What is the Purpose?

Where are We going here? It goes back to asking about Why recessions are such a problem. The only Answer which will hold up states that recessions are bad because people lose some share of their Standard of Living. Investors are an integral part of the population which suffers from recessions, but they are not the only segment of the population which suffers from the recession. They are not even the first to suffer, as Layoffs start long before poor Profits are reported. They are not the worst to suffer as well, with Labor losing a far greater share of their total Income. They do happen to be the most organized and vocal, with the greatest swing weight to influence Government officials.

Here is the Problem: Government, especially the Fed, categorically expound that there is little Inflation. What exactly is Inflation? Some who claim that it is only a change in Prices which is higher. I would advance another definition which will be picked apart drastically as soon as it is heard: Inflation is an alteration in the stasis between Income and Pricing, where Prices increase in percentage Cost in relation to Income. Inflation is often hidden under recessionary conditions, but it remains existent. People still suffer from the percentage Cost increase of Prices, even though nominal Prices have not altered. Now We enter into the realm of QE1 and QE2. Investors love Quantitive Easing because it lowers their Investment Costs, but What does it do for the rest of the Price Structure?

We can first fairly determine that it will not lower Consumer Prices in the Short-Run as would a Business demand to raise Cash through Sales, and increase those Prices in the Intermediate and Long-Run. This means that there is assured Inflation in the future, which the Fed states is needed. Is It? One has to ask if a Recession can be defined as Over when Average Income is still below the previous Average, and Prices have continued to increase. This is a good Question to answer, but there is an even more important Question to be asked: Have not QE1 and QE2 both been designed to worsen the loss of Average Income to the advantage of a specific Class–namely, the Investors? The Fed is part of the Problem, rather than a part of the Solution under these Conditions. These are definite indications that We are on the wrong Course, when We should be designing Mass Labor Public projects. lgl