I cast my ballot early. I didnâ€™t vote third-party and therefore my vote isnâ€™t being wasted. It also isnâ€™t going to matter.
Since 1990, the United States has run aggregate trade deficits above $8 trillion. This is funny, because in 1990 the M2 metric of currency supply was only $3 trillion. There should be nothing but dust coming out of the ATM machines. We have purchased entire merchant-fleets full of foreign goods, and paid for it by quite literally printing money.
Foreign countries, being more blatant about their currency devaluation policies, have been willing to go along with this arrangement. The result is this dynamic: The US prints dollars to buy goods from China, and the Chinese central bank prints yuan to buy the dollars. We get cheap Chinese stuff, the Chinese central bank gets huge dollar reserves, and the Chinese people get jobs and lots of inflation.
As the years went by, this dynamic absolutely shattered the productive impetus in the American economy. There is no reason to manufacture anything, or engage in productive activity in general. There is also no reason to hire people to help you be productive.
You can see this dynamic in your own communities, with factories that are closed, the kids that canâ€™t find jobs, and farmers – busy producing inflation-sensitive commodities on land, which canâ€™t be outsourced – buying new trucks with cash. The illness in our economy is bad monetary policy.
In a normal economy, if there is demand for consumer goods, entrepreneurs have to take land, labor, and capital and combine them in a way that produces goods efficiently, and at a price the general public can afford to pay. The American economy has another option – we can simply print money and spend it on imports, which is much simpler, requires no investment of capital or any hiring, and is much cheaper.
The result was the largest consumption binge in history, and an economy dependent on investment bubbles – tech stocks, housing, government bonds. The Federal Reserve poured new money into the financial system. You could get a home equity loan to cover your credit card debt, rung up at retail outlets selling almost exclusively imported goods.
Since manufacturing was on the way out, the service sector was the place to be, and the best service sector jobs require college degrees, so the answer is to go to college. Both parties agreed; the answer wasnâ€™t to address the problems with our monetary system, but to attend college. Every young person was told that college is critical.
Now, we have more people in their 20â€™s living with their parents, more college graduates than ever are working part time, if they can find jobs at all, and the only policy solutions coming out of our elected officials is to double down on college, fund green energy schemes ( Iâ€˜m talking about you, Chuck Grassley) and economic development kitsch projects at all levels, building economic Potemkin Villages designed to try and keep the consumption binge going.
Close down Maytag? No problem! Build a race track! Remember when Nancy Pelosi said that unemployment checks would stimulate the economy? People need to spend, spend, spend, because there is no work, work, work.
Without the inflationary monetary policy coming out of the Federal Reserve, the government could not run the enormous deficits, the trade deficit couldnâ€™t have gotten this large (currency would have become scarce, and productivity more valuable), and the government would have to be honest about the absurd arithmetic surrounding our entitlement programs.
Therefore, neither party will countenance a serious challenge to our current monetary system. Even Paul Ryanâ€™s budget plan – so maligned by the left – doesnâ€™t eliminate the deficit nor tackles entitlements. Sound money might even threaten the defense budget, and is therefore terrorism.
So, Barack Obama champions stimulus programs to re-inflate consumption and crows about tariffs on Chinese tires; Mitt Romney labels China a currency manipulator for being willing to bite the inflation bullet themselves and hold our currency as a reserve.
Work in a factory keeps their people busy and gives them the illusion of progress – a bit like how college keeps young people in America busy and gives their parents the illusion that their children will â€œamount to something.â€œ Concerns that college diplomas are worthless and that the wages of the Chinese factory worker are shredded by inflation are secondary.
Offshoring is not the machination of evil capitalists; it is a phenomenon of monetary policy, plain and simple. Other countries are willing to hold our currency as a reserve, so we can buy imports with inflation. According to the Examiner, Jeep is next on deck to offshore.
So, services and technological expertise is the key to success in America, as long as another large, developing economy doesnâ€™t devalue their currency and start holding dollars as a reserve.
Especially not one with a large, English-speaking population, and definitely not one with a past influenced by British rule. Why, if that happened, we could just print money and buy our services from that country, and you would run the risk of not fully understanding the technicianâ€™s accent the next time you have to call tech support, which is simply unimaginable.
I cast my vote. I ended up voting for the one that I figure is less likely to throw me into a gulag. I suppose this makes my vote â€œidealistic.â€
Here we are. We have an economy that cannot produce wealth, based on consumption, with a government that we cannot finance and cannot change. We are consistently running trade deficits in excess of $40 billion per month but are told that we lack demand for stuff, almost 50 million people are dependent on food stamps, and an entire generation is shacked up at home, paying their student loans and otherwise too poor to participate in the consumption economy. Yet, there is no stomach for change.
When debating Walter Mondale in 1984, Ronald Reagan cited Cicero and remarked, â€œIf not for the elders, correcting the mistakes of the young, there would be no State.â€
What are the young supposed to do when their elders who run the government have lost their minds?