraq's oil for the major transnational petroleum companies; and, oh yeah, cut veterans' benefits and deny many of them health care. So can I have the money?"
If the past is any indicator, the response would be a resounding yes, as it continues to be, if not among the public, then certainly among our nation's decision makers.
But then a miracle happens. Congress gives the president all this money for these wars. And then the president turns around and says, "Surprise! Now that we see all this money is available, I'm going to spend it on health care, education, neighborhood renewal, the environment, and infrastructure! I know I'd never be able to get this money out of you if I said that's what it was for, but now that I have the money, this is what it's going towards! Oh, and by the way, we're going to build the economy one project at a time. It is no longer going to be fueled by arbitrarily multiplying the number of dollars in circulation in a vast Ponzi scheme. Even a house of good laminated cards is more stable than a house of crumpled bills."
Every dollar spent at street level produces seven times more economic activity than a dollar spent on weaponry. The increase in public health and education brings more money into the economy for teachers, nurses, service workers – millions of Americans. Companies save money as worker absenteeism and health insurance costs decline. New industries are created from the investment in renewable energy, a well-educated populace, and production of "super-materials" targeted not for war but for constructive applications. Subsidies for new energy technologies, family farms, and small businesses create entirely new industries and vibrant economic centers. A moderate tax increase on the very wealthy helps reduce the national debt. Closing tax loopholes and going after off-shore accounts aimed at avoiding hundreds of billions in taxes brings the U.S. government into the black. Renewing the infrastructure, which is on the verge of disintegration, creates hundreds of thousands of well-paying construction jobs, which restabilizes the housing market. A reasonable trade policy protects economically strategic American industries and manufacturing jobs post a modest recovery.
All these steps, and others similar in intent, may not create a paradise, but they sure as hell would recirculate and expand our national wealth so that it continues to produce more real wealth in the form of affordable goods and services while improving the quality of life for Americans and, in a ripple effect, the entire world.
Instead, we have had the most corrupt regime in U.S. history using our wealth to fuel a bonfire of chaos and destruction and death. That is the bottom line and that is what the presidential candidates ordained by the media as the "frontrunners" continually ignore. It is what most of the mainstream media's pundits and writers about the economy continually ignore. The money we are burning in war could have been used to build the economy. The loss is two-fold, embracing not just the money we've misspent but the lack of investment in the economy and social services (health, education, infrastructure) that has actually made those services decline in value. Every cost we've ignored for the past decade is a cost that has multiplied several times in future spending – a stitch in time saves nine and all that – and has piled more debt upon the American people and added more fuel towards an upcoming inflationary – or stagflationary - cycle. The cost of war has never been more dire – in lives lost on the battlefield and in the incinerated homes of a region in chaos, to be sure – but also in the cost that Americans will continue to pay for decades. Maybe "it's the economy, stupid!", as James Carville reminded Clinton campaigners in 1992. But if we ask what's largely to blame for the state of the economy, our answer would have to be, "It's the war! Time to wake up!"
Barton Kunstler, Ph.D., is author of "The Hothouse Effect", a book describing the dynamics of highly creative groups and organizations. He is a writer with a futurist perspective on education and social change, and is available as a speaker and trainer on such topics as creativity, education, leadership, and communications.
Re:Concerned about the economy? End the war.
« Reply #1 on: 2008-01-14 19:02:07 »
If I had had the time to write on the intersection of war and politics and their consequences, the above would bear a great deal of similarity to the article I would have written.
I suggest you read it carefully and contemplate the conclusions. They appear, I'm afraid, inescapable. The sheeple, it seems, are incapable of comprehend the connections illuminated here or they would likely have revolted already.While "their" media* will continue to carefully offer any meaningful analysis. Instead, playing the role of "bread and circuses" to the extent of presenting the ongoing disintegration of poor Brittney Spears as something vastly more newsworthy than the utter irrelevance as to which of the two establishment forces is appointed, for either will continue to extract the value of life from the bemused, befuddled and muddled populace of the USA who will no doubt ignore all demographic data to the contrary and continue to imagine that they live in the best of all possible worlds.
