America’s Problem Is That the Medicine Doesn't Suit the Disease

This time around, America’s “disease” is quite severe. It has already been three years since the financial crisis began, but the U.S. has seen one plan after another do next to nothing to improve the economic situation. Furthermore, a long-depressed economy inevitably leads to social problems, which in turn increase the difficulty of treating this illness. Has the American economy reached the end of the road? Is there really no cure?

The answer is no. The real issue here is that the medicine doesn’t suit the illness. In the end, America’s disease is actually a fictitious illness brought on by years of setting up a fictitious economy, using future earnings to make payments, and taking on one debt to pay off another. It is also brought on by blind expansion and an overdraft of America’s strength. Currently, the U.S. is facing a situation in which there are problems both internally and externally. Internally, the supply and demand of America’s economy cannot form a sound cycle of economic activity. The ability to create real wealth and to develop independently has dropped significantly, forcing the U.S. to rely on borrowing money to survive. Vladimir Putin was right on the mark when he stated that the U.S. is a parasite. Externally, the U.S. is plagued with troubles and is in a position where there is little room to maneuver. Just stationing troops in Afghanistan costs $100 billion every year. This means that leaving troops is too expensive, but bringing them home means running the risk of having others move in to fill the void.

Facing this fictitious illness, in which huge debts and financial deficits are restricting financial measures, the U.S. views transfusion-type emergency methods such as the monetary stimulus as a kind of cure-all. At a time when monetary stimulus measures like ultra-low interest rates, quantitative easing, and operation twists are being implemented one after the other, for Americans to say that they their leg is broken and they are having to rely on a crutch is really quite appropriate. America’s current economic framework is like a sieve: No matter how much goes in or out, the capital generated by the monetary stimulus either goes into financial enterprises or into other countries; very little actually goes into the economy. It’s not at all surprising that America’s current economic performance is such that, as soon as it’s stimulated it improves a little bit, but as soon as the medicine is withdrawn it begins to decline.

The monetary stimulus has had a strong side effect as well: The more America takes this emergency medicine, the more fictitious it becomes. Quantitative easing as a monetary policy raises inflation rates, increases debt risks, threatens the progress of America’s economic recovery, and affects Obama’s election situation. As a result, a series of strange tactics have also been used, including releasing oil reserves, using financial derivates to lower the interest rates on the national debt, and operation twists. However, these methods only work for the short term and their efficacy is also gradually waning.

It seems that if the U.S. wants to cure this false illness, they must simultaneously try to affect both their internal and external problems. Internally, the U.S. must completely adjust its structure and bring back its self-restorative function. Externally, the U.S. needs to reel in their battle lines. However, all of this is much easier said than done. First of all, a structural adjustment will harm the vested interests of every strata of American society. The rich will have to be taxed more, the masses will have to have their incomes lowered, welfare programs will have to be reduced, and the government will need to be more frugal, all of which will inevitably be met with strong resistance from all of the affected parties. Secondly, election factors and political polarization have left every American politician doing their utmost to uphold their interests in the ballot warehouses. As a result, these politicians are unable to focus on the long-term, which would allow them to make better decisions. Finally, a structural adjustment will be highly difficult to implement, as it will lead to a reduction in domestic demand, an outflow of capital and enterprise, and an acceleration of economic decline.

In this regard, America’s trouble is not only a false illness, but also a psychological disease. It’s not that the U.S. can’t change things, but that the U.S. isn’t willing to do so. In order to cure itself, the U.S. must face reality, adopt the right attitude, change its thinking, lower its posture, take the initiative in making adjustments, and boldly face the pains brought on by these changes. Additionally, the U.S. must stop constantly trying to think of devious ploys that pass off the crisis to others, shift the blame, or divert attention away from certain issues. If these changes can’t be made, the future might be similar to what Winston Churchill described when he stated, “America can always be counted on to do the right thing…after it has exhausted all other possibilities.” However, one thing can be certain: When that time does come, the crutch will have already been broken and the situation will have deteriorated to a state in which changes absolutely must be made. But is this a price too high to pay?