Energy Efficiency

Over the last few months a troubling plan to assist the American economy via government intervention is coming unstuck; this government intervention was initially driven by a perception that the US $ and therefore economy would grow forever, however, panic is starting to set in as government engineered solutions add to pressing problems.

There is growing evidence that Washington is in a state of increasing panic; despite massive cash injections, market manipulations and ‘rescue’ plans, the recession is clearly deepening and spreading.

With little to show thus far, politicians don’t know if they should redouble past efforts, break ground on new initiatives, or both. However all agree, unfortunately, that the consequences of doing too little far outweigh the consequences of doing too much.

There are parallels between the current crisis and the Crash of 1929, however, one key difference is the global profile of the Greenback, in 1929, the dollar was on the rise and eclipse the British Pound Sterling as the world’s ‘reserve’ currency; furthermore, the American economy was fundamentally so strong that in 1934 America was the only major nation able to maintain a currency tied to gold.

Ever since, the U.S. dollar’s privileged ‘reserve’ status has been a principal factor in America’s continued prosperity. The dollar’s unassailable position has enabled successive American governments to disguise the vast depletion of America’s wealth and to successfully increase U.S. Treasury debt to where the published debt now accounts for some 100 percent of GDP.

The total of U.S. Government debt, including IOU’s and unfunded programs, now stands at a staggering $50 trillion, or five times GDP!

If the Greenback were just another currency somewhere, this never would have been possible.