US economy paying for 1980s mistakes

Press TV has conducted an interview with E. Michael Jones, editor of Culture Wars Online Magazine from Indiana. The following is a rough transcription of the interview.

Press TV: Looking at how this was indeed [US President Barack] Obama’s campaign promise to focus on creating manufacturing jobs. This isn’t a very good report card, so to speak, on his performance in office.

Jones: No it isn’t, but I don’t think you can lay the blame at the feet of President Obama. What we are talking about here are the long term affects of the [former US President Ronald] Reagan revolution and the Paul Volcker tenure at the head of the Federal Reserve System beginning in the 1980s, 1979-1980.

Traditionally whenever there was a recession, the factory would lay off the workers and they would sell off their surplus inventory and then they would hope that by the time they had sold the last product, the economy would come back and they could rehire the people.

What happened during 1981/1980 -1979 the wholesale looting of the manufacturing base of the United States to pay for this huge military buildup that we are still paying off.

It resulted in a two hundred billion dollar deficit and the United States has never gotten out of that hole because it destroyed its manufacturing base in order to raise short-term cash.

Press TV: You did mention the Federal Reserve and indeed this is a very deep-rooted issue and how much of it does, do you think, go back to the policies that the Fed (Federal Reserve) has been adopting, not just within the Obama administration, but in previous years and decades as well.

Jones: One hundred percent. They wrecked the economy. The inflation was a problem in the 1970s. Paul Volcker became head of the Fed and what he did was raise interest rates to astronomical heights between 15-21 percent like that. And once you have interest rates that high, there is no point in manufacturing anything.

So, what happened is that the people, the corporate raiders, the leverage buyout kings like Ivan Boesky (American stock trader) came in, bought up these companies, cannibalized them, sold them off, took the money and put them in treasury notes because they could earn three times the profit of the normal return rate of investment.

This is great over the short-run, but we have reached the long-run now. [British economist] John Maynard Keynes once said in the long-run we are all dead. Well, we are in the long-run right now. We are now seeing the chickens coming home to roost from these cannibalizing policies of the 1980s under Ronald Reagan.