Sunday, April 27, 2008

One Problem the Republicans Need to Address

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Read this doc on Scribd: Household Income

One problem that Republicans need to address is declining American household income. According to the Census Bureau real household income declined between 2000 and 2003. The reason is inflation. Flat and declining real family incomes have been characteristic of the American economy since Richard M. Nixon finally abolished the gold standard for foreign dollar holders in 1971. Nixon's decision was very much in the tradition of New Deal progressive liberalism and followed FDR's earlier abolition of the domestic gold standard in the 1930s.

Under George W. Bush and earlier the Repulicans have followed a progressive-liberal inflationary strategy. The Fed has created new dollars, transferring wealth to real estate developers, bankers and Wall Street (to include hedge fund managers, Warren Buffett and George Soros). In the late 19th century increasing real household income was coupled with low profits and non-increasing stock market valuations. The business community did not like this situation and claimed that there were depressions in every decade, in the 1870s, 1880s and 1890s. But real incomes were increasing throughout the post Civil War period despite massive immigration, and in 1913 real wages were considerably higher than they were 20, 30 or 50 years earlier. In 1913, the Wilson administration established the Federal Reserve Bank.

Since World War II stock market valuations have soared while real household incomes have remained flat. During the past ten years the American public has borrowed more extensively than at any point in history, cloaking its impoverishment through debt. Productive workers have been punished through the income tax and creeping inflation while speculators and borrowers have been rewarded by seeing their loan values diminished through inflation.

A nation that rewards speculators and punishes producers will not remain wealthy forever.

The American people have been slow to realize that they are poorer than before and that personal wealth has not grown as it had before President Nixon abolished the gold standard in 1971 and before the Wilson administration established the Fed in 1913. Notice that both Wilson and Nixon claimed to be for limited government.

However, the public has begun to realize that something is wrong. Unfortunately, George W. Bush has behaved as a progressive-liberal and argued for increasing Fed activism.

The choice between the two major parties is: 1. Party (a) inflation. 2. Party (b) inflation. Both parties advocate inflation and so aim to impoverish America. Perhaps it is time for Republicans to wake up and shed the pro-government platform of Bush, Huckabee, Reagan and Nixon that has led to declining household income and massive private and public indebtedness.

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