So we can clearly see how resistant the Rethuglicans are to raising taxes on the wealthy—which is the only actual source of untapped revenue for the over-extended government that won't collapse the country's economy.
We can also see how much the global markets have disliked this US cost-cutting and top tax-adverse approach to debt and job creation. So what are the actual macro answers?
Realizing that raising taxes on the wealthy is a political non-starter, I predict that the Wall Street geniuses who helped get us here will begin pressuring the Fed to trigger QE3 to print up a new batch of cash to stimulate job creation.
There are some hidden benefits to the Wall Street kleptocrats in that approach, of course. QE3 will add to inflation (and avoid the frightening prospect of deflation) that will trigger a rise in interest rates. That's pretty good for the wealthy who have lots of spare cash and may either be inclined to shove into a stock market galloping to stay ahead of inflation or into SAFE inflation-indexed, interest-bearing instruments. Even better, inflation will hit the middle class and drive even more cash up the line to the kleptocrats.
This also plays well extremely well to the energy sector (think Exxon, Shell and BP), which needs to keep charging ever higher prices for dwindling reserves of oil. The easing and the inflation will put a bit more money into everyone's pockets for 5 minutes so we can pump it all—and more—back into our gas tanks. The only down-market winners will be anyone working in the food sector, which will also see rising prices. And those who have cost-of-living clauses in their employment contracts.
As for the rest of us inflation will kill our savings, and make more money for the elite. And, read my lips: no new taxes! Wow. A perfect system.
This bodes very badly for the mid-term future, say the next 10 years. For those fans of Kondratieff, winter is here. The only question is, will the inflationary kleptocrats win or will it be Kondratieff's deflationary end-cycle dynamic?
And it seems I'm not alone in this thinking.
I do suspect Kondie was on to something and that his cycles, like the cycle of the tides is beyond our doing anything about. Our collective attempts to figure things out seem to be self cancelling when enough people, ideas, schools of thought and political parties are involved so maybe all we can hope for is to sit on the beach and watch.
ReplyDeleteI also suspect that I won't see the good times roll in in my lifetime.
We've been trying to find a spot on the beach but it seems all the good spots have been taken. Uruguay anyone?
ReplyDeleteGot it's problems, but all in all, not a bad choice.
ReplyDelete