Economic Forest Fires As Dangerous As Wilderness Wildfires!

Not only does this commentary speak my language as posted repeatedly on this blog

(Example start here:https://johnjacobh.wordpress.com/2008/06/20/nine-myths-about-forest-fires/)

but he wrote this last year before the current kerfuffle began! An excellent read, highly recommended.

Complete link:

http://fabiusmaximus.wordpress.com/2007/11/21/the-post-wwii-geopolitical-regime-is-dying-right-now-chapter-one/

Tantalizing Forest Fire related excerpt:

In the late 19th Century the goal of forest fire suppression gained wide support in the US. The Forest Service was established in 1905, becoming the lead agency in this program. After a century of successful fire prevention much of the western US consists of dense forest with layers of dead wood. Tinderboxes across the West, ready for the next drought to spark uncontrollable fires.

What can be done? Not much. Nature delayed must take its course. Logging permits are difficult to get and logging itself often uneconomic. Thinning and removal of ground cover is prohibitively expense over large areas. Controlled burns often work well. Unfortunately they occasionally become uncontrolled burns. Instead landowners clear the land around their buildings and wait for the inevitable. Eventually, over years, this process will work itself to a new equilibrium.

We have managed our economy like our forests. The US Federal Reserve has successfully prevented a severe recession for a quarter-century. The early 1990’s saw a slight downturn in GDP; the early 2000’s an even slighter one. The government responded to each slowdown with aggressive monetary policy (easy credit, low rates), aggressive fiscal policy (government spending), and often exchange rate action (devaluing the US dollar to stimulate exports). The Fed has declared war on the business cycle. As Mao said, protracted struggle.

As a result of the Fed’s success the US economy has evolved in an unbalanced manner since 1982. Large, growing trade deficits. Accelerating growth in household debt. Decreased savings. National consumption in excess of national income, financed by foreign borrowing (current account deficits) — resulting in large foreign debts.

We have been warned. Comptroller General Walker. The IMF. High government officials, like former Treasury Secretary Robert Rubin. The major credit ratings agencies. Wall Street. Academia. It is not all boring jargon; here is a paper with an usually catchy title for a Fed publication: Is the United States Bankrupt?

A long list of alarms, ringing for many years. We ignored them as obviously false, since they warned of threats not yet here.

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2 responses to “Economic Forest Fires As Dangerous As Wilderness Wildfires!

  1. I was writing an article remarkably similar to this, having spontaneously realized the parallels between our economy and forest fires, and while researching I found your writing. Great work!

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