Solution to the Economic Situation

Here is a letter I recently sent to the Charlotte Disturber newspaper. I know they won’t print it because it is too logical:

“Knowing that you don’t have space to print a well developed argument, I am going to try to explain how to solve the economic situation in just a few sentences. It really is simple, a fifth grader can see it. Naturally politicians are going about it backwards.

The root cause of our economic crisis is the global economy model. We have outsourced manufacturing and created huge trade deficits for nearly two decades. Trading partners generally have three things to do with dollars received: invest in US Treasuries, purchase assets such as stock, real estate, and commodities, or buy goods made in the US. Since we don’t make as many goods, they have fewer options. Purchasing goods would be the best choice since that would truly stimulate the economy. Handing out cash to taxpayers does not stimulate the economy since the next hand to get a dollar spent at Wal-Mart is likely Chinese.

We look at solving the Federal deficit by slashing programs which will have a contracting effect. We need to think in terms of restoring the tax base and bring back manufacturing jobs. We should enact tariffs until a balance of trade is achieved. We still need to rein in Federal spending. Trading partners will not purchase US Treasuries if we have a balance sheet worse than Greece’s or the fiscal restraint in printing money of a banana republic. They need to have goods to buy with their dollars!”

I never thought I would live to see the day when this country would intentionally destroy its economy, but that is what has happened. Rather than correct the madness of unfair trade agreements we have made, we will continue this path to its bitter end when the United States collapses. Here is a half-baked idea that is more likely to be pursued. The Federal Reserve could embark on the mother of all quantitative easing maneuvers and buy up all US debt from now on (by printing dollars), and retire any debt that foreign entities own as they mature. (What will foreigners do with their dollars then? We could bar them from buying any US property as well.) They may not stop there, they could buy up all the debt from bankrupt states which are drowning in a sea of red ink as well. Of course they do not realize that it is the loss of tax base that has caused the depression, so the states and Federal government seek more and more ways of cutting programs and services since they will not cut the military budget. Once all the debt notes are owned by the Federal Reserve, they can issue a new currency at whatever exchange rate they want. Any country opposed could be reminded that we have a nuke with their name engraved on it. So basically we would have accepted all the foreign-made goods in exchange for pieces of paper and then refused to give anything of value for it in return.

The dominance of world hegemony by the United States is destined to come to an end. The war against terror has produced an insurmountable debt that will eventually sink the United States. So ultimately, the Islamic terrorists will win because they will have put into motion the bankrupting of America, which actually started nearly a decade earlier. Once complete, they will have gold and commodity assets that the world needs. China, of course, is another player in the world hegemony game, but the days of United States dominance are coming to an end unless something very creative can be done. But we do still have our nukes and export military hardware to the world, so that is our ace in the hole. It’s too bad the economic geniuses that gave us the unfair trade agreements can’t figure this out.