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Inhabitants of Spaceship Earth are suffering through an ongoing economic crisis. I say “crisis,” only because my mind cannot grasp the enormity of total worldwide economic “collapse.” Whatever you call it, we are living in a period of economic change and dislocation.
Now begins Phase II of the crisis, in which the pain from economic dislocation begets social and political unrest. Some obvious symptoms:
- Failure of the United States political system to compromise on universal health care, or on immigration policy.
- Rise of the Tea Party protest movement in the U.S.
- States in the U.S., and nations in Europe, on the brink of insolvency.
- Rioting in Greece against government austerity measures.
- Demonstrations in Arizona against a state crackdown on Mexican immigrants.
Unpredictable acts of nature — such as Hurricane Katrina and the volcano in Iceland — or manmade disasters — such as an offshore oil spill in the Gulf of Mexico — send shock waves through the unstable economy.
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On all sides, people remain in determined denial and resist acknowledging or sharing culpability for economic damage. Wall Street arrogantly resists financial restrictions. Voters everywhere reject tax increases.
Social cohesion breaks down as elites withdraw, militias form, terrorism spreads. Groups and individuals protect self-interest, rather than support community interest. Social and political divisions harden, willingness to cooperate or compromise evaporates, battle lines are drawn. The governing emotions are anger, and fear.
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Economic fear could turn into panic on any given day. But perhaps the economic crisis will subside over time, and lead to needed reforms. Meanwhile, the ride will be bumpy. We may be seeing only the beginning of protests and riots. Social and political unrest might continue and intensify for a long time, possibly leading to localized violence, chaos, or anarchy.
No one can predict the future. Fasten your seatbelt and hope for the best.
— John Hayden
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I’m afraid that the economic crisis enveloping Greece is merely a preface to what is to come in many of our States and eventually to the U.S. as a whole. Our deficits are staggering and unsustainable. As I see it we have three choices, none of which are ideal. 1. We raise taxes on everyone. Taxing the rich will not begin to solve the problem. If we do this we must be prepared to live with high unemployment and a reduced standard of living due to long term stunted economic growth. This path would make us very similar to the present European welfare states that seem to be imploding from the results of high taxes, bloated govt. and cradle to grave entitlements. 2. Drastically cut govt. spending, reduce entitlements beginning with the repeal of the Health Care Reform Act and cut into Soc. Sec. , Welfare and education spending. If we do this we must be prepared for the kind of rioting and social unrest that we are seeing happen in Greece. In order to reduce social unrest and get people back to work taxes will have to be cut and the Bush tax levels maintained as they are.3. We can return to the Gold Standard. This would require a govt. announcement that at some specified time in the near future all U.S. Currency will be redeemable for Gold. As well, all foreign trade and transactions will be denominated according to a fixed Gold Standard. All those trading with us will be expected to have their currency backed by Gold at the same fixed rate. Gold then seeks a level more realistic to the present real value of U.S. Currency, maybe even $5,000 per ounce. This solution would be followed up with a Constitutional Amendment insuring the future mandate of fixing Currency to a rigid requirement of Gold to back it. This last solution is the one that Ron Paul and most of the Tea Party advocates would like to see. Solution 1. is what the present Administration is working towards and solution 2. is what the majority of the Republican Party would advocate. All these solutions have severe downsides and are prone to unanticipated consequences. Solution 3. might even return us to the problems of the 1880’s and 1890’s where short money supply had us fighting against the Gold Standard and arguing for free coinage of silver. We may well be in a no win situation here, but if I have to choose, I think I would choose solution 2. as it would seem to be fraught with fewer problems in the long run. Solution 1. is how we got to where we are in the first place. Solution 3. seems too complicated and requires that other major economies follow suit. The future implications are not very clear and it would be the most difficult for the average citizen to understand. Glad to see you’re still out there blogging my friend.
Thanks for your thoughtful comment, and thanks for reading. I agree that everyone is going to have to contribute to righting the debt situation. I think inter-generational fairness is our greatest challenge.
Social Security and Medicare are the only true entitlements, because we have paid for them over long, hard years of work. Since we’ve already paid for our Social Security benefit, we own it, almost the same as if it were real estate or money in the bank (or gold). I personally have paid Social Security taxes now for 46 straight years (starting at age 16). I am about to start collecting Social Security, and believe me, I absolutely need it to live. I probably will not collect as much as I have paid in.
That being said, we’ve got to find a fair way to balance the debt, so that the younger generation is not burdened with debts that our generation has run up.
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