Run Against Congress!

Even the conservative Chamber of Commerce blames Congress for the US's fiscal inaction! Ben Bernanke has said, many times, that the Fed is only doing what it can with monetary policy, because Congress isn't doing what it should with fiscal policy. So, the Fed puts forward Quantitative Easing, keeping interest rates at rock-bottom and shifting its portfolio from short to long-term assets to drive down the price of longer-term borrowing, as well as "printing" money. But everyone knows that isn't enough.

What is really needed, Bernanke implies, and Economist Paul Krugman has stated repeatedly, is government spending on stimuli, to enliven job markets, plus bring teachers, police, etc., back to work.

Congress is split; it is split between fiscal "hawks" and "doves(?)." The former, dominated by GOP Tea Partyers, claim, like a blindered former friend of mine, that "debt is debt," and The Government must stop borrowing at all costs.

The "doves" don't know what to do, because the conservative-led media has persuaded a near majority that government must cut spending NOW. But the costs really are tangible, and the GOP's solution--cut taxes on the so-called "job creators"--isn't going to create jobs, except maybe in China, only a larger deficit, probably more speculation with the extra money freed for the speculators, and draconian cuts to the programs that allow people to hang on by their fingernails, like Food Stamps.

Krugman agrees that once we are out of this recession/depression, the US will have to begin to pay down its overhanging debt, but now is not that time. Now, the US should borrow money; it's at historically low rates, because the US is the safe harbor for troubled money the world over. Now we should spend money to re-invigorate the economy: spend it on helping states re-hire their laid off workers, spend it on rebuilding and improving our shabby infrastructure and education and spend it on new ventures, like alternative energy industries, all of which will expand the tax base.

Some businesses are not hiring because no one knows what the deadlocked government will do. But why hire if there is no demand for goods and services, anyway? If demand were injected into the economy, companies would hire workers. The Fed can't cause that; only Congress and the President can.

But Republicans are vehemently opposed to any policy that would help Obama's reelection, and vehemently opposed to any further debt. Democrats, on the other hand, are timid, and too many of them are beholden to interests that want deadlock, or little government action--except on their behalf: the selfish class, I've called them.

That's where we stand today. We could go down the road to near-permanent Depression if we choose "austerity" and tax cuts for the wealthy. That's the direction the Roman Empire took in the 4th and 5th Centuries.

Obama should run against Congress, and for a huge new stimulus, instead.

Dollar Collapse!

It hasn't happened yet, but financial gurus are predicting the dollar will collapse, and "your American lifestyle" with it--unless you follow their prescriptions.

These gurus are describing a real problem: US indebtedness to the rest of the world. But the Fed didn't cause this, and it's not because The Government spends too much money; it's because we all do--abroad.

"Free Trade" agreements have advantaged American corporations. They have been able to export their manufacturing and services to lower wage, lower tax countries with lax or no regulations. They've driven American wages down and unions out, because American workers can only compete by earning less: wages have stagnated since the 1970's, while corporations have earned higher and higher profits. Furthermore, everyone buys imported goods and services, even when a product claims "made in America." Most have a huge amount of imported components, even if assembled here.

So, what can workers do? Until the bust, they adapted by working two plus jobs, depending on other family members working, and when these strategies weren't enough, they borrowed from their homes. Wall Street was awash in cash, encouraging wilder and wilder speculation--before the collapse, and after. That's why so much of the economy migrated to the financial sector; workers were providing it money through debts, and corporations were providing it money through overseas profits going to the 1%, who "earn" too much money to spend; so, they "invest" it.

Free trade means freedom for corporations, not freedom for workers, and it means importing nearly everything. So, how do we pay for the goods and services we no longer produce? We borrow through fiat dollars, which have, greatly depreciated since Nixon closed the "gold window" in 1971. Gold sold for between $1,726 and $1,743 on 11/2/11; but its price was set by the US until 1971 at a guaranteed $35 per ounce. Money supply has increased 13-fold since 1971.

Fiat money is designed to inflate a little bit each year: the Fed's target is about 2%. Moderate inflation stimulates the economy; deflation would accelerate depression.

But the real problem is: we are paying dollars created by the Fed, for goods and services abroad, while not selling enough to earn the Euros/Yen/Yuan, etc. to pay for those dollars. The "Free Trade" agreements, and policies encouraging corporations to export jobs and import goods have created the huge trade debt.

The trade debt causes government budget deficits, especially when the only people enriched by "free trade" (our Roman Senators) don't pay enough taxes, while everyone else is impoverished by it and needs help: "bread and circuses."

The dollar and the economy would regain strength, if Americans stimulated domestic production, creating jobs, got off imported oil and penalized corporations exporting jobs/production. It appears, however, that the "one-percent," like the Senators of the late Roman Empire, don't want to allow such reforms.

Perhaps the OWS movement can force their hand.

Why Dismantle the US?

It doesn't seem to make sense that Americans, many from old families living in this country for many generations, would want to dismantle the country that nurtured them.

