The current economic down-turn is not a recession; a worldwide depression is unfolding. The coming economic catastrophe will not resemble the Great Depression; the United States of today does not resemble the independent America of the 1930s and 40s. Throughout those lean years, folks in rural areas were self-sustained, the dollar was “gold-backed,” and the nation was a manufacturing dynamo. Unsustainable debt, globalization, and money-printing have fundamentally transformed the American economy.
WHEN THE DOLLAR WAS A DOLLAR
During the Great Depression, the United States had balanced trade accounts and trade surpluses. The nation was not involved in war and had no foreign military bases. The welfare state did not exist as we know it today. Most of the population lived off the land in rural areas. Money-printing by the Federal Reserve was constrained by the physical supply of gold and silver (according to the Constitution, the dollar was backed by precious metals).
In 1933, people had almost no personal debt; and all Americans owned silver and/or gold coins. The dollar had tremendous purchasing power. The paper dollar was “as good as gold.” A person could have exchanged a one dollar bill for a silver dollar or a twenty dollar bill for a $20 Gold Piece. (It now takes 65 times more paper dollars to buy the same 1 oz $20 gold coin.)
AMERICA 2017 – STATE OF THE UNION
Today, America is dependent on foreign countries for most manufactured products. Our staggering trade deficits are paid with borrowed money. The nation is involved in two wars (plus covert operations), and has more than 700 military bases around the world. Many cities and states have enormous debts.
Most people struggle with personal debt; many are upside-down on their mortgages; and almost no one owns gold or silver coins. The majority live in urban areas and cannot produce food. In a few years, 2/3 of the population will be government-dependent in some way. Public employees now out-number manufacturing employees by 2 to 1 (only 10-11% of the workforce is involved in manufacturing). The U.S. pays the bills with money-printing; the Federal Reserve digitally creates credit by the trillions of dollars.
DEFICITS & DEBT
From 1900 to 1971, the U.S. had balanced trade accounts and trade surpluses. However, America has had trade deficits 44 of the last 46 years. What happened? In less than fifty years, America has undergone a fundamental transformation:
- from economic independence to economic dependence
- from the greatest manufacturing economy to a consumption economy
- from the greatest creditor-nation to the greatest debtor-nation in the history of the world
BEFORE “FREE TRADE”
(United Nations-managed trade)
In the early days of the Republic, the Founders knew manufacturing would be the key to the nation’s economic independence. Right from the beginning, they promoted impartial trade with all nations, and created policies that changed the direction of the economy. (Before the Revolution, colonists had mainly exported raw materials and imported manufactured goods.)
The first Congress of the United States established tariffs on foreign merchandise, passing the Tariff Act in 1789. Why would they do that and what were the results?
As a consequence of the legislation, people decided to produce the stuff themselves — rather than depend on foreigners and pay the import tax. The strategy created a production boom. Equipment was invented to save work, save time, and cut costs. Competition was fierce to develop new and better products. Customers ended up paying less; and inter-state commerce sky-rocketed.
America’s export economy grew by leaps and bounds. For the next 150 years, customs duties produced 50-90% of all federal revenues (no income tax until WWI). From sea to shining sea, a powerful middle class developed because products were MADE IN U.S.A.
Before U.N.-managed “Free Trade” (sanctions, favored nations), the U.S. traded with nations impartially. The U.S. supplied the lion’s share of its domestic manufacturing needs, and exported high-quality made-in-U.S.A. products to the rest of the globe. The robust manufacturing base led America to supply about 40% of all manufactured products used by the world.
MANUFACTURING IS A WEALTH MULTIPLIER.
Tremendous wealth was created by manufacturing products using domestic raw materials. Before the dollar became the “reserve currency,” America had become the greatest creditor-nation of all time. The U.S. Treasury held title to more than 80% of the world’s above-ground, officially-held gold reserves [more than 20,000 tons after WWII]. The nation did not print money to pay trade deficits; from 1792 until 1971, the United States settled all trade imbalances with gold.
UNITED NATIONS • BRETTON WOODS
In 1944, the United Nations Monetary and Financial Conference convened at Bretton Woods, New Hampshire. Conferees pegged national currencies to the dollar, and adopted a plan to establish a world monetary system.
International trade would be centrally ‘managed’ within a framework of ‘United Nations governance’ by agencies such as the World Court, World Bank, and IMF [International Monetary Fund]. In the future, the world economies would be ‘integrated’ and made ‘inter-dependent’ by a series of United Nations trade agreements.
THE END OF ECONOMIC NATIONALISM
At the close of the Bretton Woods Conference, Henry Morgenthau, Jr., Treasury Secretary of the United States, said the establishment of the United Nations banking system marked the end of “economic nationalism.”
By the incremental loss of economic independence, countries such as the United States would gradually lose national sovereignty [nationhood]. Monetary integration, economic inter-dependence, and global government would be achieved by U.N. treaties — beginning in 1948 with the General Agreement on Tariffs and Trade [the 22,000-page GATT treaty].
THRIFT • SAVINGS • SOUND MONEY
Over the centuries, the virtue of thrift had been deeply ingrained into the American psyche. The following proverbs were quoted universally:
“A penny saved is a penny earned.”
