There are striking similarities between the economic crisis of the 70s and the current crisis. The 1970s crisis was caused by needless Vietnam war spending, an excessive trade deficit, and rising oil prices/falling dollar. Sound familiar? I wasn’t even old enough to understand what was going on back then however I do read and do know a little about history—enough to realize that history is in many ways repeating itself. Today this article came out detailing exactly what I have been noticing:
“Déjà vu, All Over Again”
The credit markets were reeling and people across the globe had lost confidence in the dollar. American tourists overseas found that many places in Europe were reluctant to exchange their dollars for European currency, and the world banking community was even more in an uproar.
Furthermore, U.S. armed forces were bogged down in an unpopular war overseas, and the U.S. economy seemed to be moving into a recession. Foreigners holding dollars were nervous and wondering if they had been fooled into holding worthless paper.
I am not describing the current economic scene in the United States; instead, this is a description of the crisis of August, 1971, when the U.S. dollar collapsed as the government’s currency Ponzi game ran its course, and Americans found it was time to pay the piper. The 1970s were wracked with stagflation, slow growth, economic uncertainty, and political turmoil.
Apparently, the lessons to be learned of the dollar’s collapse in 1971 have not been learned by the current crop of “leaders” in Washington and on Wall Street, but the thing about laws of economics is that they are impervious to the wishes and commands of politicians. Contra Franklin D. Roosevelt, who insisted that economic laws had been made up by people and could be changed by fiat, one cannot command an economy into prosperity. . . (Read Full Article)
Filed under: Economy—US Dollar, Iraq War, Vietnam | Tagged: credit crisis, dollar, economy, Iraq War, recession, rising oil prices, trade deficit, Vietname war, war spending | 2 Comments »