The Unstable State of the U.S. Economy


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By Colin Phillips

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The Unstable State of the U.S. Economy

  1. 1. The Unstable State of the U.S. EconomySince this is political in nature, I dont feel bad sharing my personal political views.Partisan:We need to shrink, shrink and shrink some more the size of the government.Non Partisan:We are currently looking at potentially faulting on our debt for the first time in American History.Do you realize that if we lose our AAA credit rating that the entire world economy will collapse?This is not an exaggeration.Start to google "usa lose"...First suggestion...."us lose aaa rating".Read any of those articles, no matter what your party/politics may be, and you will see I am notexaggerating.We are in a most critical time for our nation.There is a forced hand in the media down-playing its significance, to keep the markets under control. Bydown-playing I dont mean that most news companies (cnn, msnbc, fox, etc) arent talking about it, or ithasnt made headline news:(todays: )
  2. 2. ...because it has. It is everywhere and theyre all talking about it. What theyre only mentioning andrefraining from emphasizing too the what will happen if we fault on our loans.If you read the articles, you would understand that a mere speculation that congress may not come to adeal and we default on our loans could cause a major economic catastrophe. Currently investors arespeculating that the U.S. Congress will come through...but as it gets closer and closer...And before any of these "invest in gold" people come in, might I ask you what happened last time theU.S. government faced economic collapse?FDR takes gold from citizens.Currently U.S. law REQUIRES that every citizen keep an accurate location of all stockpiled gold on recordwith the government.So thats not the answer.So what is?Back to Partisan:WE NEED TO END THIS RIDICULOUS CONCEPT THAT WE CANJUST SPEND, SPEND, SPEND!Im not trying to scream conservative republican at you, but really the only answer is the republicanidea of shrinking the size of the government to shrink our debt/deficit.
  3. 3. If youve studied economics, especially bi-partisan economics, you would understand that there are verytwo, distinct views on debt that fundamentally separate democrats from republicans.Republicans: Spend Less, Tax Less; Let the taxpayers dollars being spent fuel the economy.Democrats: Spend More, Tax More; Let the Government spending fuel the economy.Are either wrong? No. Both fundamentally work. Government spending will actually fuel the economymore than taxpayer spending due to multiplier effects.What Im arguing is that the democratic perspective on spending is only a short-term fix, and althoughhas worked for quite some time (since FDR), we have reached the bursting point of the bubble that isour spending. it just isnt going to work anymore with new world currencies being developed and theU.S. dollar no longer being the world reserve currency.Non Partisan:Again, go to google. Type in "US dollar n" and get:US Dollar No Longer Reserve CurrencySee this: Dollars Reign as Worlds Main Reserve Currency Is Near an EndAgain, if you understand politics, you would understand that if the U.S. Dollar is no longer the worldreserve currency, we are going to see average if not way above average world gas prices.This is because currently, as the reserve currency, a country wishing to buy oil must first buy U.S. Dollars,and uses these U.S. Dollars to buy oil. The Oil seller than sells U.S. Dollars for their own currency, this iskeeping U.S. dollars valuable.The U.S. Dollar is no longer backed in gold (as of 1971), and is only backed by "The faith in the U.S.government" and the only thing currently supplying any value is its trade value for oil.It is commonly pointed out that in recent years republicans do not follow these ideals and have actuallyspent more as seen in republican presidencies.Seen in this graphic:
  4. 4. I would counter, however, that a greater understanding of the political system would realize this is notan accurate representation of bi-partisan politics.Instead, recognize that congress are the lawmakers and control spending, and view spending viapartisan and you get a clearer image:
  5. 5. As seen here, between 1981 and the present the only increasing in spending under republican control ofcongress between any two years was from 2001-2002.My ultimate goal in writing this was to share and promote the idea that we need to cut governmentspending, one way or another, regardless of whom or which party does it.If you agree or disagree to anything Ive said, Id love to hear it.If anything, Ill have considered writing all of this as valuable usage of my time if Ive educatedanybody on the matter, and hopefully as a country we can come together and solve our debtproblems before catastrophe.--Colin Phillips