Economic Power Failure: The Current American Crisis

By Sumner Rosen

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• Format: Hardcover
• Language: English
• ISBN: 0070536589
• ISBN13: 9780070536586
• Release Date: January 1975
• Publisher: McGraw-Hill Companies
• Length: 297 Pages

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The Last days of Babylon

We are seemingly living the last days of Babylon. In 1973, recession remedies by the Fed shifted from fight inflation too increasing employment and reflected both the adoption and acceptance of Keynesian economics. Keynesian economics failed to fix the economic. Keynesian thought ushered in the era of big government and policy makers wanted big government, expansion of the money supply - an inflationary act, tax relief, and more federal spending. Inflationary pressure formed a monetary squeeze of 11.4 % loan rate and a 10.4% mortgage rate. The dollar devalued twice raising the cost of imports. Mild inflationary expectations stimulate an increase of spending, however, once job uncertainties spread then spending falls and consumer postpone purchases of items. Keynesian disciples argued that increased federal spending would increase jobs and get the economy on track. Market pressures where hammering the economy, starting with the OPEC oil embargo, sliding the economy into a recession. Policy makers failed to see that new forces would be required to change the US economic situation, "if this democratic society is to survive its people must take command of the dominant institutions." OPEC oil costs represented a huge drain of wealth moving from industrialized nations into OPEC associated banks. The embargo was designed to raise oil prices without any regulatory reversing power granted to the American economic system to determine terms of trade. In 1973, wheat acreage for US, Canada, Australia, and USSR wheat production, decreased, and surpluses of wheat disappeared which caused price increases, in fear of shortages leading the panic waves, in Japan, who were heavy into wheat imports. OPEC final embargo act is a four-stage act. Stage 1, 1951-55 represents the birth of Nationalized oil. The oil companies gain control by tightening their control over both refining and distribution and latter, in the future, after OPEC is formed, the revenues flow into OPEC bank accounts. At the same time, tax incentives encourage large oil companies to develop oil aboard rather than domestically. Overproduction of oil has driven the price of crude down and oil companies prior to the embargo have work hard to reduce oil production. Seven oil companies called the seven sisters (Exxon, Shell, BP, Texaco, Standard of California, Gulf, and Mobil) produce 1/3 of the worlds oil, five are American companies and reap in $63 billion in sales. Iranian president, Mossadegh nationalizes assets of British Petroleum imposing burdensome taxes on the company. 1953, Moosadegh is overthrown by a military coup, Saudi signs a "50-50" profit sharing with Aramco; Aramco is a joint subsidiary of the four sisters; this arrangement gives Saudi a three fold increase in income over previous allow profits arranges with Iran. Stage 2, 1955-1970, the seven sisters are challenged by newcomers from Western Europe, Japan, and India however, few concession are made. Oil searches