The Great Commodity Crash

After four nationalized TV debates the cast of Republican contenders continue to show a resolute in self embellishment on how they and they alone are the next great savior of our nation. But, it was in this latest show of showmanship by all that underscored the embodiment of failing to grasp just how fragile our economy really is. An economy that is so fragile it is right on the verge of falling into an abyss where there is no return. So many missed opportunities to educate the viewing public on what are the actual causes of why the American Dream is out of reach for many millions of Americans today. And, not to mention not one word was uttered about the drastic effects that climate change has on the overall economy. Then of course everyone on that stage is in denial that "Big Oil" is a leading cause of carbon emissions.

There was one golden opportunity to show some resolve in securing the nations economic stability. But, again failure to capitalize on two specific questions asked by the moderators only precluded that everyone on that stage sought to out point the other. When asked would you bail out the banks should another financial crisis hit like it did in 2008 they all missed the mark. What should have been explained entails that when a person deposits money into a bank whether it is a checking, savings or CD account that money is now property of the bank courtesy of the new financial policies that went into effect this past summer. In essence your money is now the banks. In the event that the bank has made bad investments with your money they bear no responsibility to you, the depositor. Regardless of whether it is an FDIC insured financial institution or not those bad investments are the bank's responsibility. But what happened in 2008 when the government bailed out those same financial institutions that risked it all on failed investments that money from the government did not go back to depositors. All the billions of dollars that was funneled back into the financial sector was borrowed to begin with and all it did was put the country further in debt. That government bailout did not go back to her very people that helped these financial institutions ability to make those risky investments. The end result today is that these same financial institutions have amassed more funds in order to again make extremely risky investments that have all the earmarks of causing another great financial crisis.

Again, this past debate and even the Democratic debates have missed the mark to educate the public on just how bad our whole economic future really is. Today, many economists also have failed to surmise the potential catastrophe lying in wait poised to strike untold devastation on the United States. We must remember that history is an invaluable resource. In remembering what other nations have gone through is a great indicator to understanding the consequences of failing to act to prevent similar scenario's. For 40 years after World War II, one economy was the envy of the world. Its goods were exported globally, spurring incredible growth. Due to the diligence and foresight of General Douglas MacArthur Japan became the economic engine that rivaled the United States. By the late 80s Japan's stocks and housing market were on a massive bull-run. Its corporations were dominating the skylines of cities across the world. Its products were lining the shelves of American supermarkets and department stores everywhere. Sounding familiar? It should because China is now dominating our store shelves. But, back in 1980 the Asian Tiger ruled. Iconic American brand names were and still are taking a back seat in the markets of the world.

The 1980's was an era of unprecedented awakening for the American manufacturing sectors. Our whole economy was now being driven by Japanese imports. Toyota dealerships were opening up on street corners all across America, even in Detroit. Cadillacs were being overtaken by Camrys, the coveted Mustang was overrun by Mitsubishis. All this while the Japanese stock exchange, the Nikkei jumped by over 920% eclipsing every other bull market run on stocks in history. Japan's real estate market soared and by 1989 a single square foot in Tokyo cost over $93,000. At that time it was the most expensive real estate in the world.

Japan was an emerging market success story unlike any the world had ever known, becoming a wealthy developed country in just three decades. And the consensus was almost unanimous: the Japanese were taking over the world. But, then to the shock of virtually everybody something went horribly wrong. The Japanese economic miracle started to rip apart. Its market began a precipitous slide. The Nikkei plummeted over 50% in just two years, and continued its slide to 80% into early 2009! Even today, the Nikkei is 50% off its 1989 high! The question is what happened to cause this sudden collapse?

The answer lies with the greatest resource that drives any economy and the fulfillment of the "Williams Theory of Economic Evolution" Today, the United States is faced with the exact scenario that doomed Japan into falling into their worst economic crisis since before World War II. For over 14 years Japan's stock market and economy declined and for the next 20 years they have only experienced a minor rebound. Still many never imagined Japan's depression would last that long and today not one political candidate is even mentioning or predicting the same fate that awaits the United States.

History is about to repeat itself yet again if we don't come to grips with this imminent threat to our economic future. What make this so dangerous for the security and stability of America's economy is that all the headlines are focused on gold, oil or water. Granted all are contributing factors that drive economies but the one resource that is failing to grab everyone's attention is people, the ultimate commodity. Still many will argue that one resource cannot send a market crashing and an economy into a recession or even a depression and yet history has proven it can time and time again.

In the latest report by the Federal Reserve over $84 trillion is directly affective by our population. When you look at the United States gross domestic product or GDP is only $18 trillion. All this means that the working populations economic impact is four times greater than our GDP, meaning that people are the ultimate force that drives markets. Now when you have political candidates wanting to deport immigrants or support trade agreement that only continue to decimate the American workforce, the very resource that drive economies just think of the double impact on our economic future. A major catastrophe awaits us.

Back in the 1950's through early 1960's the birth rate in the United States was around 96% today that birth rate has declined to where it stands at 28%. As it stands today the United States is facing a major shortage which will trigger a economic recession if not a full blown depression in the near future if we fail to address this now. Let's face the facts. Right after World War II birth rates increased so that over 109.2 million were born in just 18 years. Today that 109.2 million are know as the baby boomer generation which represent 32% of the population and over $46 trillion of the nations wealth. This generation now controls 77% of the net worth of the United states. We should point out that the average person now spends the most in proportion to their income at the age of 46. The accumulated wealth reaches it's peak when they reach the age of 64. The baby boomer generation is today's driving force of our economy. But, since 2007 this generation has begun withdrawing from the workforce and retiring. It should be noted that since the mid 1990's the middle class wage jobs were vanishing faster than the jobs created. In short we have had a job shortage with minimal wages which adds to the economic quandary we face today.

The combined impact of so many baby boomers retiring at a rate of over 10,000 per day with an estimated 50 million retiring within the next decade and the continued lack of middle class wage jobs with people filling those employment venues will have a very prolonged impact on the future stability of our whole economic future. When so many millions of skilled workers that are leaving the work force or have been forced out due to governmental policies that have enticed so many businesses to relocate outside the United States the income power that they possessed is lost. This is the crisis at hand.

Some say there is no solution yet it is these naysayers of political expediency are focused not on this most pressing crisis but on maintaining their ego's is the height of their hypocrisy. The economic impact now is being felt. The failure to achieve the Williams Theory of Economic Evolution in the United States is accelerating an economic crisis that will have devastating consequences that will reverberate around the globe. So what is the answer to bring more people into the United States and at the same time rejuvenate employment opportunities with real middle class wages so that instead of failing to achieve the Williams Theory of Economic Evolution the United States will in fact be the one economic engine that will power the third industrialized revolution. The answer lies in implementation of National Economic Reform's Ten Articles of Confederation. By Dr. Tim G Williams