Wednesday, November 24, 2010
Wednesday, November 24, 2010 7 comments
The Fed is painting a pretty gloomy picture for the economy despite its plan to hand out a trillion dollars to the rich. Don't fall for the talking point that the Fed shouldn't be doing this because it benefits the rich, they really don't have any choice. The economy is on the edge of collapse and that is something to be avoided as long as possible. If you think anarchy would bring a new dawn with daisies and puppies for everybody you are mistaken. Take this little test: when you read a disaster novel do you picture yourself as the hero that leads the handful of survivors to safety or do you see yourself being tossed into the mass grave? Self confidence is great but the numbers aren't in your favor.
Make no mistake, trickle down economics doesn't work, in fact anybody who can do simple math can figure out that the opposite is true. However this isn't a quite the same thing. The money the Fed is passing out will not stimulate the economy the way doing real stimulus would but it will keep deflation at bay for a time and that is a good thing. A trillion dollars is 1/14 of the GDP so it has to have some positive effect especially if they can convince the investor class that inflation will result so that they decide to stop sitting on their money. Clearly it will affect the commodities market, so expect higher food and fuel prices. It's not the solution, it just buys time.
The problem is getting a enough people elected that are actual progressives. Not an easy task, but not impossible either. We went through the same exact thing a century ago. Unfortunately the rich pay people at think tanks to study history and refine the strategies for eliminating the middle class and democracy for once and for all. We have only a little time to educate and organize and we must not waste it.