Why don’t I like this article? Could it be that it talks about exactly those behavior patterns which destroyed the potential of the American Consumer? We do know that We are making about 8 times what our Grandparents made, but how much of that is Inflation? Americans are beginning to realize that you can purchase from a position of strength, simply by accumulating the Cash first before purchase, thus avoiding a great deal of Interest; bringing down the price of the Goods as well as the debt level. Consumer Credit has always been a great deal for the Business world, a way to minimize Business attachment to the viability of the Household Incomes at low Cost; lowered further by the level of difficulty in declaring bankruptcy. Economists would acclaim this separation of Business from the dislocations of the Household, except what happens when Business practice adopts excitement of those dislocations for the benefit of itself? We are now trying to export the practices of ‘Finance without Restriction’, knowing full well that We are additionally adding Consumer-Loss Recessions into the matrix as well, as Consumption pushes against over-pressured Credit limits. This article does nothing but spread the Joys of a major epidemic.
What I dislike most about Paul Krugman’s Writings lay in the fact that he is always Right in the technical aspects, and Wrong in the ideology. This means he will always basically be able to forecast What is currently going on in the Near Term, but does not ask the hard Questions about the Long-Run. The process of transferring Short-Term Credit into Long-Term Credit is totally Right, but what happens When Consumers think to reduce their short-term holdings of Cash Reserves. Can the Readers understand the relationship between these two paragraphs. One might not, but what happens when these two trends collide? Interest rates will rise in the Short-Run with the return of Consumers to previous practices, and Government access to Capital will not be easy or inexpensive. The Job market will obviously not have returned to previous levels, and previous levels could not repay the Government debt accumulation for something like 17 years of previous high levels of Employment. One must understand that actions taken Today can bind the economy into high Inflation rates in the future, and the Government has no program to pay for its own activities at any time–Past, Present, or Future.
This is a Piece which condemns both Congressional regulation of the Fed, and Fed policy at the same time. One has to understand that Everyone proposes platforms which have already been overused, and doubtful in effect; the most asked Question is whether this Crap will have any impact at all. Every time We propose Inflation suppression Someone screams about the Unemployment levels. Someone else screams about getting Money to flow into Households, so that they will continue to Consume. Everyone thinks Government Spending must have an impact, though no one has found one yet. Several people have asked me if I thought of anything which was worth the hot air expressed in the explanation. I finally came up with This, and asked that Everyone consider it for a while, before yelling:
The Retirement Age for Social Security benefits should be lowered to Age 55. Every Retiree could Retire, but with only 60% of the Benefits until Age 75. Each Retiree would be allowed to work a maximum of 20 hours per Week, without any dislocation of his personal Benefit. A vast Draft of new Labor would be developed, especially if Medicare Benefits were extended to the Retirees. The Cost would not be as great as the current Stimulus proposals, and Stress conditions within the current Labor market would guarantee high Participation. lgl