The Observation Deck

“The dollar: Time for a change,â€Â￾ David Champeau provides a cogent history of the US dollar and the various changes, fictions, metals and iterations that have surfaced since its inception. He looks at how two-tiered systems have been used at crunch times, but cautions that both demographic and economic cycles may preclude such a solution in the next turning point for the buckeroo.

Here’s a sampling of his take on the time frame for what’s coming next.

â€Â￾With the euro-zone countries holding over $200 billion in US securities and Asia with $1 trillion or more, the stage is now set for another change in the dollar. If the 20/40-year cycle follows its past pattern, the next change will occur sometime around 2011-2016 and it will be a big one since it will be on the 40-year cycle. We have already seen three instances where the US has had a "two-tiered" dollar, where, in two of those instances, the domestic dollar was not the same as the dollar outside the US.

The 2011-2016 time frame makes sense not just from the cycle standpoint but also from a demographic standpoint. By 2015, the baby boom generation will be well into the belly of the retirement bell curve. We know that the US government has something of the order of $50 trillion in unfunded obligations in order to make good on the promises made to the baby boomers. This $50 trillion dwarfs what foreigners are currently holding. If we spread this over 20 years, the US will need roughly $2.5 trillion a year, the equivalent of this year's federal budget. Something has to give.â€Â￾

Ah yes, give us Grinders.

Well worth reading. For more see: http://atimes.com/atimes/Global_Economy/GF04Dj01.html

Kenneth Warren

In “Losing Our Countryâ€Â￾, Paul Krugman writes: “Baby boomers like me grew up in a relatively equal society. In the 1960's America was a place in which very few people were extremely wealthy, many blue-collar workers earned wages that placed them comfortably in the middle class, and working families could expect steadily rising living standards and a reasonable degree of economic security.â€Â￾

Krugman says “middle-class America didn't emerge by accident. It was created by what has been called the Great Compression of incomes that took place during World War II, and sustained for a generation by social norms that favored equality, strong labor unions and progressive taxation. Since the 1970's, all of those sustaining forces have lost their power.â€Â￾

Lakewood’s golden age was a product of the Great Compression. Today in Lakewood it is absolutely critical that Baby Boomers acknowledge that many young Gen X and Gen Y residents of our city are working two and three part-time jobs without benefits simply to get by. There are few traditional employment opportunities. Yet the presence of this creative DIY entrepreneurial class in Lakewood is a key asset. Should youth abandon the city, Lakewood is lost.

Yesterday, I met a professional musician who is working for two orchestras, one in Akron and another in Canton, holding down a part-time retail job in Cleveland, and struggling to launch a home-based business in Lakewood.

In Lakewood the fruits U.S. government policies that favor the wealthy are flashing each day before our very eyes with many of the young people we meet.

Thus Krugman: “Since 1980 in particular, U.S. government policies have consistently favored the wealthy at the expense of working families - and under the current administration, that favoritism has become extreme and relentless. From tax cuts that favor the rich to bankruptcy "reform" that punishes the unlucky, almost every domestic policy seems intended to accelerate our march back to the robber baron era.â€Â￾

Krugman challenges the obfuscations, scare tactics and name-calling of today’s partisan robber barons. “It's not a pretty picture - which is why right-wing partisans try so hard to discredit anyone who tries to explain to the public what's going on.â€Â￾

Krugman alerts the reader to the big lies of partisan propaganda that spins “progressivityâ€Â￾ toward falsification.

“These partisans rely in part on obfuscation: shaping, slicing and selectively presenting data in an attempt to mislead. For example, it's a plain fact that the Bush tax cuts heavily favor the rich, especially those who derive most of their income from inherited wealth. Yet this year's Economic Report of the President, in a bravura demonstration of how to lie with statistics, claimed that the cuts "increased the overall progressivity of the federal tax system."

"The partisans also rely in part on scare tactics, insisting that any attempt to limit inequality would undermine economic incentives and reduce all of us to shared misery. That claim ignores the fact of U.S. economic success after World War II. It also ignores the lesson we should have learned from recent corporate scandals: sometimes the prospect of great wealth for those who succeed provides an incentive not for high performance, but for fraud.

