A national economy is very much like what the American family farm was at the turn of the 20th century. On the family farm mom, pop and the kids worked all year to produce as much as they possibly could to provide for their own needs for the upcoming year. Pop worked the fields and raised his livestock. Mom canned vegetables, cured meat, spun yarn and made candles. The boys chopped wood and helped pop where they were needed. The girls knitted socks, milked the cows and fed the pigs. Everyone did their part to produce the maximum amount of manufactured goods and agricultural produce they could.
At the end of the year, if all went well, the family found that they had produced enough of everything they needed to keep them alive, warm and healthy for another year. If things went really well, the family had more than enough of everything. When that happened, they loaded their un-needed surplus into their wagon and took it to town and sold it all. The surplus candles were snapped up by the hotel along with the extra firewood. Restaurants bought the meat they didn't need. Surplus spools of yarn went to the dry goods store and so on. Now the family had everything they needed and a bunch of money besides, that they could use to purchase things they could not make themselves. Such as ammo for pop's hunting rifle, shoes for the horses, coffee from South America and real cane sugar from Cuba to put in it. And maybe they had some money left over to stash away in the bank for a rainy day. That's if the year went good.
When luck ran bad, the farm family never produced enough of anything to satisfy their needs. Faced with shortages, and the prospect of death, eventually the family had to go into town and clean out their bank account and take out loans to cover what they were short. That's where we are today in America and countless other once Western nations. When America as a nation began to stop producing enough of what it needed to supply it's citizens needs, there was only one thing that could have happened. America had to go into town, clean out the bank account and start borrowing to make up the difference.
For the first 75 years of the 20th century, family farm America had great years. It produced a surplus of everything year after year after year. Then came the pivotal year of 1975. That was the last year the American economy produced a surplus of goods to trade overseas. It has not done so since. What is remarkable is how fast the bank account emptied and the debt piled up. There is a chart you can download at the link at the bottom of the page that illustrates the rocket sled ride to ruin. The chart covers the period from WWII, when good economic figures began to be compiled, to the present day. The chart traces the US trade surplus/deficit, US household debt, US corporate debt, and the US Federal Debt. For the period from WWII to 1975, during the surplus years, the debt charts were essentially at a flat line. After 1975, the debt in all categories took off like a rocket ship. What that chart is showing is that the moment national production falls beyond subsistence levels, the borrowing to make up the difference begins, and only accelerates from there.
What I hope you'll come to understand, what the charts show, is that there is no way out of this depression we're in right now unless America and the rest of the West starts producing again. That is a demand you must add to your #Occupy America wish list. TARPs will do nothing. Temporary job programs will do nothing. Raising or lowering taxes on who and for how much will not matter. Minting more money will do nothing. Economic protectionism at the border and economic production within is America's only salvation.
© Unknown
Scott Cruickshank's note on the chart: In the margins of the chart, are some personal notes, a little dot connecting on my part. The charts actually tell you far more about what happened to America than they seem to let on. In fact you can explain many social changes that happened during the 1970's and 80's, not just the economic changes.
They say isolationism (thier coinage of securing the economy) is bad for America, and they also told us that outsourcing is good for America.
The excuse they give for continuing Free Trade, is labeling market protection and production as isolationsim.
It is not.
Industry still walks out the door, even after being lauded by the President as a model company. The bleeding continues.