Is the U.S. Rising or Falling?

Although the balance-of-power global political system of the 1920s and 1930s dramatically differs from the current unchallenged supremacy of the last remaining superpower, the pattern of both financial and military policy then bears ominous similarity to the pattern today. Are we, by choice this time, laying the groundwork for a return to the worst era in human history?

In The Great Deformation, David Stockman spends 700 fascinating pages describing how the 1% in the U.S. has been waging class war against the 99% here and all over the rest of the globe (via both the same financial principles and neo-con wars for profit), all leading up to the following conclusion:

…the world economy is now extended on the far edge of a monetary bubble that has been four decades in the making….all the major, aging consumer economies of the world are failing;…Accordingly, democratic politics will turn increasingly ugly, strident, and nationalistic in the face of chronic fiscal crisis, recession and quasi-recession, middle-class austerity, and bubble opulence among the 1 percent. [The Great Deformation (New York: Public Affairs, 2013), 705.]

Need I point out how closely this scenario resembles the rise of fascism? Need I point out how neatly the Neo-Con wave of aggression against a long list of Muslim societies fits into this picture with its tightly coordinated machine for state-corporate enrichment, brutality against civilians, attacks on civil liberties, religious stereotyping, glorification of violence, anti-intellectualism, and the provision of the full protection of the state to the financial criminal class?

To put it politely, the evidence suggests a reasonable person should feel entirely justified in taking this scenario of utterly irrational (from a social perspective), unnecessary self-destruction very seriously. So, to what extent is this now an accurate depiction of our most likely future?

If all this pessimism is giving you indigestion, try the following summary of why Stockman is wrong in a review:

The dollar hasn’t collapsed. Inflation hasn’t soared (food prices are stable). Total debt to GDP (when you include private debt) has shrunk. The financial sector has begun to normalize as a share of the economy. Housing has come back.  US borrowing costs are not exploding. Inflation expectations very far out remain tame… probably too tame. []

Housing “back” with the mess of rotting foreclosed homes across the country? Inflation “hasn’t soared” and “food prices are stable”? Consider prices as a function of average annual incomes + benefits for everyone who wants to work (including the millions unemployed against their will). Inflation expectations “very far out remain tame.” This one is tricky, but with indebtedness growing and the middle class shrinking, can we really expect “tame” inflation “very far out?” And then there’s the long list of points unmentioned: e.g., out-of-control military budget (one of Stockman’s most crucial points) plus out-of-control military tactics (institutionalized drone wars as the new normal), the contradiction between a stock market bubble and massive unemployment, failure to control health spending. And a little item with incalculable economic implications that I won’t even mention: global warming (Shhh!). Somehow, this review did not make me feel better.

Still looking for good news…


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