Thanks for yet another stellar gem Blunderov.
Kindest Regards
Hermit
*The fact that the US media is largely owned and definitely controlled by those profiting most from the USA's illegal, unprincipled and devastating behavior may or may not have something to do with its inability or unwillingness to examine the impact of extant policy upon individuals either globally or in the USA; and why we are not acting to mitigate the devastating consequences of the end of cheap energy in the few brief years left before we are no longer able to do so
With or without religion, you would have good people doing good things and evil people doing evil things. But for good people to do evil things, that takes religion. - Steven Weinberg, 1999
Re:Concerned about the economy? End the war.
« Reply #2 on: 2008-01-15 00:11:41 »
[Blunderov] I mentioned the dread "stagflation" in another thread. It really is something to be afraid of.
The reactor is out of control. Actions which usually calm the reactor now have the opposite effect not unlike the prompt neutron surge which occurred at Chernobyl when the control rods were inserted.
The one thing that might work would be the immediate and complete ending of the war/s in the Middle East. Unfortunately The Boy General is likely to come to the opposite conclusion.
A lot of Americans have been surprised by George Bush and Israel's renewed belligerence towards Iran. After all, for any sane human being, the recently released (in order to prevent the greater embarrassment of a leak) of the National Intelligence Estimate pretty much ended the claim that Iran was some kind of threat to the UNited States. Especially in the wake of the now exposed-to-the-world lies about Iraq's weapons of mass destruction, most Americans expected President Bush to take a short pause, at least long enough to ship up an imitation of a sheepish grin and at least the pretense of repentance for having tried the same stupid lie twice in a row. Fool me twice?
But no, Bush has, following his obligatory groveling before the government of Israel, stated flat out that the National Intelligence Estimate does not represent his own 'beliefs' about Iran. In other words, having tried to dump the blame for the lies about Iraq's WMDs on the nation's intelligence agencies, Bush's new position is that he doesn't listen to them anyway; he listens to that little voice inside his head, or in the bottle, whichever comes first.
People are scratching their heads and wondering just what it the agenda driving this push for yet another war in Iran. Figuring out Israel's agenda is easy. Israel just does not like it's neighbors and as long as American blood gets spilled into the sand to kill Israel's enemies, Israel is perfectly happy to see the situation continue along for as long as possible. Hey, it's not THEIR kids getting killed.
But as for Bush and his Cabal, what is the agenda for invading Iran. Observers have suggested that our government is being bribed and blackmailed, again by Israel, to send Americans to die in wars on Israel's enemies. It is no secret that AIPAC pours millions of dollars into Congressional and Presidential campaigns. AIPAC has a long track record of being able to remove anyone from Congress who does not toe the Israeli line. You can ask Paul Findlay and Cynthia McKinney about that.
But in my opinion, the real agenda is not war on Israel's enemies, or US enemies. The agenda is the existence of war itself. That is, the agenda is simply to start a major where, and the location and target are irrelevant.
President Bush has literally bet the nation on these wars. Vast sums of money were removed from domestic spending programs such as levee maintenance, wildfire prevention, bridge inspections, etc. and spent on the wars in Afghanistan, Iraq, wherever. Vast more sums were "borrowed" from the Federal Reserve. I use quote marks because the Federal Reserve does not actually have the money it loans to the US Government; it simply prints it up, or adds a few zeroes to a computer register someplace. To the Federal Reserve it is just bookkeeping. But to the rest us os, this is real money, real DEBT, which we will be expected to repay at full face value, at interest, unto the fourth and fifth generations to come. Just how much money has been created to fund the wars is not known. The books get fudged. Trillions have simply vanished into thin air over at the Pentagon. We will never know where because the office inside the Pentagon that was trying to find where all that cash vanished to was struck by a passenger jet on 9-11. Indeed, the passenger jet literally flew past the Pentagon, then doubled back, in order to hit that particular part of the Pentagon. Go figure.
