Tuesday, November 23, 2010



America needs stimulus not virtue

The Obama administration’s insistence on fiscal rectitude is dictated not by financial necessity but by political considerations. The US is not in the position of Europe's heavily indebted countries, which must pay hefty premiums over the price at which Germany can borrow. Interest rates on US government bonds have been falling and are near record lows, which means that financial markets anticipate deflation, not inflation.

President Barack Obama is under political pressure. Americans are deeply troubled by the accumulation of public debt. The Republican opposition has been extremely successful in blaming the crash of 2008 and the subsequent recession and high unemployment on government ineptitude.

But the crash of 2008 was primarily a failure of the private sector. US (and other) regulators should be faulted for failing to regulate. Without a bail-out, the financial system would have remained paralysed, making the subsequent recession much deeper and longer. Similarly, the US stimulus package was a necessary measure. The fact that most of it was spent to sustain consumption rather than on correcting the underlying imbalances was unavoidable due to time pressure.

Where the Obama administration went wrong was in how it bailed out the banking system: it helped the banks earn their way out of a hole by purchasing some of their bad assets and supplying them with cheap money. This, too, was guided by political considerations: it would have been more efficient to inject new equity into the banks but the president feared accusations of nationalisation and socialism.
...
I believe there is a strong case for further stimulus. Admittedly, consumption cannot be sustained indefinitely by running up the national debt. The imbalance between consumption and investment must be corrected. But to cut government spending at a time of large-scale unemployment would be to ignore the lessons of history.

The obvious solution is to distinguish between investments and current consumption, and increase the former while reducing the latter. But that seems politically untenable. Most Americans are convinced that government is incapable of managing investments aimed at improving the country’s physical and human capital.

Again, this belief is not without justification: a quarter-century of calling the government bad has resulted in bad government. But the argument that stimulus spending is inevitably wasted is patently false: the New Deal produced the Tennessee Valley Authority, the Triborough Bridge in New York and many other public utilities still in use today.

Moreover, the simple truth is that the private sector does not employ available resources. Mr. Obama has in fact been very friendly to business, and corporations are operating profitably. But instead of investing, they are building up liquidity. Perhaps a Republican victory will boost their confidence but, in the meantime, investment and employment require fiscal stimulus (monetary stimulus, by contrast, would be more likely to stimulate corporations to devour each other than to hire workers).
...

... who would not want to build on liquidity ...
... in a country where predatory lending and usury has such a high return ...
... and such a friendly government protection ...
... who would not want to borrow at 0.5% and lend at 30% ...
... on top of a kickback on any dollar you enter in your accounting system ...
... with no control whatsoever ...
... and when governments buy your defaulted debt ...
... and you get to keep the profits ...

... we have reached "the worse of both worlds" ...
... paper tiger capitalized financial speculation economy ...
... combined with Bolshevist "socialization of losses" ...
... but only for the "sons of the white duck" ...
... under god and the banking racket ...
... financial extortion means have been used to eliminate dissent ...
... and to promote the dogma of the christian American superiority ...

... besides a christian, anybody who thinks with his own brain can see ...
... that the solution to this government blessed and legalized godly theft ...
... would be a "usury" limit on the spread ...
... that would force financial speculators to stop playing on consumption spending ...
... and move to collateralize capital equipment ...
... so that the money flow goes from the paper tiger economy ...
... to the real economy ...
... but we are far from there ...
... when in office are only puppets of the jeckyll island racket ...
... and the population believes the furry tales ...
... of the man with the beard in the sky forgiving your sins ...
... and blessing you as a "superior race" ...
amon
:)





<< Home

This page is powered by Blogger. Isn't yours?

Subscribe to Posts [Atom]