What ails the US economy?

In a short sentence: interference by governments. Let's list and analyze some of these:


1. OPEC. The Saudis decided to downgrade competition from American companies using new tech. How? By creating a glut of oil, dropping prices and making it unprofitable to look for and pump oil by the new tech. Normally, we would expect lower energy prices to boost the economy. But, we do not live in a normal economy. So, the loss of income from the ancillary industries tied to oil production is greater than the gain from the drop in oil prices. The problem has been not so much the lower oil prices, but the precipitous fall in oil prices.


2. The FED. The FED has created a lot of money. To offset the inflationary tendencies of this, the FED has promoted low gold and silver prices. That in turn has put commodities into a recession. So, the mining industry is also hurting. Some companies operate at a loss and exploration has virtually stopped. No company wants to find resources that they would have to mine at a loss. Larry Edelson has predicted that some gold miners would go bankrupt before gold prices turned around. The artificially low precious metal prices have another and long term effect which we will rue some day: the West's gold hoards are being sold to the East. When gold returns to being part of the currency (and at much higher prices), ours will be gone.


3. Enlarging the Welfare State. Mitt Romney has noted during the last election that 47% of the populace is getting some government payment and is, therefore, apt to vote for those who run the Welfare State. The problem with this is that there is no work required for these payments, so part of the economy is 'invested' in activity that yields no income. Since, the total income of the Nation is reduced by spending money for activity that yields no income, the government operates at a deficit that it must borrow. At the present, the sharply rising National Debt is handled by keeping interest rates low. This in turn puts industries and individuals dependent on interest income at peril (such as the insurance industry). At some point, it will dawn on those lending the US money, that they will not get their money back. So, they will demand higher interest. This will bankrupt the Country. We can get away with this, because the US Dollar is the world's reserve currency, so we can get part of the world's production at very little cost. But, the Chinese will grow tired of sending their goods here in exchange for pictures of dead American Presidents. When will that happen? When the Chinese have enough gold to have the Yuan as the new world reserve currency.


The Liberal elite that runs the country feels that they know how to beat the system. What they know is how to postpone the reckoning. That postponement is won at the cost of imperiling greater and greater portions of the world economy, so when the denouement comes it will be freaking big.