Thursday, July 9, 2009

Screw the stimulus, shoot the macroeconomists

Let’s establish a few facts. 

Modern macroeconomics as administered by the American government has brought us continuous inflation since World War II until this year, skyrocketing national and private debt, unemployment that rises after recessions in jobless recoveries, blatantly fraudulent financial practices blessed by Larry Summers under President Clinton (the same Larry Summers who is largely tasked with cleaning up the mess he created between multi-million dollar gigs with Wall Street firms), banking and investment firm bailouts of their bad debts (bad bets) that amount to the greatest expropriation of wealth by the richest Americans from working Americans in the form of future taxpayer burdens, and now exploding deficits—beyond WW II shares of GDP—that will wreck American society and culture for generations to come if not addressed quickly.

So screw the stimulus and modern macroeconomics.  Shoot the macroeconomists, or at least waterboard them.  The pointy heads who are advising the President (Blinder, Krugman, et al.) are tenured professors who have never had a real job and prima facie are not in touch with reality.  The other advisors, Summers, Geithner et al., sold out to Wall Street (mostly Goldman Sachs) long ago.  They have taken care of their own under Obama very well in the past year.

So screw the stimulus and modern macroeconomics. 

Let’s focus on the American people.

For those with jobs, a moderate deflation has actually been beneficial.  At least 84 percent of the American labor force is fully employed (84 = 100 – 16 = labor force – U6 unemployment, the more accurate measure of under- and unemployment).  One-third of homeowners have paid off houses, and probably 90 percent or more of home mortgages will not go to charge off. 

So what should the government do? 

The government should provide universal health care (props to the Big O for making that first priority), so that those whose lives are being torn apart by an economic calamity not of their own making will at least have access to health care.  Severe recessions have documented adverse health impacts.

The government should also provide a poverty level stream of support payments to the unemployed so that they can survive unemployment even if long-term.  This is what the European nations do, and their unemployment rates are now actually lower than ours.  The rationale for these payments is to allow people to find new jobs, move if necessary, retrain if necessary, and to prevent them from becoming totally alienated from America.  Stalin said that dictatorships only last so long as the dictators keep their people well-fed.  The authorities would do well to remember that.

The American economy is going through a massive transformation.  The debt-fueled consumption binge of the current decade spawned consumption and investment patterns far from optimality.  Americans spent more than they earned, spending debt taken against their rapidly inflating home values, which in turn spawned excessive investment in real estate.  All that is over.  It will take years for displaced Americans in aggregate to find their places in the reconfigured economy.  America is still the greatest industrial power in the world, the most innovative economy and culture, filled with self-selected risk-takers and self-starters. 

Betting on the people is our best bet.

Betting on the government is our worst bet.  Main Street Americans (listen up, oh ye ruling elites) view Washington and New York at a den of vipers greedily sucking the blood out of the dying economy. 

Main Street knows that America is broke, even if the idiots in the Beltway bubble cannot admit it.  Main Street knows that the Democrats are every bit as bought and paid for as the infinitely corrupt Republicans were.  Americans are sick of both parties.  The Republicans hold a slight edge in this regard in that Main Street Americans think the stimulus is a crock of shite, pork on a nation-destroying scale that will spell the end of any notion of voluntary cooperation with the government in the future.  Main Street is right.  Since Reagan, politicians have been playing the game of “tax cutting is more fun,” and avoiding facing the facts, “kicking the can down the road,” letting the blow-up fall on some future guy’s watch.

Tax increases and spending cuts are coming.  SCREAM at your elected representatives that YOU DON’T WANT NO STINKING STIMULUS!  Tell them to take care of the people who are hurting!  They’re the most effective stimulus spending possible—they’ll spend every buck they get.  Let the economy self-organize.  Minimize the additions to the mountain of national debt—shrink the deficits.  Let the people spend the money.  They will spend it wisely.  Wall Street won’t.  The Soviet Union showed us central planning doesn’t work—why would the Obama administration think they can do it?  No one on Main Street believes the contracting process will be anything other than corrupt.

And “use it or lose it”?  How stupid is that?  When we’re flat broke to start throwing money around as if we had too much of it?  This is the kind of thinking modern macroeconomics produces, and that its exponents like Paul Krugman like to trumpet in their arrogant obtuseness. 

We need to move slowly.  We need triage.  If the feds won’t bail out California’s government, they should be ready to help its people.  We are probably going to witness mass migrations as the economy reconfigures, much as during the Great Depression.  We need to make sure our educational system doesn’t do damage to a generation of Americans because of the greed of the elites, the way a generation of Chinese was damaged by the madness of Mao Zedong during the Cultural Revolution.

If the American government does not clean up its fiscal act, because the dollar is the international reserve currency it risks creating an international crisis of unprecedented proportions, that will damage an entire generation worldwide, more so than it has already been damaged, and that may well lead to world war.

Screw the stimulus.  Give the money to the people.  Let the states and localities put their houses in order.

Let’s get real, Americans.  The stimulus is a crock.  Scream your heads off now, so that maybe you won’t be sending your sons and daughters or grandsons and granddaughters off to war in ten years.

Watch Charlie Rose talking with Roger Altman to see what’s coming on the fiscal front.

1 comment:

  1. But there's no pork for our local congresspersons to crow about in the 2010/2012 elections if fiscal aid is channeled directly to the people. So this does not belong to the realm of "the politically possible."

    More and more I am sickened by the phrase "politically possible."