I am tempted to create a separate blog to discuss the economics which is confronting the world today, but for now, I will look to use this entry to summarize my views.  Since this is a slightly complicated topic to summarize, I will need to revisit this entry a few times before I am done.
The media, the pundits, and the politicians are not being honest about what is happening to the economies of the advanced nations — e.g. America, Europe, Japan (i.e. the G-7).  For this entry, I will attempt to focus in on America as it is probably the most relevant for the readers of this blog.
The U.S. is currently facing a number of economic crisis, all of which are the fruit of long term trends and policies.  Without understanding the nature of the economic ills, America risks becoming one of the Unholy 10 nations that will bend its knee to the Beast.  It is for this reason that I am touching upon the subject in this blog.
American defacto economic policy has been to allow for the US worker to suffer and for the US wealthy to prosper.  That basically is it, and that is why the US is facing so many problems now.  The often stated economic statistic that 1% of the population owns 90% of the wealth is the most obvious result of these policies.  Blame cannot be laid 100% on the Democrats or 100% on the Republicans — the established politics on both sides of the aisle are at fault.  The question will be, how can we change things in time.
The economic mechanics can be broken down into understandable pieces.  First, there has been a continual onslaught on jobs in America.  Manufacturing jobs were first lost to foreign companies, starting in the 70’s.  Japan penetrated many consumer industries like cars and electronics.  However, the Japanese currency eventually strengthened, and they also moved manufacturing back to the States.  Now however, Chinese imports swamp America.  Unlike Japan, it is undesirable to have them set up businesses in America as Chinese international corporations are extensions of the Chinese Communist Party.  A more recent trend that has severely exacerbated the jobs problem is that US corporations have similarly closed down their US factories and manufacturing — exporting those jobs to overseas locations (and then importing the goods to America).This has devastated the US middle class.  It wasn’t enough that jobs were allowed to leave the country, but the government has also allowed foreign workers to come in the country to take away jobs in America itself.  On the high end, the government has allowed Silicon Valley technology companies to import thousands of Indians (from South Asia) to take good paying jobs in the software industry.  On the low end, the government has turned a blind eye to the millions of illegal workers flooding across the borders to take entry level jobs.  For decades now, the government has allowed the continued erosion of the jobs base, which has resulted in the steady decline of the US working class.
The reason why the US voter has not risen up in revolt has been that the US government has offset the negative economic effects of this jobs erosion with two simple policies — printing money and deficit spending.    These two simple policies have delayed the economic impact on the US worker, but we seem to be reaching the point where those policies are no longer effective.
Let us first discuss deficit spending.  The federal government, as well as state and local governments, spends more money than it collects in taxes, and since the government cannot directly print money to make up the difference, the government borrows money by issuing bonds.  When ever the economy slows down, the government borrows even more money and spends it, thereby stimulating the economy — creating jobs and wealth.  That is the rationale for this policy.  However, what the government is doing is like a man who loses his job, and uses his credit card to buy his food, his beer, his car, his house, and his vacation.  This can go on until the credit card company cuts off his credit and demands payment.  This is what is happening in Greece right now — the Greeks have lived well off their credit card but now can no longer borrow.  They are bankrupt.  State governments have similarly spent more money than they have collected in taxes, and it is only because of federal help that a number of states have not gone into bankruptcy — California and Illinois are among them.
The Federal Reserve Bank is responsible for monetary policy in the US, and its current Chairman, Bernanke is responsible to lead that organization.  The previous Chairman, Greenspan has allowed for the printing of money at a very high rate, and Bernanke has taken steroids and has accelerated the rate of the printing presses to reach near the speed of light.  Some believe that the printing of money and the creation of inflation is desirable as it stimulates economic activity.  However, too much and inflation explodes, with tremendously negative consequences.  Economics is a social science that attempts to bring reason and logic and general understanding to help make policies that will have more good results than bad — however, the economy is like a virus in that it is constantly mutating, so unless one understands the present state of the organism than one cannot predict what while happen.  Bernanke is an economic historian, who is making decisions as if we are still in the 1930s.  The consequences of his policy experiments will not be truly understood until years later.  However, the use of low interest rates and monetary stimulation over the past 20 years has resulted in two stock bubbles, a real estate bubble, and a financial services sector that has bloated up like a giant leech on the US economy.  The massive printing of money over the past 20 years has resulted in a banking sector that has doubled its share of the overall US economy — whose size and leverage still threatens the world’s economy.  Without this massive monetary stimulus over the past 20 years, the banks would not have grown so large, nor have been able to build up such massive leverage.
Simply put, the fiscal and monetary polices used to offset the attack on the US jobs base has only delayed the effects of the loss of jobs, and has finally resulted in the possible bankruptcy of nations and the melt down of the world’s financial system.  The governments of Europe and America are still attempting to delay the inevitable.  It is with this background that the Beast and his servants are seeking to move forward their agenda of the creation of the  Unholy 10 confederation of nations that he will come to dominate.  The answer facing the Believers is — will they be able to keep their country separate from that unholy union of nations?  Geithner has attended a conference of EU finance ministers and is laying the ground work for the entanglement  of the US into the EU economic mess.  Bernanke has open the spigots of the Federal Reserve to unlimited borrowing to EU banks and central banks.  America is being pulled into toward the Unholy confederation — the question is, will America be able to pull back should global economic chaos occur?

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