Thoughs on our "strong economy"......

You are correct; we have a very strong economy....if you get your income from the stock market or if you are a CEO. Average CEO compensation has risen 150% in the last decade, while the minimum wage has grown 0%. Average incomes have gone up, but only because the top incomes (the far right on the bell curve) have grown - median family incomes have actually fallen, with low income families falling the furthest.

Things are especially good if you are a war profiteer like David Lesar, CEO of Halliburton. Your pay went up 170% while from 2003 to 2004, all while the government is investigating $1.4 BILLION of questionable spending by Halliburton. By the way, Halliburton's stock traded at $6.55 in the fall of 2001. By January 2006, it was at $39 a share, almost a 650% increase.

The reality is that that the “war on terror” and the Iraq war are a financial bonanza for the US ruling elite. And thus some of the measures we use to gauge the economy, like the Dow and NASDAQ, are up.

But what you would realize if you study the economic theory of John Keyes, which says that a government should take on debt in an economic bust cycle and erase the debt in the boom cycle, is that the money borrowed now to pay the military complex leads to short term benefits. Long term economic viability will require that we continue to spend enormous amounts of borrowed money to maintain our vast war machine.

In simple terms, our economy looks good now because the federal government is pumping massive amounts of deficit spending into the economy. This cannot continue.

Already we owe almost $9 trillion ($9,000,000,000,000; if divided out equally, $120,000 for each family of four). We spend almost as much on the military ($540B) as on interest payments ($460B). Mostof the debt (and thus the interest payments) are owed to foreign banks; much of it to the Chinese, by the way.

In 2005, the federal government reported a $318 billion deficit. If you follow standard accounting rules, however, the deficit was closer to $760 billion for 2005. If Social Security and Medicare are included may have been as high as $3.5 trillion. Washington is able to report lower deficit because they don't count the growing burden of future pensions and medical care for federal retirees and military personnel.

Note: This was originally posted by me on the Staunton News Leader Blogs on 1/6/07.