If knowledge is power, then people knowledge is the ultimate power.

Med Jones

Globalization of markets, competition, partnerships and risks should carry far more weight in the designing of strategic national development plans. It is not enough to think about government budgets anymore, you need to build your economy and businesses for global markets and competition

One quick and effective solution to the global economic crisis is a global economic and political reset. A global economic reset means that world leaders can come together to agree on debt forgiveness to all nations and restructuring of the global economy. Friends and enemies alike, no exceptions. To be fair to nations with lesser debts, they could be compensated on a ratio basis to enjoy treasury surpluses. A new international trade and reserve currency will probably be established to create a fair global economic system and to implement the reset. This could bring a new era of global prosperity and socioeconomic exchange. This is a much better alternative than currency wars, international hostilities and continuous risks of global socioeconomic shocks.

From a psychological point of view, when people go under pressure in life, be it economically or otherwise, they seek support from the people closest to them, usually religious or ethnic groups. They also start blaming other groups who have more control over the national resources. If the gap of power is wide, this will eventually create deep divisions in the nation. The divisions can take on new forms of conflict such as class warfare, ethnic, religious, political unrest and sometime civil war. The only effective protection against national divisions is an open socioeconomic system with a large and growing middle class

One main reason the US has been able to prevent its currency and economy from collapsing, despite the latest wars, huge debt and massive currency printing, is because the dollar is the de-facto standard for international trade and reserve currency.

Over the long term, if government revenues continue to be less than the expenditures (deficit). This will result in accumulated debt. An increasing government debt will result in higher interest payments, and less money available for socioeconomic development. To pay for the debt, the government will have to raise taxes, which will reduce the competitive position of the country in the global economy and chase investors away resulting in less economic activities and more job losses. In order to avoid higher unemployment and social instability, the government have to raise more debt to fund spending and welfare support by raising the interest rate which will increase the cost of money, reduce corporate profits and slow economic investments, thus resulting in more job losses and reduced government revenues, despite income tax increases. It is what I call a vicious economic cycle.

The US government alone cannot get its economy out of the crisis. It appears to me that the current policy makers are suffering from the gambler's syndrome. They keep spending more money hoping that they will eventually win. More debt spending is a receipt for bankruptcy. Real economic growth comes from government and private sector investments, not from massive debt spending followed by tax increases or currency devaluation.

Your Attitude determines your Socioeconomic Altitude