January 31, 2008
When Dr. Keynes advised FDR about how to get the economy moving again in the 1930s, the result was action to build infrastructure and put money into the pockets of consumers, by the works that were done. Eventually the factories reopened in response to the demand of workers with money to spend. But the wealth of productive capacity hadnít been looted for short term profit by outsourcing it to China. The stimulation package can only be a very temporary anodyne this time. While the working poor are especially desperate for the money, borrowing more to spend in Walmart that ends up in China or feeds the parasitic investors who created this mess will not revive our dead economy. Investment in finance and trade is even more stupid. These things are the problem. They are all that remains of the economy. Outsourcing has left US without the ability to produce goods - i.e. wealth.
Our leaders donít know that money is not wealth or that price is not value. Martin Feldstein, Professor of Economics at Harvard, still defends the Friedman delusion. [More about the inanity of talking heads later in this essay.] He even adopts the superior and condescending posture of the school, as Alan Greenspan is want to do. His self confidence [Feldstein channeling his presumed mentor Friedman] is incredible, Even real estate morons are no longer saying the glass is half full. Without domestic production, there is no American economy to rave about. Near the end of January, an anonymous caller to the Washington Journal on C-SPAN said, ďThe global economy is not the American economy!Ē
The ďglobal economyĒ is not our economy and the evidence thatís accumulated in the past thirty to forty years proves that it works for less than twenty percent of US. An economy thatís dysfunctional for four out of five people is a liability for everyone. But our foolish economists insist we follow the advice that is born of their failed free market theories. The politicians echo them in support of the leisure class who rule US, the community, for their individual well being. The investment stimulation the Bushies want to see will not help. Outsourcing of investment and the offshore production of consumer goods, investors and their profits are the reason the people have no money with which to consume. Traitor investors, the elite rich classes, have looted America and stashed the cash in Carribean banks. We have nothing left to stimulate but the pyramid scam of investment, usury and trade that have plundered America, the government and We the People.
They say they want to stimulate growth in the economy. Not the growth of production of real goods that FDR stimulated by putting money in the hands of consumers, who created demand that restarted the idle factories owned by the crash intimidated rich. In the 1930s the Keynesian stimulus took the form of government commissioned public works that built up the infrastructure required for production and commerce, the distribution mechanism. Most of the growth our idiot economists have claimed for the past forty years, while profitable for the few elites, has been the economic growth in China and other countries and the imaginary activities of profit, such as that on the trade of goods theyíve imported, while the real economy of the production of goods in America has shrunk. To stimulate more of this self destructive Ponzi of finance is worse than merely the futile activities of fools; it is criminal treason.
Investment has pursued the greatest returns. Those come from non productive finance, [sub-prime] home mortgages and consumer loans. We need to make real goods to consume and to trade. They think money is wealth. Theyíve got plenty of money. It doesnít bother them that theyíve sold the ability to produce wealth to get it. The factories we once had, the ability to produce wealth, are in China. We need them here to make the goods. Thatís what we must do to give our money value. Thatís what we must do to have goods to first consume and then to trade, that we may correct the imbalance. But our leaders want more of the same. They want quick profits at the expense of our common well being and livelihood, which they justify by their individual freedom to use US as they will for personal gain and to take our community demesne for their private property. Theyíve betrayed US by looting our common means of sustenance, our economy, to build their individual hoards. More investment in credit and other finance is lunacy. Itís an attempt at perpetual motion. It makes more money without making more goods or real property for it to represent. We must borrow from China to get the money to buy from China because we make no goods to trade or pay no decent wages to consumers. Wake up! How long can this insanity go on? How high can the debt kite fly?
The economic growth has been in the investment in non productive services, the scams of the rich, especially the most lucrative financial services and medical support industries that are infecting US, with the disease of exorbitant profits and CEO compensation. To stimulate more imaginary growth and concentration of wealth is to aggravate our economic disease. An economy that works to enrich a minority at the expense of the community and the work we do to support our lives is a dysfunctional economy. The Chicago School Model, the free market neoliberal theories of Milton Friedman, which have impoverished the nation the closer we get to realizing them, have enriched a few at the top* at the expense of most of US. They are in the whole self destructive.
[*They call themselves the top of the food chain and the rest of US bottom feeders but theyíre really like the scum thatís rises to the top of a boiling pot of greasy meat. The winners of their ďDarwinianĒ social games are making themselves and the entire Human Race evolutionary losers.].
Growth of finance and imbalanced trade are negative real growth. Finance is purely imaginary growth. Imports grow the economy of others. To call self destructive outsourcing or inflation - by investment in non productive [but the most lucrative] usurious activities of finance for the profit of a few - a global economy does not forestall the damage it does to most Americans. Nor does it become the American economy. If we donít make the products we need [to live] at home and to trade abroad, we are dependent for our lives on debt and the whims of the Chinese. To allow our corporate masters to undermine the real economy by offshoring in the name of their free market liberty to profit at the communityís expense is self destructive. And it makes [debt] slaves of the rest of US. If your eyes are at all open you can see examples of destructive dissipation of economic energy all around you. If you donít understand, donít feel bad. Most of US have fallen for the trick by the elites at one time or another. Weíve allowed ourselves to be indoctrinated by their self serving ideologies and beliefs. If we choose, any of US may throw off the conditioning and look at reality for ourselves. .
