There is a systemic problem in the United States that is bigger than just Trump and his minions. When it started is quite clear to anyone using Google but everyone has their own opinion, so I’m going to share mine. There are two points in our history that sent us down the path that created the system we have right now; The New Deal and dollar break from the gold standard. Did we start feeding the United States economy, our version of Mr. Creosote, money we didn’t have?
It was 1933 and the United States was a few years into its worst economic downturn in our history. Roosevelt created what he called “The New Deal” that was a series of domestic programs created between 1933 and 1938 created with laws and Executive Orders. There is a key aspect of the legislation that placed heavy banking regulations under the Glass-Steagall Act. Banks could no longer make speculative investments in financial markets with depositor funds among a host of other regulations. Roosevelt had no way to pay for the recovery he knew was required, so several relief acts were passed that essentially allowed the government to flush the economy with money and spend more than it was taking in from the tax base. If you want to blame someone, or something, for the $20 trillion mountain of debt the United States is in right now, go no further than the architects of The New Deal. The majority of that legislation remained intact well into the 1970’s when mounting pressures to deregulate started spreading through Congress.
Another action Roosevelt knew had to be done was having to break the Dollar from the gold standard, which he did in 1933. The government pumped money into the economy no longer hindered by matching the gold standard that dramatically lowered interest rates. As we’re all aware from the 90’s and 2000’s, when you lower interest rates (or eliminate them all together) it encourage growth in the economy. The New Deal, flushed with money, was able to turn the economy around and improve it over the next several years leading into World War II. The declaration of war on Japan, and then on Germany, put the United States into industrial overdrive. The economy steadily improved for decades while at the same time the government was mounting more debt.
Much like Mr. Creosote in the movie Monty Python’s The Meaning of Life, who gorged himself on food until he ultimately exploded, the United States’ economy can be compared to Mr. Creosote and it’s only a matter of time before the “wafer thin mint” is spent and the economy collapses under the pressure of its own debt. Why does it matter? The gold standard kept the government in check as there was a finite amount of money that could exist in the economy; in theory you could cash in $1,000 and get that much worth of gold in return. Once that gold standard was lifted, to put into modern terms, the government traded in their Debit card and received a Credit card. With a mounting debt of almost $20 trillion, a new way has to be adopted or the entire system will just collapse.
I’m not advocating a return to the gold standard or anything that resembles the gold standard, it just doesn’t work in a complex global system. What we can do in the short-term is re-enact the Glass-Steagall Act. What I can almost guarantee if something is not done, and soon, is that our economy will look like Mr. Creosote after he ate that “wafer thin mint.”