A thing to fear.
"The only thing to fear is fear itself," said Franklin Roosevelt on the radio on March 4th, 1933. A nation of worried listeners hoped it was true.
"This great Nation will endure as it has endured, will revive and will prosper. So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance." ~FDR Inaugural Address
He said this within the first paragraph of his inaugural speech. An economic depression had settled on frightened Americans. The unemployment rate would rise to 25% (it's officially less than 5% right now) and the hopes and dreams of a lot of people were dashed on the rocks of a foundering economy. Roosevelt rose to the occasion and turned the national government into a facilitator of welfare programs no previous government had ever attempted. He also began the process of unhinging the U.S. dollar from a backing of gold. He had to in order to start the inflation process.
It's been more than seventy years since the calamity of the 1930s and almost everybody in his heart of hearts is positive the Federal Reserve and the national government won't let that happen again. Haven't they pulled us out of several recessions over the years? And hasn't the phrase "economic depression" been dropped from our vocabulary? Aren't we the United States of America and therefore too big to stumble? So, what's to be afraid of? Except for a downturn in real estate and a little slowdown in economic growth everything's fine....right?
No, everything is not fine. There's plenty of reason to be fearful of the monetary crisis that has developed because the masses and the government got into debt over their heads. Who's going to be the next FDR with the power of persuasion to calm our fears and pull the levers to help us weather a severe recession? While we're asking rhetorical questions, where are the levers any politico can pull to get this once mighty nation back on sound financial footing? As far as I can tell there is only one candidate offering for the job of U.S. president who understands the economic calamity and knows what to do to reverse the engines. But his recipe for restoration won't fly with the majority of voters. He would resort to re-establishing honest money as mandated by the Constitution. However, the Constitution long ago fell out of favor and it would be impossible to round up enough voters to revive it. Decades of "free lunches" from Uncle Sam spoiled us all for sound money. We got hooked on inflation instead.
So, what's a body to do? I'm recommending to family and friends that they become un-patriotic and stop being overspending consumers. Certain businesses will howl we're taking away their bread and butter. Politicians and talking heads on television will point out that consumerism supports most of the economy. Business writers in newspapers will scold us for "withholding our support" from retailers.
"This is a terrible time for people to start going frugal on us," complains the business association. "They should be spending MORE, not less!" Sorry, we say. We're living in the real world and they have taken away the punchbowl and the band is packing its instruments. The party is clearly winding down and we've got to take our hangover medicine - which means paying down our debt and trying to pile up some savings. We don't know what's ahead but we'd be stupid not to batten the hatches and try to avoid personal disaster.
Gloomy stuff, to be sure. It's tempting to look away, hold hands, and raise our voices in cheery songs to assure each other there's nothing really the matter. But when somebody like Alan Greenspan suggests we had better learn how to type a € on our computer keyboards because one day the euro may replace the U.S. dollar as the world's reserve currency, it's easy to see that massive change is in the air and we'd better quit frittering away money we don't have on stuff we don't need.
The present monetary crisis should not send people into the streets screaming in fear. But it should catch their attention. The recession on our doorstep is not going to be a pleasant little tea party. The quicker we brace for it the better. As soon as the worst distortions are worked out of the economy we can fill our glasses and party some more!
September 17th, 2007 (220th anniversary of the signing of the U.S. Constitution.)
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