All that seems indispensable in stating the account between the dead and the living, is to see that the debts against the latter do not exceed the advances made by the former.
-James Madison As Pres Obama tours Asia this week, I cannot help but be reminded of our economic situation here at home. Rising unemployment, falling dollar, enormous deficit spending, imbalance of trade reflect on just how we got where we are is just the last 60 years?
We came out of WWII as the most powerful economic nation in the world because 1) our ingenuity and creativity and 2) we were spared the devastation on our homeland. Our currency was strong, our exports large, taxes low, factories full, and revenues substantial. However, today we faced trade imbalances, weak dollar, factories empty, and a $12 trillion debt. The very Japanese that we fought against in WWII and Communist China that we stood against in the frozen winters of the Korean War have become our economic masters. Is it Washington's fault? Is it corporation's fault? Is it union's fault Is it our own fault? There is enough blame to go around.
Washington concocted poor trade policies with countries that had no intent on keeping up their end of the bargain. Japan for instance...we opened our markets to their electronic products and vehicles, yet they continue to put high tariffs or roadblocks on our agricultural products. China shows little respect for intellectual property rights while flooding our markets with lead-filled toys and cheap knockoffs. Everyday, we buy tankers of oil from the Middle East where radical Islamic groups plan our destruction, yet we refuse to explore and refine energy reserves in our own country.
Corporations have become so global that there is no allegiance to any country. Corporations only have obligations to their shareholders who are global themselves. Corporations will move to where they can produce and operate more cheaply, thus the move away from the U.S.
Unions, once needed to abolish unsafe working conditions, are only concerned with their own power and survival. By embracing the very greed they labeled on corporations, have insured their ultimate demise and painted a bad light on the American worker.
Finally, its our own fault. For we have weak personal constitutions. We seek comfort and status in material things, not in our morals and faith. We have been told that we can "Have It All!", "Buy Now, Pay Later!", "No Credit, No Problem!", and we fell for it hook, line, and sinker. While it is OK to dream, plan, and acquire pleasantries of life, it can't be our over-riding goal each day. It's SUPPLY and DEMAND. We DEMAND cheap products and corporations SUPPLY them.
Now here's our Catch-22:1) We import far more goods than we export creating a deficit.
2) To pay for the deficit, the Government borrows money by issuing Treasury bonds or prints more money.
3) Printing more money makes the value of it less, so our demand for cheaper products grows.
4) Borrowing by issuing Treasury bonds - The bonds are bought by those countries that have money, those with a trading surplus, i.e., China, Japan, Saudi Arabia, etc.
5) Because the surplus countries now own our debt, our leverage in trading negotiations is greatly diminished.
6) The voracious cycle begins again with destruction of our economy inevitable if not reversed.
Is it too late for the USA? Maybe not...but time is of the essence and now is the time! Start by implementing the Fairtax and we will begin to gain some of our economic freedom back!
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