Economic Factors Make Crisis Inevitable

Sam Rachele  1995  Published in:  Social Trends Newsletters, July. 1995, No. 137

As I study history and reflect on the news, I become deeply worried about the future of most of us now living in North America.

The bomb that ripped through the FederalBuilding in Oklahoma City recently reflects a growing trend of apprehension and discontent in the United States. In fact, it foreshadows a period of increasing frustration, anger and violence. A lack of meaningful opportunities and declining living standards feed into this feeling of discontent.

Not only has the median income level in the U.S. been dropping since 1977, it also has dropped more noticeably in the past several years. On top of this reality one can expect unemployment to rise dramatically as the economy continues to slow down, and both government and industries continue to “streamline” their operations. To “streamline” means to replace more workers with modern technologies and to reorganize operations.

Herein lays the seeds of not only the gradual rise in frustration levels but also of the eventual collapse of the economic systems of both the U.S. and Canada. Undoubtedly repercussions will be felt around the world.

To understand what is happening, we need to go back to the crash of 1929 and the Great Depression that followed. The primary cause of this Depression was simply a matter of too many commodities and too little income. As farm produce rotted in the fields and warehouses bulged with manufactured goods, people roamed the streets hungry, homeless and despondent.

This unique occurrence took about 300 years to develop from the beginnings of the Industrial Revolution. The fundamental contribution of this revolution has been the introduction of machines and electrical energy into the productive processes of society. The result has been and continues to be the replacement of human labor at a small fraction of the cost and the provision of a vast output of goods.

In 1932 President Roosevelt recognized this dilemma of overproduction and under-consumption and began what has become a 63-year-period of deficit spending.

Deficit spending means that the government borrows and spends but doesn’t pay back on this debt. Borrowing is a money creation process that passed on to government when business had little or no incentive to borrow and invest at rates necessary to keep the economy going. With frequent buildup of surpluses, there was little incentive to expand.

Since 1932, the U.S. government and individuals have been on a borrowing and spending binge. Now, however, government credit is running into problems — we soon face the prospect of Federal Government bankruptcy. According to the Entitlements Commission of the U.S. Congress, by the year 2012 all Federal income will be consumed by the cost of interest on the national debt and the cost of Entitlements. Since the government has other obligations, particularly a large defense budget, the day of reckoning should occur well before that date.

Members of Congress and the President seem to be greatly concerned, but with tunnel vision mentalities they see only half the problem. Their solution: balance the budget. The last time this road was taken was in 1937 when Roosevelt was persuaded to — yes — balance the budget.

After this ill-advised decision, the economy went into a tailspin, exceeding the decline rate of 1929. By 1939 there were 9.5 million unemployed. It took a huge sum of government debt for World War II to pull the economy out of the Depression.

Most Americans prospered from the money poured into World War II, the Korean War, the Vietnam War and the extravagant Cold War, but now the government’s goose that has been laying the golden eggs is sick and in danger of apoplexy.

At a time when deficit spending can no longer be tolerated, the need for additional expenditures by the government will be greater than ever, since increases in productivity (output per person) are wiping out more and more jobs and surpluses are destined to flood the market. At the same time, the ability of the government to borrow, without raising interest rates further, will become increasingly difficult since savings are low and foreigners are getting edgy about our deficits.

Soon we shall approach the 1929 scenario, but this time there will be no Uncle Sam to bail us out. The government cannot afford another large-scale war to sop up the surpluses and many of the unemployed.

Our backs are now up against the proverbial wall. We face an Inevitable Crisis, and if something drastic is not done, heaven help us.

So, what can we do? The answer: nothing short of abandoning the monetary system, which is driven by debt. In fact, money is nothing more than a certificate of debt. Look at the inscription on the front of any greenback.

It is therefore essential that a system be incorporated that is devoid of debt. Such a system is theoretically possible. A group of scientists, engineers, educators and economists, calling themselves Technocrats, devised a system over 63 years ago to deal with this approaching crisis. They predicted at that time the eventual collapse of the economy.

Their solution involves the use of energy units as the distribution medium rather than debt in the form of money. Energy is a universal measure of all physical activities; therefore, every function in society is measurable in energy units.

They proposed that after overhead expenses are deducted, the remaining energy units would be distributed equally among all individuals. Everyone, except children, would be issued a credit card of energy units. These cards would be individualized, nonnegotiable and non-cumulative. Therefore, no one person could amass wealth that could be used to dominate and control others.

Every individual would be guaranteed housing, education, and medical care as part of the nation’s overhead expenses. In the process of eliminating money as we know it today, most crime would vanish, and conservation of our environment and resources would have high priority.

In the process of efficient utilization of our technology and resources for living rather than for profit, the number of working hours could be reduced for everyone while still maintaining high living standards.

In closing, let me say that the design of this new social operation was not based upon any ideology but on scientific facts and engineering planning.

In the end, however, it boils down to a question of survival. Either we make such an adaptation or suffer the terrible consequences. The destruction of the FederalBuilding in Oklahoma City will pale in significance to the carnage and devastation that lies ahead if fundamental change does not occur.


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