Economic Crises and the Blame Game

To look for root causes of the current debacle we have to go back many more years than Clinton and look at two concepts: democracy (with a small c) and capitalism (again with a small c). More than one writer has expressed variations of this thought: "Democracy contains within itself the seeds of its own destruction." (Attributed with variations to Alexis de Tocqueville, John Adams, Alexander Fraser (Lord Woodhouselee). The latter author explained this idea more thoroughly:

"Democracy can only exist until the voters discover that they can vote themselves largess from the public treasury. From that moment on, the majority always vote for the candidates promising the most benefits from the public treasury, with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship." [Source: Suzy Platt, Respectfully Quoted (Washington, DC: Library of Congress, 1993), p. 84.

We didn't go quite as far as a dictatorship after the Great Depression of 1929, but we did grant unprecedented powers to the President. Had Roosevelt not been elected, it seems quite possible a true revolution would have come in this country. By the first two years of the Thirties, there were small localized revolutions, particularly among farmers. There were clear warnings issued that parts of the country were on the verge of anarchy. Roosevelt, with his "The only thing we have to fear is fear itself," and the horde of legislation that took place in the first 100 days, did turn things around. Some would say he took the country too far in the direction of socialism, as the current Democratic candidate for president seems determined to do.

Now, Congress has granted unprecedented power not even to the president but to an appointed official. There is no Roosevelt in sight now. Both Obama/Biden and McCain/Palin are not even shadows of the intellect, dedication, and faith in the America people of Roosevelt and the "Brain Trust" he gathered around him. The parallels to the late 1920's are frightening. Plus now we have even more dangerous financial things going on that didn't exist in the Twenties.

There is an unregulated market in something called Credit Default Swaps (CDS). In 2007 it's estimated there was about $45 trillion in this market and now the estimate is $53 trillion. (That's not a misprint for billion; it is trillion!) Here's a brief explanation: http://www.time.com/time/business/article/0,8599,1723152,00.html

And more money is moving into this market now that short sales were halted-because these CDS's can be a form of short selling. If the CDS market begins to collapse, the $700 billion bailout will seem like a dollar handout to a homeless person.

The bottom line in the blame game is this. There is no point in looking to Wall Street or the government to cast the blame. This was done with Congressional hearings after the Great Depression and the public was shocked at the venality of "Wall Street" and "Corporate America." Did anything change in the long run? Some things got regulated, but like software, the pirates are always ahead of the producers. Nowhere is this truer than in a true Free Market, Capitalist system.

Capitalism has one underlying theme upon which everything else rests-the use of wealth to create more wealth. Christianity in the early days frowned on the whole idea of capitalism (even though the concept itself did not exist) because the primary capitalistic element at that time was usury-making money by lending money. However, when the Catholic Church in the Middle Ages came to realize the value of owning wealth and later the Protestant Ethic put the final stamp of approval on Capitalism, the whole future was set.

The irony of all ironies is that Greed is one of the Seven Deadly Sins. Yet what is the desire of getting wealthy based on? It's based on the fundamental importance of Greed in the lives of so many. Why did Wall Street and banks create the subprime market? Not only because bankers wanted to make more money; it took borrowers as well who wanted something they couldn't afford to be a willing party to the fraud. Why is the whole issue of the huge credit debt carried by Americans now so critical? Because people want things they can't afford.

So, we need to put the blame on where it truly rests. As that great philosopher Pogo once said, "We have met the enemy and he is us."

Are there any alternatives to the whole currency mess? Perhaps. Read about Berkshares-an interesting approach at http://www.berkshares.org/index.htm .These people might have a chance if the federal banking system fails.