Obamanomics: Restoring Faith and Currency

Money is basically a form of religion. Like God it cannot exist without faith and confidence of people whose actions are governed by their trust in the future. Fiat money predominates now which means that our currency like many others, is entirely dependent upon the degree to which we trust each other to accept the currency as a uniform  and stable store of value.

Without that faith, money, with or without fiat from the government that issued it, is worthless. Other forms of exchange would predominate (like barter systems or vouchers) or other currencies would become accepted — like wampum, tobacco, rice and even stones and shells have been accepted for thousands of years in some parts of the world. Without directly referring to the true nature of money, Edwards helped define the discussion, Clinton pandered to it, and Obama lived it, breathes it, and makes it happen. So what can we expect from this improbable man? What will be result when he is President?

America is never “just right.” The pendulum always swings too far in both directions. we are at that point where the corporatocracy gives way, willingly or unwillingly, to populism. The day will no doubt come for the pendulum to swing the other way. What we get with Obama is the opportunity to restore faith in the U.S. economy, trust in American policy, and a chance to at least minimize the damage to the U.S. dollar. Somethingshave changed forever so we should not look for a return to the good old days.

It’s a new world out there and the United States does not really dominate it the way it once did. We have gone from half the world economy to less than a quarter of it. Militarily we are stretched thin, dealing with many radical regimes whose agendas undermine commerce, safety and human rights. Our middle class, what is left of it, is on the ropes — in an economy that depends upon the middle class to fuel it with consumer spending. Over-reaching by unregulated lenders, investment bankers, and institutional rating and insurance entities has resulted in the largest case of economic fraud in human history.

The next President, in all likelihood Obama, will face a series of urgent challenges to the country. If he is true to form in his personal history American jobs, healthcare and middle class income will be the centerpoint of his first year in office. If his programs work, the effect won’t be apparent until some time after that. In every economy there must be some referee to bring some sort of equilibtrium to the marketplace, allowing growth, success, innovation and and an equal opportunity for distribution of wealth and upward mobility. When the scale becomes unbalanced — like when the corporate interests forced us into the Spanish American War, it is time to break into that power base and allow the populace access to the levers of power.

Like many democrats before him, Wall Street’s predictions of doom and gloom will be proven vastly overstated. Only the corrupt need fear the new administration. Those that created the mortgage meltdown, CDO fraud, and credit crisis have plenty to fear. They needed an environment where, with impugnity, they could trick unsophisticated borrowers into signing their own financial death warrant, and where they could trick money managers and other investors into buying what appeared to be very safe, triple-A rated, insured investment vehicles giving a higher than normal return on investment. 

If Obama succeds in restoring faith and in getting money into the hands of American consumers, and if those consumers both spend and save, eschewing steadily mounting debt, the economy will recover, the financial foundation of our society will improve and Wall Street will do very well in an environment where investment vehicles from America are trusted again.

This blog is devoted to analyzing the U.S. and world economy in the context of populist U.S. President. Your comments are invited and appreciated.