Financial Breathing

The dollar is no longer the standard for exchange throughout the would, and larger amounts of American currency are necessary due to this lack of confidence. Where will it end? It is difficult to assess the exact changes, but with some reasoning, I believe it is possible to determine the direction we are going.

    I believe that ultimately we can look for a new, cashless system. If the present system collapsed and we had high prices even in the midst of that collapse, people would become hysterical and even riot, stealing what they wanted. The government would be forced to establish some kind of control, which could best be done by temporarily stopping the flow of money and then totally reorganizing the monetary system. It would have to be virtually dictatorial under government control so that the new economic system could operate on a cashless or credit card system.

I believe that initially each individual will be issued a number of digits (or units) for the amount of money held in the bank and proportional to earnings. A master credit card will be used to make most or all purchases. Eventually, as the system progresses, there will be no money, only a credit card per individual. The card will be checked through the electronic cash register at the store and also against a central computer to determine allocation of credit so that no one will be able to borrow beyond his ability to repay, nor will anyone be able to accumulate excessive amounts of money. It is conceivable that each individual will have a definite accumulation limit so that no large surpluses will exist. Profits may be allowed in business, but they will be contained within the maximums that the government prescribes.

Additionally, crime could be drastically reduced through this system, since crime prevention will become one of the major goals of the government. As the economy continues to slip, the cashless system will be an important tool in the battle against criminals. Money thefts will become a thing of the past because there will be no money. It will be fruitless to rob banks because they will only store computer tapes. It will make no sense to kidnap someone, because the criminal could only have his account credited. Retail store thefts will be reduced to product losses only. Thus, two major problems could be solved at one time—crime reduced and a common medium of exchange established throughout the world. I believe that whatever system is enacted, it will have to be worldwide, thereby creating a common medium of exchange.

I believe we are going to see ever intensifying recessionary and inflationary spiral. During the inflationary periods, Americans will experience higher prices. These prices will be caused by more money being created and disbursed into the market, with fewer products being produced to offset this new money. Government controls will expand, causing increased subsidies with fewer people contributing. Combined with the higher prices will be higher taxes.

During the recessions, more individuals will become unemployed as basic industries contract. Many of these people will be added to the government payrolls in an effort to appease those being hurt by the system. I believe we will develop what might be termed “shear economy.” In a shear economy, one segment will boom while another will suffer. Workers in the boom industries will be able to demand higher wages, while those in a lagging industry will be laid off. The unemployed will then demand compensation from the government, which will step in with subsidies, welfare and job supports, thus creating the need for more money to be put back into the system.

It is easy to envision shortages in industries involving fuel, food, and shelter. As other nations such as oil countries, demand higher levels of affluence for their people, we must begin to relinquish some of our affluence to compensate.

In this situation, more people will depend on the government for the answers—perhaps even a national hysteria in which the government is expected to make virtually every decision.

Pressure groups will chastise government leaders whenever they make wrong decisions. Consequently officials will become less prone to make any decisions, but when forced to act, they will be more likely to just treat the symptom to pacify the people, whatever the cost. During the recessions, they will spend all the money necessary to reverse the cycle. In inflationary spirals, leaders will try to appease the people by giving them something “for nothing.” The attitude will be to deal with whatever happens to exist at that time. It will become almost a necessity for the government to have total control of the money supply through some form of nationalization of the banking interests.

Will we ever have another great depression or collapse? I don’t know. But I do know that we are evolving into a new system, perhaps precipitated by a collapse. No matter what happens, we will have another “new deal”—one that people will ask for because of devastating problems (high prices, high unemployment, money almost worthless because of inflation and the prospect of a crime epidemic).