29 September 2014

The Problem In One Picture: Monetary Stimulus In an Unreformed Economic System

"The problem of the last three decades is not the 'vicissitudes of the marketplace,' but rather deliberate actions by the government to redistribute income from the rest of us to the one percent. This pattern of government action shows up in all areas of government policy."

Dean Baker

"Most of them became wealthy by being well connected and crooked.  And they are creating a society in which they can commit hugely damaging economic crimes with impunity, and in which only children of the wealthy have the opportunity to become successful. That’s what I have a problem with. And I think most people agree with me."

Charles Ferguson, Predator Nation

Trickle down stimulus doesn't work to activate aggregate demand and encourage real economic growth because the largely unreformed economic system continues to divert the bulk of the stimulus and growth to the top.  

Whatever is put in to this great economic machine, whether it be labor, materials, or monetary stimulus, the best and the most of what comes out is skimmed to the top.  This is not a bug or fault, it is a 'feature.'

This is like sending aid to a Third World nation, where the warlords take the aid for themselves, and allow only a very small portion of it to reach the people.   They take the stimulus and leave the debts.

And then there are the enablers, the professional class.   They must support any regime for it to last.  The Fed knows.  Most academics know.  Big media knows.  Politicians know.  It takes a pliant mind to ignore it, and a devious mind to rationalize it away.  On one hand their brilliance justifies their rewards and positions.  

But on the other hand, when something goes wrong, they don't know nothin' 'bout nothin', and had nothing to do with any of it.  There are lots of fabulously paid CEO's of the public trust, who in reality do nothing and know nothing, except on paydays when they know they are worth a lot.

These latest ubermench are members of the 'winning class.'   And those others, those losers, are obviously lazy, and stupid, and not favoured by the god of fortune.  

Why should they do anything about it, even for the sake of their own conscience?  Am I my brother's keeper?  And the bribes are very good, very Darwinian.  And the positions very piously taken, with pride. 

Why consider the parable of the talents, when we would be as gods?  We will write our own bible, our own parables.  And we will believe them.

So they are sitting back and waiting for the little people to do something about it first, to take all the risks, again.  Whether in war or peace, their cleverness and birthright prevails.  Only the little people suffer and bleed.  We are as wolves, and they are as sheep.  And justice is ours, to do with as we will.


The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.

History Lesson

Tsar Nicholas II:   I know what will make them happy. They're children, and they need a Tsar! They need tradition. Not this! They're the victims of agitators. A Duma would make them bewildered and discontented. And don't tell me about London and Berlin. God save us from the mess they're in!

Count Witte:   I see. So they talk, pray, march, plead, petition and what do they get? Cossacks, prison, flogging, police, spies, and now, after today, they will be shot. Is this God's will? Are these His methods? Make war on your own people? How long do you think they're going to stand there and let you shoot them? YOU ask ME who's responsible? YOU ask?

Tsar Nicholas II:   The English have a parliament. Our British cousins gave their rights away. The Hapsburgs, and the Hoehenzollerns too. The Romanovs will not. What I was given, I will give my son.