The Federal Reserve’s decision to start an open-ended program of money printing is not only dangerous, but wrong as well.
The European Central Bank, the Chinese government and our own Fed announced similar programs within one week of each other. This indicates that the global economic situation is deteriorating, while the United States is slipping back into recession.
The concerns are legitimate, but the “solution” will prove as inadequate as the previous bouts of stimulus and “Quantitative Easing” — here or abroad.
The Fed’s justification is the poor condition of the U.S. labor market, and the key assumption is that added liquidity will of itself generate employment.
This stems from studies of the Great Depression. The assumption is not only unproven, but neglects the main reason why the Depression ended.
What launched the U.S. economy on its last half-century (1940-1990) of near continuous expansion was the industrial build-up of World War II. Between 1940 and 1945, the U.S. Gross Domestic Product doubled, technology made a huge leap forward, U.S. industry was completely overhauled and modern management methods came into their own.
This was not some kind of “patriotic miracle” but a process that was willed, planned and managed from beginning to end, in that case a smooth transition from military to civilian production.
The process was financed with unprecedented government borrowing, but this expansion of the money supply had a goal: to raise our war production far beyond the capacity of our enemies.
It involved huge investment in planning, training, technology, production plants and research; generated new management and engineering methods; eliminated unemployment; and laid the base for future economic growth.
This is exactly what we need today, and because the WWII model was a process it can be scaled and adapted to our current needs, as long as we understand what made it successful.
The goal then was the material underpinning of victory. Today we have a goal that is just as clear.
Our economy is highly energy-dependent. We can no longer assume that our needs will automatically be met.
In the short term, our capacity to import oil is threatened by the growing turmoil in the Middle East, the global petroleum reserve.
In the medium term, we need to overhaul our entire infrastructure, including industrial uses, housing and transportation, to achieve a much higher efficiency in energy use.
Long-term, we must initiate a research and development program into energy sources, with total sustainability as a final goal.
This project is as complex and challenging as winning the biggest war in history. It can also provide us with a generation’s worth of economic progress.
We have done it before. We know how to do it.
What are we waiting for?
Jacek Popiel of Colorado Springs serves as policy advisor to Dave Anderson’s campaign for the U.S. House of Representatives in Colorado’s 5th Congressional District. With years of experience in international business development, he is the author of two books, Viable Energy Now and unCOMMON SENSE.