Financial Collapse was Foreseeable, More People-centered Investment Needed

A return to people-centered investment can motivate the flow of private capital As I go back and look over what was being written about the economy, and the federal budget, the lost Clinton surpluses, falling wages, and the property bubble, throughout George W. Bush’s second term in office, it is clear the signs were there throughout that … Continue reading Financial Collapse was Foreseeable, More People-centered Investment Needed

Spending vs. Cutting to Encourage Recovery

There are some things that fit well with the phrase common sense, and some that don’t. Not everything that seems complex or uncertain is outside the bounds of reality, but some things, ultimately, just don’t make sense. There is a strong political bias that “cutting spending” is a conservative principle, because it is prudent to spend less, but whether the policy is in fact conservative, or whether it works: that is another story.

There is a powerful rhetorical draw in the idea: just spend less, and everything about “the economy” —whatever that means— will improve. This is like saying, if you provide less opportunity for investment, there will be more opportunity for investment; or, if you reduce the wealth available, the wealth available will increase; or, you need to burn the village in order to save it.

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The Fiction of Automatic Wealth is Bankrupting the U.S.

America’s banks have, over the last decade, entered into a dangerous fictional world of projected automatic wealth in which they expect that all payments they might receive will without fail materialize, regardless of circumstance. They treat the human beings with whom they have major financial relationships as if they were nothing more than endless fonts … Continue reading The Fiction of Automatic Wealth is Bankrupting the U.S.

Stimulus is Needed & Will Mean Big Spending

Whether you are an avid supporter of Barack Obama, a perennial political skeptic, a critic, or a staunchly ideological opponent, it is clear that there must be some sort of vast, perhaps unprecedented economic stimulus put into effect in order to slow or reverse a now spiraling economic downturn. And, all have to admit as well, it is a very risky thing to gamble one’s political capital, at such a crucial moment in American history, on a huge spending package that might not have a very visible effect in the immediate short term.

Stimulus means spending, and that’s why it’s a gamble. It can mean spending by issuing cash tax-credit payouts, which consumers can then use as they please (this will likely lead only to the paying of already existing bills, which tends to be less stimulative, especially when banks are not issuing new credit freely). It can mean spending on public works, which will spur industrial output and is likely the most serious motivator of job-creation.

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