Author: Curt Doolittle

http://www.caseyresearch.com/articles/will-iran-kill-petrodollarWHY DO THE LEFT QUANTITATIVE ECONOMISTS IGNORE STRATEGIC CIRCUMSTANCES? – AN Analysis Of What Our Future Might Look Like.

I always find the Keynesian quants amateurish. They select the policy that suites their ideology. It’s just another example of confirmation bias. The constantly quote data going back only as far as the second world war.

Monetary policy and spending policy are short term tools for fine adjustment of an economy. Industrial policy and Strategic policy, Education and Cultural policy for the long term construction of an economy. Monetary and spending policy serve statist and redistributionist ends, Industrial, Strategic, Education and Cultural policy serve conservative ends. Conservatives think in terms of accumulating reserves of capital, and leftists in terms of distributing it.

The United States has benefitted from 1992 onward from cheap labor, and cheap prices, due to the adoption of consumer capitalism in the post-communist world, combined with the petro-dollar which has artificially increased our purchasing power since 1973. From 1945 to the sixties we benefitted from being the only remaining industrial power, and the cheap conversion of farm labor to industrial labor. From 1840 to 1930 we benefitted from having cheap land and the ability to immigrate excess european population, which we could sell at a discount to the expanding european empires. From 1750 to 1850 we benefitted from conquering a continent occupied by a small number of stone age indigenous people.

The left economists would have us believe that our quality of life is the product of our democracy and our technology. But it is not. They are a luxury good produced by the organized application of violence in order to obtain a strategic economic advantage. Just as the greeks used organized violence to obtain trade access through the Dardanelles, the Muslims then the italians in the Mediterranean, the northern europeans in the new world.

Our temporary advantages that were born of the western advancement in violence, reason, commerce and technology, have been neutralized by our evangelism of consumer capitalism, over their strenuous objections and often violent resistance, to the rest of the human race.

We have created an inter-temporal hazard: an economic dependency upon anticipated future profits which are unsustainable in without strategic military advantages, and unsustainable a population that is polarized, and as such unsustainable as an economy and possibly a polity. Much of that polarization is caused by conflict over this very issue. And class, cultural, and race warfare can be masked through redistribution in times of wealth. But it cannot be masked in times of prolonged distress. A prolonged distress caused by the loss of those strategic advantages.

Our external debt is irrelevant. We can inflate it away with ease. But we must continue to sell debt to pay for our entire discretionary budget: every dollar of the military and every dollar of the entire federal government is paid for with debt. The other two thirds, consisting of social security, medicare and medicaid are paid for by the totality of our taxes. If the USA is unable to sell debt for petro-dollars, there is absolutely no way for us to replace one third of our budget. ie: that 1/3 which comes from debt, is in fact, 100% of the budget which our government exists to spend. Without that 1/3 that coes from debt we have no money AT ALL for our government to spend.

Now, the cautious reader might say that we will not lose 100% of our ability to sell debt. There may always be a market for american debt, simply because of the size of our economy. But again, this is a circular statement. It may only take a decrease of fifteen or twenty percent of demand for our debt to decrease the size of our economy such that our debt is no longer desirable whatsoever. At that point, people will fly to some other currency: a currency that is backed by oil and gold, and which will most likely come from the BRIC countries.

The left’s argument is that we simply can create demand by printing, borrowing and spending. Yes. But we cannot calculate a future based upon predictions that are specious. The future is uncertain.

That is the entire philosophy of conservatism: Save, Produce, Take Joy In Present Goods Over Fantasy Future Perfections, in order to avoid the error of human hubris. The very human hubris wich is the justification for progressive ideology and policy.