Itís helpful, at this point, to step back and have a look at what the economy is all about. Thatís not difficult to do but not often done. Itís really quite simple. The economy is what we do as a community to provide for our sustenance and survival. We band together and produce goods collectively which we trade among ourselves. The economy canít exist without a community. It must aid the public welfare, to justify its existence. If we donít look to our common survival first, how likely is it that an individual will make it. In fact, the idea of an individual succeeding without a community is absurd on the face of it. Without the definition in time, space and thought thatís provided by others, individual has no meaning. Without others with whom to trade, there is no economy except rudimentary foraging. An individual economy is possible for a lone hunter gatherer but even thatís unlikely to be successful. It doesnít take a philosopher king to see that all of economy as we know it is a collective thing we do for our common well being. Further, an economy that works for less than one in five of US is a failed economy.
Every day weíre reminded that to be competitive in a global market we must . . .. And it turns out that what we must do will profit a few at the top and drive the rest of US closer to desperation. Itís obvious that competition, even on a level playing field without artificial limitations to opportunity, can only result in a few winners of our zero sum game; yet we have internalized the belief in its beneficial effects. Look around. The collective effect of the mindless greed that motivates the individual scams of enrichment is the destruction of the community that produces the wealth in order to feed the greed of a few. Adam Smith called the mass idiot created, when each individual operates in its own self interest without regard for the health of the community that is the ultimate source of all much greater than average profit, the invisible hand. Today the same fools who were mindlessly repeating, ďwe canít repeal the law of supply and demand,Ē have switched the ritual invocation of Smithís liberal and Friedmanís neoliberal dogma to, ďthe market knows best.Ē The market they refer to is the collective effect of mindless greed of which we, ďwho are about to die,Ē speak. But if we compete hard enough with one another, we can assure that the all time winners of our game will be enabled to continue unimpeded down the road to destruction, which has been built by greed and to which weíve been blinded by our unenlightened self interest. To call the economic system in which the many work for and to enrich the few a free market is an abomination of language in support of the abomination of Human Nature by the corruption of social instinct that enabled the rich to dominate US to begin with.
Is Martin Feldstein, Professor of Economics at Harvard, a Chicago Boy? I had hopes that the stupidity so virulent that itís existence is a positive evil would start to dissipate when Milton Friedman died. I heard Marty say that extending unemployment benefits would be a disincentive to finding a job and later that it might be better to increase Food Stamps for consumer stimulation. I knew then that the evil of neo aristocratic hubris and the exploitation of the many for the enrichment of the few was still a threat to Human existence. Why Food Stamps instead of unemployment benefits?. Itís easier to sell starvation for discarded workers if you can claim they donít want to work. The morons on the Brookings Panel [C-Span 1/10/08] are still concerned about the loss of ďwealthĒ due to the crash of the housing market. Theyíre upbeat about balance sheets that still show profits. They fail to see that the Ponzi of Finance and the debt kite of borrowing to consume are the profits in the service economy and energy industry and medicine, insurance and Pharmaceuticals - or that they are the problem. I wish their sanguinity was all over their chests - running down from their slit throats. The clowns running this circus are a threat to our survival. We must act to defend our lives.
The old guy is still holding the gate. The young ones, like Mark Zandy [at Moodyís economy.com] have misgivings but their fear of the inquisition deters heresy. Jason Furman, Brookings Institution senior fellow, wonít challenge the Friedman Dogma, though some like himself are starting to see that itís a delusion. The true believers had the nerve to say that hedonism of consumers would bail them out. They donít have a clue that the profits of investors and the well being of corporations is illusory when itís based on outsourcing and impoverishment of consumers who are the market for the products on which the profit is made. That theyíre proud of the balance sheets the corps who arenít laying off but arenít hiring right now either is evidence of delusion, stupidity or schizophrenia. Maybe all three! They donít recognize the fatal flaws of the Ponzi of finance, the outsourcing and the debt kite fueled consumption and profit. These guys really are morons.
Jason Furman says it may not be so bad because thereís still growth. They never look at and are probably afraid to see the nature of the growth. Itís all financial Ponzi and debt but they just look at the statistics and canít see what that they represent useless motion of people and money instead of production of goods that could give the money value. [Reagan changed the statistical water so that even what they do see is false.] They donít even try to fathom the cause of the statistical growth. No one produces anything real. All [most of] our goods are imported. But the genius economists canít see thatís why the dollar is worthless and the whole pyramid scam of finance not just the housing bubble fraud must collapse. Nor can they see the inevitable end of the dept kite that keeps consumers buying and gives the appearance of real economic activity while providing only inflationary profits. Unless we make goods, first to consume and then to trade the surplus, there is no real economy in America.
