Is the United States really a “free market” economy and the bastion of “capitalism” as we claim? Or is it a Bureaucratic mess? Is it a “command economy”? Obviously we haven’t reached the depths of socialism or communism that China and Russia reached before their fall and reemergence as capitalists but none-the-less our economy is not as free as it once was. There is burdensome regulations that prevent competition, political cronyism, corruption, and as David Galland contends in the following article “Europe and the economy of the United States is – and has been for decades – increasingly under the control of central planners at the expense of the free market.” ~ Tim McMahon, editor
The point is that the economic model that allowed the United States to rise out of abject poverty at its inception to become the most powerful economy the world has ever seen has been tossed aside in favor of a model that has proven time and again to be fundamentally flawed and always doomed to fail… That the central-planning model, here and around the world, has been advanced by a fiat global reserve currency is undeniable. However, as the two charts clearly show, the consequences of having central planners controlling monetary and fiscal policy have created a ticking time bomb set to explode.
By David Galland, Casey Research
This missive begins with a couple of unusual charts – unusual because they contain no reference points. Here’s the first. As you’ll note, something occurred that triggered a waterfall slide in the chart. We’ll get to what that triggering event was in a moment.
And here’s the second. In this case, again it’s clear that something triggered the chart line to do the equivalent of a moonshot.
We’ll return to those charts momentarily. First, however, a confession.
As much as I read, and despite interacting with very smart people on a daily basis, until just recently I have missed something about our economy that, on reflection, should have been as obvious as the computer screen I spend far too many hours staring at.
Allow me to emphasize the point in somewhat stronger terms.
That I could have overlooked this particular aspect of the US economy and the overarching consequences that follow from it for all these years should, if I were a lawyer, cause me to be disbarred. If I were a doctor, the medical practice board would be entirely within their rights to revoke my license. If I were a politician, my benefactors would be entirely justified in cutting off my bribes donations. If I were a… well, you get the idea.
Interestingly, as smack-up-the-side-of-the-head obvious as this feature of the economy is, and has been for years, virtually everyone else has failed to spot it as well.
So, what is this mystery?
Succinctly, it is that, like Europe (where, during my recent trip there, the spark of awareness was lit), the economy of the United States is – and has been for decades – increasingly under the control of central planners at the expense of the free market.
As proof of that contention, we return to the two charts above. Here again is the first, but with the contextual reference points in place.
As you can see, the chart tracks the purchasing power of the US dollar since 1914, the year that the government, through its stooges at the Fed, took command of monetary policy. Laughably, the stated mission of these central planners was to preserve the value of the dollar. Predictably, exactly the opposite resulted.
And here’s the second chart, also with the reference points in place.
As you can so clearly see, after severing the last connection with the gold standard in 1971, after which point the central planners took command of fiscal policy, we have seen an exponential growth in government debt.