Originally posted by ziggy1706
I've often wondered, wether or not its possible..the war in Afghanistan and in Iraq is what, at least at some level what really keeping our economy
afloat right now...
(note: edited for readability, not your fault, I occasionally hose myself also when I'm in a hurry)
Well... if you want to buy into a somewhat "out there" point of view... What is propping us up are a series of "bubbles" that were artificially
generated by Greenspan et al. The general idea, is to pump money and spending in the economy by throwing debt on us.
Nikolai Kondratiev was a Russian economist who proposed a theory that Western capitalist economies have long term (50 to 60 years) cycles of boom
followed by depression. These business cycles are now called "Kondratiev waves".
Kondratiev waves are driven by technological revolutions and rise to a peak as the technology becomes adopted and exploited, then a recession phase,
followed by a depression period which typically has some sort of economy driven/related war, then a recovery with a new technology being
discovered/developed that then drives the next wave.
Waves can overlap as the different technologies used by the society shift importance.
Wave One - 1771 - Industrial Revolution - War of 1812 at the dip
Wave Two - 1829 - Steam and Railways - American Civil War at the dip (Austro-Prussian War in europe)
Wave Three - 1875 - Steel, Electricity, Heavy Engineering - World War I at the dip.
Wave Four - 1908 - Oil, Autos, Mass Production - World War II at the dip.
Wave Five - 1971 - Information Age - The economy related war is likely still pending
If you will note, wave five peaked in the 1981 - 1987 time frame. Oddly enough... Greenspan who took control of the Fed August 11, 1987, seems to
have engineer or enabled a massive run up in the stock market. What specifically he changed to let the market run away like that, I don't know. But
it staved off an inevitable recession and the Dow peaked around 11722.98 on 14 Jan 2000.
This is where you might get angry...
, in the New York Times.. in an opinion piece, the following was written:
The basic point is that the recession of 2001 wasn't a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and
easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning
after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household
spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble
to replace the Nasdaq bubble.
The Dow peaked again 12 Oct 2007 at 14093.08.
Right now... if Kondratiev's theory is correct, we are in for one huge fall as all that over extended debt comes due. Whatever new technology there
is to drive the next wave will probably not show up until somewhere between 2016 to 2034... provided we are still a capitalist society.
BTW... Greenspan went on to do consulting work for Pimco after he left the Fed.
Now... as for spuring people to take on new debt... that's what it's all about. That's what "Drive America" and "Cash for Clunkers" was all
about. Personally, I suspect that Cash for Clunkers was also intended to funnel money to the States. You paid sales tax on the full retail value of
the vehicle, and you will pay Federal tax on that "voucher" come April 15th. Having a brand spanking new car loan to pay off helped the finance
companies... such as GMAC.
Here, another graph for you...
This is the current debt, in 1980 dollars, for each individual in the civilian workforce, as defined by the Bureau of Labor and Statistics. It's
based on outstanding private debt figured from the Federal Reserve.
Note: Chart data comes from here:
So... there's why, as best I can figure.
Note: Not every one buys into the "Long Wave" theory, so take it with a grain of salt.
[edit on 2-9-2009 by RoofMonkey]