Why The United States Of America Is Doomed

Very simply, the mindset of the citizens is
conducive to what is normal in a centralized system
and actually destroys free markets and democratic
principles. Both are necessary and are all that has
created the high living standards Americans are
used to.

In a true democratic system, the citizens lead and
government follows. In order to manage
government, citizens need as much information as is
possible to obtain. In our system, most of which is
reverent, is withheld from them. It is reasoned that
ordinary people would misunderstand and misuse
information that only those in power can use wisely.
The overall population buys into this notion. Is it

The common man is hopelessly inept and ignorant? If this is true, perhaps we should do away
with the jury system. Should grand juries have be the source of indictments with respect to all
cases including complex situations. If ordinary people are so stupid, why is our legal system,
based on the jury system, operating so well while other institutions are functioning so miserably?
Should a panel of experts decide who stands trial and who doesn’t? Should all legal decisions be
handed down from the bench?

It is universally acknowledged that power corrupts. Do you disagree? Does absolute power
corrupt absolutely? Are there any who believe otherwise? If all power corrupts and complete
power guarantees total corruption, does it not make sense that those who are high up on the
power scale are many more times corrupt than the people who elect them?

Citizens want government to solve their problems and assuage their fears. Those in charge are
looking for fears and problems to exploit. In today’s world government is even protecting
citizens from insulting one another. Assuaging fears is such a profitable activity, various entities
now scare people in order to sell them goods and services as protection.

With this mindset cemented in tact, it is an absolute certainty our system will collapse.
Democracy and free markets demand a mindset that is comparable with these systems. That
mindset is messing so our system will indeed collapse.

Views: 29

The Case For Deflation

Inflation is the current fear. That is fine for mainstream economics. But, thinking is not allowed in economics. First, deflation is not bad for an economy. Inflation favors the wealthy, government and others who have borrowed. Deflation favors the working class. In a free market, economic power naturally shifts back and forth from one sector to the other.

Deflation occurs naturally when the productivity of labor increases. Inflation is created politically.

When power starts to shift in the direction of the working class, the upper class can and does create inflation politically as a means of maintaining its advantage. During the period between 1873 and 1879, prices dropped by nearly 3% every year, yet real GDP growth was around 7% during the same time period. However, despite this economic growth and the rise of real wages, historians have called this period “The Long Depression” because of the presence of deflation.” Investopedia

Prices dropped profoundly during the 1870s during a long period of economic growth. Real wages increased significantly. At this time procedures for enhancing economic activity by way of “stimulus” had not yet evolved. A degree of economic power did shift to the working class for a while.

In our modern era, the Federal Reserve has been fighting deflation since the Reagan
administration. Increases in the productivity of labor have been monumental. Yet, real wages have stagnated. Profit margins of corporations have increased. Prices have been very stable until recently. This is no accident. The working class has been robbed of the productivity bonus it would have received had prices been allowed to fall. This has all been accomplished politically.

Now it is politically expedient to create inflation as a means of shrinking the debt size of heavy borrowers.

Deflation has been defeated for 40+ years but deflationary forces are still present and have increased. Unlike other economies where runaway inflation has taken hold, the United States has massive production capabilities which can be used. An enormous amount of demand has been in non essential goods and services. There are also plenty of substitutes for all we buy and consume. Creating ever rising prices will be an enormous task.

One of the many negatives with respect to stimulus is that resources become more and more inefficiently allocated over time. Recessions occur because businesses are not getting the profits they expect from what they are currently producing. Recessions disappear and business finds more productive ways to use its resources. Inflation prevents this from happening.

In economics, if we prevent what will occur naturally, what would occur naturally occurs
anyway eventually. Notice, I am not citing numbers or pointing to lines on charts. I don’t need to. Instead, I think things through and as always am focused on what causes numbers to be what they are instead of thinking the statistics just happen to fall into place the way they do.

So, I am expecting things to reverse. Inflation will give away to deflationary forces and the overall price level will fall. Lets see what happens.

We are facing a depression, not a recession. Deflation, honestly is more likely.

Views: 149