An inquiry into what the next decade will bring drawing off the previous expectations of past decades. by Edward S. Paxson
(libertarian)
Monday, February 15, 2010
With the current recession, 9/11 terrorist attacks, and two new wars against an unprecedented enemy with little end is sight, most were glad to say goodbye to this past decade and welcome what the future has to hold.
Ten years ago, we were delightfully satisfied at the resilience of our new technology through the Y2K scare. Though, we had yet to discover or at least come to grips with the horrors of what terrorists were planning throughout the 1990's.
Even though the sub-prime mortgage crisis started in the mid 1990's with government action after reports of minorities (except Asians) not receiving as many mortgages as whites, we didn't see its bubble burst until 2007-2008. This was the eye of the storm that launched the world into a recession by causing the financial markets to crash when un-credit worthy customers stop sending in their mortgage payments. By then, most of the politicians and central bankers that helped set up these low income home owners for bankruptcy were long gone.
Going back even further, all we really know is that there will be good and bad times with the bad ones hitting us by great surprise.
In 1860, few really envisioned a Civil War, let alone one that would last more than a couple months.
WWI was originally called "The War to End All Wars" by President Woodrow Wilson and in my opinion, many of his grave blunders set the stage for the rise of the tyrants responsible for WWII. President Franklin Roosevelt won re-election in 1940 promising to keep America out of this war. A year later, we found out that would not be possible.
On economic history, no one in 1930 was able to figure out the main reason we were sinking into Depression. It was because the Federal Reserve, created in 1913 to stabilize monetary policy, was allowing the money supply to greatly contract causing massive deflation. We then inaugurated FDR 3 years later only to be let down by the failure of the New Deal to bring down unemployment.
The beginning of the 1970's showed us many of the problems with the Great Inflation who's foundation had already been set and the status quo was being followed by the ruling Keynesian's including President Nixon himself. It finally ended with the inauguration of President Ronald Reagan who help cut tax rates and worked with Federal Reserve Chairman Paul Volker to end the cycle of inflation.
The almost self inflicted 1981-1982 recession was caused by workers not being able to get their automatic 10% raise that happened under inflation due to an over-increasing money supply. This was cut off to stop the tremulous economics times of the 70's from repeating. After pursuing the politically unpopular yet correct economic policies, Reagan and Volkers results were soon vindicated.
What history has taught us is that we are most likely to see peace and prosperity when politicians take a minimalist role. When the government sets simple rules for the game and stays on the sideline to enforce that coercion doesn't take place and competition is high. This protects consumers and workers and produces fairly steady growth.
Regardless of who is in power, the real burden of government, spending, just seems to grow indefinitely. The Democratic controlled government pushing for more medical entitlements, energy taxes, and regulation (which inevitably stifles competition by favoring big business over small business), will just make things worse by preventing the tide from turning.
As the baby-boom generation retires, the entitlement programs of Social Security and Medicare, set up as financial ponzi schemes, will burst going into the red, with a hefty bill for my generation to foot and no benefits for us.
The chances of us defaulting on our massive and sharply increasing debt will not be fear mongering for my generation, but even a possibility for this decade.
All this before even considering the apocalyptic possibilities if countries like Iran and North Korea get their hands on nuclear weapons. Other foreign policy fears may include actions that countries like Russia, China, and Venezuela may take towards the international community.
The next decade will likely be a precursor for my generation. It will be a test to the direction future decades will inevitably take. The level of responsibility our elected officials demonstrate will drive most of it. Because of the nature of politics, because responsible politicians are those that limit their reaches and don't give out special goodies, I have little hope.
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The views expressed
in this article are those of Edward S. Paxson only and
do not represent the views of Nolan Chart, LLC or its affiliates.
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