There is some good reading about the cost of the new war we are in here at Forbes. In involves some history.
The history discussed is how we went from a nation that stood up a military only when we needed it—long ago we had the time to do this and things were less high-tech—up to today, where we cannot manage military procurement, the economy is in the tank and the War Department in the West Wing along with the spendthrifts on the Hill keep draining our limited resources.
For years, it is all our fault. We elected the people on the Hill and the Presidents. Proper voting might save us; or not.
The Forbes article mentions how post-WWII we had the industrial might to build the military machine to what it is today. What it doesn’t mention much is that some years before the end of the Cold War, we decided (our votes put them there; that kind of “we”) that having a strong home industry is no longer important. We declared war on the American worker. No, I’m not a Teamsters guy, a Democrat or a Republican. I believe in “America first”. I do not believe in free trade. I believe in fair trade.
We decided that gambling on the market—the dot com boom and bust and flipping houses, with a boom and bust—would make our nation healthy. It did not. Today, we no longer have the industry, the science and math people in numbers or much else to maintain the military we have or to create and sustain domestic business. We don’t even seem too interested in protecting our borders or seeing to it the workforce we have has a legal right to be here. “A thousand points of light” and “a new world order” is our undoing. A nation that is too heavy in the service industry is like a football team composed of bench staff. Besides weapons that cost too much and aren’t always that useful, not much of what we have is worth exporting.
Wasteful Federal spending of all flavors and dumb wars for no gain are dead weight we have to eliminate.
If our elected officials can’t take this on board and change our direction, we will never recover.
The root cause of the decline of the US is the presence of a fiat currency that has allowed for a bubble in Government to form. The Government bubble is the ultimate malinvestment and will be unwound by the collapse of the US dollar.
Enabling this bubble are the US Federal Reserve which provides the (physical) mechanism for infinite fiat printing (QE2 and beyond), and Keynesian Economics which provides the (intellectual framework) rationale for ever expanding Government intervention into the economy.
I anticipate that within the next 2 to 5 years the USD will enter a hyperinflationary crisis, that will precipitate a major social upheaval within the US.
I cannot find a reference to a fiat currency lasting longer than a human lifetime, they all implode as the lure of free money for the those who control the creation of the money supply always overwhelms the system. The USD has been fiat since 1971.
My personal view is that the US is like a corporation where the directors and the board are actively engaged in frauduently stripping the assets of the company before it’s empty shell is torched for (1) the insurance and (2) to hide the fraud.
I hope that I am deluded.
As to what rises from the ashes – could be anything. A possible analogy is the USSR breakup. Remember how the USSR was there – and then it wasn’t. The same with the US. The collapse will be sudden and most people, driven by their normalcy bias will be shocked by the change.
And the problem is that no one that counts in that country has conscience of the problem. The topic is not even for debate. The system where senators protect local industry, for the jobs, and ultimately decide where the money goes creates a endeless circle without control.
While the Asia watch and keep on working and saving money, the west spends their last drop of $£€ in wars-ultra-subsidized agro-pharma-etc-industry.
In the end, and again, it is all written in the history books, the same mistakes done over and over in the past, too bad that people that our leaders forgot to read them, because they were watching the stock prices of the day.
The fiat currency works for all other countries (at least it works for those that do well…), ergo financial problems is not caused by having a fiat currency.
I believe the root of the problem is two fold.
First it is the political system. Priority nr. 1 for all congressmen is to get reelected which leads to an extreem inability to make tough decisions and stay in congress. This makes sure that shortsighted decisions often are made, and that there is too much focus on local issues and concequences in favor of the broader picture (the wellbeing of the country as a whole).
The second problem is the huge power the industry holds over the elected officials (thru the lobby) and over the society (thru commercials). The industries interests lies in making money, thats what they should do, and that is perfectly alright. However, this means that they dont hold any direct interest in how this country is doing. Of cource they want the US to be a thriving economy, but each company is too small to have a direct effect on the US economy so “why should just my company sacrifice it-self when all the others dont?”. Also, the vast majority of company executives are put in their position to increase profits, not in five or ten years, but this year. This shortsightedness is nessesary for many companies since the market changes so fast today, but it often leads to problem in the long run, and this will not change as long as the owners (stock holders and funds) keep trying to maximize their short-time earnings.
So of the three most powerfull parts of society, the White House, Congress and Industry, only the white house holds the interest of the whole country at heart (unless they also have large interests in the industry, like Bush Jr.), and all have a short-sighted perspective.
Some observations:
- Theres not enuff demand for USA treasury bonds so the Fed prints money from thin air and buys them.
- The need for money comes mostly due to the USA 1800 bil goverment deficit and bailouts.
- The Fed needs to continue buying cause the USA goverment wont cut its deficit.
All of this will lead to these options:
A) USA goverment will cut the deficit to what comes in goes out.
B) Default and a restructure of the Debt mountain.
C) Print more money and the Dollar takes a dump.
D) USA falls apart.
Bottemline Joe sixpacks looses. In any case you want to move your money abroad and into anything not dollar related. Cause whatever gonne happen it wont be good for the dollar currency. Think -40% buying power at least if you stay in the dollar coming years.
In my opinion the USA goverment ( option C) wanne devalue the dollar so much it will be intresting again to use cheap labour from the USA to make stuff.
Only people hurt in that process will be the average Joe not the rich. They will just go on as they always do. Spend others peoples money.
Ofcourse this is all not gonne work but they gonne try it anyways. And then they gonne start looking to the other options.
Its really sad why the USA goverment cant get their act together like the austerity programs in Europe. At least they try.
The USA would not even qualify for entry into the EU.
That says enuff.