The Transformation of America from the Revolution to the Present, Part V


Note:  If you become an annual paid subscriber, you will receive an autographed copy of my memoir. Please send me your address and I will mail you my book. 

Robert Wright’s review of my book captures the essence of my journey in America. 

Murray’s Newsletter is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

“There is a right way and a wrong way, always choose the right way.”  Abraham Sabrin (1914-2001)

The end of World War II ushered in what some analysts assert was the expansion of the American empire overseas.  The US dollar became the dominant world currency forcing nations to obtain dollars to trade goods across the globe.  With the dollar defined as 1/35 of an ounce of gold and the United States having about $25 billion in gold reserves, no other nation could challenge America’s economic dominance in the first two decades of the postwar period.

The first undeclared war of the postwar period occurred in Korea, with United States acting through the United Nations, created a coalition for a “police action” to challenge the North Korean communists on the peninsula after it attacked South Korea in June 1950.

The three-year conflict led to a stalemate and the continued partition of the communist North and the ant-communist South.  The relatively free market South has thrived giving us companies such as Samsung, LG, Hyundai, Kia, etc., in contrast to the grinding poverty of the North. 

The Cold War heated up during the 1950s as the Soviet Union developed its stockpile of nuclear weapons and communist ideology was embraced by third world countries challenging the colonial powers that dominated their homelands for scores of decades.   However, some analysts have revised the narrative that the Cold War was the result of US reaction to the Soviet threat.  One study traced how the US foreign policy establishment in cahoots with Wall Street was primarily responsible for the overseas interventions by the our government.   

America’s welfare state expanded slowly during the Eisenhower administration with the creation of the cabinet department of Health, Education and Welfare, even though some

Republican members of Congress thought that the Hoover-FDR New Deal policies would be abolished or downsized during the Republican Eisenhower administration were disappointed. Anti-New Deal Republicans were in effect fighting for a return to a relatively limited government but to no avail.  The welfare state was now entrenched in America. 

The election of JFK in 1960, the first US president born in the 20th century, was a watershed event. He campaigned “to get the country moving” especially after the economy was in a recession in 1960 and unemployment spiked to 7 percent.  JFK’s economic advisors were long-time supporters of the New Deal and hoped the Kennedy administration would take the country further down the road to more federal government spending and regulations.  In other words, they wanted an “activist” government to deal with poverty, which had been declining since the end of World War II not because of government programs but because of an expanding economy based on market principles.  The chart below from a 2014 study reveals the poverty rate flatlined relatively soon after LBJ’s War on Poverty began in the mid 1960s

The conclusion from the Heritage Foundation study is clear—government spending does not reduce the poverty rate.  In fact, the LBJ’s war was a great leap in welfarism and one of the results has been a breakdown of the family.  “When Johnson launched the War on Poverty, 7 percent of American children were born outside of marriage. Today, the number is over 40 percent. (See Chart 4 in this study referenced above) As the welfare state expanded, marriage stagnated and single parenthood soared.”

Thus, one of most egregious legacies of LBJ’s administration has been the undermining of the American family. 

LBJ became president after JFK was assassinated on November 22, 1963, 13 months after the Cuban Missile Crisis that thankfully was diffused because of back-channel negotiations between the US and the Soviet Union.  Five months before the assassination Kennedy gave his pro-peace commencement address at American University.  Did this speech seal his fate?  I think so. 

One of the best accounts about the JFK assassination is a must read.  James Douglas presents a compelling case in JFK and the Unspeakable: Why He Died and Why it Matters pointing out that Kennedy wanted to have a rapprochement with the Soviet Union after the near nuclear exchange with the Soviet Union in October 1962.   The military-industrial complex and the intelligence agencies wanted continued confrontation and even a nuclear exchange with the Soviet Union.  And yes, there was a conspiracy to kill JFK.  The evidence is powerful.  Lee Harvey Oswald was the “patsy,” as he stated in the Dallas police station after he was captured and subsequently murdered by a mob connected strip club owner Jack Ruby. 