“Neither a borrower nor a lender be.”
“Never spend your money before you have it.”
“Look after the pennies and the pounds will look after themselves.”
But Americans’ frugal habits began to change after silver coins disappeared from circulation and the dollar was no longer backed by gold [Aug. 15, 1971] just as John Maynard Keynes had warned:
“There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”* ~Lord John Maynard Keynes~
UNLEASHING ECONOMIC DESTRUCTION
As a result of debauching the currency, the ‘hidden forces of economic law’ moved the nation in a new direction. Previous generations had created, saved, and invested their own capital to expand enterprises. After the dollar was debased, debt began to play a new role in the lives of Americans. The savings rate began to decline; and people began using bank credit cards.
Businessmen began to rely less on private capital. They turned to the banks, instead of saving for business expansion. Over time, the bank (debt) became the third party in most transactions.
UNITED NATIONS “MANAGED TRADE”
National economies were ‘integrated’ and made ‘inter-dependent’ in phases. In 1994, the U.N. North American Free Trade Agreement was “fast-tracked” and signed by President Clinton. NAFTA signaled the beginning of a manufacturing exodus. Why? Super-cheap labor, low taxes, fewer regulations, lower prices, lower quality, and no employee retirement or healthcare. Millions of America’s industrial jobs vanished [and millions of U.S. government workers were hired]; production declined; and debt ballooned.
In 1995, the General Agreement on Tariffs and Trade [U.N. GATT Treaty] was replaced by a sweeping United Nations ‘management system’ called the World Trade Organization [“WTO”]. In the decade leading up to the 2007/ 2008 crash, the United States manufacturing exodus accelerated. Almost 50,000 manufacturing plants (with 500 or more employees) moved operations off-shore. And high-tech manufacturing disappeared.
Image courtesy of The Atlantic.
A CONSUMPTION ECONOMY IS A DYING ECONOMY.
Until bubbles popped and credit froze worldwide in 2007, people enjoyed the illusion of growth and prosperity as a result of easy credit at low rates. The last nine years of Quantitative Easing [QE], 0% interest rates, and government programs have helped to disguise the fact that more than 95 million Americans are no longer counted in the work-force (an all-time high number of young, eligible workers do not have jobs).
Today, the U.S. exports mainly raw materials (wheat, fertilizers, coal, meat, tobacco) as we did 300 years ago.** As a result of switching from a manufacturing economy to a service/ consumption economy, America’s preeminent position among the nations has slipped; wages and the economy are stagnant; and the average person’s standard of living is falling.
It is not an accident the United States has become economically dependent and indebted beyond belief. Lawmakers debased the dollar and hitched America’s wagon to U.N. ‘global governance.’
Agencies of the United Nations are establishing world government –incrementally– by U.N. treaties that govern much more than trade. According to the World Court, U.N. laws have the force to over-rule U.S. law (U.N. trade agreements over-ride the U.S. Constitution and Bill of Rights). Closed-door trade negotiations by un-elected bureaucrats are rapidly replacing open government by our own elected representatives.
Each one of the following U.N. treaties serves to destroy America’s sovereignty and national autonomy: The World Trade Organization [WTO] (including the Marrakesh Agreement, Uruguay Round, etc.); North American Free Trade Agreement [NAFTA]; Central America Free Trade Agreement [CAFTA]; Security and Prosperity Partnership of North America [SPP]; Trans-Pacific Partnership [TPP]; Korea Free Trade Agreement; Columbia Free Trade Agreement; Panama Free Trade Agreement, etc.; Transatlantic Trade and Investment Partnership [TTIP], [TISA].
The U.S. House of Representatives alone has Constitutional authority to regulate commerce with foreign nations. The Treaty Provision requires two/thirds U.S. Senate approval [Article II, Section 2]. President Thomas Jefferson emphasized the danger of international entanglements in his Inaugural Address. President George Washington warned against foreign alliances in his Farewell Address:
“The great rule of conduct for us in regard to foreign nations is in extending our commercial relations… our commercial policy should hold an equal and impartial hand… It is our true policy to steer clear of permanent alliance with any portion of the foreign world….” President George Washington, Farewell Address.
“Peace, commerce, and honest friendship with all nations – entangling alliances with none….” President Thomas Jefferson, Inaugural Address.
by Denise Rhyne
* John Maynard Keynes, The Economic Consequences of the Peace, pp. 148-149, 235-236, (London: McMillan/ St. Martin’s Press for the Royal Economic Society, 1919, 1920, 1971).
Who Were the Bankers at Bretton Woods? See the first-ever list.
** U.S. CONSUMPTION ECONOMY/ PCE [Personal Consumption Expenditures]: From 1998 through the third quarter of 2007, government spending plus consumer spending [81.3%] equaled 96% of the growth in GDP; U.S. exports plus business investment accounted for only 3% of GDP growth. In the 25 yrs leading up to the 2007 crisis, consumer spending [debt] accounted for 82.5% of real GDP growth. Each year, PCE grew 3.5% continuously compounded. [William Emmons, Jan. 2012, Federal Reserve Bank of St. Louis]