In 'Great Expectations', Charles Dickens wrote: "Annual income 20 pounds, annual expenses twenty pounds and sixpence, result misery" (or words to that effect).
In the 1960's, the US undertook an orgy of spending on the Great Society and the Cold War (including the Vietnam War and Space Race). At the same time, the typical middle-class American lived an extravagant lifestyle, relatively speaking. This was all fueled by cheap American oil, gas and coal.
By 1973, we had used so much that OPEC had us over a barrel, and by 1975 we had our first large trade deficits, which have grown every year.
Since about 1980, not much has come out of our industry that the rest of the world seems to want to buy.
Did we go broke 30 years ago, and are just now noticing it?
What happened nearly 40 years ago is that all the currencies of the word became (or already were) fiat currencies. So we have had a 40 year free ride utilising our printing presses. And because we could print our own money, we outsourced the dirty, smelly, dangerous manufacturing to places where the population were prepared to do the hard work we were not. And we grew fat, literally and metaphorically, sitting in our offices, providing 'services' to each other. And selling and maintaining other peoples manufactures. And tying what industry that remained in knots with more and more red tape. All the time selling more and more of the family silver to foreigners to make ends meet.
ReplyDeleteNow the end is near. There is no more silver to sell. The oil windfall is gone. And yes, we are broke. Sadly, no politician will tell this truth, because we are not prepared yet to face it as a nation. Things must get a lot worse before we will accept the diagnosis and the medecine prescribed.
I remember in the 80's being so confused as the stock mkt kept going up and up; America's stock of real wealth and productive capacity hadn't tripled so why had WallSt tripled. I never could have imagined that a whole nation could be in the grip of such a colossal swindle and for more than a quarter century; Easter Island, here we come.
ReplyDeleteEaster Island? Are we talking mass cannibalism? I think that there is still hope for the US, as we have a lot of energy, arable land, and a few educated people (real educations, not just communications, psychology, sociology, education, etc.)
ReplyDeleteAs I've said elsehwere here, I believe, I was working with an experimental pyschologist. He and a team of economists are doing models of the stock market, which turn out to be much more a mob effect than anything 'real'.
ReplyDeleteOh good grief. If the US uses factories in China it still makes a huge profit from them. If the US still is the world #1 food producer, it still makes a huge profit. If the US $ is still the worls reserve currency, it will make a profit from that too. If the US is still perceived as being the most stable of large economies, it will make a profit from that.
ReplyDeleteAsk yourself, if you HAD to invest money right now, would you choose an American company with a big name or some Chinese company you had never heard of?
Hi Anon. Food production, yes. Reserve currency - not sure. A stable economy - yes, if manufactures survive somehow, which may involve the currency devaluing. US or China - for a while now, I've been thinking India.
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