Sunday, November 09, 2008

The Righteous Path--Right!

China has joined the rest of the World in believing it can pump up the economy, like some weight-lifting exercise. All the major economies are now in the Stimulus business, and the Question becomes whether the economy is going to respond. Intelligent review says that it should, but old-fashioned Common Sense exhibits a tendency to ignore artificial expansions of the Money Supply, when there has been no increase in the disposable Income of the Consumer. The End-Result of Stimulus without solid economic growth is Inflation. This will not be the promotion We all desire, because it actually shrinks disposable Consumer Income.

Greg Mankiw brings Us this Comment, which shows the Restraint and Judgement of the Party out of Power. Greg states all the basic Truisms which every Economist will concede, but which are always forgotten in the heat of being in Power. Everyone brings forth their own nuance for Spending the new Cash flow, and then the Politics starts: Who has the most political pull? There is nothing wrong with this system, if there is unlimited funds available, and there is limited Numbers of Players involved. It is another Situation in entirety, where the Players are virtually unlimited, and Politics dictates that Everyone gets their individual piece of the Pie to maintain support. Widespread coalitions are a Terminal Illness under such Conditions.

The only Salvation from the above conditions is Leadership, and such Direction must act sensibly. The real sense of loss among Americans today resides in the sentiment that responsible Parties are at the helm. The first job of Obama must be a economic Plan which Americans can understand, where old and overused economic theories are actually dismissed, and new Options are explored. I would first tell Everyone that the famous Quid pro Quo won’t work, and a Budget will have to be organized cognizant of limited resources; the old political Payoff system cannot come into play this time. The second thing I would tell Obama, and other political leaders, is that they have to forget about the angry Middle Class who are Mad about finding Bills harder to Pay. The emphasis must be on getting Unemployed Millions back to Work, even if it is Minimum Wage; only this churn will bring Consumption back to necessary levels. The last thing may be the hardiest of the entire program: Informing the very People who supplied you with Votes and Contributions that their hard-luck Stories hold less sway than actual destitution. We still await a decision on Barrack Obama, and whether he has the cajones. lgl

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