The Emperor's Feet Are
In spite of attempts by our government to keep it under control, there are signs in the wind that
a second great depression is bearing down on us.
The terrorist attack of 9-11 may have been the catalyst that started the fall, but I believe that
careless plastic monetary policies in place since 1973 were setting us up for disaster.
It doesn't take a genius to figure it out. The basic rules of Economics 101 apply to the American
When we did away our gold standard in 1971 and then sold large amounts of our gold stock to pay off the national debt, we launched a financial system built solely
on public trust. That worked fine as long as the public could be convinced that the American dream was still alive and well;
that ordinary people could work hard, invest money, and have a chance of acquiring wealth.
What few people understood was that without something valuable like gold or silver to back it up,
the concept of paper and coined money was an illusion. The great profits showing in stock trades were another illusion. They
were just a bunch of numbers on paper.
After 9-11 the stock market went into free fall and the public trust started to waiver. When
people began losing their jobs, or at least feeling insecure about their jobs, they stopped using plastic credit cards
to buy goods and services. To assure those all-important profit margins, the factories and businesses that provided the goods
and services laid off more workers. It never dawned on them that keeping workers on the job would insure confidence and stop
the chaotic market.
Then came the domino effect. As more and more people lost their jobs, more and more
plants and businesses saw red ink. To stave off those bad earnings reports and keep stock values stable, marketing "experts"
next chose to start shutting down plants and business interests that were only showing weak earnings. Thus thousands more
workers, many with white-collar jobs, were thrown into the street.
Alan Greenspan's Federal Reserve Board struggled to generate more spending by lowering interest
rates on loaned money. The interest rates dropped to levels not seen in over 40 years. For a while that tended to stave
off the inevitable. People rushed to re-finance home mortgages, lowering house payments. Other people bought the promise that
things would get better and invested in real estate, believing land was more stable than the stock market.
Concessions by unions to give in to threats by United Airlines to submit to reduced pay or face
bankruptcy and job loss is the first sign that there is a major crack in the dam. Inflated incomes are starting to revert
to deflated incomes. We can expect this to happen everywhere as jobs grow more scarce and employers struggle to keep
Either we agree to work for less, or we don't work at all.
While all of this is happening in the private sector, I am watching a disaster developing in state
and local governments.
States, facing dramatic cuts in tax revenue from the growing economic slump, are struggling to balance
their budgets by cutting revenue sharing payments to local governments, raising fees for services, laying off workers, and
appealing to the federal government for help.
The Bush Administration, in the midst of its anti-terrorism campaign, has already used up a multi-trillion
dollar budget surplus inherited from the former Clinton years. Now, with plans to stage a war against Iraq, Washington is
in no mood to consider doling out money it doesn't have to help the states.
On the local government level, I am watching counties and towns scramble to keep police, fire and
general office services operating in spite of the red ink in their budgets. One approach to balancing budgets is to ask the
courts to raise fines and court fees for traffic offenses and other charges. The police, in turn, are under pressure to issue
more tickets and make more arrests to protect their jobs. I am sure that all governments are considering tax increases.
it won't work.
It won't matter if the little guy on the street is fined $100 or $200 for driving 10 miles over
the limit, if he is out of work and can't pay to feed his family, he is going to choose jail time rather than spend money
he doesn't have.
Thus governments may be soon faced with the need to build more jails and pay to keep a
larger number of prisoners. The court revenues will not save them.
The county where I live is even going so far as to charge prisoners rent for the time they spend
in lock-up. But if the man can't pay his speeding ticket, how is he going to pay the rent for going to jail? What will they
do to him if he can't pay, throw him in jail?
How can government get more tax money from people earning less, or who are out of work and not earning
The newspapers in my area are filled with bank foreclosure notices on houses, and bank sales of
cars. It is obvious that people are losing their homes and having their cars repossessed for lack of payment.
problem of homelessness is a growing issue even in the semi-rural agricultural area where I live.
At last official report the
nation's unemployment level jumped to an astounding six percent. I believe it may be worse than that. At least 300 workers
who lost their jobs in my area when one factory shut down about a year ago, just fell off the unemployment rolls. They didn't
get jobs. They just stopped drawing unemployment benefits. That means they are no longer being counted among the unemployed.
Is this happening all over the country? I think it is.
The President's recent decision
to fire his top financial advisors and appoint new people was another ominous sign. At least the problem is catching
his attention. It is said Mr. Bush wants a new round of tax cuts to stimulate a dying economy. But if we do that,
how will he fight his high tech wars with those million dollar smart bombs? Will he use our social security money?
As the severe cold weather from another El-Nino year begins to grip our nation, I am seeing more
and more news reports about broken sewer mains and flooded streets. They say most cities are still trying to get along with
100-year-old water systems that are worn out, leaking and cracking.
Old bridges are failing.
Our sewer pipes, just as old, are probably also failing although we don't hear much about that.
Could leaking sewage be seeping into our leaking water pipes? Will we blame the sudden rash of E-coli cases on terrorists?
Highways are crumbling.
The entire infrastructure of what was once a great industrial nation, is falling apart.
Because of the shortage of steel and other construction materials, the high cost of labor and government-imposed
rules for public works projects, the cost of putting it all back together is so high that nobody can imagine how it will be
Yet our government has its eyes on spending billions, if not trillions of dollars that we don't
have to fight imaginary wars against defenseless little countries like Iraq.
Our president is busy empire building while the supports under his feet are cracking like the Biblical
feet of clay.