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The inauguration of the 44th president of the United States amidst one of the most turbulent times in our history shows as much as anything how history repeats itself, and how everything cycles, especially the economy. Some cycles occur naturally, without any intervention from outside forces, including the Federal Government.
In recent times, The Federal Reserve has micromanaged the economy through the raising and lowering of interest rates to control inflation. Prior to 1971, the US currency system was backed by Gold physically stored primarily at Fort Knox, Kentucky among several other sites.
The fluctuations in the price of gold based on the market for gold served as a check on inflation, as the value of the currency could not exceed the value of the gold on deposit at the US Mints.
As the total value of all the currency in circulation, approached the value of all the gold EVER mined, it became necessary to abandon the gold standard, as President Nixon did in 1971.
That left the Federal Reserve in charge of monetary policy, to control inflation, being much more activist in the last 20 years, particularly under Fed Chairman Alan Greenspan, who became somewhat of a Guru to the financial markets. Considering the fact that the monetary system in the US has been set up to respond to certain manipulations, it stands to reason that there must be more than one way to do it. In fact, a retrospective look and study of the causes and events leading up to, through, and after these cycles of expansion and contraction, prosperity and recession.
Prior to the US entering WWI, production of military equipment and supplies was already underway, as sales of such products to countries allied to the US had commenced. By the time America entered the conflict, military production was in high gear. The fact that money from outside our borders seeded this production, the Federal Government did not have the burden of financing 100% of the war, which gave way to The Roaring 20's, quickly followed by The Great Depression.
Franklin Roosevelt's New Deal was a result of the Federal Government spending it's way out of the crisis, not in entitlement giveaways, but through public works projects, infrastructure improvements, hydroelectric dams and such, which put men to work, and gradually eased the effects of the depression. December 7th, 1941, all but ended the depression, fading into the history books, as men went off to war en masse, and the government's mobilization of industry for war production. Tanks, Jeeps, Aircraft, fabric, industries shutting off their commercial assembly lines in favor of military equipment and supplies. This was followed by a peacetime expansion, as war production was replaced by housing construction, new products, new autos, new appliances, new everything. President Eisenhower enacted the US Interstate Highway System, a nationwide project to build highways across the country.
Throughout the 1960's and '70's, the economy undulated. JFK's challenge to The Space agency gave life to NASA'S Moon Project providing fuel for the economy for nearly a decade, financed by the Federal Government by way of taxpayer dollars.
As this project was winding down, the economy Under Jimmy Carter was affected negatively by an Arab oil embargo which created gasoline shortages, high fuel prices, high costs for everything, long gas lines, and long memories at the ballot box in 1980. That coupled with taking of hostages in Iran, and a failed rescue attempt, which ended in the Iranian Desert as our helicopters crashed due to age, neglect and disrepair, opened the door for a new President.
Enter Ronald Reagan, Republican nominee for president. His campaign to replace the already unpopular President Carter, used the mishandling of an inflationary economy which needed lower interest rates, tax reduction, and the rebuilding of an obsolete military as his theme. This talk, while not much on specifics, resulted in Reagan's detractors calling him "RayGun", and saying "He's going to get us into a war." He didn't, but what occurred was one of the greatest peacetime military expansions in history, all with government funds, put into the hands of the defense contractors, who in turn, put people to work building ships, weapons, aircraft and all the associated parts. People who were paying taxes into the system, allowing the president to cut taxes. The next best thing to a wartime economy, is to do the things you would do if you were actually at war. "Trick" the economy. But the spending continued unabated, only this time with borrowed money. By the time Reagan left office in 1988, we had a well stocked military, and record deficits, but economically for the average citizen, happy days were here again. However it's clear that the economy is much more responsive, when the Federal Government infuses cash into businesses, who then hire workers who can do the same.
