Monday, April 4, 2011

Economic de-stimulus

George Will commented on Sunday Morning that the Fed is printing money and buying 70% of the new Treasury Bond issues and this will end in summer. He didn't say what any of this meant allowing anybody who even got what he was saying to jump to their own conclusions. First the Fed isn't buying new issues but buying them on the open market allowing the rich to bail on their Treasury holdings at full price. Secondly pumping a cool trillion into the markets does stimulate the economy at least at the Wall Street level. This is great for the rich but does little for the rest of us but drive up food and fuel.

If they really wanted to stimulate the economy they would increase demand. Seventy percent of demand comes from consumers and half of consumers have little or no discretionary income and increasing food and fuel costs only makes that worse.

It would take little more than the stroke of a pen to increase the demand by increasing consumer income. They could increase the pay for lower income government workers (teachers, nurses and so on) and increase the minimum wage (adjusted for inflation it should be around $14/hour). Increase Social Security payments, unemployment benefits, food stamps and welfare. All of these people would spend the money immediately and boost demand. You would need to increase tariffs to keep the money from draining away to China and crack down on trans-national corporate tax avoidance schemes. Tax revenue would increase dramatically with the revitalized economy, coupled with a crack down on the rich you would run a huge surplus.

Not surprisingly the Republicans want to do just the opposite. Drastically cut pay for government workers, slash pension payments, eliminate unemployment benefits, cut food stamps, do away with welfare, cut the minimum wage to zero, bring back child labor and on and on. And they constantly clamor for more free trade and tax cuts for the rich.

Lets be clear, the people who come up with these talking points aren't stupid. They aren't just trying to play to their base by appealing to their shortsighted jealously, fear, hate and bigotry, they are deliberately killing the economy. The crisis this will cause cannot be over emphasized. They intend to use the crisis to grab power once and for all.

14 comments:

Anonymous said...

"... they are deliberately killing the economy." If so, why?

prairie2 said...

"If so, why?" ????? read all the way to the end of the blog.

revvv_pshhh said...

Research Latin America in the 1970's. Does Pinochet ring a bell?

Anonymous said...

"They intend to use the crisis to grab power once and for all." That is not a satisfactory answer to why 'they' would deliberately destroy what 'they' intend to control. Even sociopaths must realize on some level of consciousness that ruling over a hell hole is not a sane nor sustainable goal.

My theory is that 'they' are not operating in the real world, but honestly do believe that the games 'they' play are reality. "They' just want to win their games in the short term, then play another. Sane people know the difference betwixt gaming and real life ......... 'they' do not.

prairie2 said...

Well okay that certainly true of a good number of conservatives but the thing is they operate top down. The people at the very top do understand what they are doing and don't care. The big think tanks have been working on these policies since the 40's. I read a book in the 60's that laid all this planning out and it sounded like crazy conspiracy theory, it wasn't. They even laid out what a super Walmart type of retail store chain would look like, how far apart to build them and the effect they would have. None of this is happening by accident. Neo-feudalism appeals to all the people who think they will be part of the ruling class.

Yosemite said...

Once again, right on target!

Anonymous said...

Have you given much thought to how long such a Neo-feudal Amerika might last if 'they' succeed? Given the complexity of maintaining a populous modern state, it is doubtful such an anachronistic type of societal organization could survive more than a few years at most.

Heck, considering none of our pressing problems is being addressed adequately by even the sane politicians and businesses, I'm not too sure that what we've got now can last for very long. All the best :·)

prairie2 said...

This isn't about radical change to the day to day workings of society although you could see some bizarre things. For most people you will probably find your life to be much like that of the Walmart associate but poorer and with less freedom. How long will this last? The kind of freedom we take for granted as our birthright has been but a blip in the passing of time and will probably be lost forever down the memory hole.

Duke said...

Social mobility...that is upward mobility would seem to be the most at risk. Otherwise, everything is just fine.

prairie2 said...

"Upward mobility the would seem to be the most at risk. Otherwise,everything is just fine" Was this tongue in cheek? or don't you know what the Walmart world is like? And this is for the well off. Ever been to a third world country? There won't be a middle class. And when I reference Walmart, I didn't mean to bring up the picture of endless shelves of consumer goods, that will be gone. Think of the Soviet Union, everybody working but little getting done and nothing to buy.

Yosemite said...

Picture this. Someone robs you at gunpoint. You cannot call the police because there are no police, only contractors like BLACKWATER that YOU have to pay for and your income level is not nearly enough to afford that. Maybe your house catches on fire and you have not paid your dues. No-one comes to extinguish the fire and your house burns down. That is Walmart living, where only the wealthy can afford the things that you now take for granted.The power grab is to establish a caste system in this country where the few own the many you become totally dependent on them.

Dave said...

I think watching or re-watching the film "Soylent Green" would be instructive. The world we're heading for will look something like that whether the wealthy intended it or not.

The current economic policies that perpetuate and increase neo-feudalism are idiotic for the long run. However stupidity is a perfectly viable reason for extinction.

Anonymous said...

Any 'Walmart' type of organization can only survive when there are a lot of other types around to prop it up, as is the case now. I really doubt that if the USA passed some tipping point percentage of Wals, it could remain stable for long. We are too populous now and our economy is too complex and fragile for a regime that lopsided to endure. My guess would be a brief 'weird ugly' period, followed quickly by a chaotic restructuring and probably some military control until a new constitutional democratic government can be formed from the mess ......... and maybe we can let the South go its own way this time? ;·)

Anonymous said...

Ominous.