Sunday, 24 July 2011

Grapes of Wrath: 2011 sequel?

The US predicament is looking increasingly like the dust bowl / poverty sceanrio that was the setting for John Steinbeck's The Grapes of Wrath.

There is a monster heatwave and drought raging across the country and while there is little talk of a return of the 1930's dust bowl, the weather pattern is certainly impacting on the country.

Alongside the weather, the US economy seems on the brink of collapse. The budget talks are in difficulty with a breakdown on Friday although they seem to have restarted yesterday. They are still discussing how to handle $14 trillion of debt with an assumption that this needs to be reduced and of course the Republicans want to cut benefits and taxes to do so.

It is worth remembering that in general terms the size of the money supply is defined by the totality of debt, so reducing the government's debt can only be achieved by either shrinking the money supply or shifting the debt to someone else. I doubt neither option would be palatable to them.

The real impact is being shown on the streets. Unemployment has been running between 9% and 10% for last two years and there are stories about the displaced people with no jobs and no homes. Worse still are the actions by authorities to confiscate and destroy the vehicles and tents that people are living in. If you haven't read Grapes of Wrath, I would recommend it.

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