Save the Fed

Doomed to repeat history? Of course we are, but the fate I fear isn't the sort of doom that descends upon us from above unless you consider the cesspit of "Conservative" rhetoric to be a higher plane of thought. No, I'm not talking about the market bubble of the late 1920's that was brought about by slashing the top marginal tax rate or the deregulation of the markets that gave us the 1929 crash; I'm talking about where we were fourscore years ago in 1931 when the European banks began to fail and nobody was able or willing to do anything about it. Then as now, we had "Conservative" rhetoric attempting to blame the mess on the usual suspects, like lazy American workers and in Europe: the Jews. We had calls around the world for even more austerity, as if the world could save itself by saving money.

" Instead of easing monetary policy by cutting interest rates and buying bonds, the Fed tightened. The result was a catastrophic chain reaction of bank failures, which caused the money supply to contract by approximately a third, and economic output with it"

writes Niall Ferguson at the Daily Beast, lamenting the gross lack of knowledge of bankers, investors, fund managers, regulators, policymakers, and economists. Ferguson cites Milton Friedman and Anna Schwartz’s Monetary History of the United States, which argues that

"the stock-market panic of 1929 turned into a depression because of avoidable errors by the Fed. Instead of easing monetary policy by cutting interest rates and buying bonds, the Fed tightened. The result was a catastrophic chain reaction of bank failures, which caused the money supply to contract by approximately a third, and economic output with it."

The Gold Standard, the massive debt from The Great War, the partisan inability to compromise brought on the disaster we know as the Great Depression and only those countries that dropped that standard and began hiring while gearing up for war, began to recover. Germany led the way and the US followed.

With some Republican spokesmen demanding the return of the gold standard, demanding an end to the Fed, demanding more austerity, demanding that more capital be tied up in the hands of a tiny minority, the money supply diminished and the demand for goods and services curtailed, the few who understand what needs to be done are being shouted down by politicians who insist that the only solution is a bigger cut in the marginal rate, and the angry mob they feed.

"We are indeed fortunate that at least the world’s leading central bankers have studied this history: not only Ben Bernanke but also the heads of the Bank of England, the Bank of Canada, and the European Central Bank. The bad news is that so few politicians and voters understand what they are trying to do, or why. The even worse news is that central bankers by themselves may not be able to stop our depression from turning great."

Worse news even than that, is the fact that people like Dr. Ferguson, a professor of history at Harvard University, a senior research fellow at Oxford University, and a senior fellow at the Hoover Institution, Stanford University do not inform the Cains, Bachmanns, Palins or Gingrichs or the rabble who support them, nor would the public trust any "elitist" "Libtard" "pinhead" over the kind of small minded moral abomination now stumbling toward Washington.

When up means down

The Mayans were far less pessimistic about 2012 than the people who fill my inbox with prophecies of economic doom every day. Actually doom is too mild a word and so is apocalypse if one is trying to set a mood so terrifyingly descriptive of what is happening now and is about to happen, thanks to that Obama. Of course these people are selling investment strategies which I'm sure include buying things they're desperate to get rid of like the gold they bought at $1900 an ounce, but any way the market wind is blowing, they make money from the seminars and newsletters and from screaming like Chicken Little. There's a lot of money in the doom business.

Most of the people I talk to seem convinced that everything is getting worse and won't get better until we "get rid of" Obama in 2012; replacing him no doubt with someone who thinks managing a worldwide economy is an easy task for someone who once managed to save a pizza business by firing everyone, and yet has the nerve to talk about being able to "create jobs." Not to change the subject, but it's truly stunning to see the seamless segue from "government can't create jobs" to "elect me and I'll create jobs, jobs, jobs."

I guess it's no less stunning than Fox News' and John McCain's embarrassing assertions that the 2008 economy was "robust" as we all marched unwittingly off the cliff like a certain cartoon coyote -- and of course, that because "Liberals" were warning us about the inevitable collapse, they "hated America." Not like those forward thinking optimists that modern conservatives are.

We can expect, now that the next presidential election is a year away, that the howling and wailing and rending of garments will grow louder and angrier and numbers will appear proving that calamity awaits us all, no matter what actually happens. It's far too soon to be sure, but this chronic pessimist and a few others with more credible credentials are noticing that our Gross Domestic Product After adjusting for inflation, climbed to $13.35 trillion last quarter, topping the $13.33 trillion peak reached in the last three months of 2007.

