Economists: Are we headed for civil war?

Could recession really lead to armed warfare? 'Zero Hedge' expects a civil war, does TIME agree?

By , Guest blogger

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    Civil War buffs reenact the Battle of Round Mountain in Stillwater, Okla., in this 1999 file photo. The 1861-1865 American Civil War was driven by concerns over property rights (what others called 'slavery') and anger over the role of the national government. Could America be on the brink of repeating history?
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Not exactly, but Stephen Gandel, writing for TIME’s Curious Capitalist blog, certainly entertains the notion of a Fed-instigated civil war. He remarks that the upcoming November 2nd Federal Reserve meeting could “maybe” be the most important in its history.

At issue is round two of quantitative easing, Bernanke’s Treasury bonds buying mission – which is in many ways equivalent to simply printing money — the uproar it could inspire in the public, and the possibility that it could leading to a taking up of arms.

From TIME’s Curious Capitalist:

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“A number of people both inside the Fed and out believe this is the wrong move. But one website seems to believe that Ben’s plan might actually lead to armed conflict. Last week, the blog, Zerohedge wrote, paraphrasing a top economic forecaster David Rosenberg, that it believed the Fed’s plan is not only moronic, but ‘positions US society one step closer to civil war if not worse.’

“I’m not sure what ‘if not worse,’ is supposed to mean. But, with the Tea Party gaining followers, the idea of civil war over economic issues doesn’t seem that far-fetched these days. And Ron Paul definitely thinks the Fed should be ended. In TIME’s recent cover story on the militia movement many said these groups are powder kegs looking for a catalyst. So why not a Fed policy committee meeting. Still, I’m not convinced we are headed for Fedamageddon. That being said, the Fed’s early November meeting is an important one. Here’s why…

“…nearly two years after the Fed cut short-term interest rates to basically zero, more and more economists are questioning whether the US central bank is making the right moves. The economy is still very weak and unemployment seems stubbornly stuck near 10%.”

It seems imaginative to consider the people who are militia-minded in the US as being the same people who would pay close attention to Fed meeting minutes, in particular, and then take to the streets in violence. That said, a continued deterioration in the economy, coupled with increasing joblessness, has been the source of many a prediction of civil unrest: from Barry Ritholtz suggesting investors get long torches and pitchforks to Dr. Ron Paul warning of riots in the streets.

With that longer-term perspective, it’s certainly plausible that any inflationary consequences Fed actions may bring about, could, in turn, ignite an outcry of some magnitude. For more details, you can read TIME’s Curious Capitalist post on how the Federal Reserve may cause a civil war.

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