I wonder if the Romans knew they were about to fall, before the fall. I wonder how their debates went. “Well Maximus, I disagree, I think we need to pass out more bread and increase the number of lions at the games!” “No, no Commodus, we need to expand our forces even further in order to control more of the world!” “I have it! Perhaps we can do both if we simply trim the amount of gold in the coins.” “Excellent, then we are agreed!”
How do countries/empires fall? Seems like they are either invaded, over-run, and conquered or taken down by their own people. There is another way – their economy collapses first, and then they are invaded or taken down by their own people.
I’m not really seeing an imminent outright foreign invasion of America. Our politicians have actually planned well ahead for that possible threat. I am more concerned about the thing they can’t seem to plan for past the next election cycle. They seem to have extraordinary difficulty preparing for medium or long-term economic problems. Other countries seem to have figured that out (c.f., Sweden, Chile, Norway, even South Korea). As EcoMonitor notes, “The centerpiece of Chilean fiscal policy is a balanced budget rule of a much more sophisticated variety than the one endorsed last week by the U.S. House of Representatives.”
And I think it is in this vein that the Libertarian passion is often misunderstood. One of the quickest roads to the destruction of individual liberty is via economic crisis. During economic crisis or collapse, countries can become more vulnerable to foreign invasion as well as increasing totalitarian practices and influences.
So the real question becomes, how can one foresee economic crisis and what does a government do about it once it is recognized? The problem is getting that question answered from the very people who have apparently been unable to foresee it/defend against in the first place. I’m not sure I trust their answers. Maybe they don’t see it. Maybe they do see it but are afraid to acknowledge it. Maybe that is why the discussion is often avoided.
For example, if the Fed is engaged in unlimited QE and artificially lowering interest rates – is that good for the economy? Why is QE3 and the FED not a topic for the current candidates? Why is there no discussion about how QE3 and our debt may influence the stability of the dollar in the global market? Why is there no mention of China entering into partnerships with multiple countries (Germany, Russia and Brazil to name a few) to use their own currencies instead of the dollar? Analysts said that Beijing has been trying to push for trade to be settled in yuan, rather than in US dollars, as part of its plans to seek a more global role for its currency. “The motivation is to be less reliant on the US dollar,” Sean Callow, chief currency strategist at Westpac, told the BBC.”
Why is there no mention in the MSM or on the campaign trail about Saudi Aramco partnering with China’s Sinopec Group for a new 400,000 bpd refinery in Yanbu (on the Red Sea coast in Saudi Arabia)? “China’s investment in oil infrastructure and refining capacity is unparalleled. And more importantly, it executes a consistent strategy of developing world-class refining facilities in partnership with OPEC suppliers. Such relationships mean economic leverage that could soon subordinate U.S. relations with the same countries.”
I thought one of the reasons we’re told not to be worried about the dollar and debt is because the dollar runs the world – they have to have the dollar – right? That is why they are willing to buy our Treasuries even when they’re getting little to no return – because the dollar is “safe.” What if they stop buying them?
Here are a few props I’d love to see at the next debate (you can find these and much more at the Federal Reserve Economic Data (FRED) site).
How safe do these look?
I’m not sure but I think that helps to explain why China and Russia are stockpiling gold (Wall Street Journal Market Watch).
So, yes, yes, we get it. Obama must be defeated. But with Romney in office we are still going to not only need less bread and fewer lions, but also less world military expansion and “control” if we hope to keep any value in our coin.