By Ed Stephens Jr.Special to the Saipan Tribune
For many years, I have warned Saipan Tribune readers that the U.S. dollar, and the pile of toxic debt it is built on, will all collapse in an ugly heap.
And it’s happening. Right in front of our eyes. It’s the stuff of global headlines right now. There will be time, a lot of time, later, to analyze the impact on Saipan, but today let’s just ponder the general situation.
And first, yes, I’ll say "I told you so," about this dollar and credit gig, since I figure if a guy ventures predictions in writing, he’s entitled to settle the account when the scores come in.
Now that the stuff has hit the fan, many folks have asked me, recently, how they can prepare for the financial mess. Well, it’s too late to prepare, of course. The time to hide from this storm was before it hit, which is why I’ve been poking you in the chest all these years with my warnings.
Understand this: This is not a mere U.S. "recession" we’re talking about, anymore than driving your car off Suicide Cliff is a speeding problem. This isn’t some hiccup in financial markets that can be smoothed over by the government, the banking industry, some clever interest rate tweaking, a glib speech, or anything else. The plain fact is that the world is realizing that the U.S. has amassed so many debts, both public and private, that much of the money can’t, and won’t, be paid back. In order to try to prop up this dead horse, the U.S. is reducing interest rates and, basically sacrificing the value of the dollar in the process. My pals who thought I was paranoid about this years ago, well, they aren’t laughing now. Suckers!
This is a one-way slide. Standards of living in the United States will fall substantially. I don’t want that to happen, of course, but what I want isn’t the issue.
As it is, over my lifetime, I have seen the typical middle class household going from needing one earner, to needing two, just to get by. It’s not the welfare class that is totally dependent on government; now the middle class, too, has government as the single biggest player in their expenses, their mortgages, their educations, their health care, their pensions. I’m not saying this is good or bad, it’s simply what the people want. Politically, nothing else can come from a large democracy.
But, economically, they’ve been living in a fool’s paradise, thinking they could enjoy both a living standard toward the top of the list, while also plunging into total bureaucratic collectivism. The latter entails centralized planning, and this induces distortions in markets that eventually reduce economic output, investment and, eventually, average income. Again, I am not saying this is good or bad; that’s not my judgment to make.
In the coming months, you can expect a louder chorus of whining for "somebody else" to fix everything, since the people have long ago given up their abilities, or even desire, to control their own lives. You’ve seen this dynamic on Saipan, of course; the "next" politician is going to fix everything that the "last" politician messed up.
My first exposure to that mentality was my school days, when I’d travel to Europe. I noticed that the main topic of conversation in cafés and on trains was how the government should do this, or should do that. Government, not private initiative, was the central focus of life. Subsidies took place of opportunity. Many people seemed to revel in their helplessness; they rooted for officials to improve their lives like football fans root for a running back to score a goal.
Sure, it’s an odd way to live, yelling from the sidelines, but it requires no exertion or skill, and it allows one to blame everyone else, or at least someone else, for any bad outcomes. Most of the Western world has sunk to this level. The Eastern world, by contrast, is rising. And here, twixt the two, is Saipan.
Never mind what the stock market did yesterday. Forget what the pooh-bahs of policy say. And who cares what gold costs? That’s mere trivia now, so trivial that it’s not even newsworthy. The real news is that, as much as it breaks my heart to see it, the U.S. financial structure is in danger of losing its credibility. The recent headlines may be the gust front ahead of the storm, or they may be the actual storm, but rest assured, the dark clouds are on the horizon.
So don’t condescend too much to our garment workers; your grandchildren may wind up being nannies for their grandchildren.
Ed’s column runs every Friday. Visit Ed at TropicalEd.com.
