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And if these policy reversals don't sound warning alarms, how about Fed Governor Bernanke threatening to support any asset market decline that threatens to reinforce deflation. Come to think of it, Fed Chairman Greenspan by encouraging the belief in a Greenspan "put" has been interfering in our and other countries' stock markets for several years now. Open markets? The door appears to be closing fast.

Well, I'm glad that someone finally said it. Get government out of the darn markets!

Richard W.

FYI

Comments and opinions welcome.

Richard W.

Would you give a one sentence summary of Bill Gross' screed?

The period to look at closely is the "Great Depression" of 1873-1896. During this period, English agriculture was severely hurt by falling prices for produce, and English manufacturing was hurt to a lesser extent by the rise of manufacturing in other countries. In American economic history, this period is more benign, beginning with the Panic of '73 and ending with another panic in the '90s. In fact, we were part of England's problem.

After the Civil War, there had been a great boom in investment in steel and railways. This opened the American West, and facilitated the movement of agricultural products to the East Coast ports. From there, the new, efficient steamships moved the goods to English ports.

This phenomenon was not limited to the US. Railways crossed Canada, Argentina, Australia and other fertile lands, and steamships now plied all the oceans.

Besides allowing the efficient importation of goods, the technologies of steam and steel directly enhanced agricultural productivity. Mr. Deere's steel plow turned the prairies and Mr. McCormick's reaper gathered the harvest with less manpower than before. Manpower itself was plentiful in the new lands, as the ships brought new immigrants with their large families.

Today the United States is in the same position as England was, and we are in for an extended period of economic malaise from which we may not recover. But the problem is not cheap agricultural or manufactured imports -- it is much more serious than that.

Much has been made of our service economy. A major part of the service economy is "information services". Broadly speaking this is any job which relies on telephone, computer, networks, ordinary mail, etc. It is all the clerical jobs which the "pink collar" employees used to do, as well as a large fraction of the "white collar" jobs in programming, engineering, and so forth.

Most of these jobs can be done cheaper off-shore. The office workers of the United States are destined to suffer the fate of the English farmers.

The semiconductor, disk drive and computer industry provides the technology to do these jobs more efficiently, just as did the farm equipment of the late 19th century. It is produced in the new growth centers of Asia, just as the new farm implements were produced in Moline and Waterloo.

The global fiber optic cables are the steamship lines, and the Internet is the railway. The cheap information transport they provide enables the movement of call centers from Omaha to Bangalore. Cisco systems is Baldwin locomotive, and the submarine cable systems makers are the Glasgow shipyards.

Cheap labor is also available in the new growth centers of the world economy. The number of really bright people is directly proportional to the population, and both China and India are well endowed with really bright people. The same information technologies needed to compete with United States information service workers are useful in training these low wage workers to undertake their tasks.

Just as Great Britain became more agressively imperialistic during the last quarter of the 19th century, the United States also is also espousing the virtures of unilateral, interventionist policies.

This is not a sign of strength, but of weakness -- a sign of a decadent society, an uncompetitive economy, and an leadership who see no way out.

Self interest alert: Gross runs a bond fund and has every interest in scaring the wits out of stock investors.