Saturday, April 23, 2011

Another type of fantasy

Please read this post in conjunction with my basic position paper "What is this blog all about?".

There is another type of writer, columnist, analyst who is even more damaging than those who put forward "Fantasy Explanations" for our economic problems.  (See previous post).

What shall we call these writers, for ease of reference?  Maybe "elephant in the room" boys.  The "elephant in the room" boys (and probably some girls) write about and analyze our economic situation without once mentioning such huge issues as unemployment.  Without ever mentioning the fact that our negative balance of trade in manufactured goods is half a trillion dollars per year.  Without ever mentioning that our wealth is hemorrhaging out of our country at the rate of a trillion dollars per year.  These are huge elephants but these writers have selective vision and don't see them.

Illustration:  Suppose your car is not working well.  The car is very sluggish on the road.  You look over the car with keen eyes.  Two tires are flat but you don't see that.  You keenly look under the hood, you check the gas tank, and you look at the drivetrain, but due to your selective vision you never see the flat tires.  This is how the "elephant in the room" boys operate.

Anthony Mirhaydari is one of the worst  "elephant in the room" boys.  He published a lengthy article on April 21, 2011,   In the article he discusses America's debt problems.  There have been similar articles in the past.

In the present article he says that China has had a "roaring recovery".

Here is a letter I have sent to Mr. M.:

Dear Sir:

Aren't you aware that we are sending China the money that is powering their "roaring recovery"?

Isn't it possible that if we kept our money here at home and paid our own workers rather than workers in China we would have the roaring recovery?

Do you ever go shopping?  If so, have you noticed that many stores are filled 99% with goods made in China?

Are you aware that our negative balance of trade with China is over 270 billion dollars per year?  If you are aware of this fact, isn't it something that should come into any discussion of the U.S. economy?

Are you aware that our negative balance of trade in manufactured goods with all foreign countries is over 500 billion dollars per year?  If you are aware, isn't this huge hemorrhage of wealth a material fact that should be mentioned in any analysis of the U.S. economy?

Are you aware that in addition to the above, China, Japan, and other foreign countries have used money we unwisely sent them to buy U.S. Trreasury securities, so that we have to send them 100 billion dollars per year in debt serviice?

Are you aware that in total our foreign expenditures are on the order of one trillion dollars per year and that foreign expenditures are much more damaging to the economy than domestic expenditures?

Have you ever thought that the largely wasteful and unnecessary foreign expenditure of one trillion dollars per year if re-directed to getting manufacturing going again at home would go a long way toward solving our economic problems?

Are you aware that many millions of manufacturing jobs have been transferred to foreign countries?  Are you aware that one result of this process is that tax revenue has been lost because foreign workers don't pay U.S. taxes?  Has it ever occurred to you that if we could get our own workers back to work they would pay taxes that would help to reduce the deficit?

You say in your article that "IMF has lambasted U.S. leaders for the lack of a credible strategy to reduce debt".   Yet if America stopped import of goods from foreign countries that don't buy from us, and put our own people back to work so they could pay taxes, IMF would be totally shocked and would also "lambast U.S. leaders" for abrogating the very trade arrangements that created the debt!

If you cut yourself badly on the edge of your computer, you would want a doctor right away to stop the hemorrhage.  Yet inexplicably you write analyses of American economic problems without apparently seeing and certainly without mentioning America's wealth hemorrhage of one trillion dollars per year, going to foreign companies and foreign countries, never to be seen again. 

Your articles are purveyors of disinformation, confusion, and chaos.

Yours truly,

Ed Farkas

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