I hate to make too much of it, particularly with the Filibustering Vandals doing everything they can to sabotage the economy until November 8th, 2012, but the reality is not quite what the pseudo-conservative chorus is chanting. At least for the moment, things are looking less down. Unemployment is still high, of course -- just a bit above Ronald Reagan levels and we can expect the screamers to keep screaming about that while refusing to do anything about it. We can expect Tea Pissers like Tom "Looney" Rooney (R-Florida) to keep meeting with "Job Creators" and telling us that business owners will hire more employees, irrespective of demand, if we cut their marginal rates even more -- and we can expect that if things do recover steadily and noticeably, he'll find a way to take credit for it because after all, they kept that O-BAH-ma from doing anything for four years while lambasting him for doing nothing. If there is anything these Doomsters are optimistic about it's that they'll always have someone to blame.

As They Like it

Wake up, little Susie, wake up
Wake up, little Susie, wake up
We’ve both been sound asleep, wake up, little Susie, and weep
The movie’s over, it’s four o’clock, and we’re in trouble deep
Wake up little Susie
Wake up little Susie, we gotta go home.

-Everly Brothers-

___________________________

I'm relatively sure that our new "save your way out of unemployment, no job needed" austerity program will stifle the economy and thwart any meaningful recovery and that a good share of the people who held the gun to our heads to push this sorry debt ceiling bill, not only know it too, but desperately want that outcome so as to help push the Tar Baby out of office and privatize the presidency in 2012.

The Tea Terrorist Great Leap Backward may not let 20 million people starve as Mao Zedong's Great Leap Forward did, but it's not only not going to put bread on the table, for many of us, that table may be a park bench.

Victory is so close they can almost taste it. Unemployment is so high so that millions don't have the money it takes to be heard, don't have the money it takes to buy the products that make the economy expand -- but corporate profits are up -- way up. Call your congressman? Write your Senators? Sorry Charlie, teabags come with strings attached and unless your letter is stapled to a million dollar check you might as well save the postage and stationery.

Corporate profits are up, and that's OK. We're selling overseas and manufacturing overseas and American workers are redundant -- and face it, America and what we used to think of as the American way of life, the American Dream, is a millstone around the corporate neck. It's a global economy now and global corporations owe no allegiance to the United States even if they're nominally American companies. They will use every strategy they can to avoid paying taxes in the US or benefiting workers who can be replaced and exploited cheaply in China and India. We're witnessing one of those strategies today. The only people not in danger of being outsourced or laid off or screwed out of benefits and pensions are the legislators and judges and corporate propagandists on the payroll and sorry, little Suzie Teabag, that ain't you. Wake up.

Now all that Social Security money and that Medicare money go right back into the economy, purchasing goods and services immediately. Minimum wage workers spend every dime they make. Nobody hoards food stamps. They don't want that. They don't want money in your hands, since it's money that might give you some political power, since it's money they could sit on and hoard and invest abroad with no taxes paid. Think it will go to creating American jobs? Are you stupid?

Your taxes aren't going down, theirs is. They're not creating any jobs you're eligible for or would accept, and your cost of living will be going up as the Dollar shrivels like Limbaugh's penis and your freedom and your rights and your privacy and your political voice and your retirement plans are dissolving in the rapidly rising water.

And they like it that way.

Pledge Scams as Ambush Politics (And why the No Tax Pledge Violates the U.S. Constitution)

Two pledge scams have been in the news lately: The so-called Family Pledge (covered by Nameless Cynic in this post, The American Taliban) and Grover Norquist’s so-called No Tax Pledge. Although seemingly unrelated, these pledges share at least one trait in common: To bully public officials and hold them hostage. More to the point, pledge scams are a form of ambush politics designed to preclude any reasonable debate on any subject by coercing compliance without forethought as to implications, impacts, or alternative solutions.

The No-Tax Pledge represents a case in point. As a Damocles sword wielded by nihilists over the heads of GOP chumps, it is the singular cause of gridlock in the current debt default debate. Here is what a debt default will mean:

• A downgrade in the credit worthiness of the nation;
• Interest rate increases on home mortgages, auto loans, student loans, and credit cards;
• Worldwide turmoil in bond and equity markets;
• Steep losses in the value of homes and retirement accounts;
• Interruptions in Medicare, Social Security and VA disbursements;
• And a crippling double-dip recession.

In other words, it is not just GOP stooges who are being held hostage; it is the American economy and We, The People … all on account of an anti-tax lunatic fringe wielding The Pledge to play brinksmanship at our expense.  When these GOP stooges took their oaths of office, they also pledged to uphold the U.S. Constitution, which requires them among other things to honor the nation's debts. Does this mean Grover Norquist holds more authority than the U.S. Constitution?  In allowing themselves to be suckered, the GOP have turned themselves into fools as well as hypocrites.  And they have no one else to blame but themselves!

It reminds me of a nursery rhyme I once read to my kids …