This article is to review the results of our independent research about the origin, the rise and the self-destruction of the globalization scheme. The research has started in 1997, triggered by the disappointment with modern economic theories and models. Those theories and models have consistently failed to explain, not need to mention foretell, major economic events and trends throughout the globalization era. Thus we have decided to take the matter into our own hands and have started this research from scratch to see exactly how the globaliztion process had evolved into its final self-destruction.
The special event that pushed us into this research in 1997 was the "Asian Financial Crises" of 1996 to 1997. Main stream economists had not only failed to explain and anticipate the calamity of "Asian Financial Crises", but flooded major financial media with ridiculous and foolish claims like, "Asian Financial Crises is due to the incompetence of Asians". By 1998 our research has uncovered the evidence that the boom and bust cycles in The U. S. are induced by the explosion and the wane of U. S. trade deficit. The Asian Financial Crises was the result of Japan's near-zero interest rate policy that boosted Dollar high vs. Yen and led to the second explosion of U. S trade deficit that happened in Clinton era. Asian Financial Crises was the first fallen domino of a chain reaction that finally torpedoed the mighty dot-com bubble. This stunning result is reported on an online paper in December, 1998, and is now reposted on our website forcastglobaleconomy.com as article 1.
After the launch of the website of forcastglobaleconomy.com in 2003, more research results have been added to the website until the successful prediction of the coming of the Great Recession of 2008 - 2009. Due to the severity of the recession, the globalization process should be considered as self-destructed at that time. After the self-destruction of the globalization process, the U. S. economy has entered a new phase. The new phase may be called as the era of creation of fiat money; huge amount of fiat money created in the hands of The Federal Reserve now has overwhelmed the U. S. trade deficit as the deciding factor in the economy. That is why we are writing this review as an eulogy of the "Globalization Scheme" of yesterday.
We treat economics as a science. To treat economics as a science does not mean to use powerful mathematics nor
sophisticated computer programs to crunch out numbers. The rules of research in any discipline of science can be
summarized as the following steps:
Step 1. From a set of data regularities are derived and a model is constructed.
Step 2. The data set is immediately enlarged, and the constructed model is required to explain the enlarged data set as well. If the model fails to explain the enlarged data set, either the model is revised until it is able to explain the enlarged data set, or the model abandoned and a new model that can explain the enlarged data set searched.
Step 3. Step 2 is repeated over and over until the data supposed to be explained are all explained. At this level the model is elevated as a theory.
Step 4. Even when a theory emerges, the check and check process of Step 2 never ceases since new data will keep streaming in.
On the other side, a non-scientific approach also starts from Step 1 mentioned in the above paragraph, but Step 2 and beyond are short changed. When some inconvenient data comes in, either the data is totally ignored, or the failure of the model or theory are claimed to be due to random event that is beyond human ability to explain and foretell. Thus the proven-to-have-failed model or theory is kept alive, hoping that it can explain the next round of incoming data by miracle. We can see clearly that as time goes on, there will be no comparison in the ability to explain and foretell economic events between the scientific approach and the non-scientific approach.
We would like to thank the efforts and the dedication of various U. S. agencies for assembling and disseminating numerous
amount of economic data. Without them this research would not be possible. Among those agencies, we would especially like
U. S. Census Bureau,
U. S. Bureau of Economic Analysis,
U. S. Bureau of Labor Statistics,
and Board of Governors of the Federal Reserve System.
Also we would like to express our deep appreciation and respect to U. S. Congress and U. S. Government, in the name of U. S. citizens, to keep such valuable amount of statistical data about the economy openly accessible to any one who wants to know.