Third World, the Third Economic minefield

If the European Debt Crisis and weak American recovery from the Great Recession was not enough, the so-called emerging markets are starting to show signs of slowing.  Part of the reason stems from the Federal Reserve’s move to end its stimulus efforts, which flooded the global economy with easy money and diverted massive amounts of capital into underdeveloped countries as investors saw more room to grow, i.e. they got more money, far quicker by investing in foreign countries.  Unfortunately, this means the growth seen in these emerging markets was built on an unsustainable subsidy that cost economic growth in the American Main Street economy.  In other words, we created economic bubbles doomed to fail and hurt the Peoples of emerging markets while we hindered growth in the developed world, thus hurting the American People.

Clinton era globalization was built on a worldview that preached economies should be built to service global demand with each country offering a selection of specialized goods.  Because this model creates a fragile global market built on global pricing of overly relied upon goods and price suppression, which is often seen in lower wages and suppressed tax revenues, it can only sustain poverty with marginal improvements in living standards for those in the emerging markets, until the system collapses as this model creates bubbles.  A national economy must be built on industries that serve the local needs of its People with locally plentiful resources that are as local as possible with excess production being used to participate in the global economy.  Although this latest news is distressing, it also demonstrates the wisdom in shifting how we approach economic development and globalization.