A Half Century of Financial Extraction: How Our Political Class Exploited Our Producer Class
Here’s how it works. The U.S. government spends more than it takes in, lots more. So how do we keep interest rates low? Our central bank creates money and lends it to The U.S. Department of the Treasury. Okay, so then how do we avoid hyperinflation from all that money creation? Foreigners buy and hold our dollars. Dollars held in Saudi banks don’t create domestic US inflation. Okay, then how do we get foreign governments to hoard those excess dollars of ours? Simple, we use military pressure – we tell the Saudis that we’ll give them military aid if they play ball, and won’t if they don’t.
If you take this complex system and reduce it to one big picture, it is that the US political class have been throwing industrial workers under the bus for decades. The financing system which they have created REQUIRES large trade deficits. It requires a stronger dollar than market forces would create on their own. The only way for the government to keep massive spending increases and massive borrowing going without creating massive inflation is to pressure foreigners to absorb the excess dollars. As Nobelist Robert Mundell has pointed out, and economist Jacques Reuff before him and Henry Hazlitt, too: our trade deficits funded our budget deficits. When you take out all the intermediate steps, what it amounts to is that US industrial workers were sucked dry by US government. Our rulers extracted value from our workers via a complex financial mechanism which even very few economists understood. Trump tapped into the anger over this raw deal, but without understanding the true roots of the problem and the true solution. The true solution is an international gold standard, and a real one, not a mix of paper dollar and gold or pound sterling and gold. Just gold, no gold/fiat hybrid. No room for manipulation. When currencies are tied to gold, there’s no reason at all to hoard one currency over another, because dollar, yen, pound, etc. are just different names for coined gold.
Jerry Bowyer is a Forbes contributor, contributing editor of AffluentInvestor.com, and Senior Fellow in Business Economics at The Center for Cultural Leadership.
Jerry has compiled an impressive record as a leading thinker in finance and economics. He worked as an auditor and a tax consultant with Arthur Anderson, as Vice President of the Beechwood Company which is the family office associated with Federated Investors, and has consulted in various privatization efforts for Allegheny County, Pennsylvania. He founded the influential economic think tank, the Allegheny Institute, and has lectured extensively at universities, businesses and civic groups.
Jerry has been a member of three investment committees, among which is Benchmark Financial, Pittsburgh’s largest financial services firm. Jerry had been a regular commentator on Fox Business News and Fox News. He was formerly a CNBC Contributor, has guest-hosted “The Kudlow Report”, and has written for CNBC.com, National Review Online, and The Wall Street Journal, as well as many other publications. He is the author of The Bush Boom and more recently The Free Market Capitalist’s Survival Guide, published by HarperCollins. Jerry is the President of Bowyer Research.
Jerry consulted extensively with the Bush White House on matters pertaining to the recent economic crisis. He has been quoted in the New York Times, The Wall Street Journal, Forbes Magazine, The International Herald Tribune and various local newspapers. He has been a contributing editor of National Review Online, The New York Sun and Townhall Magazine. Jerry has hosted daily radio and TV programs and was one of the founding members of WQED’s On-Q Friday Roundtable. He has guest-hosted the Bill Bennett radio program as well as radio programs in Chicago, Dallas and Los Angeles.
Jerry is the former host of WorldView, a nationally syndicated Sunday-morning political talk show created on the model of Meet The Press. On WorldView, Jerry interviewed distinguished guests including the Vice President, Treasury Secretary, HUD Secretary, former Secretary of Sate Condoleezza Rice, former Presidential Advisor Carl Rove, former Attorney General Edwin Meese and publisher Steve Forbes.
Jerry has taught social ethics at Ottawa Theological Hall, public policy at Saint Vincent’s College, and guest lectured at Carnegie Mellon’s graduate Heinz School of Public Policy. In 1997 Jerry gave the commencement address at his alma mater, Robert Morris University. He was the youngest speaker in the history of the school, and the school received more requests for transcripts of Jerry’s speech than at any other time in its 120-year history.
Jerry lives in Pennsylvania with his wife, Susan, and the youngest three of their seven children.