The economic quicksand that sinks us

quicksandFunny how it is that when both the Republican Party and the Democratic Party both have the same economic program, that so many of the same actors are pointing fingers at each other? But then again what could we really expect from these two partisan camps run by the same economic interests?

What we have now is a situation where More of the Same means CHANGE, and those that push CHANGE actually push More of the Same! Most of us just kind of watch from our points stuck in the economic quicksand and hope that somehow, somebody manages to throw us all a rope to help pull us out with. Good luck…

Salon has an article where it mentions some of the critics of the Obama Presidency’s economic policies. None of the summaries mentions anything about the War Budget’s effects on the greater economic quicksand we currently reside in! That’s kind of amazing, really it is. Still, check Salon out and see who are the people the article highlights… The Prophets of Doom– Meet the Cassandras, 14 economists, bloggers, politicians and businesspeople of all political stripes who have become the most strident critics of President Obama’s stewardship of the economy.

Amazingly, the author at Salon who selected these 14 people missed including Joseph Stiglitz! Well here he is then with his latest commentary, Obama’s Ersatz Capitalism

And what about James Galbraith? Here below is what he says on Democracy Now back in February.

Economist James Galbraith: Bailed-Out Banks Should Be Declared Insolvent

With estimates of the cost of addressing the financial crisis exceeding $9.7 trillion, we speak with economist and University of Texas professor James Galbraith, author of The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too. Galbraith says rather than pouring billions into propping up troubled giant banks, the government should declare them insolvent.’

There are so many notable people who don’t like Obama’s economic policy that trying to include only 14 people in the list by Salon was a little bit unwise on their part. It is simple reality that Obama and his recycled Clintonistas are in quick danger of becoming sunk in this economic quicksand, too, since they seem to only know how to pour gasoline on the fire…. uh… I meant pour water into the quicksand…. or is it to throw tax monies into the economic quicksand?

Oh well, the idea is the same. Obama only knows how to sink us all yet further into the economic quicksand not get us out of it like some sort of fantasy Super Hero Economist could. HOPE for CHANGE is now underneath the muck.

Say’s Law and undemocratic monetarism

Richard C. Cook has written an excellent synthesis of C. H. Douglas, Keynes and Galbraith in Global Research repudiating the orthodox economics used to legitimate the Federal Reserve under which the world’s capitalist economies are enslaved.
Cook writes: “Overall, banks have served four main purposes—one legitimate, one dubious, one puzzling, and one deeply flawed.

1. Legitimate
“The first purpose—a legitimate one—is to facilitate commerce. It is often cheaper for a business to borrow capital from a bank than to stockpile cash itself. This was the purpose of the state banking system in the U.S. prior to the Civil War. The state-chartered banks existed to provide working capital for commercial transactions, such as stocking inventory, or for business expansion. Use of banking for these purposes was tied to specific commercial activities—the “real bills” doctrine. Of course credit used for this purpose has a cost which is factored into prices. When these loans are repaid, they are canceled at the bank which thus removes purchasing power from the economy. This is another area, besides retained corporate earnings, that contributes to the gap between prices and purchasing power identified by C.H. Douglas. But lending for commerce itself remains a legitimate activity.

2. Dubious
“The second use of banking—the dubious one—is for capital formation in the creation of new businesses, a function which overlaps with capital markets such as the stock exchanges. But this use very easily turns into lending for speculation by permitting investors to borrow money in order to buy stock on margin or to “leverage” investing by borrowing money in order to purchase whole companies. The costs of this borrowing also show up in consumer prices without introducing any new purchasing power into the system.

“This practice has mushroomed in recent decades starting with the buyout/merger/acquisition mania of the 1980s and has reached disastrous proportions through the creation and growth of equity and hedge funds. The use of bank borrowing for such speculative purposes is an obvious abuse that should not even be legal. It is actually a form of theft from the nation’s natural and normal store of credit that should be carefully administered by competent public authorities as a utility as critical to social health as the water supply.

3. Puzzling
“The third use of banking—the puzzling one—is for consumer credit. This includes borrowing for big purchases such as buying houses and automobiles, or small ones such as items bought with credit cards. Increasingly it includes purchasing even the necessities of life such groceries.

“Buying an object with a credit card often means that a person cannot afford to buy it at the present moment. So the person is gambling that he or she will be able to pay off this loan—including interest—at some point in the future. What is puzzling is that in the midst of what is claimed to be the most productive economy in the history of the world, why are most people so poor that they cannot buy what they need to live with the proceeds of their present earnings? This is the ultimate repudiation of Say’s Law and its derivatives—Libertarianism, supply-side economics, and the like.

4. Flawed
“The fourth use of banking—the one that is deeply flawed—is the financing of government inflation through purchase of public debt instruments which allow deficit financing of public activities, most particularly the waging of war. Banking for the purpose of financing war has a long pedigree, going back to the medieval times where kings were perpetually in hock to the money-lenders. Today we have the national debt, which has been used primarily for war, as well as for the Keynesian pump-priming described previously. A classic case of the use of banking for deficit financing of war is the borrowing by the federal government under the Bush/Cheney administration to raise the trillion dollars already spent on the Iraq and Afghanistan wars.”