"Above all, the partisans engage in name-calling. To suggest that sustaining programs like Social Security, which protects working Americans from economic risk, should have priority over tax cuts for the rich is to practice "class warfare." To show concern over the growing inequality is to engage in the "politics of envy."

The large factor behind the economic stress experienced in Lakewood comes down to eclipse of America’s middle class society.

Lakewood is the middle. It is only to be expected that economic insecurity ripples in the threatened middle.

We need to create buffering circuits and community relationships between generations and DIY entrepreneurs that will build a sense of mutual exchange and interpersonal security. And we must do it ourselves by knowing our skills and building a network of flow and trade in our community.

As Krugman note, “The fact is that working families aren't sharing in the economy's growth, and face growing economic insecurity. And there's good reason to believe that a society in which most people can reasonably be considered middle class is a better society - and more likely to be a functioning democracy - than one in which there are great extremes of wealth and poverty.â€Â￾

“Reversing the rise in inequality and economic insecurity won't be easy: the middle-class society we have lost emerged only after the country was shaken by depression and war. But we can make a start by calling attention to the politicians who systematically make things worse in catering to their contributors. Never mind that straw man, the politics of envy. Let's try to do something about the politics of greed.â€Â￾

http://www.nytimes.com/2005/06/10/opini ... _popular_1

Lakewood is the critical urban space for building democratic, municipal and neighborhoods norms and values that can radically qualify “the politics of greed.â€Â￾

Kenneth Warren

You might want to re-read this thread from 2005.

One reason why I love this project.


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It's wrong to resurrect such ancient posts. Your point?

Stephen Calhoun wrote:Contest idea.



Think up of brand names for the orders of local beverage necessary in troubled times, from fey grape-based stem glass tinklers to corn-based shine.



Gold Coast Gut Snapper?

I've noticed small Vineyards in a few yards scattered across town. I don't know if the owners use them, but the grapes taste good.

There are probably strains of marijuana that would grow in gutters if simply left there. This is probably less capital intensive and time intensive than liquor.

Much of the gulf coast would probably be suitable for rice paddy cultivation. All that is missing are a million water buffalo and a few hundred million asians.

much of the appalachia mountains might thrive as terraced potato and bean fields: all they are missing are a few million Peruvian aborigines.

My vineyard was pillaged by the local critters this year... The bright side is at least my grapes did not go to waste this year in a jelly jar

if deflation hits hard enough there will be less need for two income households. This could take pressure off unemployment.

if the healthcare system collapses perhaps the numbers of specialties would coalesce into many fewer specialties. or at least, many specialists would return to general practice and healthcare will magically be as affordable - with or without insurance - as it was 30 years ago or 50 years ago.

Will the motion picture industry collapse? Perhaps it doesn't really matter. it is so cheap to make DVDs, people can spend centuries watching old stuff.

The rub of globalism and the new information/media economy is that the United States has a front row seat to view its own decreasing industrial and financial stature in the world. I suspect this makes some Americans feel a greater need to "step up to the plate" by "fixing" places like Iraq, or prepare to "compete" with China in the global arena of the Future, or arm and train Georgia for years then get offended when an autonomous province about the size of Lorain County adjacent to Russia appeals to the Russians for support.

I'm not sure even what the new Knowledge Economy is. most people don't seem any smarter to me than I remember. I think it is a sort of code or cant for liquidating productive capacity to subsidize consumerism and inflate certain professions. many professional fields do require byzantine sophistication: Without our tax laws CPAs would have to go back to being 19th century bookkeepers. you need a license to be a barber. the cost of prosecuting and imprisoning many convicts far exceeds the value of their crime. teachers and administrators in Cleveland have greater training than teachers and administrators in Cleveland had 40 years ago.

This has been unfolding since the mid-seventies and the Viet Nam era overhang in structural deficits melded with the hollowing out of manufacturing lifetime employment. Adjusted for inflation, marked to the purchasing power at median income, household income has been stagnant.



