a question of economics

[historian]

Let me see if i understand this correctly. 60% of GDP (correct me if wrong) depends on consumer spending. CEO's are desperate to send jobs anywhere they can as long as its cheap. As a consequence, americans lose jobs and purchasing power. Being good little sheep, many still rush out to store to buy things they dont need with credit they shouldnt have. Once they run out of credit, they either stop buying or go bankrupt. Just who do these brilliant cretins we have running this country think is going to spend our way out of economic demise? Santa Claus?
In the meantime we give money back (so called tax reductions) to the ultra wealthy who will then (unless they already have several) rush out and buy another yacht. This will of course provide a much needed boost to small town america.
In the meantime, we spend billions on weapons (which obviously arent doing much good since we are mired in Afghanistan and Pakistan and couldnt even deliver in somalia - all extremely modern states no doubt) and run up an absurd debt which will have to be repaid. Two alternatives left: we dont or cant pay - dollars vanishes and we return to bartering (perhaps not a bad idea) or the competition for tight money becomes so intense interest rates go through the roof.
Further intensifying our demise is the appalling system of so called education we have. School falling apart physically, good teachers either being underpaid and looking elsewhere for work or killed in school, and so we churn out more illiterates and mathematical neanderthals - all good signs for economis more and more dependant on technology (the old days of turning a bolt for 20 an hour are gone folks).
Am i being dense or is there something wrong here?

[Ksec]

1. They didnt have slave wages and greed in the Capitalism model

When you introduce the low wage it does take away purchasing power which is the driving force of Free Market. So you have Greedy corporations causing their own demise. These two things were never introduced in the models of Capitalism so their effect was never studied by the founders of Free Market. We are seeing what happens, we become third world and its a race to the bottom.

No- youre not dense, something IS wrong with this picture

[Union Thug]

2. This is what my wife has...

...noticed as the biggest flaw in our system. She grew up in Russia and came to the US four years ago. She constantly harps about the false economy and fake prosperity that credit enslavement provides.

[Jacobin]

3. Yeah. You're right, of course

However, the oligarchs living on their investments will become ever richer cause the companies they own stock in have such cheap labor costs and they figure they will end up living in an america that is like Brazil or Argentina, where there is a tiny upper class ensconced behind walled mansions in the middle of a majority of poor people, with a tiny middle class consisting of a few professionals such as doctors.

I think they're nuts, but they give money to SmirkCo like its going out of style.

[historian]

4. youre right but

I lived in Brazil many years and still visit now and then - the rich live in luxurious jails they call homes and cant even trust their own guards who would do anything for a few extra bucks, even opening the main gates to the mansions. Fuithermore, none of them dare wear their best jewelry (or any jewelry really) because they will become an instant target. They are constantly terrified that their children will be kidnapped (the current sport at the moment). Driving a fancy car (meaning import) is hopeless (instant target) unless it is fully bullet and bomb proof. Even then you will probably be followed and assaulted when you exit the car.
Nope money guarantees nothing when the people are either pissed or pushed to the wall.

[RichM]

5. You're identifying some very real problems, but it must be borne in mind

that as ugly as it looks, it's still possible for our brilliant cretins to simply "play for time." IOW, they don't really HAVE to come up with a solution, just yet. They can rely on the same old strategy that got us here in the first place. Eventually, there will be a reckoning - but this may still be several years off.

As you noted, the basic strategies include low interest rates, debt accumulation, military spending, and consumer spending. Just by keeping rates low, they can gain time by encouraging home refinancing, which gives people cash, which lets them continue to consume. With this, plus insane amounts of military spending, they can keep the economy "moving." It won't move that robustly, but it can keep going for a while.

Eventually, there will be a titanic collapse, because the system depends on phony gimmickry, like a Ponzi scheme. But the point is, that the day of reckoning can be postponed, possibly for years.

One more thing: if they do succeed in crushing the resistance in Iraq (looks doubtful, but can't be ruled out), the oil flow will give the US economy a great boost - in the same way that successfully robbing a bank can give your personal finances a great boost. This of course is why they decided on a course of conquest in the first place - conquest is very lucrative, & offers a way of solving economic problems that you can't otherwise solve.

[IrateCitizen]

6. You're ignoring an important underlying association...

That is, the link between American "security" concerns and its approach to "economic and trade" matters.

I can think of no work that better explains this link, and how it has led to the hollowing-out of America's manufacturing and technical base coupled with the rise of finance-driven capitalism, than Chalmers Johnson's Blowback.

His analyses of the US relationship with East Asia -- and opening of our markets to Japanese and S. Korean exports in exchange for the right to base thousands of troops on their soil -- is quite astute. It highlights complex issues that are not readily visible through a purely mathematical economic analysis.

[historian]

7. Astute? Perhaps...

for the ruling classes but dont forget that in the long run it is the starving masses who overturn things. Besides, and i dont know if you are aware of this, but US troops have a horrible reputation abroad. Drunkeness and (in Okinawa rape of young girls by some soldiers) arrogance dont do much to keep citizens happy. Angry citizens will one day usurp any so called astuteness.
Keep in mind past revolutions; i know that they only serve to breed another class of hypocrites, but at least they keep things in check for awhile.

[IrateCitizen]

8. Johnson addresses what you're mentioning here...

He devotes an entire chapter to the presence of US forces in Okinawa and the resultant problems.

All I can do is recommend to you to read the book. It's one of the more interesting reads I've found recently -- probably right up there with William Greider's Fortress America.

[historian]

9. i will thanks

[TreasonousBastard]

10. Pretty close, but...

one problem is that most of us grew up in the Golden Years since WWII.

We tend to forget that most of the world, including the US through most of its history, has rarely seen a substantial middle class. Most of us grew up with a growing and prosperous middle class, and I think there's a good argument that this is a fluke, and a most unnatural state of affirs. It is entirely possible that we are reverting to a more "normal" state of the rich and indentured/wageslave poor, and a small merchant/professional class in the middle.

India seems to be the only country growing using the European model of building a solid middle class, but that could be simply because it started so far behind. Europe, North America, Japan, and a a few other places seem to be running out of steam. Latin America is still run by the remnants of old Spanish feudalism, and China is picking the most economically effective, but socially ruinous, aspects of all systems to grow. Africa we seem to have completely abandoned, and the Middle East is mired in feudalism, old feuds, and fundamentalism.

It doesn't look good.