OUTLOOK FOR THE FUTURE - LOOKING FORWARD FROM 2020
What we're going to talk about today is the outlook for the future. This is a subject we deal with over and over again. It's February 2020 and we are going to look forward and in particular discuss the political plans that are being put together by the candidates. We're going to make some big picture observations. Obviously, as we document on our website, the planet, the biological foundations of life, are in a state of total crisis and getting worse. And the outlook if things are not changed is not good. And the outlook is for very serious problems to occur sooner rather than later in the next 10 years and ultimately a very high death toll if things don't get corrected.
Things were not going in a good direction under Obama. Obama talked a good game but set in motion a series of very disastrous policies, such as the reignition of the global arms race and a new Cold War with Russia and the disastrous expansion of fracking. Indeed, Obama was probably the best president in American history for the US oil industry, not a productive situation. But under Trump it's been kind of like throwing gasoline on a fire. This is documented on our website. We’re not to get into the details of that here other than to point out the Trump Administration is an existential threat to the survival of life on this planet unless it drastically changes course, which doesn't seem very likely at all.
LACK OF REAL SOLUTIONS FROM THE DEMOCRATS
The Democrats mean well. It's not at all clear that what they're proposing is drastic enough to solve things and/or whether they have the political strategy to get their ideas adopted. We support the concept of the Green New Deal. We are very skeptical about parts of the plans that have been put forward, but that's a whole other issue which we probably won't get into detail of in this discussion.
THE FINANCIAL AND ECONOMIC SITUATION IN AMERICA
We are going to talk about and concentrate on the financial and economic situation in America and in the world. The situation is not good. We need to backup a little bit to understand how we got where we are. By the 1960s, America had to a large extent recovered economically from World War II. Indeed, in the Johnson Administration, there was a tremendous sense of optimism about where things were going. Unfortunately, that got pretty thoroughly derailed by Vietnam and in the 70s things started going in a very bad direction. In 1973 and 1974 you had the energy shock, the oil shock as oil prices were raised sharply by the OPEC cartel. It is not an accident that at the same time constant dollar wages in the United States peaked. It is not an accident that starting in the 1970s the US government began to have quite serious budget problems and budget deficit problems.
Also in the 70s, America began to have problems in its international balance of payments. Now when Reagan came in, in 1980, he and the Republicans basically poured gasoline on a fire. They basically dropped the financial hydrogen bomb on the finances of the US government and created a fiscal disaster that prevented the US government from even coming back to a balanced budget until about 2000, and even then that was very marginally balanced. And so this was a very bad situation.
DECLINE OF AMERICAN TRADE
Meanwhile the trade situation deteriorated sharply as America with its low investment economy fell further and further behind other countries and also the money lords, the plutocrats, were willing to sell out the American people to move factories overseas to make higher profits. Indeed, as we have pointed out, while the so-called robber barons of the 19th century were not the world's most wonderful people, they did build the American industrial machine. While the money lords who have been running this country since the 70s the 80s are a much more malicious group of people. They have basically destroyed a good part of the American economy and sold it out to foreign countries.
THE DESTRUCTIVE NATURE OF SHORT-TERM ECONOMIC POLICIES
Now whether Republicans came back into power or not, in 2001 they dropped a new financial hydrogen bomb on the US government and sent the deficit soaring. In 2017 they were content with having done that and they dropped yet another financial hydrogen bomb on the US government. So we now have trillion dollar deficits extending as far as the eye can see.
Meanwhile, the popularity of neoliberal economics and fairytale thinking has led to the wholesale destruction of key parts of America's industrial base and the transfer of that industrial base to foreign countries, particularly the foreign country of China.
These are long-term trends. So the American economy today is very sick. It has endless debt, endless foreign debt, because we have a structural balance of payments deficit of about $700 billion and we have $1 trillion government deficit extending as far as the eye can see. Trump has been able to successfully bully the Federal Reserve Board to keep interest rates down. It's not at all clear how long that can go on. Our prediction is that we are finally reaching the turning point of probably the longest debt super cycle in history. And these things don't end well.
THE FAIRY TALE IDEAS OF THE PROGRESSIVES
Now when we look at the Democratic Party we are very sympathetic to Bernie Sanders and his ideas. But his real problem is financial fairytale thinking. Following a in our view a crackpot theology known as modern monetary theory to just print a whole lot of money and this will supposedly create a happily ever after. In our view that's absolute nonsense. And very dangerous nonsense. What happened if Sanders’ spending plans were put into place is probably a financial heart attack because that would finally push things over the edge and we think things are gonna fall over the edge before the election, but it's possible the plutocrats might do all sorts of stuff, desperate to try to keep Trump in office and so who knows, but the point is that this isn't going to go on all that much longer. We’re surprised it's gone on as long as it has and people say, “You predicted trouble and it didn't occur.” That's not necessarily good news because the reason that we have not had trouble is because we ramped up the debt even further. So yes, they avoided problems that logically should have occurred by simply wrapping up more debt but these stories don't end well regardless of who's elected.
