September 18, 2011

When one lives in a madhouse, it isn’t prudent to speak with too much sense. When one lives in a banking house, it isn’t practical to make any sense at all. In that vein I proffer the Must-Bust-Boom Theory of extricating America from its moribund economy.

As of 2011 only 8% of the American economy is engaged in non-agricultural manufacturing. This is from approximately 13.5% in 2000, 16.5% in 1990, 21% in 1980, and 25% in 1970. In the past decade alone, the United States lost over 42,000 factories and more than 5.5 million manufacturing jobs. (The vast majority had health coverage, retirement pensions, and other benefits. The few that returned did so minus these accoutrements and at lower pay rates.) We don’t make anything anymore.

This can be solved, as Patrick Buchanan and others have put forth, by an increased tariff. But that will never happen. There are too many powerful aligned interests which benefit too greatly from the current system. These parameters cannot now be altered, and there will be no rise in the tariff. Perhaps there will not long be a tariff at all.

“The best way to save the American economy? Destroy the world economy.”

But if the basic assumptions upon which the global system currently operates will not be modernized to meet the new reality, they can be manipulated. The very mavens who forbid restructuring to ensure a steady supply of cheaply produced items must be aware that there is less cash to purchase such trinkets.

This is a real problem. Although we do not care to make things any longer, we still relish buying them.

The American economy is now largely predicated on its people purchasing items (generally of little to no intrinsic value) and then purchasing more on credit. Nearly 70% of US economic activity is predicated solely on consumer spending.

There can be no rehabilitation until there is more money to put toward obtaining more objects. Without a job one cannot acquire flat-screen televisions, front-loading washing machines, and Italian luxury-discount goods. The “housing crisis” will not abate until there is money for the down payments. We might have a “jobless recovery,” but we simply cannot have a “cashless recovery.” All of it hinges on having something to trade, but Americans no longer make anything worth trading.

We need cash to climb out of the quagmire and begin buying again. How do we obtain it?


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