For a while, the flood of new money pouring into the economy was not a problem because the soaring real estate market was a "cash sink." Money was printed up, spent on the defense contractors, entered the economy, then was sucked back out of the economy as citizens tried to prove that they could pay a quarter million dollars for the same home their parents paid forty thousand dollars for. For a while, the scam worked. People felt their lives were improving because even though they still lived in the same house, that house at least on paper was now a mansion! Inflation was under control. Most of the military spending for the wars was off the books as far as Congress was concerned and therefore not a source of political embarrassment.
And it might have all worked had the wars in Afghanistan and Iraq been quick ones.
But it didn't.
So, here we are in 2008. The economy is in a shambles. The real estate market has tanked and no longer functions as a cash sink. So all that printed-up cash being poured into the defense plants and form there into the general economy is starting to pile up, and when you have too much cash chasing too few goods and services, you get price increases, which is what we are starting to see now.
This surplus of dollars creates another effect. Whether you define the dollar as the net worth of the nation divided by how many dollars there are, or whether you simply look at it from the point of view of supply versus demand, the fact is that all those extra dollars push the value of each dollar downward.
For a long time, the US Government did not worry about the value of the dollar, because following WW2, the value of the dollar was set in stone, via an agreement called Bretton Woods. Bretton Woods set the dollar at a specific value. All the others signers agreed, and the dollar became the de facto global currency against which all other currencies were set.
Then the US did something a bit sneaky. After getting the other nations agree to a fixed value for the dollar, the US started printing up more dollars. Other nations had to accept them at full face value because of Bretton Woods and because the value of their own currency was pegged to the dollar. So the United States was buying goods from other countries with printed paper notes that had nothing to back them up, and in this clever manner, exacted an imperial tax on the rest of the post WW2 world. As the US realized that it could just print up more money to buy what it needed from other countries, we stopped making our own products. US dollars began to pile up in the banks for foreign nations which had to hold onto them in order to keep up the value of their own currency.
But, all good things come to an end, and as more and more of the oil producing nations turned to the Euro as their currency of choice, foreign demand for dollars dropped, and this drop is the straw which broke the US camel's back!
Now we are seeing foreign nations trying to slowly reduce their dollar reserves (as a sudden move might trigger a dollar crash), and those nations for whom a dollar peg is not working are already redefining their own monetary system in relation to a "basket" of currencies.
All of this, plus the over-valued and falling stock market paints a very bleak picture of the US economy.
The people of the United States, after surrendering their money to the government which in turn controls their economic lives, are justified in turning on the US Government when the economy goes bad. History is full of instances where Kings have been killed by their own people when the crops failed. That has been true from the slain rulers found bobbing around Europe's peat bogs to Louis XVI to Tsar Nicholas.
The US has been in dire financial trouble before. Twice in the last century, the US was in serious financial trouble, but the people did not blame the government for their reduction in living standards because the government had the perfect scapegoats; WW1 and WW2. Wars are notorious attention-getters, and the people of a nation are far more willing to endure hardships of war then the hardships caused by greedy and incompetent rulers. As the Gilded Age wound down, laissez-faire excesses saw a massive transfer of wealth from the working classes to the ultra-rich, leading to a great deal of unrest as corporations battled the emerging labor unions. The nation had endured a four-year depression, then the worst in US history. MOst Americans blamed the government for having done too little to reign in corporate abuse.
Then Arch-Duke Ferdinand was assassinated and WW1 kicked off, and with the war, the concerns about the US Government vanished from people's attentions. Everyone was united in the fight against the Kaiser. Their hardships and deprivations now had a purpose. After WW1 ended, and the survivors came home, rebuilding and reconstruction took everyone's minds off the economic problems of the previous decades.
The years before WW2 were in many ways very similar to those prior to WW1. Again, there was labor unrest, a new depression even worse than the previous one, and the Communist movement in Europe and Russia was apreading to the United States, fueled by the anger of the working classes; threatening to end the lives of wealth and privilege of the nation's elite families.
Then Pearl Harbor happened. And in this case, there is little doubt that President Roosevelt MADE it happen, for the purpose of getting the United States into the war against Hitler.
As had happened in WW1, the American people rallied behind the war effort. What was unacceptable levels of hardship during peace was suddenly acceptable. Complaints only aided Hitler, Mussolini, and Hirohito, or so the conventional wisdom said. and again, by the time WW2 was over, the memories of the Depression were decades old, and fading.
