Will Economy Survive Current Tinkering ??
How the Dollar System works
At the end of WWII, the United States had the bulk of the world gold reserves and a surplus of dollars back by that gold. From the beginning and during most of the “Cold War,” the U.S. was very generous to it’s allies like [West] Germany and Japan. We both allowed and aided, the Asian and Western European economies to grow, primarily as a deterrent to communism. This pretty much made the U.S. Dollar the world standard, which gave us a distinct advantage in all the world markets. The American involvement in the Viet Nam War had a tremendous negative affect on the dollar. The associated costs drained the national treasury, and with it, a good percentage of the gold reserves. In 1971, then President Nixon broke the “Bretton Woods Agreement” and refused to exchange dollars for gold.
[[The Bretton Woods Accord was established in 1944, towards the end of World War II. The United Nations Monetary Fund convened in Bretton Woods, New Hampshire, with representatives from the United States, Great Britain and France. The Bretton Woods Accord established the policy of pegging currencies against the U.S. dollar in order to stabilize the global economy. It set fixed exchange rates for major currencies and subsequently established the International Monetary Fund (IMF). ]]
After President Nixon’s refusal to honor the exchange of dollars, the world’s currencies were tied to nothing more than the Treasury Department’s printing presses. The federal government, much as it does today, used it’s role as the planet’s “Hi-Muckety-Muck” to demand that it’s allies continue to use the American Dollar as they had before.
Currencies floated up and down against the dollar. Financial markets were slowly deregulated. Controls were lifted. Offshore banking was allowed, with unregulated hedge funds and financial derivatives. All these changes originated from Washington, in coordination with New York banks.
The current economic crisis, if left to the markets, would correct it’s self. Most recessions last from 8 months to a year; the average length of a recovered economy is six years. The best “tinkering” the federal government could do-with the most positive results-is to have true tax cuts!! My definition of a “true tax cut” is to determine the percentage of the rate cut; then determine by historic data, the dollar amount that will be reduced; make commensurate spending cuts. Otherwise, the reduced funds are just made up from other sources, hence not a tax cut but income re-distribution!!
All the deficit spending in the proposed Porkulus Bill requires the Treasury Department’s printing presses work twenty-four/seven. World-wide, the most grevious affect might be… the loss of confidence in America’s economic guidance. When and if that happens….. the U.S. economy and most probably, the world economy will suffer a total collapse…. the end of economic life as we know it!! The nearest example of the drastic affect of a collapsed economy is The Weimar[Germany] Republic: After WWI, The German Republic suffered economic collapse. Early in 1921, the Mark was valued at 60Marks=1 USD; or 1Mark=1-1/2cents, US. Early in 1922 the Mark stabilized at 320/dollar; by December that year, the exchange rate was 8,000Marks per USD. For the year of 1922, the German cost of living increased by a factor of 16!! [The illustration above right, is reputedly, the cost of a loaf of bread-many, many MILLIONS of Marks] Before this hyperinflation was conquered, the government printing presses could’t keep up with demand; they used an “overstamp” to change the value of the currency [The illustration above left, is a 100Mark note overstamped with a value of 50MILLION Marks; The center photo is of a lady burning hordes of cash-cheaper than buying firewood or coal.]. This could very well happen again. In any case, it ain’t the change I wanted!!!!
The Middleclass TaskfArce!
WASHINGTON — As vice president, joe biden will oversee an obama administration effort to find ways of building up the ranks of the middle class, that ambiguously defined segment of society most Americans identify with.
The task force will include four Cabinet members as well as other presidential advisers, the obama Transition Team announced Sunday.
The goal is to recommend proposals to ensure the middle class is “no longer being left behind,” biden said. The proposals could include executive orders and legislative plans.
This is truly a “taskfArce!!” I normally don’t cuss a whole lot…. but these dam’ idiots are driving me to distraction. This farce is nothing more than continuing the “fluff” of the campaign!! Where are the middleclass members of the taskfarce? It’s made up entirely of the ruling class-the Washington Insiders!! Betcha their findings will benefit the democrats including the lobbyists, far more than it will you and I!!
Til Nex’Time…..