Little Alex in Wonderland: The State with nothing to spend can't spend to stimulate the economy, no matter what the Keynesians say.
Today, Paul Krugman's New York Times opinion is a 'Stimulus Cheerleading for Dummies' pamphlet to counter arguments made against Pres. Obama's coming stimulus plans. He makes extremely valid counterpoints that:
- Christian fascists injecting family-planning is a "cheap-shot";
- There are miscalculations in the price per job numbers floating around; and
- There's no more room for the Federal [sic] Reserve to cut interest rates.
These are true, but Mr. Krugman also makes the reckless analogy of tax cuts being equal to eliminating air traffic control tomorrow when Mr. Krugman consistently says that spending comes from three places:
- The State
In a credit crunch, investors can't invest (because they invest on credit) and consumers are too deep in debt and/or are lacking confidence in the market. Translation: Mr. Krugman has the audacity to say that consumers who can consume that aren't consuming are 'saving too much'.
After the asinine analogy of planes crashing in a massive airspace slaughterhouse and implying that people not spending beyond their means is a bad thing, Mr. Krugman ignores the two most consistent and valid arguments against an Obama stimulus:
- Recession is the only cure for recession because a recession means that prices are too high to be affordable. The solution isn't more money to afford the prices. The solution is the fall of prices.
- The only spending entity left to spend when investors and consumers aren't doesn't produce revenue.
The first argument is self-explanitory, but if it's still confusing, Mr. Krugman's article reminded me of Dom Armentano's article simply titled, "The Obama Stimulus Plan Won't Work":
This may seem harsh but the ultimate cure for a recession is recession. Economic booms "malinvest" labor and capital and recessions are necessary to "clean out" these malinvestments. Declining prices allow consumers to more easily purchase products (homes, autos) in excess supply; inventories are reduced and supply and demand are brought into balance. And declining profits weed out business organizations and their managers that have invested poorly during the boom; bankruptcy allows resources to flow to more profitable areas of the economy. A sustainable recovery is now possible.
The second is simple once you cut through the Newspeak and get to reason. We're indoctrinated to believe in the State as this Godhead to solve all woes and the only argument is a complicated explanation of the State's inefficiency due to its bureaucratic complexities. The complexity makes the argument difficult to understand and it's a natural reaction for people to pass the buck onto people they trust can understand better than them.
Namely, the People resort to Mr. Obama's lazy statement from his inaugural speech: "The question we ask today is not whether our government is too big or too small, but whether it works."
This statement isn't only lazy, it's deceitful because it ignores the rational counter-claim to stimulus, the State as a spender to boost economies, and the size of government. Let's simplify this.
There are only three ways that one acquires anything:
- They sell goods or services/labor to acquire to means to acquire (capital);
- They steal it;
- They receive it as a gift; or
- They borrow it.
1.) The government doesn't produce anything, so #1 is out.
2.) Taxation is the State's method of theft, but a gross rise in taxation would be to the wealthy class of employers, owners, and super-managers who just pass the tax on to the consumers by raising prices and cutting jobs.
3.) No one is handing the State $1 trillion as a gift.
That only leaves one possibility for the State to have the money to spend in order to stimulate the economy.
The economy boosting spending State isn't a fallacy because there are people who just don't like poor people or don't like Democrats or don't like Mr. Obama or are still in a Red Scare. It's a fallacy because all the State has is a printing press. That printing press doesn't generate revenue to spend, it creates dollars to borrow that the taxpayers have to return at interest and raises the most regressive tax in our monetary policy: inflation.
State spending [sic] to help the middle class and working-poor actually damage the people State spending is supposed to help more than it helps.
But spending from the State has to help someone because it's spending, so it raises the question: Cui bono?
For this we can go back to Mr. Armentano:
In theory, the money to fund the stimulus will have to come from either massive federal borrowing, substantial tax hikes, or pure money inflation by the Federal Reserve. But none of this can remotely promote recovery in the private sector of the economy. All it will do is substitute some private/public sector jobs in one part of the economy for other private/public sector jobs in another part of the economy.
With a federal deficit well over $10 trillion, the US just doesn't have the credit to borrow from other countries on such a massive scale. The last resort for the State to garnish the means with which to spend would be to inflate the money supply which is exactly why the US economy is where it is. After the people face massive price hikes and producers face higher taxes to cover the debt, the only winners in this game are the lenders who can collect interest, the banksters who engineered our economic crisis.
Every reason for the economic crisis agrees that reckless lending on credit not backed by assets and the housing bubble are the causes. "Housing bubble" has become a generic term, but think about it: when you chew bubble gum, what's the best way to assure that your bubble splatters all over your face and makes a gigantic mess? Inflate the bubble as large as you can.
House Financial Services Committee Chairman Rep. Barney Frank (D-MA) actually explicitly encourages giving more regulatory power to the unregulated Federal [sic] Reserve Board of banksters. Pres. Obama's new treasury secretary was the chieftain of the New York Fed that just printed and handed over $8.5 trillion to the banksters and VP Biden is already saying that the banks need more.
What happened to 'rebuilding the economy from the bottom-up'?
Any stimulus package within our current monetary policy would only be Mr. Obama and Congress further serving the elite to further prove the Investment Theory of Party.
In many parts of the Western world, the People have seen and viscerally reacted how the State has deceived them in order to serve the bankster elite. Mr. Obama and Mr. Krugman just want to inflate a dollar bubble and like all inflated bubbles will splatter all over our faces in the end.