The next president, George Bush Sr. was faced with the task of winding down a heated economy, closing military bases, stopping the runaway spending, which put people out of work, among other things. Although the first Iraq war had us using military resources, these were already stockpiled, so no new government spending was needed. Failure to plan for a "peacetime" economy set the country into a fiscal tailspin in just 3 short years. That opened the door for Arkansas Governor and Rhodes Scholar Bill Clinton to become the Democratic nominee for president who campaigned on the promise to"zero in on the economy like a laser beam." The internal mantra for the campaign war room was "It's the economy, stupid."
As a result, according to the US Census Bureau, beginning in 1992, after Mr Clinton was elected President, the U.S. economy expanded for 120 consecutive months into the year 2001, particularly in the last 3 years of the Clinton Administration. How did this happen? VP Al Gore was busy re-inventing government, there was no war to wage, no military buildup needed, no major public works projects. How do you get cash infused into the economy, while paying down the deficit. First think NAFTA, which allowed for foreign cash, new cash, not recycled American cash or borrowed cash. Cash spent on American goods and services, but that was only part of the equation. What was needed was a crisis of not only national but global proportions. The US government couldn't do it alone. It needed a partner.
Here's the McGuffin. Remember Y2K? The Year 2000 when every computer in the world's internal clocks would not cycle to 2000, but recycle to 1900 at the turn of the century and be rendered useless and obsolete. In fact that was expanded to anything with a computer. Vehicles, household appliances, industrial power plants...Everything. The works. What took place after that announcement, (repeated advertisements on the news, in the newspapers, magazines, tech bulletins, virtually everywhere,) was an investment by almost every business, every individual, and every government worldwide in NEW computers and NEW software for them, at the very least using a patch of some sort.
Microsoft, headed by Bill Gates, who manufactures the software shipped with nearly every PC sold at retail, and has become the World Standard for software, just happened to be one of the major beneficiaries of this crisis, along with retail stores, IT professionals, and Dot Com investors. By the end of the Clinton Administration, most companies were doing very well, as was Wall Street, and Main Street. Unprecedented investment into the Global, and the US economy by not only government which replaced all their IT infrastructure, but private enterprise and individuals. This served not only to provide for a robust economy, but provided the impetus via capital to computer, computer component, Internet, and software companies to invest in research and development of new and more efficient ways of doing things via computer. Most of us would be hard pressed to live without a computer, Blackberry, or The Internet. Today's 21st Century economy is nothing but a result of greed on the part of several unchecked industries, blatant disregard for Main Street, and either an uncaring or unknowing Presidential Administration. Had the United States not ratified the 22nd amendment, it is probable Bill Clinton could have been elected to a third term.
I am not a conspiracy theorist by any means, but just as it is difficult to believe that we are here on this earth by some cosmic happenstance, it is difficult to believe that the longest economic expansion in history was an accident, or that computer and software geniuses did not know this was going to "happen" until, gee, 3 years prior to the year 2000. It just seems that someone orchestrated it. What happened Jan 1 2000? Nothing. I turned on my Commodore 64, which I had not touched in 5 years. It started, booted, and loaded the program I put in it, and still does so to this day. I started it before I began this article several days ago. Who talks about Y2K now, let alone even remember it. Some computer people insist that the threat was real, and the fact that nothing happened is testimony to the fact that everyone involved reacted the way they did. Real or imagined, the fact remains, it was a phenomenal opportunity that was seized to the benefit of the world economy. We can only hope such a situation can present itself, to get us out of the current fiscal crisis. Before it becomes known as the Greater Depression.
By Tony Kudalis
Relationship Analyst studying the Effects of Politics, and Societal Changes on unmarried individuals
Social Research and Observation, Critical Thinking
Independent Consultant to the Social Community
14 Years experience observing, interviewing and analyzing Single, divorced, and widowed individuals nationwide. Studies done on request. Results of studies already completed are available by request by writing to k3ynot@gmail.com
Research Results are part of ongoing studies and research.
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