In other words, as the class of affluent lower upper class households has grown, those gains have been offset by the sinking into worse living standards at the level of the so-called middle class.

The Wii, the DVD player, the Plasma TV and the SUV are all just window dressing.. How about taxes and their impact on the standard of living in this country?

Wow, I actually agree with Steve C on something... The end is near...

How about going back to the gold standard?

taxes on corporate earnings, capital gains, and higher income brackets have all gone down. GDP growth has gone down with them, as has investment in R&D and capital assets.

the leveraged buyout boom of the 80s consolidated many industries not as capital intensive as the automobile industry. this made "innovation" less likely, and also made it easier for the remaining giants to buy out innovations and sit on them, or simply close the market to them. it also made it easier for them to "lobby" congress and fun think tanks and University Economics Departments.

bottom tier income taxes have gone up. The social security tax went up. the social security surplus has consistently been pilfered to partially mask the annual reaganomics deficits.

inflation has not been uniformly distributed: the cost of most staples, k12 education, higher education, medicine, and housing has gone up. I wonder how much increases in education, medicine, and housing are a portion of GDP "growth". the requirements of living have gone up. most family households need at least 2 cars, multiple televisions, cable television, rides for the kids to school, daycare, retail, after school activities, part time jobs, etc. the kids all have to go to college. this all takes a lot more highway off ramps and over passes.

Stephen Eisel wrote:How about going back to the gold standard?

Here is what happened last time there were significant attempts at returning to a gold standard. the Panic of 1873. this ushered in the Long Depression, which lasted about 23 years.

A British Agent had "lobbied" the right congressman to put the U.S. on a narrower gold standard. The very act of banking takes you off of a gold standard. nominal or legal proclamations of a gold standard are a valuable psychological crutch though.

http://en.wikipedia.org/wiki/Panic_of_1873

The interesting parallel is that this coincided with an equine flu disabling or killing many horses. although railroads were important, you need livestock to carry freight to and from the train, and to carry people anywhere there weren't trains. the good news was that horses didn't require gasoline.

Stephen Eisel wrote:How about going back to the gold standard?

Well today we would be far better off, now wouldn't we.


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Jim O'Bryan wrote:

Stephen Eisel wrote:How about going back to the gold standard?

Well today we would be far better off, now wouldn't we.


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Well probably not. While we're experiencing a recession, the economic growth allowed by moving off the gold standard over the past decades has been tremendous.

So yes, while in this short-term, we may be better off than compared to the most recent short-term period, over the long-term, if we had stayed on the gold standard, our standard of living would be far below what it is now.

Bryan Schwegler wrote:
Well probably not. While we're experiencing a recession, the economic growth allowed by moving off the gold standard over the past decades has been tremendous.

So yes, while in this short-term, we may be better off than compared to the most recent short-term period, over the long-term, if we had stayed on the gold standard, our standard of living would be far below what it is now.

Bryan

While I can agree with this assumption, I am not so sure it cannot easily be argued the other way. Moving off the gold standard has allowed America, and in turn the people of this country to spend money like drunken sailors.(If there are any drunken sailors reading this, please understand this is a metaphor).

I has been a godsend for banks, large business and the industrial military complex, but I am not sure it has served America, long or short term.

Gold has gone from $64 - $874, and I believe that had the government actually been holding their gold as backing, possibly higher. So the economy would have grown, and funds would have been available for growth. As rapid, as not, probably not but that would have also in my humble opinion created a slower safety valve for everything. Which COULD have lead to more responsible growth, so the problems today would not exist or at least not to this extent. Slow steady growth, is more solid, then quick speculative growth, that does hit massive home runs, but allows for equally spectacular losses.

I also find it odd how many people actually still believe $$$$ are back with anything, except a promise from a private banking institution that the paper is actually worth the amount printed on it. In truth, it could fail. A promissory note only has value, if it can be cashed or traded.

While Nixon pulled us off the gold standard for many reasons, one being funding the war, in 2008 we are now feeling the sobering effects, and I would argue, that this is the beginning of a long, long day after the party.

FWIW

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