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Why savers are getting screwed

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"Without the intervention of economic policymakers, interest rates would be naturally higher. That would increase the cost of borrowing for businesses and consumers, but there would be some offsetting economic benefits. Savers are getting screwed by the current monetary policy

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Geithner admits USA bankrupt to US Senate

Geithner admits USA bankrupt to US Senate

"Never in our history has Congress failed to increase the debt limit when necessary. Failure to raise the limit would precipitate a default by the United States. Default would effectively impose a significant and long-lasting tax on all Americans and all American businesses

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Real reason for electricity blackouts hitting southern US

Real reason for electricity blackouts hitting southern US

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World economies on verge of currency revaluations to deal with debt

World economies on verge of currency revaluations to deal with debt

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Is Obama the next Mugabe of Zimbabwe?

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US raiding foreign countries with dollars, not soldiers

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Canadian government admits recovery never happened

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Will we see double digit interest rates from the 1980s?

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Greenspan: credit crunch “by far the greatest financial crisis”

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Content By: The Coming Depression Editorial Staff (dates cited below)
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detroit ruin of city

Most major media outlets, politicians, business people, and government officials have officially announced that the world has entered a recession, while some have declared much worse: a depression that makes the last Great Depression of the 1930s look like a walk in the park. While the media is busy boosting its ratings with such doom and gloom verbiage, it rarely is able to mention how or why we are in the current financial situation we find ourselves in.

They rarely mention the root causes, let alone the real problems people are facing in the economy as people lose their livelihood and finances. The world geo-political structure should be looked at similarly to building a house: we should be looking at the foundation first, and then the very top. Disappointingly, the major media outlets only look at the very top, or the exterior of the building.

America is being turned into a service sector based economy, where a majority of the occupations are concentrated with servicing products manufactured elsewhere, while the supposed home head quarters of corporations which manufacture items out of the country remain in the home nation. Indeed, and similarly in Canada, three quarters (3/4) of the economy is service based while establishment, shill economists and financial gurus tout such a fact as advancement or a progression of an economy from one step to another. While this sounds convincing, because it comes from the mouths of credentialed individuals and orgnaizations, the truth is that when products are no longer produced, money is no longer made; it is simply redistributed from one place to another, much like the tenets of socialism.

The key fact is that manufacturing is the back bone of an economy because this sector is the one which actually produces tangible items. Some might say that intangible items like financial services, computer programs, and the like are products, but the reality of the situation is that these activities can be done almost anywhere in the world by anyone. What will stop these industries from fleeing just as manufacturing did? Indeed, they would flee even faster due to their nebulous nature. We have seen are only in the infant stages of the off shoring phemonenon of industries such as financial services and computer programming by large multi national companies.

Some facts and figures:

The US global merchandise trade and current account deficits hit annual rates of $900 billion in the fourth quarter of 2005, which amounted to 7 percent of US GDP, twice the previous record of the mid-1980s (as a result of which the dollar declined by 50 percent over the three-year period 1985–87). The deficits could reach annual rates of $1 trillion within the next year or so.

China’s role in the global imbalances is even greater than these numbers might suggest. A substantial increase in the value of the Chinese currency, the renminbi, is essential to reduce the imbalances, but China has blocked any significant renminbi rise by intervening massively in the foreign exchange markets, buying $15 billion to $20 billion per month for several years to keep market pressures from pushing its currency up. China apparently sees its currency undervaluation policy as an off-budget export and job subsidy that, at least to date, has avoided effective international sanction (Peterson Institute, 2006)

Manufacturing is not an industry that any country wants to fiddle with, as has been displayed with countless other economies in the past who have attempted to send their higher cost positions to other countries have shown. According to the WTO[PDF], only 20 percent of the trade among the regions of the world is in services; the rest is in merchandise. So the fact that 65 per cent of the US economy is part of the non governmental service economy, most of this output can therefore not be traded for manufactured goods. Therefore, the current US trade deficit that threatens the value of the US dollar cannot be closed unless some of the manufacturing industry is returned to US soil.

As if manufacturing industry leaving the United States and Canada weren’t enouogh, so called free trade and crony capitalistic, governmental intervention in the economy is allowing high skilled jobs — the very ones that politicians and academics touting as the savior for the economic oes we are facing — are being off shored or taken by cheap foreign workers from places like India through the H1B visa program. This visa program has been a contentious program especially among the service sector workers of the United States; particularly so around the era of the dot com bust of 2000 to 2001.

According to some economists, manufacturing is a wealth-producing sector of an economy, whereas a service sector tends to be wealth-consuming (“No Light at the End of the Tunnel” & Moneterism is not enough). Emerging technologies have provided some new growth in advanced manufacturing employment opportunities in the Manufacturing Belt in the United States. Manufacturing provides important material support for national infrastructure and for national defense.

Figure 2. Rising imports fuel trade deficit with China : Canada-China trade, customs basis

On the other hand, most manufacturing may involve significant social and environmental costs. The clean-up costs of hazardous waste, for example, may outweigh the benefits of a product that creates it. Hazardous materials may expose workers to health risks. Developed countries regulate manufacturing activity with labor laws and environmental laws. In the U.S, manufacturers are subject to regulations by the Occupational Safety and Health Administration and the United States Environmental Protection Agency. In Europe, pollution taxes to offset environmental costs are another form of regulation on manufacturing activity. Labor Unions and craft guilds have played a historic role negotiation of worker rights and wages. Environment laws and labor protections that are available in developed nations may not be available in the third world (this is the case in places like Mexico and China). Tort law and product liability impose additional costs on manufacturing (Wikipedia, 2009).

Why is this happening?

5. To bring about the end to all industrialization and the production of nuclear generated electric power in what they call “the post-industrial zero-growth society”. Excepted are the computer- and service industries. US industries that remain will be exported to countries such as Mexico where abundant slave labor is available. As we saw in 1993, this has become a fact through the passage of the North American Free Trade Agreement, known as NAFTA. Unemployables in the US, in the wake of industrial destruction, will either become opium-heroin and/or cocaine addicts, or become statistics in the elimination of the “excess population” process we know of today as Global 2000 (Educate yourself, 2009)

Related posts:

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