The U.S. Government and Consumers are Big Spenders Heading for a CrashDavid Redick Even highly educated analysts make the same mistake. I was shocked to read the rosy evaluation of our economic condition, and future prospects, in a Nov. 11, 2014 article by Jay Lehr Ph.D., Science Director of the Heartland Institute. He wrote; The U.S. economy is holding up well. Industrial production is at its highest point since 2008, then Jobless claims are at their lowest since 2000. He uses a paragraph heading Bright U.S. Outlook. He apparently believes that government management of the economy, such as the QE series of money creation by the Federal Reserve System (the Fed, our central bank), will create a rosy future. Switching gears, after a trip to Europe he said; They appear to be oblivious to their long-term problems. Too bad he cant see (or wont say) the same in the U.S.! For example, his article fails to mention; 1) Our massive (unpayable) government debt of $18 trn (admitted) and another about $130 trn (hidden) of unfunded liabilities for Medicare, pensions, etc. This is a big part of the reason that governments are promoting the lie that price inflation is a good thing, and deflation (lower prices because the money has higher purchasing power) is bad. They want to pay their debts with cheap money!! 2) The falling use of the USD as the worlds primary reserve currency (was 80% of international transactions, now about 60%). Note that as the issuer of the worlds primary reserve currency, we are the only nation that can create new money (via the Fed) to pay our bills! We have abused this (what French President Charles De Gaulle called our exorbitant privilege) by creating trillions of new dollars (monetary inflation), which will cause hyper price inflation (over 20% loss of value monthly) if we dont stop! 3) The inflation and jobless numbers are distorted by the government to keep them low, 4) The BRICS (Brazil, Russia, India, China, and S. Africa, plus more joining) are angry at U.S. imperial bully tactics and are avoiding the USD by dealing in their own currencies. To reduce dependency on the U.S. (and our bully tactics), they are creating a central bank, an IMF-style lender, and a funds processing (checks, deposits, etc.) network. The so-called Petrodollar (Saudis have agreed to sell oil only for USD since 1974) is getting weaker as various producers sell in a variety of currencies and gold. Not selling oil for USD is a death sentence, and was a big part of why we invaded Iraq and Libya, and are poking Iran, and 5) Our conversion to a consumer economy due to a massive amount of imports, funded by excessive amounts of new money (which only the issuer of the worlds primary reserve currency can do), that results in offshoring of jobs, factories, and technology. This article is not meant to be a personal attack on Dr. Lehr. He is just a good example of an economist with Keynesian-Socialist-Progressive thinking, all of which tout a major role for government ownership and control of industry and the market. The Keynesian brand of economics is named after British economist Lord John Maynard Keynes. In 1936 he published his magnum opus The General Theory of Employment, Interest and Money. The work served as a theoretical justification for the interventionist policies Keynes favored for ending a recession. Another example is Dr. Paul Krugman, an economist from Princeton University, who is the U.S. king of those who believe the government should manage the economy, and ignore the bad results of the past. President Obama is another! In fact, he, and his successor, may use the next crash to convert the U.S. to a socialist government! They all explain failures by claiming the government didnt do enough! Over 95% of economists (in colleges and think-tanks) follow this school of thought, with some Marxism (reduced property rights, more controls, etc.) included as deemed necessary. Their tenure, pensions, grants, and social life would drop if they disagreed with their Keynesian peers. I respect the Austrian school of thought (started by Austrian economists) which emphasizes that there should be no market intervention (subsidies, price controls, etc.) by the government, and that entrepreneurs and sound money in a competitive free-market system will produce the most Peace, Prosperity and Liberty for all. History shows this to be correct, but politicians love to do favors for voters to get campaign contributions, which creates the crony capitalism we have today. Austrian type economists (Mises, Rothbard, Hoppe, etc.) have always had a hard time getting a teaching job. Fake money is a key tool used by the Keynesian economists and politicians. It pays for their wars and subsidies for friends, and grants, salaries, and pensions for themselves. Fake (or fiat) money is just paper with no value, but people are forced to use it by legal tender laws which declare a face value. Real (or sound) money is made of a commodity (gold and silver work best) which has market value even when not used as money. It acts as a medium of exchange, store of value, and unit of account for pricing (I prefer weight of gold; i.e. grams). In this case, gold has no price, just an exchange rate with other money. Example; What is the price of a US Dollar? Paper notes are OK as a convenience in handling, if redeemable for the commodity by any bearer on demand. Private mints should be allowed (no government monopoly). For details, see my essay A Plan to Convert the US Dollar to Gold as Money, and my books on Amazon.com. Dr. Lehrs Heartland Institute showed their preference for big government when they lauded the June-2014 book Money by Steve Forbes and Elizabeth Ames. Its plan is big government oriented by using the Fed to manage the price of gold, and ignoring golds store of value. No free market here, but plenty of money for big government! Forbes has further credentials as a big government conservative by his role as a Trustee for the big government, ultra-conservative Heritage Foundation (Heritage.com), which gave war-monger, proud torturer Dick Cheney one of their highest honors. The truth is that the U.S. economic and social systems (subsidies, entitlements, etc.) are heading for another crash, and bigger than the one we had in 2008. We have all the characteristics of a failing empire; falling domestic production, big and increasing debt (government and personal), desperate politicians seeking more money and control (search for FATCA), restricting rights of citizens, and endless wars to gain and retain powers. For details, see my essays, The Phases of an Empire and, The Cost of Building and Operating Empire (USA). To avoid (or minimize) the next crash, we must; 1) End wars for empire (fight only for homeland defense), 2) Reduce government and personal debt, 3) Convert to gold as money, and 4) Comply with the Constitution. This approach ALWAYS brings more Liberty, Peace, Justice, and Prosperity for ALL. Lets get started! David Redick, BS Engineering, MBA-Economics. Dave writes to promote better government (more liberty, peace, prosperity, liberty, morality, and justice), using ideas based on his education in economics and experience as a successful entrepreneur and CEO. 