EUGEN VON BÖHM-BAWERK at Bawerk.net
In several articles we have shown how the world changed from the 1970s with the breakdown of the old Bretton-Woods system. For example, in China’s unfortunate dependence on the Eurodollar expansion we showed how economies like Japan and China boomed on the back of what appeared to be real demand for their products, but was nothing more than an un-backed expansion of the world reserve currency; which promptly collapsed when further ‘dollar’ expansion came to an abrupt halt, either as a result of political intervention (Plaza Accord) or because of too much capital consumption and subsequent financial crisis (Lehman).
In Goebbelnomics – paper propaganda we showed how today’s monetary masters and their henchmen tries to condition the broad masses of people to spend and borrow money in a fallacious belief that an ever increasing level of spending – i.e. increased velocity of money – can maintain an economic perma-boom and by extension abolish the dreaded business cycle.
We will change tack a bit from here and now show how exponentially issuance of ‘dollars’ structurally changed the US economy itself and why it will eventually end in tears.
Exhibit 1 depicts the structure of the US labour market where we calculate the share of the labour force employed in primary, secondary and tertiary sectors of the economy.
Source: US Census, National Bureau of Economic Research (NBER), Bawerk.net
In the early 1800s most people in the US were unsurprisingly working in primary, or agricultural, occupations. Almost 90 per cent of all workers were employed in this line of work, while only a tiny fraction worked in manufacturing and service based industries.
The reason was simply because agricultural output could scantily support more than the family working on the farm, producing very limited surplus to support other parts of the economic structure. However, as increased
Originally appeared at: http://davidstockmanscontracorner.com/the-damage-is-done-something-will-have-to-give/