Government Fiscal Policies and the Decline of America's Main Street Economy giving rise to the new digital currency.
The decline of America's Main Street economy can be attributed to various government fiscal policies implemented over the years. Two significant events, the removal of gold from the US currency and the manipulation of interest rates, have had profound implications for the nation's economic prosperity.
These policies have led to the financialization of the economy, creating a system that prioritizes financial wealth over real wealth and exacerbates inequality. This article explores the consequences of these fiscal policies and their impact on America's Main Street economy.
The Removal of Gold and the Rise of Fiat Currency
Between 1968 and 1971, gold was detached from the US currency, severing the link between money and tangible assets. This move multiplied dollars faster than the goods and services they could purchase.
Previously, in a capitalist economy, the increase in money supply was tied to producing more goods and services, driving economic growth. However, with the removal of gold backing, money creation became detached from real-world economic activity.
The Financialization of the Economy
The detachment of the US dollar from gold marked the beginning of the financialization of the economy. Financialization refers to the increasing dominance of financial engineering in the lucrative financial markets, speculation, and credit-driven economic activities. Instead of relying on real capital to generate wealth, the new system depended on credit provided by the Federal Reserve and banks.
This shift allowed money to be made without contributing to producing goods and services, creating a system prioritizing financial wealth over real wealth.
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Financial wealth, which can be generated through speculative investments, leverage, mergers and acquisitions, and other economic activities, differs from real wealth. Real wealth is created through productive work and producing goods and services. Before the financialization era, the rich and the poor had opportunities to earn money and improve their economic standing. However, the new financial system tilted the playing field in favour of the elite, exacerbating wealth inequality.
Consequences of Financialization as it brings the end of an era.
The rise of financialization had far-reaching consequences for America's Main Street economy. Rather than creating wealth through innovation, entrepreneurship, and the production of tangible goods, the focus shifted to manipulating credit and financial instruments. This shift led to manufacturing outsourcing and the erosion of domestic industries as cheaper alternatives emerged overseas. Americans became consumers rather than producers, relying on debt to fund their consumption of goods produced elsewhere. Hence, the new DeFi needs to replace the end-of-cycle CeFi.
The Impact on the Main Street economy as we know it and the soon-to-be-new DeFi crypto economy mainstream does not even talk about
As financialization took hold, the benefits of economic growth became increasingly concentrated in the hands of those with access to credit, business connections, and financial expertise. Once Main Street's backbone, the working class and small business owners faced increasing challenges in generating wealth and economic advancement. The new monetary system emphasized quick profits through speculation and financial maneuvers rather than long-term investment in productive industries.
Government fiscal policies, including the removal of gold from the US currency and the subsequent financialization of the economy, have played a significant role in the decline of America's Main Street economy.
The shift towards prioritizing financial wealth over real wealth has contributed to rising inequality and the erosion of domestic industries. The economy needs to be rebalanced to revitalize Main Street, focusing on productive work, entrepreneurship, and policies that support small businesses and local communities.
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