So, here we are today. We are not yet in a Depression just yet, and we don't need to be. The American people see what is coming and they do not think that the loss of their high paying jobs, and worse, their homes, is acceptable under the circumstances. Once again we have been seeing a massive transfer of wealth from the working classes to the ultra-rich.
History is repeating itself, and because history does repeat, no doubt Bush and his advisors are thinking that if they can start a major war, they will be off the hook. Once more the American people will silently endure their hardships for the war effort, silence their complaints, and accept with dignity yet another enforced decline in their standard of living.
For this, to save themselves, Bush and his advisors are willing to risk turning a regional war with Israel's enemies into a wider war, possibly a global war with Russia, possibly with China, possibly with the rest of the entire world as the globe realizes that the United States has become this century's embodiment of the Nazi empire.
It is for this reason that President Bush scarcely missed a step when the National Intelligence Estimate proved Iran innocent of Bush 'a accusations, before trying to stage a new "Gulf of Tonkin" provocation in the Straight of Hormuz. Bush doesn't want this war. Bush NEEDS this war. The entire US Government needs it. Indeed, having already depleted the nation's resources to fund the current invasions, the US Government probably will not be able to survive without a new world war.
Which is why they will do anything, and I stress ANYTHING, to start one.
Posted by CRIMES AND CORRUPTION OF THE NEW WORLD ORDER NEWS mparent7777 Marc Parent CCNWON at 12:14 PM
In today's markets, when the price of oil seems to be on a ceaseless uphill climb and the value of a dollar seems to be sinking more every day, the spectre of inflation is touted again and again. The truth is, the US economy faces something far worse than inflation. It faces stagflation.
Stagflation is a term that strikes fear into the hearts of economists and businessmen worldwide because it can destroy an economy and it is very hard to fix.
What You Need to Know About Money & Inflation
We tend to think of money as a kind of "fixed" group of objects. There is only so much of it in the world, and it moves from person to person when people buy things. Both of those obvious truths are dangerously inaccurate.
Money is a "place holder". The dollars in your bank account and in your pocket represent goods. A baker cooks a loaf of bread, gets five bucks, and he can buy flour or an hour of baby sitting from the kid next door.
Dollars are how we trade things in this nation. We use them to decide the relative value of things. A Jaguar costs more dollars than a Honda Accord, perhaps because more time and materials went into the Jaguar or perhaps because there are just fewer of them.
Now, if there were only a fixed number of dollars in an economy, we'd have a huge problem. Because we actually make more stuff every year. If we increase the number of objects in an economy and keep the same number of dollars, the "price" of every object in dollars goes down.
For example: If there are only ten dollars and ten apples in the world, you might pay a dollar per apple. But what if there are suddenly twenty apples? The price of an apple might fall to $0.50 (half a dollar). The guy growing apples would think his apples weren't as valuable as they used to be, and he would probably decide to produce less. The same "falling price" rule applies to almost everything. What if you found out tomorrow that your job suddenly paid half what it currently does? Wouldn't you quit and find something else to do?
Now that you understand why we need more money circulating every year, you'll be happy to know that the United States has a way to increase the amount of money to keep up with the production of things. Actually it has several. First, the government can just print money. It uses all kind of complicated tools (like buying bonds or making loans to banks) to release more money into the economy. It often does that when it wants to fund things like wars.
Understanding Deflation
The Federal Reserve actively manages money all the time. It sets the rate at which banks can borrow money from the Fed to loan to others. In the months after 9/11, the Federal Reserve set the reserve rate very, very low to stimulate the economy. They had to do that because businesses and consumers were not spending money and many costs (like airline security) had suddenly skyrocketed. Without the infusion of cash, nobody would have bought anything and businesses would have stopped producing the stuff people weren't buying. Businesses would have laid people off, thus further reducing the ability of people to buy things.
