NOURNEWS-
NORTH CAROLINA - Opining about the future ramifications of current events may be a fool’s game these days since Covid 19 erupted across the world and set about plunging economies into the worse downturn, so far, since the Depression of the 1930s. Many countries such as Iran were already suffering, in large part because of U.S. sanctions, and Iran may be able to better manage the hard times ahead because already they are accustomed to hard times and have been working hard to adjust to them.
In particular, it’s the Western and particularly the U.S. economy, on a relative basis, that may be most at risk going forward and this because America has long been utterly spoiled by relative prosperity making the impact that much greater.
However, the task of getting a reliable grip on what lies ahead is difficult, in large part because the overall situation is changing so fast it makes anyone dizzy, and meanwhile there is such disarray and conflict, real and potential, that at bottom one’s best hope is that the world can avoid expanded military conflict especially between China and the U.S. If there IS further military conflict, one can bet the blame will ultimately be laid at the feet of the U.S., which has become like a wounded predator beast which has suddenly, as billionaire Warren Buffet has warned for a long time, has been revealed, as the tide has gone out with the emergence of Covid 19, as just another “naked swimmer.”
But it’s important to note that the U.S. seems no longer a serious “capitalist” country. One of the great economists, Joseph Schumpeter, an Austrian by birth who moved to the U.S. and who died in 1950, is famous for his concept of “creative destruction” in capitalist societies. He is noted for his belief that economies can ultimately advance if only the powers that be permit internal industrial and economic mutations or destructions which dispense with old structures and permit innovations to emerge and refresh societies.
Take, for just one example, the U.S. airline industry. The U.S. seems set on bailing out the current failing companies and their stake holders, making the stock and bond owners whole despite the downturn. But also consider this: many of these companies have been poorly managed and failed to set aside funds to help them ride out their current problems. If, say, these companies were not bailed out as they are, would suddenly their working assets such as aircraft be destroyed? No. Allowing the bankrupt to GO bankrupt ONLY destroys their financial assets and current managements and owners. These companies could emerge from bankruptcy with new managements, new owners, and little to no debt, offering travelers better deals and lower fares. This, if it were to occur, constitutes an instance of Schumpeter’s “creative destruction”. This sort of action is precisely what’s really required when things go bad in a capitalist system.
The crashing U.S. economy was not caused by Covid 19. The virus only precipitated the crash. The downturn was actually caused by the underlying weakness of the system burdened with trillions of debts, gross malinvestments, false pricing of assets and interest rates. And who is to blame for that? The U.S. Federal Reserve Bank which is neither “federal” nor a real “bank”, but a consortium of private owners established more than 100 years ago to issue “money” in the U.S. and elsewhere. Note that a dollar is as Federal Reserve Note solely.
The Fed just seems incapable of allowing “creative destruction” and its cleansing effects, but this failure is at the behest of those who would be most hurt financially, those who control the U.S. system primarily for their own benefit, not the ultimate benefit of Americans generally. In 2009 the Fed bailed out the false economy, and they are setting about it now and this time it’s not going to work. You can only kick the can down the road with money printing for so long until money, or dollars, eventually become worthless while the specter of hyperinflation arises. This is the real threat to whatever dominance the U.S. still has worldwide.
The current problems were seeded back in 1971 when Richard Nixon crushed the conversion of dollars into gold, and with the earlier establishment of the Federal Reserve. In truth, as will be discovered this coming decade, there is no such thing as “free money” to slather over economic disruptions. It’s like putting a band-aid on a gaping, bleeding wound. And all the while, many members of the U.S. Congress are demanding the Fed do even more money printing after inflating their balance sheet by more than two trillion dollars in the last month alone. The bank, if it can be called that, has truly become a lawless economic government that is putting the entire U.S. monetary system at risk and has been for decades. In some respects, the country that has caused tremendous pain worldwide with its free spending ways and debt accumulations for military adventurism and bullying tactics to maintain control, may become the country that suffers most as a result of the spark that is Covid 19.
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NOURNEWS