The agreement primarily targets taxpayers who earn more than $450,000 per year
The strategy of this is simple: either use it or lose it. The top 1% in this country are not job creators, like some evil wordsmiths have tried to sell to the American public, but they are either going to become job creators or they are going to die trying. If they do die, it will be death by spending, because that is what this is all about. It is about increasing the want to spend in America.
Tools like Grover Norquist are useful in the process, but when strategy takes hold they are soon discarded, as they become irrelevant. Yanis Varoufaks, author of “The Global Minotaur” and a professor of economics at the University of Athens, makes the case that the U.S. fiscal problem could just as well be called a “savings” problem as a debt problem.
He says that, with the help of Henry Kissinger and Paul Volcker in 1971 during the Nixon years, our economy was made to supplied the demand for what was coming–globalization. A plan like this is called Grand Strategy.
The Grand Strategy of the U.S.A. has been all along to create a deficit that would absorb the world’s surpluses in manufacturing, and give world power to the American consumer.
In other words, a debt based on the future (as all debt is) would fuel manufacturing in places who are now homes to cheap labor.
Manufacturing was supposed to follow these places of cheap labor around the world, as our debt became more and more powerful. But when the US became one of these places needing jobs, our wealthy stopped spending. The problem is, as Yanis says, America (at least wealthy individuals and corporations) has lost much of its power of consumerism, at least by 30%.
So now in today’s news, the enemy of the strategy that was hatched by Kissinger and Volcker are those who are saving, like big corporations and the top 1%, and the way to spur the economy is to force the corporations and the rich to spend, or be taxed.
Yanis says that the power of our demand (consumer) economy is down 30%, because America isn’t spending enough. To me, the fiscal cliff and the debt ceiling are not tools to bring a change to Washington, its the gun held to consumer’s heads and used to make the wealthy of this country spend, like you and me. A change in Washington would mean that our lawmakers would develop a different Grand Strategy, and none is being developed.
And while this effort at extortion may produce a bunch more Mitt Romneys, hiding their wealth from taxes and abandoning the U.S., the wealthy should understand that if they decide to move to a different country or hide their wealth off shore, they are hiding green-backs, which will not be worth anything if the power of our debt is gone. (On the other hand, it may not be too late to change them into Euros)
And the gun will be used again, as we get to the real issue in a few months, defaulting on our debt. Once the power of the consumer is gone in the U.S., as we destroy the dollar through default, we will need the power of our military, either externally or internally, to maintain our economy, or become the new Russia.
While the wealthy will make out like bandits if the US becomes Russia, the pivot towards Asia should be closely looked at. In other words, Russia was not pivoting in any direction when its economy dissolved, because the US was isolating it at the time in Cold War.
The US is not isolated. The US is on the move and getting ready to butt heads with two advisories that each represents half of the economy of the world. The same condition when the US and Russia were butting heads in the Cold War.
Good or bad, by defaulting on our debt we are destroying our National Grand Strategy, which has been in place since 1971, and it looks to me like war is the probably outcome, unless some other strategy replaces it, or the wealthy blink.
With our present Grand Strategy war is being used to keep the U.S. dollar relevant in the Middle East and the Pacific. The fiscal cliff and the debt ceiling are being used to make our Grand Strategy relevant, by promising to destroy the power of our Grand Strategy, i.e. debt.
In his campaign Romney wanted to declare war on China’s economy (which is actually declaring war on China). Perhaps just paying taxes is a good compromise, as the next generations develops their own Grand Strategy.
Of course there needs to be a “next generation” first.