Einstein famously dismissed common sense as the collection of prejudices acquired by age 18. Given today's financial complexity, we will require much more than common sense to overcome the economic difficulties we face.
Our age requires exceptional judgment and the will to act quickly and decisively. Common sense says that inflation is always undesirable, because prices go up and goods of all kinds become more expensive. However I believe that a period of high inflation is both inevitable and badly needed.
Why devalue the dollar? Every part of American society is now overburdened by debt. John Talbott explained it well saying, "today American assets are valued 40 percent lower than at their highs, while total debt has remained virtually unchanged."
That means households, city governments, family businesses and large corporations are all effectively much deeper in debt than before the great asset devaluation. Nearly one out of every 10 people in Georgia is looking for work. Many more are working fewer hours. Incomes are declining, while debt is not.
The deregulated financial system is in shambles, and we have two paths to financial health. One option is to patiently dedicate a large portion of our shrinking incomes to pay down what we owe and spend possibly the next 10 years with very low economic growth while our national wealth is regularly handed to overlords who loaned us too much money. I believe that amounts to indentured servitude.
How old will you be in 10 years? My own generation is now starting families. How old will our children be in 10 years? Does the elder generation of this country believe that we are willing to sacrifice our children's opportunities for experience, learning, travel and simple pleasures in order to dedicate ourselves entirely to paying off monstrous debts and financing the gargantuan welfare programs of Social Security and Medicare?
It is indicative of the cowardice, hypocrisy and careerism of our politicians that with all their recent ranting about the evils of socialism, not one single government official has come out publicly against the two most socialist programs in place, which also happen to be bankrupting the American state. These entitlement obligations, combined with the current debt burden, are simply too great for us to bear.
Experience tells us that the young and vigorous do not react well to such constraints. The energy of youth surges forth and lashes itself against all barriers. America must not constrain its young people with impossible financial obligations, lest their rage against these confines crack the very foundation of trust that cements our society.
A relevant example is the situation in Italy, a rich Western country where the old monopolize power and the young are burdened with extreme taxation to support indulgent pension programs. Underemployment is the norm with young men and women, and many live with their parents because of the high cost of real estate. The end result may be that Italians will disappear from the earth.
The selfishness of the aged and the centrality of the family bond in that society has resulted in a quiet but devastating revolt by young women. They refuse to bear children. For many years now, Italy has had one of the lowest birth rates in recorded history.
To avoid a prolonged burden on our own people we can choose the quicker, though less orderly, route to reduce debt. Deflate the dollar until the effective value of our debt is back at a tolerable level. If carried out incrementally, savers will get higher rates on their bank accounts and CDs. The losers will be holders of long-term debt, many of them Chinese.
Federal Reserve Chairman Ben Bernanke has recently pledged never to allow harm to these lenders. But why should we care about paying back usurers who put their money at risk to profit from maniacal excesses?
Institutional lenders and Big Business are more powerful than ever, and this commercial class will surely fight such a proposal. After all, its only concern is relentless profit taking, not the welfare of citizens or their children.
Currency devaluation will not be popular among the commercial elites, their lobbyists or the opinion peddlers of television news. But I believe that there are enough people of good judgment to reach the right conclusion and demand corrective action.
Besides, the vulgar opinions of the public should never be an obstacle to the welfare of the community as a whole. Although contrary to our current demotic norms and the tyrannical influence of a fickle majority, it is good advice.
Be encouraged that though we are few who care about the financial health of this country, a small united and determined group can accomplish much more through action than the fragmented, ignorant and lethargic mass of society. There are many historical examples of such success.
The fact is that we have the means to decrease the debt of the nation decisively. We need only the determination to cut the lavish welfare programs draining our public resources and take on the industrial elites sapping our private wealth.
Jesse Corn is a Gainesville native and Northeast Georgia resident whose columns appear frequently.