Has the US defrauded the world's economies?

By Ben Tanosborn

ccun.org, January 26, 2008

 

A yes answer to a question with such scary implications begs postponement ‘til another day… perhaps it is a question that should never be answered, not out loud.  Let’s just say that Uncle Sam has always appeared to the world as an affable, worldly relative that they never quite really knew, or understood; one who visited occasionally wearing fancy duds and displaying graying hairs – and cocky airs – exuding both stability and success; someone who made the world his oyster… and all the relatives envious.
 
Unfortunately, that uncle who visited his family during the last two decades was more of a jobless, penniless relative who had whittled away his fortune in fancy living and lousy gambling – warmongering and selective globalization may be more apropos – schemes.  And his visits started to be more frequent, now inviting one and all to share in his “good fortune”… apparently by investing in many of those schemes.
 
The reality of a recession is finally talked about by both imbecilic and sage members of America’s Hope Springs Eternal society, and that includes super-greedy Wall Street, a government in lying perpetuity and the amenable Fed.  Now, after all this time, when we know that we are already there… or, at least, at the entry way! 
 
Actually it’s not the “R” word that scares me, but the possibility of the unmentionable capital “D” for depression.  An “R” with fair penmanship for much of the world, and a “D” with illegible calligraphy for the US of A!  Of course, there’s a chance that the White House and Congress might create enough hocus pocus – perhaps by “having” the Fed cut its rate 2 or even 3 points and throwing away another 150 to 200 billion dollars on the shoulders of future generations – to decelerate the economic bloodbath until past the November elections, but the observed (even if hidden by the government) rate of true inflation won’t allow smoke and mirrors to cloud reality, and America’s economy will appear buck naked before the world, directed behind curtains by the Wizard of Oz.
 
On Monday and Tuesday Asian and European markets gave us a preview of their own nervousness with the US, even if this nation’s share of the world’s GDP (now at just 28 percent) keeps, understandably, declining.  Combined losses averaged over 10 percent overseas, if mildly affected by Wall Street losses on Tuesday (1.1 and 2 percent for the Dow and NASDEQ), told us that America’s actions still weigh heavily in economic world affairs.  And it was also an icy reminder that the credit largesse by those creditor nations may soon be coming to an end.  Then, whose money will Americans be able to spend, er…waste?  Isn’t the US really following on the footsteps of Argentina, Brazil, Mexico and third world nations whose economic policies America has criticized for so long?
 
America, the should-be creditor nation par excellence, has become instead a parasite to the savings of the world, becoming the largest debtor nation in the planet with only two possibilities left: one, allowing America’s creditors to liquidate the paper for hard assets, permitting once-proud Americans to become vassals to foreign capital; or two, change America’s consumption habits… and learn to live within our means.
 
The precarious economic fix does not seem to be understood by most economists, and even the very elite in the profession make questionable statements which seem out of the ballpark.  Like Paul Krugman, whose judgment I usually respect, asserting how complex the US economy is, when the adjective should have been deceptive.  Weren’t derivates supposed to have disappeared after the dot-com fiasco?   Instead, additional crooked financial instruments were allowed to debut without proper scrutiny by a hands-off government happy to see capitalism run amuck in predatory ways to once again redistribute wealth from middle-class to rich.  Not complex, Dr. Krugman, just deceptive!
 
And all the while, those in the trade-brotherhood of economics in solemn silence!       
 
As I am writing this article engaged in the thought of the applicability of physics’ laws of thermodynamics to the art-science of economics, I came up with what I thought to be a proper term to describe it: econodynamics (or movement in economics).  After googling the word, however, I discovered that it wasn’t for me to coin, that it had been used once before, probably in a different context to mine, or in its seriousness.
 
For our purpose here, let’s just say that it would probably be worth considering if our graduate schools of economics required their Ph. D. candidates to have an academic background in engineering, at least through the junior year, with at least knowledge of thermodynamics and quantum physics – I might add that it has helped me.  Certainly a more appropriate complementary background than that of politics!  Knowledge about conservation of energy, entropy and absolute zero temperature (the three laws of thermodynamics) can certainly prove insightful to the understanding of economic growth, and the treatment of production, consumption and savings… plus much more.
 
Perhaps Arnold Sommerfeld, the German physicist, had it right, if this attribution to him is correct: “Thermodynamics is a funny subject.  The first time you go through it, you don’t understand it at all.  The second time you go through it, you think you understand it, except for one or two small points.  The third time you go through it, you know you don’t understand it, but by that time you are so used to it, it doesn’t bother you any more.”  Substitute thermodynamics with economics and you may understand what most economists are all about.
 
Religion, to have value for the human condition, must be much more than just faith.  In like fashion, economics should aspire to become more of a science, and its practitioners must be more than just charlatans, at someone’s service, with a fast sleight of hands.
 
Since both foreign policy and economic policy are thoroughly enmeshed in the US, an economic bloodbath coming sooner than later might give Americans a much needed push to finally clamor for the impeachment of Bush and Cheney, the two men at the top who have brought this nation to such level of plight and misery; concurrently heralding impending exits from both Afghanistan and Iraq; and also giving credence to the idea, that in the future, America will only be solicitous with Israel when that nation brings to a halt its dominance over Palestinians and engages in true negotiations for territorial co-existence in peace; that Israel will remain a good friend and ally but will not be allowed to hold the key to US foreign policy as it has done up to now.
 
 
Ben Tanosborn
www.tanosborn.com 
ben@tanosborn.com