Viable Energy Now

President Eisenhower warned us about the Military-Industrial complex. Though we never really developed one, the Soviets did, and it did them in. Instead we grew our own Financial-Political complex and now it is doing us in.

The state of the economy will determine the outcome of the November election. And the state of the economy will depend on whether the financial bailout was primarily for the benefit of the banks, with the overall economy at best a secondary consideration.

The economic crisis, which started with banks, is now expanding to governments: several European nations could possibly default on their obligations, and the creditworthiness of others is being questioned. So far, the current crisis has been compared to the Great Depression, and remedial measures have been designed accordingly. But other forces and processes are probably at work, connected to the globalization drive of the last three decades.

The success of Scott Brown in the recent Massachusetts election has been attributed to the popular reaction to economic hardship and government arrogance. While this is certainly true, there may also be a more fundamental issue: the growing obsolescence of the ideological templates from both Right and Left.

Current policies aimed at economic recovery are both futile and dangerous. They will produce a weak recovery (at best) while insuring that an even more severe crisis will occur in the near future.

The American political system has a built-in capacity to regenerate itself. Such a change occurred in 1854, with the creation and rapid growth of the Republican Party. We may be approaching a similar episode of political realignment.

The root cause of the current crisis is the mismatch between the monetary mass within the global financial system and the amount of assets available for investment. Current government and central bank policies have increased that mass beyond the system’s capacity to absorb it. The probable outcome will be a massive currency crash, which only the implementation of alternative policies could prevent.

The foundation of democracy is the people’s right to control the circumstances of their lives. This right has both political and economic dimensions. When the U.S. was founded, the political had priority, while economic control was a given. This is no longer the case, and today economic sovereignty has to be both affirmed and protected.

The coming climate summit in Copenhagen has been the occasion for calls to do something quick to reduce carbon emissions. While the issue is serious, the single-minded focus on carbon keeps us from developing a more balanced and inclusive view of climate-altering factors.

A great part of the liquidity created by the ultra-loose monetary policy of the United States is exported through the global financial system, creating asset inflation abroad. Once the economy takes off and imports rise with it, this inflation will be recycled to the US and choke off any meaningful recovery.