Thursday, July 16, 2009

Dirty little Secrets

Some old-fashioned Economists may think it is important when the Numbers do line up, but it All means nothing unless People are being paid good Wages for purchase of their product. I wonder if it is time to tell some of the dirty little Secrets of the profession. Stimulus, as a process, is highly akin and related to Inflation. Both elements artificially suppress the purchasing power of stable Incomes, diverting it to rising Incomes with enhanced Need to Spend. Each is a Tax upon previous Earnings, with the larger denomination of funds to hide the suppression which is present. These stable Incomes are expected to stay Silent; the whole Process helped by the fact that most such Incomes are already saturated in Household Goods. Economists rely on these facts, even if they don’t comprehend them clearly.

Recessions are over in actuality only when Consumers have adequate Income to purchase necessary Household Goods, without dipping into their Savings. Some Economists would contend that this Condition can never be reached, while Others will suggest that the Average of Income can be used in this determination; One has to utilize the statistical Mean. You can inform Any who ask that the Recession is far from over, and it will be a long one; I even suspect that it will not be finished until We Baby Boomers leave this Earth; distributing our stored Wealth. We have been the most innovative generation in a long time, yet Our amassing of Wealth was consistently High for the effort expended; Labor being underpaid, while Management vastly overrated in Dollar terms. The previously Successful are again an impediment to advancement; a common characteristic of Recessions.

Labor is overtaxed, and has been for some time. Management is overpaid, and has been for some time. Labor cannot sustain more taxation, without significant loss of their Standard of Living. Management is highly adverse to increase of their own taxation, and control sufficient Votes in Congress and Executive Government to ensure their current immunity from taxation. Their Solution to Government Spending–accumulation of Debt–is fast losing its reputation among Lenders, while Debt Service is becoming an additional burden for Labor. There are Some, maybe only Me, who think the financial crisis will not reduce, unless the Debt bubble of federal debt is also burst; and Congress is forced to increase Taxation where it can–on the Wealthy. A new Boom in the old style may never again be with Us. lgl

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