In the summer of 1965 LBJ signed two bills that had been the goal of the New Dealers since the 1930s—Medicare and Medicaid, thereby expanding the welfare state in America.   He also committed more US troops to Vietnam bringing the total to more than 125,000 by the end of 1965, even though he claimed during the 1964 presidential campaign that American boys are not going to fight in the jungles of Southeast Asia.   

And the rest is history.  The promised limited military intervention escalated to more than 500,000 troops by 1968 and growing anti-war sentiment that led to LBJ announcing on March 31 he would not seek the Democratic nomination for president. A few days later Martin Luther King, Jr. was assassinated in Memphis, and then two months later Senator Robert Kennedy was assassinated after winning the California primary. RFK was probably going to win the Democratic presidential nomination. 

Was Sirhan Sirhan the lone gunman who killed Kennedy or was there a plot to take out the pro-peace senator?    To ask the question is to answer it.

As price inflation accelerated after the Vietnam War and the Great Society spending kicked in (late 1960s and early 1971), and the Federal Reserve printed money to support the federal government’s outlays, President Nixon imposed wage-price controls and closed the gold window severing the last link between the dollar with gold.  Foreign holders—central banks and other official institutions—no longer could swap their dollars for gold.   

This inflation cycle lasted until the early 1980s, when price inflation reached more than 12 percent.   

Since the stagflation of the he 1970s and early 1980s, the US economy experienced the dotcom bubble, the housing bubble and what some analysts have called the current “everything bubble,” because of the endless Federal Reserve’s money printing.  Money printing causes price inflation and the boom/bust cycle.   And when the 2020 Covid lockdowns caused the economy to implode price inflation accelerated in 2022 to a four-decade high. 

In addition, federal government “stimulus” spending has skyrocketed because of the Covid lockdowns but since has receded.  More ominous is the increase in the federal debt, which is projected to reach $40 trillion by the end of the decade or soon thereafter. 

Another serious development is the US and our allies supporting Ukraine’s military against Russia’s invasion. This proxy war is the most serious crisis since the Cuban Missile Crisis of 60 years ago.  And for President Biden to cavalierly state that we are on the brink of nuclear Armageddon is unconscionable.  Where are the “adults” in the Biden administration working to end the war between Ukraine and Russia? 

In sum, the US economy will face another major financial crisis, which I believe will occur by the end of this decade or early in the 2030s.  Moreover, our civil liberties have under attack since the passage of the Patriot Act in response to 9/11. 

How do we restore the American republic of limited government?  How do we establish a peaceful foreign policy that George Washington and Presidents Eisenhower and Kennedy recognized would be in the best interests of the American people?

I will continue to provide solutions on my Substack columns to the fiscal irresponsibility of both major parties, the reckless money printing of the Federal Reserve, the tax burdens faced by families and businesses, and the unnecessary regulations that hamper small business owners. 

My latest piece on the economy was published in Fortune,  This is an update of my 2021 forecast, 

Murray Sabrin, PhD, is emeritus professor of finance, Ramapo College of New Jersey. Dr. Sabrin is considered a “public intellectual” for writing about the economy in scholarly and popular publications. His new book, The Finance of Health Care: Wellness and Innovative Approaches to Employee Medical Insurance (Business Expert Press, Oct. 24, 2022), and his other BEP publication, Navigating the Boom/Bust Cycle: An Entrepreneur’s Survival Guide (October 2021), provides decision makers with tools needed to help manage their businesses during the business cycle.  Sabrin’s autobiography, From Immigrant to Public Intellectual: An American Story, was published in November, 2022.

Murray’s Newsletter is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

What do you think?

Written by CONK!


Nathan Worcester on In The Dark

The Week That Was: Progressives Scheming, Mentorship Beaming, and Bureaucratic Reaming