THREE DRASTIC SOLUTIONS FOR THE USA TO GET OUT OF A SELF DESTRUCTIVE SOCIOECONOMIC COLLAPSE:


Money creation and destruction is highly non linear, and depends upon mass psychology. As of March 2008, the USA is threatening to plunge into a classic self perpetuating deflationary spiral. A complicating factor is the US debt held by foreigners, in a situation of trade deficit (the latter for the reason of a dearth of industrial infrastructure, hence a dearth of production of real products that mean something when exchanged in the world economy). While, simultaneously, the US Dollar is not anymore the sole world reserve currency (at the present rate, it will soon be displaced, not just by the Euro, but even by the Pound!). In other words, the USA is affected by problems reminiscent of Japan in 1990, and also of Argentina much earlier (when Argentina enjoyed the world’s second highest GDP per head, before collapsing in a classic currency run when the foreigners which held Argentinean debt had enough of its self indulgent profligacy). To boot, the USA is stuck in a disastrous war which sucks away all the investment which could leverage the economy up with investments profitable in the long term to the US socioeconomy in general, instead of being sown somewhere on the other side of planet, among dunes and minarets.

Here is a short term solution to the US financial crisis: what about reevaluating all principals on recent residential mortgages 50% lower? (Tapering off the reevaluation in a crafty way.) That would be an enormous shock, but a heart gets out of fibrillation through a shock. There would be problems with municipalities, through some tax receipts readjustments, but this should be addressed as they happen, with localized federal bail outs, etc.

And now for how to solve the long term socioeconomic problems affecting the USA: starting with Nixon (debasement of the dollar, creation of HMO plutocratic health “care”), the basic problem of the USA became that it wanted to be the Wild West. And what happened to the Wild West? Well, it disappeared, right. And why did it disappear? Because it was not compatible with modern civilization. The Wild West was legislated, and regulated out. Now the world economic community is doing the same to the entire USA, or more exactly the USA is doing it to itself: making itself disappear everyday ever more as the US currency sinks quickly into irrelevance.

The present world economic situation calls for new regulations and solutions, and the rest of the world has been implementing them (Kyoto Treaty), boosting world wide efficiency. The USA has been innovative in some fluffy picturesque details of the world economy (Google clicks, iphone, hedge funds, etc…), but missed the big picture for incredibly long.

So here is the one and only long term solution for the USA: to get a modern economy one needs to change to a modern behavior, which one gets from behavioral (Pigovian) taxes on consumption and energy. The US economy, after decades of stuffing its face with SUVs and inefficient houses, transportation, and everything inefficient one can possibly imagine, has become not just deeply inefficient, but obsolete in its habits and short of around one hundred trillion US $ of past infrastructure investment that has never happened (to understand what is going on, start to consider what it would take to build a modern railway system in the USA; a little detail: the Swiss and Franco-Italians are building three very high speed trans Alpine tunnels for 30 billion US $; Europe is investing hundreds of billions in very high speed rail (up to 250 mph); US rail was obsolete 50 years ago, but still, it is crucial to the US economy).

Oh, yes, and that would be the third solution dimension, it would also help to have a hyper efficient health care system, and that means a legislated single payer basic system, as all other advanced countries have (not having this puts the US at a deep economic disadvantage). People’s life should not been held hostage to the rich. Real health care reform does not mean the pathetic tinkering Hillbama has been reduced to, before they even started. Nixon did not have only bright ideas, and, contrarily to what he asserted, he was a crook. (His) HMOs got to go.

Patrice Ayme
Patriceayme.com
Patriceayme.wordpress.com

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