That downward spiral is called "deflation" and many folks blame it for the Great Depression. The stock market crash of 1929 sucked a huge amount of money out of the economy, and failure to put it back in made businesses stop production and fire workers, who subsequently wandered the streets looking for something to do. Some guy called Keynes said we'd fallen into a "liquidity trap" and convinced the government to spend money on stuff like building Hoover Dam. The economy got a little better. We had a big World War, the Government printed a bunch of money, and it got better still. That was the economic boom of the 50's.
By this time you understand that money is not a passive thing. Changing the amount of money circulating in an economy, shocks that dramatically impact spending habits, dramatic increases in the real cost of things (like oil) relative to other objects (like food) can have a massive impact on the lives and well being of people who have to live in that economy.
Which Brings Us Back to Stagflation and the Credit Crunch of 2007
Having read all this, its easy to imagine the Government should just print money all the time. Obviously its good for production. The problem is, the more money you have circulating, the less any given dollar can purchase. If you are fan investor with a lot of cash, a person living on a pension, or a country that has a lot of its wealth in dollars, you don't like having the dollars you hold become worth less every single day. So you use those dollars to buy something like Euro's that hold their value a little longer. If you are selling things to people with dollars, you charge them more dollars every day. The result is no one wants dollars and prices in dollars go up very fast.
Over the last seven years, the price of oil has gone from $30 a barrel to over $100 a barrel, resulting in $1.29 gallon of gas going up to over $3.50. The cost of health insurance has gone up by more than 400%. The average price of a house in some areas has almost doubled. The cost of food has risen more than 10% this year alone. Five years ago the Dow was at 8000, and earlier this year it was at 14000. That increase far outstripped the growth the nation saw in real production during that time.
Very low interest rates implemented by the Federal Reserve after 9/11, and the increased government deficit spending occasioned by the War on Terror, have created much inflation in the price of things. Wages, have not kept pace with with inflation. An employer who gets twice as much for his bread may not instantly decide to pay his bakers twice as much.
In order to maintain our standard of living, most of us have resorted to the use of credit. Some of us charged up our credit cards. Some of us borrowed against our homes. In effect we've created a new source of revenue based on the increasing value of our homes and the liberality of banks in lending money.
What Went Badly Wrong
People borrowed against their homes, or purchased new homes, with help from Banks. Wages aren't keeping pace with inflation, so folks can't make the payments on all those variable interest rate loans. They are losing their home. Perhaps more important many, many folks are spending far less because they are borrowing less. Partially its because folks have gotten scared. Partially its because banks are less likely to make loans.
People are spending less. That means that producers are getting the signal to produce less. So they are not giving out wage increases. They may be firing people soon. If some way isn't found to make credit available to people and businesses so the amount spent can continue to increase, we will slide into recession.
The Ugly Truth
Now, here is the really ugly thing. It is possible to have massive inflation and massive recession at the same time. If you have a massive number of dollars circulating, and no one trusts they will hold their value for very long, folks will stop producing new goods and selling them for those dollars. Its too risky to invest much in enterprises that might receive a bunch of worthless dollars. That's the kind of ugly thing that happened to Germany in the 1930's where the world saw wheel barrows of cash chasing loaves of bread.
A Tough Situation
It is unwise to pretend that its business as usual here in the United States. Inflation can wreak havoc in an economy but stagflation can destroy it. We face a monetary system in crisis and, what is really frightening, there is no easy way to fix it.
Nancy Fulton is a writer and filmmaker. Her credits include BACK FROM IRAQ: The US Soldier Speaks and more than a dozen books for designers and animators. She is currently in production on a feature film called NO BETTER FRIEND: A Military Ghost Story, supported by the GUNMETAL GROUP: Military & Tactical Team. You can find her books and documentary DVDs at www.Amazon.com.
Just when I thought I was out-they pull me back in
Re:Concerned about the economy? End the war.
« Reply #3 on: 2008-01-15 00:47:27 »
Outstanding Blunderov.
Thank you for sharing this wonderfully concise and accurate summation of the Mongolian clusterfuck that we call the United States these days.
If I think about it too hard, I vacillate between thoughts of expatriation or staying and polishing my skills in NRA Long-Range, International Fullbore and F-Class shooting disciplines.
