The Perfect Plan for Depression:

Good Morning Middle America, your King of Simple News is up and at ‘em.

This is a re-run for this column, but I think that you will all agree…a very timely re-run. I find it necessary to ground my beliefs from time to time in order not become lost in the daily fray of sound bites and non-newsworthy subjects.  The following seven remarks were written by Robert L. Hickerson, March 1, 1995.

1. We will never again be able to get sufficient growth of the economy to eliminate or even markedly reduce unemployment. NAFTA, GATT, and Clinton’s hope of growing the economy to solve unemployment is doomed to failure.

2. The promise of competing in the global economy is a hoax perpetrated upon the working and unemployed people of this country because over time a nation needs to buy and sell overseas in roughly equivalent amounts.

3. All attempts to reduce the deficit, balance the budget or pay off the national debt are futile. The deficit and the national debt represent the subsidy the government has paid in its attempt to keep growth and unemployment at the level of social tolerance.

4. The steady state economy into which we are being inexorably forced implies an interest rate of zero.

5. An interest rate of zero (as Hubbert explains) means the end of the money system. We are being forced to completely rethink our cultural ideas about how to organize our economy and distribute purchasing power.

6. Increasingly desperate means will be used by those who think we can continue to have business as usual.

7. The proposals of Negative Population Growth should be implemented immediately.

It is my opinion that this list represents the most clearly written and concise synopsis of America’s economic situation, that I have ever read; and I’ve read a lot. Brilliance doesn’t have to come in long form. There is a famous quote, “If I had more time, I would have written a shorter letter.” Robert Hickerson had more time.

Hickerson’s item number six explains a lot about our current election debacle and the ideas being trotted out. Ideas such as, “Americans don’t have any money, so why don’t we send them some? Let’s send everyone $600, but wait, there’s more, we’ll throw in $300 for every dependent kid. Oh yeah, and next year we’ll raise taxes.”

M. King Hubbert’s studies on a steady state economy (not based on growth) suggest that an interest rate of zero will become necessary. Sound like a nutty idea? The second largest economy in the world doesn’t think so, that is exactly what the Japanese did.

The U.S. is entering a very similar period to that which Japan has suffered for years, it’s called deflation. That is, deflation of your home value and the purchasing power of your good ol’ greenbacks, however we’re experiencing inflation in nearly everything that we purchase…like food and fuel. In precise economic terms, these twin events occurring simultaneously are referred to as “really, really bad.”

Japan’s central bank realized that their economic situation was really, really bad in 1995 when they found themselves in the deflation mode. In February of 1999 (acting on this information in the lightning speed of only four years) the Bank of Japan lowered their interest rate to zero…as in none, nada, nonexistent, where it stayed until 2006 when it was raised to 0.25%.

Japan earned the envious distinction of being the only example of prolonged deflation in a major economy since the Great Depression period of the 1930s. The U.S. apparently can’t stand the thought of being unseated and is attempting to regain the title by entering a second Great Depression. That’ll show those Japanese.

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