Jason went on to refer to the paper that Doug and he wrote. I see a clique of morons telling each other how smart they all are but failing to see the most obvious flaws in the stupendous failure of an economic engine that the invisible hand of collective greed has built. The neoliberal theory is bullshit that panders to aristocrats just as was Adam Smithís original delusion.
Jason says consumers are adjusting their confidence downward because the housing collapse has decreased their wealth. The fools who occupy the ďacademic chairs of virtueĒ donít know the difference between price and value or money and wealth. They went on to say they donít think the dollar is in peril even though the Euro is worth $150 now. Martin Feldstein says that in the 1980s the dollar fell dramatically and nothing bad happened. We continued to grow, he said, and everything worked out. But at that time a much smaller percentage of consumables had been outsourced. We still had an economy. We still paid Americans half way decent wages to produce things. It wasnít nearly as imaginary as today though the majority was already starting to feel the crunch. Thatís why Reagan changed the unemployment and inflation statistics. [the beginning of letís pretend new speak economic indicators!] Well Marty, we no longer have the ability to produce wealth. And youíre still confusing price with value, money with wealth. How can a Harvard Professor of Economics be so stupid and live?
There was disagreement by Mark Zandy about Feldsteinís patronizing letís not extend unemployment insurance because it will be a disincentive to work. Mark said that weíre desperate and will spend that money and it will help. They also mentioned food stamps for those who donít pay taxes and tax rebates like 2001 to put money into consumers hands. Thereís some recognition of the problem. They know the people must have money to keep the economy going but theyíre not ready to see that the profit of investors that concentrates wealth and the usuries of finance and the resulting debt kite fueled economy are at the root of the economic disease. All they see are the aggregate statistics. They try to find parallels from the past so they can recommend the things that seemed to work then. [Of course Sachs never saw that it was the return to the Coca economy that saved Bolivia and not his Friedman-esque shock therapy.] Theyíre incapable of seeing the truth because their patrons and bank accounts wonít tolerate it. They canít see the debt kite or ravages on the ability to produce wealth from outsourcing or the unprecedented size of the Ponzi of finance that make todayís crisis unlike and worse than any in the past. The old bullshit canít even pretend to work today.
Feldstein rebutted that when they see their unemployment running out they get a job. It may not be the one they wanted but itís a job. That cynical, greedy, evil, selfish son of a bitch thinks that desperation and pain are good things. He allowed that we could increase food stamps. I guess that way when unemployment runs out they can drop off the unemployed list and become homeless. Then they can be culled by simply cutting or failing to increase food stamps, which weíre programmed to see as evil like all social spending. The problem goes away and the victim gets the blame. I guess thatís win-win for Marty.
Mark hinted at the weaknesses of Chicago School but hadnít the nerve to attack. In any case theyíre going about it too slowly. The crisis has deteriorated to what any one not deluded by free market bullshit would expect. The neoliberal free market delusion of Milton Friedman demands that wealth be concentrated and losers starve. In time the community that creates the wealth must deteriorate because in a finite world all the goods end up with the elites who run the show. Who would expect!? Survival demands we take control of our economy. One way or another! Neoliberal delusion led to debt kited consumers, finance Ponzi and outsourcing of the ability to produce the goods we need to live. Whatís the solution? Canít say. But this doesnít work. And I didnít make the mess. Iíd sure like to see some of the rich morons who did put together the free market suicide pact dogma shot and killed by their righteously irate victims.
Whatís really scary is that the Brookings Institute is said to be a liberal think tank. Could you imagine what CATO or Heritage are saying?
At some point we have to pull the plug on our corpse of an economy. Itís been killed by the reverse development of outsourcing and kept functioning by debt and the Ponzi of finance and service. We must birth a new means of survival, by building factories and infrastructure that can support our lives. Else we remain dependent on China et al, as the old third world was once dependent on US for manufactured goods. No package of stimuli will pull it out this time. The tried and true never was a good answer and canít even pretend to work now. But thatís all the ďexpertsĒ have to offer.
In the last week of January the House passed a stimulus bill. The Republican Senators are busy trying to amend it to give less help to the poor and more to investors and thereby sabotage the too little too late too thoughtless package and make it even less effective. They and most of the Democrats still havenít begun to see that the excessive profits on the investments by the rich and the scams and outsourcing and downsizing of the American People and economy are the problem. They regurgitate the blather previously cited from the Brookings panel and other pseudo scientific economistsí drivel. Sometimes their names are dropped by our politicians to bolster the authoritativeness of their blathers. Even without much cherry picking of the economistsí ďexpertĒ testimony, they manage to maintain their denial and delusion. They still think ďthe market knows best.Ē If so, then the vicious aggressiveness and acquisitiveness, [for the property of others] demonstrated by crocodiles, proves the superiority of the reptilian brain.
I'll feed myself and provide other necessary resources so that I may continue to write.
A G Kaiser