REALITY AND AUSTERITY
What we need to talk about is reality and reality is some kind of organized austerity as the planet, and in particular, America, deal with both the financial debt and the economic debt. We see nobody out there really talking about this and as long as they don't talk about that then the problem isn't going to get better. So fairytales about modern monetary theory are just that, fairytales. And those things aren't going to happen. They're not. Yes of course raising taxes on the wealthy is necessary, though that has to be done with care to make sure it doesn't destabilize the whole economy. We favor a social democratic system such as in Europe where you have lower taxes on investment and higher taxes on consumption.
Unfortunately, traditional liberal economic theory in the United States does not follow that. They want to mindlessly increase taxes on capital gains. America still has among the highest estate taxes in the world and so on. And this shows the utter incompetence of the plutocratic rulers because they can't even get the estate tax down and stuff like that. It's basically a system focused on short-term greed and on Wall Street. You have these massive stock buybacks which used to be illegal in the 1980s but hundreds and hundreds of billions of dollars are going into buying back stocks and artificially inflating stock prices. Now some people such as the peddlers of modern monetary theory claim, “Well look, you had all this Federal Reserve creation of money and it has led to consumer price increase.” Well of course it has led to consumer price increases, because the money didn't go to the consumers, it went to the people investing in stocks. We had huge price increases in terms of stock prices and you had an artificial resuscitation of the real estate market.
UNSUSTAINABLITY OF THE CURRENT SYSTEM
This just can't go on. It's not sustainable and when it shifts it's likely to shift quickly. These bubbles don't go well and there could be very quick interest rate rises which could be absolutely catastrophic. You have to remember that the American economy today is very sick. It's not like in the 1930s when you had the crash that was mainly due to incompetence by the economic leaders and the clowns on Wall Street. In those days the US economy in the 1930s was very healthy. The US was the industrial heart of the world. We were the world's leading oil exporter so on and so forth.
Today the American economy is an absolute wreck. The guts of the economy (the industrial part of the economy) has been shipped overseas by the money lords. This is probably one of the most disastrous economic decisions of any country in the entire history of the world.
Trump made a lot of noise about trade but he has really not done anything, and if anything, he's made things worse by his yelling and screaming and tariffs and so on and so forth. When what was needed was a quiet long-term reorganization of the economy which will take a long time. It's taken 30 years to ship all these industrial resources overseas they can't return next year and that just has huge negative long-term implications for the US economy.
ORGANIZED AUSTERITY
All the more reason you need to have a hardheaded approach to austerity. So the choice here is going to be organized austerity with some kind of concept of social justice or the magic of the marketplace will take care of it in terms of a big crash.
Yes, and the latter is far more likely than the former. These problems will sort out themselves. It is very important to understand what you are going to need is some kind of government direction of the economy as is theoretically planned out in the Green New Deal, which is a very good idea. The details of it we have some disputes with but that's going to be necessary. People say that will tamper with the free market, well you have a tampering of the free market anyway in America which is the buying and selling of politicians. So there is a free market as far as that's concerned but there is no free market really in terms of the economy on a macro level, which are the incentives of political payoffs and political bribery.
If you look at the postwar history of America, you had huge subsidies to the auto industry, to the oil industry, with the interstate highway system, to the airline industry etc. The railroads did not buy and sell politicians at such a rate so it ended up on the losing end. As a result we have one of the most inefficient transportation systems of any country in the world. Likewise, we could've invested in solar power, which was recommended even back in 1953 by the US national Security Council in which case we would have solar power today. That was not done. And again because there was no political constituency to fund that.
THE DANGERS OF NUCLEAR WAR
We also have the very dangerous issue started by Obama, which is the re-escalation of a Cold War with Russia, just an incredibly dangerous situation and this has been exacerbated by the Democrats coming up with an excuse for Hillary Clinton's loss and so on and so forth. The escalation of arms spending and the express escalation of the arms race is very dangerous combined with the U.S. pulling out of still more nuclear weapons treaties. So that could lead to a rather terminal situation all by itself and that has to be de-escalated.
WHAT IS NEEDED IN THE FUTURE?
So in conclusion we need a hardheaded understanding of the need for years of austerity and developing a Green New Deal that will actually work and we need a massive de-escalation of the arms race and a normalization of relations between the US and Russia to avoid a total catastrophe. There is also a very dangerous escalation of US relations with China which is also a very dangerous threat to the world future to say nothing of running around assassinating foreign leaders such as the assassination of Mr. Soleimani by the US government. This again is an invitation for disaster so there has to be a recognition of austerity and a de-escalation of tensions. It doesn't mean that people approve of Mr. Putin or approve of the Chinese government. There is far more at stake than that. It's a question of global survival of having key powers in the world work together to build a sustainable future.
This is the end of this lecture.