I’ll Gladly Pay You Tuesday…

They called it “Trickle-Down” economics. It was a magical time of new capitalistic ideas and new collaboration between legislators, executive agencies and the Federal Reserve, a new way of managing the flow of money and the creation of wealth in a new and expanding ‘world order’.

It was brave, it was foresighted, it was designed to take America into uncharted territories as undisputed leader of an increasingly designed and aligned world… and it was doomed to fail.

It did enjoy an exciting 25-year run of “Greed Is Good” philosophy, the suspension of usury limitations (sans debate on the moral issue itself), the abrogation of market regulations and the rolling back of taxes on profit taken. Accompanied by basically unlimited, unsecured credit not just for citizens, businesses and corporations driving the national economy after the great recession of the early 1980s, but also for the government itself.

The new economic scheme did have dramatic effects in the broader world, producing results almost immediately that could be counted as a plus for large swaths of humanity at large. Even though it entailed massive debt, primarily held by wealthy Japan on behalf of the western alliance. The U.S. national debt soared under the dozen-year Reagan-Bush regime, much of it used to finance expansions of huge military-industrial saber-rattling programs – the “renovation” of antiquated nuclear weapons systems, the cavalier dismissal of long-negotiated treaties, a militarized space race called SDI.

The balance of power maintained artificially for decades shifted dramatically in favor of the U.S. and its alliance, driving the Soviet Union to bankruptcy and finally ending the Cold War. By 1985 the member states were beginning to separate themselves politically from the increasingly cash-strapped collective, and rebellion proceeded apace from there. By 1991 the Soviet system finally fell apart after a failed coup against Mikhail Gorbachev and the ascendency of Boris Yeltsin.

Thus it can be said that Trickle-Down economics worked very well to accomplish certain international goals for the New World Order crowd. Deal is, the later need to mitigate accumulated national debt with moves toward the globalization of markets could not be maintained forever in the face of new multinational policies and regulations designed to level the playing field for new players in the second and third world. New wealth was certainly being shared internationally, but it wasn’t trickling down to the people.

Instead, the wealthy grew richer and the poor grew poorer, while the middle class – so vital to the long-term economic stability of the U.S. – was being steadily impoverished by easy credit policies at usurious rates and decreasing influence of organized labor in the face of international competition. Jobs were being outsourced at an alarming rate, personal bankruptcies hit record numbers, and the long sustained housing market “bubble” built on easy credit at sub-prime rates finally burst.

The blogosphere has amassed a host of excellent analyses of the situation, some with predictions of what will have to happen now for the U.S. to salvage its economic hegemony as the world markets realign. All of these listed are excellent sources of information for those who wonder how the ‘08 elections may change things for the better. It’s good to keep in mind that U.S. foreign policies and economic foolhardiness encompass more than just recent attempts to seize Middle Eastern petroleum assets by military means (at staggering cost), and that the next administration’s vision on such matters will affect all of us, workers and investors alike.

The Politics of the Market Crash

The Bonddad Blog
(An excellent source of professional analysis going back years!)

The Federal Reserve, Moral Hazard, Corporate Welfare and Double Standards

McClatchy: Huge Fed Doleouts Followed Pro-GOP Agency Briefings

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