Just for the hell of it, I revisited what was posted to the CoV listserv on September 11, 2001.
The following was from yours truly on that awful day. ----------------------------------------------------------------------------------------------------------------- Subject: virus: one long reign of continuous terrorism From: Walter Watts <walwatts@tulsa.com> Date: Tue, 11 Sep 2001 13:34:46 -0500 To: virus <virus@lucifer.com>
Folks,
This could be very difficult indeed to find the "TRUE" culprits. These acts required almost "NO" resources. Just four men (or women) willing to die for allah, and the capability to walk into an open cockpit while the flight attendant is serving the pilots their coffee. Break a neck, slit a throat or shoot both pilots with a plastic gun shaped like a radio from their carry-on luggage, and the plane is yours.
No need looking for a Saddam Hussein or an Osama Bin Laden or any other oil-money soaked islamic fundamentalist.
It just wasn't necessary for the successful completion of these acts to be either wealthy or "known".
Let's just hope the U.S. response is veracious as to the identification of the perpetrators and not punitive to the "ideals" behind the acts.
If the U.S. is seen by the Islamic world as being punitive to their dearly held ideas, we are in for one long reign of continuous terrorism.
The following was from yours truly on that awful day. ----------------------------------------------------------------------------------------------------------------- Subject: virus: one long reign of continuous terrorism From: Walter Watts <walwatts@tulsa.com> Date: Tue, 11 Sep 2001 13:34:46 -0500 To: virus <virus@lucifer.com>
Folks,
This could be very difficult indeed to find the "TRUE" culprits. These acts required almost "NO" resources. Just four men (or women) willing to die for allah, and the capability to walk into an open cockpit while the flight attendant is serving the pilots their coffee. Break a neck, slit a throat or shoot both pilots with a plastic gun shaped like a radio from their carry-on luggage, and the plane is yours.
Good call. Although it turned out to involve more individuals, it was really technologically even simpler. No guns. No real piloting skills (no need to actually take off or land). With just a few extra people no need to use anything that wouldn't have normally made it through airport security at that time even in plain view. It could have all been prevented if we had just locked the cockpit doors, as was already being done in many non-American airline carriers.
Re:Concerned about the economy? End the war.
« Reply #5 on: 2008-01-23 13:56:35 »
John McCain looks like he is surging toward the likely Republican frontrunner status, and sadly he has been and consistently continues to be one of the most pro-Iraq-war politicians in either party. In his latest speeches he continues to urge his contrast with the Democrats on the war, promising not to "withdraw and surrender".
I'm hoping this is simply indicative of the Republican delusional commitment to inflexible political suicide, but should he win the presidency we can expect more fiscal irresponsibility and increasing national debt from this expensive war. We can't handle this burn in the midst of our economic crash. While the surge may have "worked" in temporarily reducing violence, it still fails to facilitate any of the political benchmarks necessary to avert an otherwise inevitable Iraqi civil war. It only succeeds in costing us even more taxpayer dollars, putting us even deeper in debt. McCain's is clearly a kamikazee crash and burn vision for our country.
Re:Concerned about the economy? End the war.
« Reply #6 on: 2008-01-25 16:36:34 »
McCain states that it would be fine if American troops were in Iraq for 10,000 years. He certainly doesn't shy away from wacky-talk. To be fair he DOES put it terms of casualties, but seriously, on what financial and economic planet is he living on?
Has he been in the senate so long that he thinks he owns our tax dollars in perpetuity and can commit them to his personal empirical dreams? A quarter-century in Washington DC has seriously impaired his judgement. Here we are teetering on the edge of budgetary oblivion and economic stagflation, and he's advocating ever further extensions of the already-bloated American military empire! He's already been caught admitting that he doesn't understand economics, now if some candidate running against him can put this modest proposal of his into dollars (or perhaps Euros would be more appropriate in the near future) we can shove that nonsense down-his-throat or up-his-ass before he gets elected president.
PS: Since I wrote the above, I did a bit of exploring McCain's grasp of economics.
Quote:
"The issue of economics is not something I've understood as well as I should," McCain said. "I've got Greenspan's book."
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