Wednesday, February 9, 2011

Economic incentive: Part II

I am a firm believer that many wars are fought for economic reasons. I do not believe that it was a coincidence that the largest, most destructive war ever fought (WW II) was immediately preceded by the greatest economic downturn in mankind’s history. The American south rose up and revolted against the national government because the President was threatening to stop the expansion of the principal that the economy of the south was dependant upon. (Slavery) Another way of looking at it: Some people will in fact take violent action because they believe in a different god. However, many more people will take violent action against others for their wallet. In many cases, the excuse is the god. The real reason is the wallet, land or water. I am worried that the United States is leading the world to the next big war.

Big wars occur every so often. It is human nature to fight wars, just as natural as fighting with your spouse. Big issues come up every so often that cannot be decided by talking or negotiation. Attempting to take away the slaves by talking to the slave owners would not have worked. It required force of arms. The world has not seen a major war since the mid-1940’s. That was more 60 years ago. The world just may be ready for another. I believe all it will take is a severe economic downturn or disruption of some type. And the U.S. economy is a prime candidate.

The governments of the United States are ALL in financial trouble. State, city, local and the Federal government have ALL been spending well beyond their means for generations. Borrowing money through the issue of bonds has made up the difference. The interest on this debt is enough to impact the expenditures by being one of the biggest, if not the largest item on the budget. Sooner or later the interest will become so large that we will be unable to pay it, leave alone pay back the principal. This is a recipe for disaster.

On the personal level, if any of us reaches this point, we will need to declare bankruptcy. Our State, city and local governments just may be allowed to do this. The impact will be hurtful, to say the least. However, the biggest problem is on the Federal level. We do not have any device to allow the Federal government out of our debts to foreign countries. We can default and expect all new borrowing to dry up. Or else print lots of money and let inflation destroy what we have left. By the way, this is what happened in Germany in the 1920’s. After the Germans had had enough, they elected Adolph Hitler as a way to get out of the economic jam they were in. And it worked VERY well for a number of years. Don’t think that this could happen here? Remember that Germany in the 1920’s was an advanced country. The population was well educated and they already had a modern economy.

I am not saying that we will elect a Hitler. What I am saying is that these economic problems are placing our representative form of government in jeopardy. The austerity that will be required to resolve these issues will make the ‘adjustments’ that we are seeing in Greece and England look like beginners. And riots are occurring in these countries because of them. To prevent this, all we can do is push this off to a future date, which will make that day of reckoning that much more difficult. Sooner or later, the bill will come due. When it does, I believe that we have a very good possibility that the economic stress that will result will trigger a major war. The war itself may not necessarily begin here in the U.S. The violence can easily begin somewhere else in the world that is impacted earlier and more severely than the United States. Like in Europe in the 1930’s.

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