In my Dec. 7th blog-post, "Come-on to Apocalypse," I showed how a libertarian/conservative list was promoting relocation to any of "80 beautiful countries." Allegiance to the US seems absent among the moneyed. Their attitude: take your fortune somewhere else, where you won't be so heavily taxed/regulated/controlled. The assumption is that the US is all of these things, although our tax burden is lower than almost all other developed nations. In many developing ones, however--and some developed ones like Greece--taxes and regulations are not enforced.

I expect the emigres would evade taxes of both their new abode and their former one, but it's ironic that the site promoting emigration also highlighted free medical care, something most conservatives complain about when it's "Obamacare."

So, the financiers, or other wealthy, have places to go. Their means of enrichment, however, might even suggest a parallel to fugitives from the law, who flee the country to escape imprisonment. For example, Goldman Sachs, JP Morgan, et al, get virtually free money from the Fed, which they use to speculate through computer programs and algorithms, doing split-second trades for billions of dollars, and profiting with fractions of a cent. Actually what they are doing is ripping off millions of dollars daily, from everyone else. How different are they than the cyber-criminals who siphon unnoticeable fractions of a cent from millions of transactions? There have been crime movies, in which super-criminals invade bank security networks and do the same thing.

But Goldman, et al aren't criminals, at least in the legal sense: they're Wall Street operators. Why do they want to dismantle the US? Because they can: they can come away fabulously wealthy, but at the expense of everyone else.

The same ethos rules many American businesses: military contractors who overbill, "frackers," who don't care if they ruin our drinking water, for-profit prisons gaining "clients" from corrupt judges and manufacturers who outsource to avoid taxes and union wages.

This isn't just economics, it's politics: the effect of trade treaties. Mexican or Chinese workers undercut American labor. Trade barriers were lowered or eliminated enabling corporations to break unions and force American workers to compete with the lowest-paid labor globally.

Again, why? There is strong anti-union feeling among those who earn from capital: after all, the more a worker gets, the less they get--and vice-versa. Additionally, workers without unions can't resist the boss.

It boils down to class struggle. Capital is winning, never mind if it's destroying the country. With their money, the wealthy can always go somewhere else: one of those "80 beautiful countries." They can even find new victims.

In Rome, Senators voted to hand Italy and the Emperor over to the Ostrogoths, rather than raise taxes on themselves.

Roman Senators: 400 AD, 2010-2011 AD

They're much the same. Roman Senators in fifth century Rome were the wealthy elite; they had formal titles; our elite does not. There are no legal disabilities and privileges dividing society, as there were in the fifth century, but it hardly matters.

In both eras, the dominant "Senators" constructed schemes to loot the wealth everyone else produced. Maybe it was a natural outgrowth of the Roman Empire's conquest-slave society. But it's happened here especially with the explosion of the financial sector--supported by empire, the US and wealthy nation's national banks.

Alan Greenspan helped create the casino financial system, opening the door to Wall Street's "inventions," like Credit Default Swaps, and even, variable interest mortgages, encouraging homeowners to cash in, to gamble, or buy ATV's.

In Roman times, Senators arranged it so they could collect everyone else's taxes, while avoiding taxes themselves. They used their positions and connections in the Imperial bureaucracy to collect all the gold, land and slaves in the empire, impoverishing everyone else. In the US, today, Warren Buffet and his hedge fund colleagues pay taxes, but despite the many millions they earn, they pay at about half the rate of ordinary Americans. Obama and Congress just extended low income tax rates for the wealthy, who already pay lower rates on capital gains, interest, and payroll taxes. They’ve cornered most of the new wealth created since 1975.

In the US, the Fed creates money for the elite: it's been expanding the money supply for decades. Why for the elite? Low interest rates--virtually zero for the banks--allow them to make cost-free profits on the rest of us. Have you ever borrowed money at zero interest? Further, cheap money induces fools (like me) into the stock market, but the sophisticated traders, the ones with "algorithms" and computer programs--and lots of virtually free capital--are the ones who walk away with profits. The rest of us buy high, sell low, and enrich our brokers with fees.

Of course, Wall Street isn't the only reason why US wealth concentrated at a staggering rate since the 1970's. There was the Reagan "revolution," the proliferation of conservative "think tanks" (propaganda sites now fueling Fox News) the Clinton collaboration, W's triumph, and now Obama's compromise/capitulation. With the important exception of Clinton's tax hike on the wealthy, all the rules, all the financial innovations, all the dilution of regulations, were directed toward the enrichment of a tiny elite.

And it has prospered. Wall Street, after the massive government bailouts of 2007-8, has sucked in greater profits, largely from gambling with government money, than it ever did before: in the midst of the Great Recession, with 9.6-18% unemployment, job insecurity, and banks gambling, instead of lending.

We're not out of recession, but we're on our way to another bubble crash. The elite, like 5th century Roman Senators, could capture all the wealth.